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Capital Expenditures FAQs

FAQs for federal stimulus funding capital expenditures, including the Elementary and Secondary School Emergency Relief (ESSER) I, II, and III funds and the Governor’s Emergency Education Relief (GEER) I and II funds.

Acronyms

Assembly Bill (AB); California Code of Regulations (CCR); California Department of Education (CDE); California Multiple Award Schedules (CMAS); Code of Federal Regulations (CFR); Department of General Service (DGS); Division of the State Architect (DSA); DSA Bulletin (BU); Expanded Learning Opportunity Grant (ELO-G); heating, ventilation, and air conditioning (HVAC); Interpretation of Regulations (IR); Learning Loss Mitigation Fund (LLMF); local educational agency (LEA); Office of Management and Budget (OMB); Senate Bill (SB); State educational agency (SEA); U.S. Department of Education (ED); Uniform Grant Guidance (UGG); United States Code (USC)

Note on Guidance

Please note that the information below is intended as guidance only, not legal advice, and is updated as more guidance is made available by ED. The CDE recommends that LEAs discuss their specific situations with legal counsel to determine the most appropriate action, in line with applicable State and federal requirements.

  1. What federal funding sources require LEAs to obtain CDE approval for capital expenditures? (Updated 31-Oct-2022)

    In accordance with 2 CFR 200.439, "[c]apital expenditures for general purpose equipment, buildings, and land are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or pass-through entity." As such, any ESSER and GEER fund sources require prior approval for single big-ticket purchases of $5,000 or more (as do federal funds generally).

    LEAs are not required to get pre-approval for purchases using the Coronavirus Relief Fund or General Fund dollars. To clarify, when referring to the General Fund dollars, this is the funding source that an LEA was allocated through the LLMF package established in Section 110 of SB 98 (Chapter 24, Statutes of 2020), as amended by Section 59 of SB 820 (Chapter 110, Statutes of 2020), and as amended by Section 4 of AB 86 (Chapter 10, Statutes of 2021).

    To obtain approval, an LEA must fill out the Capital Expenditures Pre-Approval Application Form (PDF; Updated 2-Feb-2024) and then send the completed form via email to EDReliefFunds@cde.ca.gov.

    NOTE: Any approval is only for the funding source and specific scope of work described in the application that is approved by the CDE. The CDE must be notified of any changes to approved funding sources or costs of the approved project. For example, if an LEA receives approval for an expenditure using ESSER I funds and then later wants to use ESSER II funds for that expenditure, an email must be sent to EDReliefFunds@cde.ca.gov requesting approval. Any changes to the scope of the project require a new application to be submitted.

  1. What types of projects require prior approval from the CDE?

    In accordance with 2 CFR 200.439, prior approval is required for any single big-ticket purchase at the cost of $5,000 or more using the funding sources cited above. These purchases can include general purpose equipment, buildings, and land, including material improvements. This means one costly item (or several items which make up one unit) and the cost includes all the ancillary expenses such as design costs, new electrical circuit for the item, and other related fees.

    To obtain approval, an LEA must fill out the Capital Expenditures Pre-Approval Application Form (PDF; Updated 13-Jan-2023) and then send the completed form via email to EDReliefFunds@cde.ca.gov.

  1. Are shade structures allowable as a Capital Expenditure for ESSER/GEER?

    In many situations, yes. However, in the pre-approval application, the LEA must show the cost is reasonable and necessary to prevent, prepare for, or respond to the COVID-19 pandemic and that all applicable procurement requirements will be met. The project must receive prior approval from the CDE. An LEA must describe how the items acquired will support/enhance the educational program.

  1. Can school buses or vehicles be purchased for student transportation under ESSER/GEER? (Updated 7-Jan-2022)

    In many situations, yes. However, in the pre-approval application, the LEA must show it is necessary, reasonable, and allocable and that all applicable procurement requirements will be met. The project must receive prior approval from the CDE. In the event of monitoring or reviews, the LEA may be asked to demonstrate that it considered less expensive options such as leasing, contracted services, or other alternatives that are more reasonable. An LEA must explain how this will support/enhance the educational program.

    Requests for staff cars for district office use or new maintenance vehicles should explain how these expenditures will benefit students and school site staff.

