Assembly Bill (AB) 1200 Information

Butte County Office of Education

Fiscal Oversight Role

AB 1200 InformationBCOE Fiscal Oversight Role

• Overview– The first level of fiscal oversight remains with

local boards of education and their administration within the Local Education Agency (LEA)

– A County Office of Education (COE) is the intermediary agent between the state and the district and is responsible for fiscal oversight

• Provide management assistance• Provide progressive intervention if needed

• AB 1200– Assembly Bill 1200 was enacted in 1992– Provided the authority and responsibility for

COE’s fiscal oversight– Created the Financial Crises and

Management Assistance Team (FCMAT)

AB 1200 InformationBCOE Fiscal Oversight Role

• FCMAT– Purpose is to serve LEA’s by providing fiscal

crises intervention and management assistance

• Provides information to LEA’s and policymakers– FCMAT predictors of LEA’s needing intervention– FCMAT fiscal health risk analysis questions

• Provides proactive, preventative services• Fiscal crises intervention and oversight services

AB 1200 InformationBCOE Fiscal Oversight Role

• Budget Review– Districts submit their original and interim

budgets to BCOE for review• Original Budget: district adopts budget through

board action– BCOE evaluates budget and issues a letter either

approving, conditionally approving, or disapproving the budget

• 1st & 2nd Interim Budgets: districts certify budget through board action as either positive, qualified, or negative

– BCOE evaluates budget and either agrees with certification or may change certification

AB 1200 InformationBCOE Fiscal Oversight Role

• Interim Certifications• Positive: LEA will meet its financial obligations for

the current fiscal year and subsequent two fiscal years

• Qualified: LEA may not meet its financial obligations for the current fiscal year or two subsequent years

• Negative: LEA will not meets its financial obligations for the remainder of the current fiscal year or for the subsequent fiscal year

AB 1200 InformationBCOE Fiscal Oversight Role

• Collective Bargaining Review– AB 2756 added this requirement if a district is

either qualified or negative• BCOE has ten days to comment on tentative

agreements before they are approved by the board of education

• BCOE often provides this service for districts not in AB 1200 review as additional assistance

AB 1200 InformationBCOE Fiscal Oversight Role

• Education Code 42127.6 (a) “Qualified Certification”– The county superintendent of schools shall report to the

Superintendent of Public Instruction on the financial condition of the school district and his or her proposed remedial actions and shall do at least one of the following and all actions that are necessary to ensure that the district meets its financial obligations (A) Assign a fiscal expert, paid for by the county superintendent(B) Conduct a study (C) Direct the school district to submit a Multi-Year Projections (MYP) (D) Require the district to encumber all contracts and obligations (E) Direct the district to submit a proposal for addressing its financial

condition(F) Withhold compensation of the governing board and district

superintendent for failure to provide requested information(G) Assign FCMAT to review teacher staffing practices

AB 1200 InformationBCOE Fiscal Oversight Role

• Education Code 42127.6 (e) “Negative Certification”– … the county superintendent, in consultation with the

Superintendent of Public Instruction, shall take at least one of the actions described in paragraphs (1) to (5), inclusive, and all actions that are necessary to ensure that the district meets its financial obligations and shall make a report to the Superintendent about the financial condition of the district and

remedial actions proposed by the county superintendent. (1) Develop and impose a budget revision

(2) Stay or rescind any action of the district’s board of trustees

(3) Assist in developing a financial plan

(4) Assist in developing a budget for the subsequent year

(5) Appoint a fiscal advisor (district pays 75%, COE pays 25%)

AB 1200 InformationBCOE Fiscal Oversight Role

• What happens to a district once it is in AB 1200 status– Qualified Certification

• Regular, documented meetings with board, administration, and BCOE staff

• District must submit collective bargaining agreements for review• BCOE review of board agendas & minutes• Possible appointment of “fiscal expert”

– Negative Certification• Regular, documented meetings with board, administration, and

BCOE staff• District must submit collective bargaining agreements for review• BCOE review of board agendas & minutes• BCOE has “stay and rescind” authority regarding any item on the

LEA’s board agenda• Most likely appointment of “fiscal advisor”

AB 1200 InformationBCOE Fiscal Oversight Role

• Cash is King– Cash flow projections a priority

– Multi-year cash flows needed to determine if and when cash deficits are realized

• Cash Management– Spending reductions and reserves

– Tax Revenue and Anticipation Notes (TRANs)

– Interfund borrowing

– Short-term loan from County Office of Education

– Short-term loan from Butte County Treasury

• Cash Insolvency– At the point an LEA runs out of cash and is unable to repay

short term debt (cash management) the LEA would be cash insolvent and state receivership required

35AB 1200 InformationBCOE Fiscal Oversight Role

Questions?

AB 1200 InformationBCOE Fiscal Oversight Role