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If the category has not been used, then you can delete the category if you are on the grade book by navigating to the categories page and you should be able to see a checkbox under the trash can icon. Click on the checkbox and click save.
If the category has been used, then all usages of it need to be found.
Only the Lead teacher controls the categories for a class. The co-teacher has to be assigned as the lead teacher to be able to edit the categories.