UPDATE, March 13, 2013: The California Report this morning gives an overview of the role of the Dept. of Education's Foster Youth Services, interviewing advocates for retaining the program's categorical funding status.
February 26, 2013: Gov. Brown's "Local Control Funding Formula," the overhaul of public (and charter) school financing proposed for '13-'14 budget year into two primary formulas eliminates the majority of categorical programs. As to local control funding behaviors in the past, let's go to the video tape:
The 2011, the RAND Corporation, funded by private foundation money, examined how 10 school districts responded to the ("not a well-articulated policy") deregulations (SBX-4 2009)of $4.5 billion in categorial flexing ("local educators [were freed] from specific guidelines that ...regulated spending on 40 [categoricals]"). Most of the districts used the money to "backfill" cuts. Some highlights: