The Art of School District Fiscal Oversight CCSESA.

The Art of School District Fiscal OversightThe Art of School District Fiscal Oversight CCSESACCSESA

Stan Mantooth, Ventura County Superintendent of Schools

Misty Key, Merced COE Assistant Superintendent

Damon Smith, Alameda COE Associate Superintendent

Stan Mantooth, Ventura County Superintendent of Schools

Misty Key, Merced COE Assistant Superintendent

Damon Smith, Alameda COE Associate Superintendent

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Presentation OutlinePresentation Outline

Our Responsibilities

Our Tools

The Art

Our Responsibilities

Our Tools

The Art

Our ResponsibilitiesOur Responsibilities

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Education Code 1240Education 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

(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 OversightDistrict Fiscal Oversight

AB 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…

AB 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 dutiesWe have many duties

Education Code

Government Code

Public Contract Code

Education Code

Government Code

Public Contract Code

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Budget approvalBudget approval

We 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

We 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 budgetIf we disapprove a budget

We 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

We 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 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

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 reportsWe review Interim reports

Districts certify financial health:PositiveQualifiedor Negative

We may change a certificationAppeal process through SPI / CDE

Districts certify financial health:PositiveQualifiedor Negative

We may change a certificationAppeal process through SPI / CDE

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PositivePositive

A 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

A 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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QualifiedQualified

A 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

A 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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NegativeNegative

A 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

A 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 reviewWe also review

Unaudited Actuals (year-end financial statements) for mathematical accuracy

Audits for exceptions and corrective plans of

actions

Unaudited Actuals (year-end financial statements) for mathematical accuracy

Audits for exceptions and corrective plans of

actions

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Collective BargainingAgreements

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

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 SchoolsCharter Schools

All charter schools must send us the following reports:BudgetInterimsUnaudited actuals year-end reportAnnual audit

We are not required to do anything with these reports

All 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 CollegesCommunity Colleges

County Offices of Education may offer financial services to Community Colleges

Oversight authority is the responsibility of the Chancellor’s office

County 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 DebtNon-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

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 WarrantsCommercial Warrants

We 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

We 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 WorkMore Work

Set the payroll processEmployer of record for PERS and

STRS for all districts in your countyCertify attendance, deferred

maintenance and other reportsDistribute apportionments

Set 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 RestNo Rest

Calculate revenue limitsWaive bid requirements in

emergenciesReconcile county treasurer cash to

school recordsReport local tax collections

Calculate revenue limitsWaive bid requirements in

emergenciesReconcile county treasurer cash to

school recordsReport local tax collections

The ToolsThe Tools

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Lack of Going ConcernLack of Going Concern

Lack 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

Lack 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 ReportsReceive / Give Reports

All 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

All 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 InvestigateAuthority to Investigate

Extraordinary audit - any time With reason to believe fraud,

misappropriation, or other illegal fiscal practices have occurred…

Any district or charter

Audit the expenditures and internal controls

Extraordinary audit - any time With reason to believe fraud,

misappropriation, or other illegal fiscal practices have occurred…

Any district or charter

Audit the expenditures and internal controls

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Criteria and StandardsCriteria and Standards

These 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

These 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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AuditorsAuditors

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

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 SystemsFinancial Systems

Districts 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

Districts 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 ExpertsAccess to Experts

BASC

SFSS

COFS

FCMAT

Fiscal Experts / Fiscal Advisers

BASC

SFSS

COFS

FCMAT

Fiscal Experts / Fiscal Advisers

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$69,920 annually$69,920 annually

Every 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

Every 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 ArtThe Art

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District RelationsDistrict Relations

Most Important of All

Positive relationships are powerful

Districts are willing to disclose their

mistakes, problems, and concerns to

a COE they trust

Most Important of All

Positive relationships are powerful

Districts are willing to disclose their

mistakes, problems, and concerns to

a COE they trust

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CommunicationCommunication

CommunicateOften, 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

CommunicateOften, 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 TrainingsProvide Trainings

Host 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!

Host 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 Meetings

Host 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

Host 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 HammerThe Hammer

Don’t be afraid to qualify a district

Much better to qualify a borderline

district than to let a district go under

We are routinely criticized by the

State when a district goes straight

from positive to negative

Don’t be afraid to qualify a district

Much better to qualify a borderline

district than to let a district go under

We are routinely criticized by the

State when a district goes straight

from positive to negative

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The Bully PulpitThe Bully Pulpit

Frank discussionOften 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

Frank discussionOften 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 OtherSupport Each Other

When in doubtCall your colleagues

Someone in CCSESA has been down the road before

One big mistake affects us all

When in doubtCall your colleagues

Someone in CCSESA has been down the road before

One big mistake affects us all

Thank YouThank You