Dear County Superintendents of Schools:

Reduction to Final Allocations for Title I, Parts A and D
Fiscal Year 2020–21

The purpose of this letter is to inform you that the California Department of Education (CDE) has revised Fiscal Year (FY) 2020–21 Title I, Part A and Title I, Part D local educational agency (LEA) allocations resulting in approximately a 4.5 percent reduction in funding. A summary of the circumstances, methodology for corrections, and other important details are included below. County offices of education (COE) are requested to forward this information to school districts and charter schools in their respective county.

In May 2021, CDE calculated and published FY 2020–21 Title I allocations for LEAs based on the full grant amount awarded by the U.S. Department of Education (ED) plus $88.2 million in carryover funding identified in the 2020 California Budget Act (Chapter 6, Statutes of 2020) as amended by Senate Bill 85 (Chapter 14, Statutes of 2021). Unfortunately, the budgeted carryover amount was established in error and, therefore, not available for allocation to LEAs. As a result, all LEA allocations for FY 2020–21 Title I, Part A and Title I, Part D have been adjusted to reflect the total funding available. The impact to LEAs is an approximate 4.5 percent reduction to their Final 2020–21 Allocations dated January 2022. The revised final FY 2020-21 allocations will be available at https://www.cde.ca.gov/fg/fo/r14/title1pa20result.asp.

For LEAs that have fully or almost fully spent their FY 2020–21 Title 1, Part A or Title I, Part D allocations, CDE recognizes there will be a need to find alternative revenue sources to backfill prior expenditures. LEAs that have incurred expenditures that exceed the revised allocation may need to utilize eligible state, federal, and/or local funds to mitigate the impact of reduced Title I funding. Possible sources of funds include Local Control Funding Formula (LCFF), as well as any other unrestricted funds or unspent restricted funds such as Elementary and Secondary School Emergency Relief (ESSER) I, II, III funding, where the previously incurred expenditures would be an allowable use of funds. Allowable expenditures for ESSER are available at https://www.cde.ca.gov/fg/cr/.

There is no impact to ESSER II and III allocations, which is based on a proportional share of an LEA’s  2020–21 Title I grant amount because the ESSER allocations did not reflect the carryover funding.

Recovery of Funds

If an LEA has received FY 2020–21 Title I apportionments in an amount that exceeds the reduced allocations, the overpaid amount must be recovered by CDE. The recovery of overpayment will be made pursuant to California Government Code Section 12419.5 through an offset to each LEA’s March 2022 Principal Apportionment payment to the greatest extent possible. LEAs that do not have a sufficient Principal Apportionment balance for an offset will be invoiced. Amounts recovered will be identified on the Schedule of Recovery to be posted on the CDE Categorical Programs web page at https://www.cde.ca.gov/fg/fo/r14/title1pa20result.asp.

The CDE’s recovery of overpaid Title I funds should be recorded as an abatement (debit) to revenue in Resource 3010, ESSA: Title I, Part A, Basic Grants Low-Income and Neglected, and Object 8290, All Other Federal Revenue.

LEAs that have remaining unpaid FY 2020-21 funds due based on the January federal cash management reporting period will be included in the next Title I apportionments scheduled for the end of April.

Maintenance of Effort Impacts

LEAs may experience an impact on the federal Maintenance of Effort (MOE) calculation if state and/or local funds are used to mitigate the impact of reduced Title I funding. In doing so, the base expenditures used in the MOE calculation will be increased in the 2021-22 fiscal year. The increase in the base expenditures in the 2021–22 fiscal year could make the MOE more difficult to meet in the 2022–23 fiscal year.

Questions regarding MOE implications of this recovery may be emailed to the Financial Accountability and Information Services Office by email at SACSINFO@cde.ca.gov.

Other Impacts for LEAs

If an LEA paid excess interest that was returned to ED, the LEA may not be able to recover the excess amount if the LEA adjusted unrestricted state funds rather than unrestricted federal funds.

Auditors will need to be informed about how the LEA handled late adjustments. Please retain a copy of this letter as documentation for auditors and Federal Program Monitoring.

The CDE apologizes for miscalculation and recognizes the impact to LEA budgets and the additional workload making this adjustment may require. Questions regarding accounting guidance may be emailed to the Financial Accountability and Information Services office at SACSINFO@cde.ca.gov. All other questions should be directed to the Categorical Allocations and Audit Resolution Office by email at CAAR@cde.ca.gov.

Sincerely,

Keith Smith, Administrator
Categorical Allocations and Audit Resolutions Office
School Fiscal Services Division

KS:ls