The Art of School District Fiscal Oversight
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Transcript of The Art of School District Fiscal Oversight
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The Art of School District Fiscal Oversight CCSESA
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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
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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
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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
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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
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Thank You