    If an LEA purchases a vehicle (for staff or students) with ESSER/GEER funds, the LEA may need to follow disposition rules within the UGG at the end of the grant period. Please see the FAQ “If a district makes a capital expenditure with COVID-19 federal stimulus funding, must the item be disposed of when the grant period ends?” for more information.

  1. Are construction costs allowed under ESSER/GEER? (Updated 13-Jan-2023)

    ESSER and GEER funds may be authorized for construction, only if it is necessary to prevent, prepare for, or respond to COVID-19. The project must receive prior approval from the CDE. Additionally, related construction costs resulting from an eligible project, including all California Building Standards Code compliance, such as structural, fire & life safety, access compliance and energy code compliance are allowable uses of ESSER and GEER funds, if prior approval has been received.

    UPDATE (13-Jan-2023): In question B-6 of the December 2022 revision of the ESSER and GEER Use of Funds FAQs External link opens in new window or tab. (PDF), ED clarifies that, while allowable, they strongly discourage LEAs from using ESSER and GEER funds for new construction, given the limited time frames for projects to be completed using these fund sources. ED also expresses concern that use of funds in this way would limit opportunities to address other, more pressing needs to address the impact of lost instructional time on student academic achievement, mental health, and well-being.

    If your LEA plans to use funds for construction, please be aware that the project must be completed within the allowable grant timeline. Projects that are not completed within the allowable grant timeline may be deemed unallowable uses of federal funds. The LEA may be required to reimburse all expenditures using Federal Stimulus funds with an unrestricted fund source if the project is ultimately determined to be unallocable to these federal funds.

    Construction projects must also meet all applicable procurement requirements and comply with the requirements of the Davis-Bacon Related Acts, if applicable. Please see the FAQ "Must LEAs comply with requirements of the Davis-Bacon Related Acts when using Federal Stimulus Funds?" below for more information regarding compliance with the Davis-Bacon Related Acts.

    Please see the full text of ED's FAQ B-6 for additional considerations regarding all federal requirements when using federal funds for construction.

  1. What types of construction projects could possibly be allowed? (Updated 13-Jan-2023)

    School facility repairs and improvements to enable operation of schools to reduce the risk of virus transmission and exposure to environmental health hazards and provide for the health needs of students may be allowable, with prior approval from the CDE.

    This could include the inspection, testing, maintenance, repair, replacement, and upgrades for indoor air quality improvement.

    Possible projects that may be allowed are:

    • Construction of additional classrooms, purchasing, or leasing portable classrooms to assist with social distancing;
    • Replacing windows for improved air quality;
    • Replacing carpet with tile or similar flooring material for cleaning purposes;
    • Replacing or fixing roof for air quality;
    • Updating facilities to utilize for additional classroom space;
    • Construction of areas for health purposes (e.g., waiting areas for sick students or testing areas).


    Please note: all applications must provide a thorough justification of how the project is reasonable and necessary to specifically prevent, prepare for, or respond to the COVID-19 pandemic and demonstrate how the planned procurement will align with applicable state and federal requirements. The examples above should not be considered a pre-approved list.

    UPDATE (13-Jan-2023): In question B-9 of the December 2022 revision of the ESSER and GEER Use of Funds FAQs External link opens in new window or tab. (PDF), ED clarifies that renovating, remodeling, or constructing athletic facilities, such as swimming pools, playing fields, or sports stadiums may not be an allowable use of funds, unless there is a sufficient connection between the expenditure and preventing, preparing for, or responding to the COVID-19 pandemic. Allowability of such a project would require significant specific facts and circumstances of the project to clarify the context and how it relates to the purpose of the ESSER and/or GEER program. Furthermore, ED generally discourages the use of funds for new construction (see question "Are construction costs allowed under ESSER/GEER?" above).

  1. What requirements must be followed for construction projects? (Updated 12-Jan-2024)

    For construction projects, LEAs must follow applicable federal construction regulations, such as safety and health standards (34 CFR 75.609), energy conservation (34 CFR 75.616), and Davis-Bacon prevailing wage rules. Please see the FAQ "Must LEAs comply with requirements of the Davis-Bacon Related Acts when using Federal Stimulus Funds?" below for more information regarding compliance with the Davis-Bacon Related Acts. Any LEA requesting pre-approval must provide documentation showing that the LEA is not able to meet the need arising from the health emergency in a more cost-effective or efficient manner, such as leasing property or improving property already owned and in use.

