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Categorical Programs

Categorical aid is money from the state and federal governments targeted to particular programs, such as K-3 Class Size Reduction and to students with special needs, such as Special Education - the largest state categorical program and a significant federal categorical program.  In addition to be aimed at certain programs or populations, categorical aid usually comes with restrictions on how the money can be spent.  Title I (extra support for students who live in poverty) and Child Nutrition (school breakfast and lunch) are among the largest ongoing federal programs. 

Traditionally, about one-third of total K-12 education funding comes from state and federal categorical programs.  The money is granted according to a variety of formulas, often tied to districts' student demographics.  Sometimes programs require a local match, and some are competitively awarded.  With differing student populations and abilities to compete for funds, districts vary substantially in the amount of categorical funding they receive and the percentage of their total revenues that funding represents.

Major Change in State Categorical Funding

In February 2009, to help districts deal with budget cuts, lawmakers made substantial changes to many of the state's categorical programs, allowing districts flexibility through 2012-13 to use funds from about 40 state categorical programs for other educational purposes.  These new flexible programs total about $4.5 billion statewide in 2009-10 (nearly 20% lower than their 2008-09 funding level).  Prior to implementing this new flexibility, a school district or county office of education (COE) must discuss proposed changes at a public hearing.

In addition, lawmakers cut 11 relatively small state programs by nearly 20% while maintaining their requirements.  These non-flexible programs total about $300 million in 2009-10 and include programs such as Student Assessment, English Learner Student Assistance, and Foster Youth Services.  Another 10 state categorical programs - most of them large - retained their requirements and were not cut substantially.  They total about $9.6 billion and include programs such as Special Education, Child Care and Development, K-3 Class Size Reduction, Economic Impact Aid, Child Nutrition, and the after-school programs created by Proposition 49.

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