The Art of School District Fiscal Oversight CCSESA

Stan Mantooth, Ventura County Superintendent of Schools

Misty Key, Merced COE Assistant Superintendent

Damon Smith, Alameda COE Associate Superintendent

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Presentation Outline

Our Responsibilities

Our Tools

The Art

Our Responsibilities

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Education Code 1240

(a) Superintend the schools of his or her county

(b) Maintain responsibility for the fiscal oversight of each school district in his or her county pursuant to the authority granted by this code

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District Fiscal OversightAB 1200 – Effective January 1st,

1992

At least 39 subsequent bills have been passed that amend or alter our responsibilities for fiscal oversight

As economic times evolve, the process and necessary legislation continues to be refined and defined

And the art changes too…

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We have many duties

Education Code

Government Code

Public Contract Code

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Budget approvalWe examine the budgets for

compliance with the state standards and criteria (adopted by the SBE)

Determine if the budget allows the district to meet its financial obligations

We may either approve, conditionally approve, or disapprove the submitted budget

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If we disapprove a budgetWe must recommend to the

district’s governing board revisions to the budget and reasons for the revisions

We may assign a fiscal adviser (at our expense) or we may appoint a committee to review our recommendations

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Many technicalities If the district makes budget

modifications and the COE approves, all is well

If we are not satisfied with the district’s revised budget then steps continue…Leading up to budget review committeesSPI involvementPossible severe measures against the

district including an imposed budget

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We review Interim reportsDistricts certify financial health:

PositiveQualifiedor Negative

We may change a certificationAppeal process through SPI / CDE

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PositiveA positive certification is assigned

to any district that, based upon current projections, will meet its financial obligations for the current and subsequent two fiscal years

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QualifiedA qualified certification is assigned

to any district that, based upon current projections, may not meet its financial obligations for the current fiscal year or two subsequent years

Often viewed as a budget dilemma

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NegativeA negative certification is assigned

to any district that, based upon current projections, will not meet its financial obligations for the current fiscal year or subsequent fiscal year

Often viewed as a cash dilemma

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We also reviewUnaudited Actuals (year-end

financial statements) for mathematical accuracy

Audits for exceptions and corrective plans of

actions

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Collective BargainingAgreements

All districts must disclose the costs of an agreement with an exclusive representative at a public meeting

Districts with Qualified or Negative certifications must give us 10 days to comment on the agreement

We must notify the district within those 10 days if the agreement would endanger the fiscal well-being of the district

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Charter SchoolsAll charter schools must send us

the following reports:BudgetInterimsUnaudited actuals year-end reportAnnual audit

We are not required to do anything with these reports

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Community CollegesCounty Offices of Education may

offer financial services to Community Colleges

Oversight authority is the responsibility of the Chancellor’s office

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Non-voter Approved Debt

Districts with qualified or negative certifications may not issue such debt without us first determining that the repayment of the debt is probable

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Commercial WarrantsWe may audit commercial

warrants issued by districts

If we determine there is evidence of fraud or misappropriation we are required to notify the governing board, the State Controller, SPI, and the local district attorney

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More WorkSet the payroll processEmployer of record for PERS and

STRS for all districts in your countyCertify attendance, deferred

maintenance and other reportsDistribute apportionments

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No RestCalculate revenue limitsWaive bid requirements in

emergenciesReconcile county treasurer cash to

school recordsReport local tax collections

The Tools

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Lack of Going ConcernLack of Going Concern = troubleEducation Code 42127.6

If at any time during the fiscal year the CSS determines a school district may be unable to meet its financial obligations for the current or two subsequent years….

Triggers an array of options almost identical to a qualified certification

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Receive / Give ReportsAll districts are required to give

you a copy of any study, report, evaluation, or audit that contains evidence of fiscal distress

We are required to give an annual report addressing the fiscal status to the district governing board of a qualified or negative district

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Authority to InvestigateExtraordinary audit - any time

With reason to believe fraud, misappropriation, or other illegal fiscal practices have occurred…

Any district or charterAudit the expenditures and

internal controls

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Criteria and StandardsThese standards help identify

signs that a district is in danger of experiencing fiscal distress

Ensure a degree of uniformity across the state in interpretation of fiscal distress

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Auditors

School district auditors are required to provide us information on qualified, negative or “lack of going concern” districts as requested

Will not violate auditor – client confidentiality

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Financial SystemsDistricts are not required to be on

COE systems, but it sure helps!

Real-time information access

Many emergency loans are made to districts not on the COE system

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Access to Experts

BASCSFSSCOFS

FCMATFiscal Experts / Fiscal Advisers

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$69,920 annuallyEvery COE in the state receives at

least $69,920 to support fiscal oversight Larger COEs receive a little more

TrainingBASC has an annual training session

on the technical aspects of fiscal oversight

The Art

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District Relations

Most Important of AllPositive relationships are powerfulDistricts are willing to disclose their

mistakes, problems, and concerns to a COE they trust

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CommunicationCommunicate

Often, honest, sincereRespond to budgets, interims,

collective bargaining agreementsEven when not technically requiredThe more often you say it, the greater

chance it will be heardKeep the Superintendent and CBO in

the loop even if communicating to the Board

Many of us give CBOs a chance to comment on district letters prior to official distribution

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Provide TrainingsHost and provide trainings for districts in

your county (or regionally)The more our district business officials

know, the better job they will perform A better job on their part makes our work

easier! Consider subsidizing the trainings if you can

find a wayIt’s a lot cheaper to train than to help a

district recover from fiscal distress!

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Host MeetingsHost monthly or quarterly

meetings for district business officials and superintendents

Use these meetings to listen to your districts as well as share the latest information

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The Hammer

Don’t be afraid to qualify a districtMuch better to qualify a borderline

district than to let a district go underWe are routinely criticized by the

State when a district goes straight from positive to negative

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The Bully PulpitFrank discussion

Often a discreet, but frank conversation with the CBO and Superintendent can prevent a simmering pot from boiling over

Most districts do not understand what happens to them when they are qualified or negativeEnlightenment is a powerful tool

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Support Each OtherWhen in doubt

Call your colleagues

Someone in CCSESA has been down the road before

One big mistake affects us all

Thank You