    Additionally, the placement of new modular classrooms, other new construction, and many modernization projects on a school site may be subject to the requirements of Title 5 CCR Section 14030 and oversight by the DSA. During the onset of the pandemic, DSA offered assistance and flexibility for emergency school facilities through BU 20-01, "DSA Assistance During the COVID-19 Pandemic for Emergency School Facilities." Accordingly, relocatable buildings and structures, including shade structures, receiving DSA approval for temporary use during an emergency could be temporarily installed for a maximum period up to three years in accordance with IR A-1.16 External link opens in new window or tab. (PDF). These exceptions are no longer available, as of November 8, 2022. Reconstruction or alteration projects to school buildings less than specified construction cost thresholds are exempt from DSA review, as described in IR A-22 External link opens in new window or tab. (PDF).

    The project must also be tied to the allowable uses of the applicable fund source and prevent, prepare for, or respond to COVID-19. Additionally, an LEA will have to show that the cost is reasonable and necessary and that cheaper alternatives were evaluated.

    Important: The project must also follow federal procurement requirements in 2 CFR 200.317–327 and be obligated and liquidated in alignment with the allowable grant period of the funding source that is being used.

  1. Can the CDE provide approval for a purchase that has already been made by an LEA? (Updated 26-Oct-2023)

    Given the authorization to use ESSER and GEER funds for expenditures as early as March 13, 2020, there is some flexibility with the approval timeline. If you plan on using ESSER or GEER funds for a purchase that has already been made, the purchase must have been made during the eligible grant period (e.g., ESSER I is available for obligation March 13, 2020 – September 30, 2022), the LEA must have met all federal requirements in regards to the bidding process, the LEA must ensure that it has complied with construction regulations, and the LEA must be able to show the purchase is necessary, reasonable, and allocable in response to COVID-19.

    However, please be aware that if the request is not ultimately approved, the LEA will be required to charge any applicable expenditures to an alternate, allowable fund source.

  1. Can an LEA use ESSER/GEER funds to replace or install an HVAC system?

    Most likely this would be allowed as long as the LEA can demonstrate in its pre-approval application that the purchase is reasonable and necessary in order to prevent, prepare for, and/or to respond COVID-19. You must also meet state and federal requirements on procurement and likely will have to comply with DSA requirements.

  2. Do construction projects funded under ESSER/GEER require CDE or DSA plan approval for the architectural plans? (Updated 12-Jan-2024)

    If the funding source of the construction project does not include state reimbursement through the School Facility Program (i.e., Proposition 51), then CDE approval of architectural plans is not required. However, the LEA must ensure the project meets Title 5 Regulations.

    The DSA previously issued BU 20-01, "DSA Assistance During the COVID-19 Pandemic for Emergency School Facilities." The information in this bulletin offered guidance on prioritization, indicated flexibility for plan approval requirements for specific project types related to school re-opening, and encouraged outreach to the local DSA Regional Office. Temporary flexibility offered through BU 20-01 was rescinded as of November 8, 2022, and is no longer available. Not all HVAC projects require DSA review; however, when structural alterations or improvements are needed, then DSA structural review is required and access compliance path of travel improvements are triggered.

    LEAs should contact DSA External link opens in new window or tab. for more information.

  3. Can ESSER and GEER funds provided under the ELO-G be used for Capital Expenditures?

    Yes, an LEA that receives ELO-G funding may use this funding for capital expenditures, if prior written approval is granted from the CDE. LEAs will be required to submit a Capital Expenditures Pre-Approval Application Form to EDReliefFunds@cde.ca.gov for any funding that uses the following federal funds under the ELO-G:

    • ESSER II SEA Reserve (Resource Code 3216)
    • GEER II (Resource Code 3217)
    • ESSER III SEA Reserve – Emergency Needs (Resource Code 3218)
    • ESSER III SEA Reserve – Learning Loss (Resource Code 3219)

    The purchase must be allowable under both federal and state requirements under the ELO-G program. For more information on the allowable uses of the ELO-G, please refer to the Expanded Learning Opportunities Grants Strategies web page, or you may contact the ELO-G Team via email at ELOGrants@cde.ca.gov.

    Note: If an LEA is using state funds and not using any federal funds for a purchase, then a capital expenditure pre-approval is not required. However, the purchase must still be aligned with applicable state allowable uses and law.
  4. If a district makes a capital expenditure with COVID-19 federal stimulus funding, must the item be disposed of when the grant period ends? (Added 7-Jan-2022)

    Per 2 CFR 200.313(c)(1), equipment purchased with federal funding may continue to be used for the original purpose or activity “as long as needed, whether or not the project or program continues to be supported by the Federal award.” If the equipment is no longer needed for the original purpose, then it may be used in other activities supported by the same federal agency (ED) or federal awards from other federal agencies. Only when the equipment is no longer needed for the original purpose and is not needed for any other federal purpose, then the district must follow disposition rules in 2 CFR 200.313(e).

    For example, if a district purchases a vehicle to assist with socially-distanced transportation using ESSER funds, e.g., reducing bus loads from 36 students to 23 students, the district may continue use the vehicle to provide transportation services at reduced numbers after the ESSER period ends. If the bus is no longer used to provide socially distanced transportation, or for any other federal purpose, then the district must follow disposition rules in 2 CFR 200.313(e).

  5. How can an LEA dispose of equipment that is no longer in use? (Added 31-Oct-2022)
    Generally, when equipment is no longer needed for the original purpose or program, or cannot be used in other currently or previously federally-supported activities, the following disposition rules apply:

    Equipment with a current per unit fair market value of $5,000 or less may be retained, sold, or otherwise disposed of with no further responsibility to ED.

    Equipment with a current per unit fair market value in excess of $5,000 may be retained or sold, but ED should be contacted by the LEA to request disposition instructions, if required by the terms of the award. ED must be compensated for its share of the cost of the original purchase. To calculate this amount, multiply the current market value (or proceeds from the sale) by the federal agency’s percentage of participation in the cost of the original purchase. However, the LEA may be permitted to deduct and retain from the Federal agency’s share $500 or 10 percent of the sales proceeds, whichever is less, for the recipient’s selling and handling expenses (2 CFR 200.313[e]).

    The disposition of items purchased with Federal Stimulus funds must be noted on the equipment inventory maintained by the LEA for all equipment with a current fair market value in excess of $500 (California Education Code Section 35168). The LEA is also responsible for completing and submitting to the CDE the ESSER and GEER Equipment Removal Form(PDF) for approval before the equipment can be removed from the inventory.
  6. Can an LEA pre-pay for a multi-year product license or service using ESSER or GEER funds? (Updated 12-Jan-2024)

    While multi-year licenses or services themselves may align with an allowable use of funds, depending on the necessity and reasonability as part of the LEA’s response to the COVID-19 pandemic, it is important to make sure all such costs follow federal requirements. An LEA must liquidate all financial obligations incurred under the federal award no later than 120 calendar days after the end date of the period of performance (2 CFR 200.344[b]). For federal awards utilized by LEAs, “financial obligations” means orders placed for property and services, contracts and subawards made, and similar transactions during a given period that require payment by the LEA (2 CFR 200.1). Further, 2 CFR 200.405 describes that costs are allocable to a federal award only if the goods or services are assignable to that federal award, in accordance with the relative benefits received.

    In accordance with these requirements, the full term of licenses or services paid for with Federal Stimulus Funds, even partially, must conclude prior to the end of the allowable time period of the funds utilized. Licenses or other services cannot be paid in advance for, or partially cover, services that would continue after the allowable time period, as the liquidation would not have occurred until the service is completed.

  7. What are the federal reporting requirements associated with using ESSER and/or GEER funds to purchase land, construct a building, or make improvements to a building? (Added 13-Jan-2023)

    The following information is provided from ED's revised ESSER and GEER Use of Funds FAQs External link opens in new window or tab. (PDF), released on December 7, 2022.

