1 county office fiscal oversight workshop october 25, 2006 presented in partnership with ccsesa,...
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COUNTY OFFICE FISCAL OVERSIGHT
WORKSHOPOctober 25, 2006
Presented in partnership with CCSESA, FCMAT and BASC
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COUNTY OFFICEFISCAL OVERSIGHT RESPONSIBILTIES
Deborah L. SimonsDirector, Division of Business Advisory Services
Los Angeles County Office of Education
Susan Birch Grinsell, CPAAssistant Superintendent of Business Services
Humboldt County Office of Education
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What we’ll cover
An Overview of County Office Fiscal Oversight Responsibilities
What’s New in Fiscal Oversight
Feedback from the Field on the New Criteria and Standards
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Why County Office Fiscal Oversight?
Increasing Number of State Bailouts
Lack of Authority to Intervene
Keep Local Problems from Becoming State Problems
Inappropriate Use of Long-term Debt
Inordinate Delays in Budget Adoption
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What is AB 1200?
Legislation Became Law in 1992
Established Fiscal Crisis and Management Assistance Team (FCMAT)
Increased County Office Intervention Authority
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What is AB 1200? (continued)
Crisis Prevention vs. Crisis Management
Multiyear Fiscal Solvency Analysis
Disclosure of Collective Bargaining and Other Multiyear Obligations
Tighter Deadlines/Increased Penalties
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What is AB 1200? (continued)
State Criteria and Standards/Milestones for Measurement of Fiscal Health
County Office Fiscal Advisor with Stay or Rescind Authority
State Take-Over in Extreme Situations
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Levels of County Office Intervention
Day-to-Day Monitoring and Review of Fiscal Reports
Discussions/Meetings
Letters/Board Presentations
Qualified Certification/Not a “Going Concern”
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Levels of County Office Intervention (continued)
Negative Certification
Fiscal Advisor
Plus
“AB 139” Audits
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Levels of State Intervention
State Loan
Trustee
May stay or rescind actions of Board and Personnel Commission
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Levels of State Intervention
(continued) Administrator
Assumes rights and powers of Board
Board becomes advisory only without compensation/benefits
District superintendent automatically leaves
Other high level management can be fired
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Ongoing Monitoring (continued)
Collective Bargaining Disclosures
Independent Audits/Audit Exceptions
Expenditures/Cash Flows
Annual Financial and Attendance Reports
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Ongoing Monitoring (continued)
Analyses Using County Office Data Bases
Contact with District Staff
FCMAT “Predictors of School Agencies Needing Assistance”
Newspaper Articles
Comments from FCMAT, CDE, auditor, other districts, community, etc.
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Taking Action Based on Financial Analysis
Conditional Approval/Disapproval of Budgets
Change of Interim Certification to Qualified/Negative
Declare District as “Not a Going Concern”
Prepare “AB 139” Reports on Districts with Fiscal Issues
Assign Fiscal Expert/Advisor
Notify Board of Concerns About Proposed Collective Bargaining Agreement
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Taking Action Based on Financial Analysis (continued)
Notify District of Fiscal Impact of Negative Fund Balances, Declining Enrollment, Audit Findings, Low Cash Balances, etc.
Conduct “AB 139” Audits of Districts with Potential Illegal Fiscal Practices
Conduct a Study of the Financial and Budgetary Conditions of the District
Direct the District to Submit a Plan for Addressing Its Adverse Fiscal Condition
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Impact of Fiscal Oversight Duties on County Offices
White Hat of Service
Black Hat of Mandated Solvency
Bankruptcies – Reality vs. Legislative Perception
Until 2004, Penalty of 40 Percent for Failure
Attempt at Uniform Application
Broad Intervention Powers Scaled Back
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Impact of Fiscal Oversight Duties on County Offices
(continued)
Impact of State Loan on County Office
SPI may review quality of county superintendent fiscal oversight of district
SPI may assume county superintendent’s fiscal oversight duties
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Common Reactions to County Office Intervention
Denial
Staff Fired or Leave
Distrust of Fiscal Data
Appeals to CDE/Lawsuits
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Common Reactions to County Office Intervention
(continued)
Media Attention
Political Attention
Chaotic District Board Meetings
Union Pressure
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Keys to Successful Fiscal Oversight
District
Good financial practices
Ongoing communication with County Office
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Keys to Successful Fiscal Oversight (continued)
County Office
Knowledgeable staff with understanding of district operations
Ongoing communication with district
Understand the big picture
Proactive review
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Background
AB 2756 Purpose: Help identify districts that are
developing financial problems before the problems become severe
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AB 2756 District health indicators
Specified comparisons and reviews to be included
Clear definitions/guidelines for financial certifications
Comprehensive review and assessment of the financial conditions of districts
FCMAT Predictors of School Agencies Needing Intervention
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AB 2756 (continued)
SPI Committee to Revise Standards and Criteria
Timeline for the work November 2004 SBE approval – June 2005 Implemented with 2006-07 Budgets
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Information Gathering
COE CBO List Serve provided by FCMAT
Six questions About 14 COE’s responded Full responses are in your packets
Statistical Data Summary from 7 COE’s is also part of your
materials
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Information Gathering Results
Overall impressions were similar
North to South
Large to small COE’s
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What was the feedback from school districts in your county? What was their overall impression and what did they specifically like/dislike? Advantages
Good information District administration and board
Consistent wording of the standards from a positive perspective
Automated features of the software
One-page summary of district health
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What was the feedback from school districts in your county? What was their overall impression and what did they specifically like/dislike? (continued) Concerns:
Time consuming to prepare
Collect and enter data
Length of the report (23 pages) was intimidating for boards
Information from districts was incomplete
“Not Mets” did not always indicate fiscal instability
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What was the feedback from school districts in your county? What was their overall impression and what did they specifically like/dislike? (continued) Concerns
Stigma of “Not Mets”
Specific Criteria/Standards or data elements Long – term commitments Base Revenue Limit changes (NSS) Salary and Benefit breakout by 3 groups Total health benefit costs
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Was the software easy for the districts to use?
