California's system of school finance is highly regulated and prescriptive. A large share of state funding is allocated through categorical programs, that is, programs whose funding is contingent upon districts using the money in a particular way or for a particular purpose. In 2008-09, the strings were taken off 40 of those programs, collectively known as the "Tier 3" programs, as part of a budget deal that also reduced the funding for those programs. The authors conducted a survey of 350 California school district chief financial officers (CFOs) between April and August of 2011 to see how district leaders responded to this sudden, limited fiscal flexibility and the conditions that shaped their decisions. Appended are: (1) List of Advisory Group Members; (2) List of Tier 3 Categorical Programs (2009-2010); (3) Procedures for Sampling, Data Collection, and Analysis; (4) Median Values on Selected District Characteristics; (5) Comparing CFO Responses Based on District Characteristics; (6) School Characteristics Associated with District Responses to Tier 3 Flexibility; and (7) Online Survey. Individual chapters contain footnotes. (Contains 25 figures and 27 tables.) [This report was written with Mary Briggs, Bing Han, Beth Katz, Angeline Spain, and Anisah Waite. The research described in this report was conducted by PACE research network and RAND Education, a division of the RAND Corporation.]