    There are three sets of reporting requirements for LEAs that use ESSER or GEER funds to purchase land, construct a building, or make improvements to a building. The first is to record the Federal interest in the title of real property and include a covenant in the title of real property acquired in whole or in part with Federal assistance funds to assure nondiscrimination during the useful life of the project. In addition, as part of the grant award assurances for ESSER I, ESSER II, ESSER III, GEER I, and GEER II, the grantee assures that they would comply with the OMB Standard Forms 424B and D (Assurances for Non-Construction and Construction Programs). OMB Standard Form 424D states, among other things, that the grantee and subgrantees:

    • Will not dispose of, modify the use of, or change the terms of the real property title, or other interest in the site and facilities without permission and instructions from the awarding agency.
    • Will record the Federal interest in the title of real property in accordance with awarding agency directives and will include a covenant in the title of real property acquired in whole or in part with Federal assistance funds to assure nondiscrimination during the useful life of the project.


    The second reporting requirements are found in the UGG and are triggered when Federal funds are used to acquire or improve real property. For example, see 2 CFR 200.310–313, which provide more detail on consulting with ED when property is modified or disposed of, including the conditions under which the Federal government must be compensated when property is sold.

    Finally, annually, States must report to ED and LEAs must report to the State/SEA (pass-through agency) on the status of the real property for at least the first 15 years (see, e.g., 2 CFR 200.330).

  8. Can ESSER and GEER funds be used for the cost of purchasing and installing video systems for security purposes? (Added 13-Jan-2023)

    In question B-14 of the December 2022 revision of the ESSER and GEER Use of Funds FAQs External link opens in new window or tab. (PDF), ED clarifies that there may be limited circumstances in which ESSER and/or GEER funds may be used by an LEA for the purpose of promoting safe and secure schools, as long as it is consistent with applicable law and the purchase supports the overall purpose of preventing, preparing for, or responding to the COVID-19 pandemic.

    However, ED cautions LEAs to consider what additional requirements must be met during and as a result of these purchases, to the extent that these systems will capture student and staff behavior. Please see the full text of this question in the ESSER and GEER Use of Funds FAQs External link opens in new window or tab. (PDF) for resources and guidance when considering how such systems will impact student and staff privacy, student and staff civil rights, and LEA policies around video use and record retention.

  9. What should an LEA consider if it wants to use CMAS or similar multiple award schedules to assist in the procurement process for a capital expenditure using ESSER and/or GEER funds? (Added 13-Jan-2023)

    Please be aware that when using CMAS or other multiple award schedules to assist in the procurement process, your LEA is responsible for ensuring that all applicable requirements for use of the multiple award schedule are met. In addition, given that these are federal funds, it is still incumbent that your LEA ensure that it is also meeting all required federal procurement requirements found in 2 CFR 200.317–327 External link opens in new window or tab. . LEAs must also meet all state procurement requirements, which can be found in the California Public Contract Code, sections 20100–22178. LEAs should additionally reference the state guidance found within the most recent Bid Threshold Adjustment Letter available on the CDE Accounting Correspondence web page.

    Federal procurement requirements in particular are not necessarily fulfilled under a CMAS Agreement alone, and your LEA is required to maintain documentation to substantiate that all federal procurement requirements were met in the event of future audits or monitoring reviews.

    More information regarding CMAS can be found on the DGS's California Multiple Award Schedules web page External link opens in new window or tab. , including links to the Local Government Agency Guide External link opens in new window or tab. (PDF) that details requirements when using CMAS contracts.

    Receiving pre-approval for a project as a result of alignment with the allowable uses of the applicable fund source does not alleviate the LEA's responsibility to maintain and be able to provide documentation during audits and monitoring reviews to substantiate that all state and federal procurement requirements were met.

  10. Must LEAs comply with requirements of the Davis-Bacon Related Acts when using Federal Stimulus Funds? (Updated 12-Jan-2024)

    Yes. As a result of 20 USC 1232b Labor Standards, which is considered a Related Act, Davis-Bacon prevailing wage requirements apply to any construction, repair, or alteration (including painting) contracts over $2,000 using laborers and mechanics financed by federal education funds, including ESSER and GEER funds. An LEA that is using federal education funds to support a construction, repair, or alteration (including painting) project must include all applicable contract clauses found in 29 CFR 5.5. The LEA must also maintain contractor-certified payroll records.