Yes (mostly)
Some difficulty in navigating
Difficult to read & distinguish between sections
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Were the reports easy for the districts to use?
Yes (mostly)
Certification page was a good recap
Some boards questioned “Not Mets” - but not all Presentation styles differed widely
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Were the reports easy for the districts to use?
Areas of confusion
ADA and enrollment for charter ADA, County ADA, declining enrollment and NSS
Inter-fund transfers to “cover operating deficits” related to other funds DM match Contributions to capital project reserves
Independent position control: good or bad
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From your particular COE perspective, how useful was it in helping you meet your oversight responsibilities? How did it make your oversight responsibilities more difficult?
Helpful
More information
Validated information that some COE’s already requested
Districts took it more seriously/more thoughtful More reasonable assumptions Provided better information
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From your particular COE perspective, how useful was it in helping you meet your oversight responsibilities? How did it make your oversight responsibilities more difficult? (continued)
Helpful
Certification page was a useful tool
Quality control $3.3 million error in a revenue projection
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From your particular COE perspective, how useful was it in helping you meet your oversight responsibilities? How did it make your oversight responsibilities more difficult? (continued) Difficulties
Districts completed the form incorrectly COE staff assistance
Number of “Not Met’s” for NSS
Prior year information needed to be audited for accuracy Prior to trend analysis
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Was there a high percentage of either a “Met” or “Not Met” criteria/standard that was not helpful for you or the school district in assessing its fiscal conditions? 7 counties responded
210 school districts 12 ROP’s
Of the three criteria for population estimates ADA projections were best
5% - 17%
Enrollment projections had an overall higher % of “Not Met” 5% - 29%
ADA to enrollment ratio had the overall highest % of “Not Met” 18% - 50%
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Was there a high percentage of either a “Met” or “Not Met” criteria/standard that was not helpful for you or the school district in assessing its fiscal conditions? (cont’d) Projected change in RL for budget compared to
subsequent two years
8% - 41% Large COLA in 2006-07
Projected salaries/benefits to total expenditures
25% - 71% Again, may reflect the size of the 2006-07 COLA
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Was there a high percentage of either a “Met” or “Not Met” criteria/standard that was not helpful for you or the school district in assessing its fiscal conditions? (cont’d) Consistent projection for other operating revenues and
expenditures
Generally very high 25% - 100%
Required Deferred Maintenance included in the budget
0% - 18%
Required RRMA included in the budget
6% - 60%
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Was there a high percentage of either a “Met” or “Not Met” criteria/standard that was not helpful for you or the school district in assessing its fiscal conditions? (cont’d)
Deficit spending Software only measures decreases in fund balance Consistent range
23% - 50%
Overestimated projected ending fund balance
6% - 50%
Overestimated projected reserves
Generally very low 0% - 33%
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Was there a high percentage of either a “Met” or “Not Met” criteria/standard that was not helpful for you or the school district in assessing its fiscal conditions? (cont’d) Information was also collected from some on the
supplemental information
Areas with consistently high “yes” responses: Long-term commitments Post employment benefits Open status of labor agreements Contributions Independent position control Declining enrollment Uncapped health benefits Change of CBO or Superintendent
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Is there something else you would like to share about the process or the
documents? Things should get easier
First year implementation
Training for district staff was effective CDE and COE
Training for school boards is needed
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Is there something else you would like to share about the process or the
documents? (continued)
Software could be more user friendly
Yes/no buttons once pushed couldn’t be cleared w/o deleting the document, etc.
Hitting the “Enter” key relocated the cursor somewhere other than the next data field
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Is there something else you would like to share about the process or the
documents? (continued) Long – term commitment test related to
General Fund revenues
Not always correlative
COP’s, GO bonds and CFD’s
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Next Steps
Coordination with CDE
Did non-compliance mean districts were facing fiscal problems?
Technical software User friendly formatting Technical software cleanup
Electronic linkage of current year budget and multi-year projections
Coordination of RRMA and Deferred Maintenance
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Next Steps (continued)
Coordination with CDE Clarifying language/explanations necessary to be
sure interpretation is consistent throughout the state Total Health Benefit Costs Includable ADA
Next round - Interim Reports!
Collect the same type of data
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