From $500 to $1,500: What the New Inventory Law Means for Districts

Signed July 28, 2025, AB 629 reshapes how schools track assets, manage grants, and prepare for audits with new federal and operational implications.

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Signed July 28, 2025, AB 629 (Ch. 62, Stats. 2025) updates Education Code §35168 and modernizes your equipment-inventory threshold. (PolicyEngage)

What changed (in plain English)

• Inventory threshold moves from $500 to $1,500 per item. Districts must maintain an inventory for items with a current market value over $1,500 and include description, ID number, date acquired, location, original cost (or reasonable estimate), and later the date/manner of disposal. (LegiScan)

• Built-in inflation updates. The Superintendent of Public Instruction (SPI) must adjust the threshold every two years using the LCFF inflation factor (Ed. Code §42238.02(d)(2)), rounded to the nearest $50, and post the new threshold on CDE’s website. (LegiScan)

Yes, we “lived with $500 for decades.” The Legislature paired the jump to $1,500 with an automatic, biennial adjustment so we don’t fall behind inflation again. (PolicyEngage)

Three big implications for districts

1) Federal grant compliance (CTE/Perkins, Title I, etc.)

Under federal rules (2 CFR Part 200), “equipment” is property with a useful life >1 year and a per-unit cost equal to the lesser of your capitalization level or $10,000. If your district’s capitalization level is $1,500, then for federal purposes many items will count as “equipment” at $1,500—not $10,000—bringing the federal inventory/management requirements with them. (Legal Information Institute)

CDE’s fiscal guidance echoes that the $10,000 federal threshold applies unless your local/state threshold is lower. If you lower your capitalization level, you may increase what the feds expect you to treat as “equipment.” (California Department of Education)

Takeaway: Before aligning everything to $1,500, confirm how your capitalization policy interacts with federal grants used in CTE labs, STEM programs, and other Perkins/Title funding. A well-intended change could expand your federal inventory workload. (Legal Information Institute)

2) “Walk-off” risk and theft-sensitive items

Even when items fall below the Ed Code threshold, federal guidance and state best practices still expect controls for theft-sensitive property (think tablets, cameras, tools). Many states’ Perkins manuals require biennial physical inventory and extra safeguards for such assets—good practice for any district with shared labs and carts. (Maryland Public Schools)

Takeaway: Keep (or create) a separate sub-inventory for theft-sensitive items under $1,500. Your auditors will thank you.

3) New operational cadence: update every two years

Because the SPI will post a new threshold every two years, you’ll want a repeatable process to adopt and communicate the change. The LCFF-based adjustment avoids another decades-long freeze, but it adds a biannual tick-tock to your policies, forms, and training. (PolicyEngage)

A pragmatic policy approach (for consideration and internal discussion)

1. Separate the concepts:

   • Ed Code inventory threshold (reporting) → Track items above the posted $1,500+ amount. (LegiScan)

   • Capitalization level (accounting policy) → Set for financial statements with your auditors; don’t change it lightly because it drives the federal definition of “equipment.” (Legal Information Institute)

   • Theft-sensitive sub-inventory (operational control) → Maintain lists and check-out procedures for high-risk items under the threshold.

2. Add a biennial “SPI Threshold Update” task:

   • Calendar a policy review every other spring to check the CDE posting, update your AR/BP, forms, and training, and brief site leads. (LegiScan)

3. Tune procedures for federal programs:

   • For purchases with federal funds, apply 2 CFR 200.313 equipment controls (tagging, records, inventory at least every two years, safeguarding, and disposition rules). If your capitalization level < $10,000, apply the lower number. (eCFR)

4. Right-size physical inventories:

   • Keep the legally required inventory for >$1,500 items.

   • For theft-sensitive items under the threshold, use streamlined tags and site-level check-in/out rather than full finance-grade asset records.

5. Communicate the “why”:

   • Message that the new law reduces unnecessary workload while preserving accountability, and that the biennial update prevents another long stagnation at an outdated dollar figure. (PolicyEngage)

FAQ for your board and cabinet

Q: Why didn’t the Legislature just set $1,500 and leave it for years?

A: They did set $1,500 and required a biennial inflation adjustment so the threshold keeps pace with costs. This avoids repeating the $500-for-decades problem. The SPI will post updates on CDE’s site. (LegiScan)

Q: Can we raise our capitalization level to $10,000 to match the federal definition?A: You can set capitalization policy with your auditors, but remember: federal definition uses the lesser of your capitalization level or $10,000. Raising capitalization affects financial reporting and may have other ripple effects—coordinate with finance, auditors, and program leads first. (Legal Information Institute)

Q: Do we still track sub-$1,500 items like tablets?

A: Ed Code doesn’t require them in the formal inventory, but sound internal control (and many federal programs) expect safeguards for “walkable” items. Keep a lighter-weight sub-inventory and checkout process. (Maryland Public Schools)

Quick action checklist

• Confirm today’s SPI-posted threshold and update AR/BP inventory language accordingly. (LegiScan)

• Review capitalization policy with finance/auditors before making any change. (Legal Information Institute)

• Map grant-funded purchases (Perkins/CTE, Title programs) to 2 CFR 200.313 controls. (eCFR)

• Stand up/refresh a theft-sensitive sub-inventory for items under $1,500 (tags, custody, spot checks). (Maryland Public Schools)

• Schedule a biennial inventory-threshold review tied to the SPI posting cycle. (PolicyEngage)

• Train site leads on what belongs in the formal inventory vs. the sub-inventory—and why.