    In partnership with the U.S. Department of Labor, ED hosted a Davis-Bacon webinar on April 26, 2023, in order to provide guidance and resources to support compliance with the requirements of the Davis-Bacon Related Acts. The webinar recording External link opens in new window or tab. is publicly available for review.

    Please see ED's Davis-Bacon Overview one-pager External link opens in new window or tab. (PDF) for more information regarding compliance with these requirements and additional resources.

    UPDATE (12-Jan-2024): The U.S. Department of Labor has issued new guidance for implementation of the Davis-Bacon Related Acts. In October of 2023, the U.S. Department of Labor released Fact Sheet #66: The Davis-Bacon and Related Acts External link opens in new window or tab. , which summarizes the applicable requirements and identifies common issues with compliance with these requirements. Common issues that frequently arise during review of projects subject to the Davis-Bacon requirements include:

    • misclassification of laborers
    • failure to pay full prevailing wage
    • inadequate and incomplete record keeping
    • failure to maintain a copy of the bona fide apprenticeship program and individual registration documents for apprentices
    • failure to submit certified payrolls weekly
    • failure to post the Davis-Bacon poster and applicable wage determination at the work site


    LEAs performing work subject to Davis-Bacon requirements are encouraged to review these common areas of issue (and the requirements generally) to ensure their projects are in compliance with the Davis-Bacon Related Acts.

    As of October 23, 2023, revisions have been made to the Davis-Bacon Related Acts, in 29 CFR Parts 1, 3, and 5. Generally, these revisions apply only to new contracts established on or after October 23, 2023, unless an existing contract or order is changed to include additional or substantive work not within the scope of work of the original contract, an existing contract is modified to require the contractor to perform work for an additional period of time, an option to extend the term of a contract is exercised, or an existing contract includes a general commitment to perform necessary construction, as the need arises, over a period of time not tied to the completion of any particular project.

    For more information regarding the revisions in the Final Rule, please see the U.S. Department of Labor's Davis-Bacon Related Acts Comparison Charts External link opens in new window or tab. .

    Additionally, on December 7, 2023, ED hosted a webinar in partnership with the U.S. Department of Labor to review the revisions to the Davis-Bacon regulations. The slide deck, recording, and transcript of this webinar are available for review through ED's Office of Elementary and Secondary Education ESSER Resources web page External link opens in new window or tab. .

  11. May an LEA use a "piggyback" contract in the procurement process for a capital expenditure using ESSER and/or GEER funds? (Added 26-Oct-2023)

    The CDE recommends extreme caution when considering the use of a piggyback contract for a purchase utilizing federal funds.

    In general, under 2 CFR 200.317, all LEAs "must follow the procurement standards in 200.318 through 200.327." 2 CFR 200.318(a) requires an LEA to "have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The [LEA]'s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327." Emphasis added.

    So-called piggybacking (known in the federal regulations as cooperative purchasing) is allowed only under certain circumstances. 2 CFR 200.318(e) provides, "To foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared services across the Federal Government, the non-Federal entity is encouraged to enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services. Competition requirements will be met with documented procurement actions using strategic sourcing, shared services, and other similar procurement arrangements."

    However, ED has not spoken directly to the question of under what circumstances piggybacking may be allowed in the context of ESSER and GEER funds, or federal funds generally. Due to the lack of explicit guidance from ED, efforts to piggyback on existing contracts using federal funds run a significant risk of being found out of compliance.

    As a practical matter, new contracts which rely on prior contracts, or those which rely on cooperative purchasing agreements, must contain enough information to demonstrate compliance with federal rules and State and federal procurement requirements. This includes information to demonstrate that the cost of individual expenditures is reasonable and necessary to accomplish the purposes of the grant. For this reason, piggybacking contracts must be for the same type of services offered at the same prices as enumerated in the original contract.

    Additionally, please note that requests for approval of expenditures that rely on vague contracts (with unspecified services or costs in either the original or piggyback agreement), those that would involve different services or pricing from the original contract, and those that rely on contracts originally made with non-federal funds or which received approval prior to the passage of ESSER may not be approved because compliance with the requirements of the grant and federal procurement requirements cannot be guaranteed.

Questions:   Federal Stimulus Team | EDReliefFunds@cde.ca.gov
Last Reviewed: Friday, February 2, 2024
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