Fiscal Oversight Guide
For AB 1200, AB 2756 and Subsequent Related Legislation
Fiscal Oversight Guide
For AB 1200, AB 2756 and Subsequent Related Legislation
A Resource for Local Educational Agencies
December 2015
A Publication of the
Fiscal Crisis and Management Assistance Team
Joel D. Montero, Chief Executive Officer
Christine Lizardi Frazier, Kern County Superintendent of Schools
Administrative Agent
ii Fiscal Crisis and Management Assistance Team • www.fcmat.org
Table of Contents
Table of Contents
Introduction.................................................................................................. 1
FCMAT Services............................................................................................ 3
Budget Adoption Process............................................................................. 7
Local Control and Accountability Plan (LCAP) Approval............................13
Budget Review Committee Process: Review of the Budget..................... 17
Budget Review Committee Process: Disapproved Budget.......................19
Going Concern............................................................................................21
Interim Reports...........................................................................................27
Response and Appeal Procedures............................................................31
Charter School Oversight by Chartering Authority....................................33
Public Disclosure Responsibilities.............................................................37
Requirement for Annual Audit....................................................................43
Fiscal Oversight Responsibilities of Specific Entities............................... 47
Sample Oversight Letters..........................................................................63
Appendices.................................................................................................65
Appendix A: California Department of Education Guidance................................. 67
Appendix B: Disclosure of Collective Bargaining Agreement Document .............69
Appendix C: FCMAT Indicators and Fiscal Health Risk Analysis........................... 79
Appendix D: Sample Fiscal Oversight Review Checklists...................................... 91
Appendix E: Business and Administration Steering Committee LCAP Manual....93
Appendix F: A Glossary of School Finance Terms, with some Education Terms.. 95
Appendix G: Acronyms..........................................................................................121
Fiscal Oversight Guide • December 2015 iii
iv Fiscal Crisis and Management Assistance Team • www.fcmat.org
Introduction
Introduction
Assembly Bill (AB) 1200 has been successful in focusing the attention of school districts and
county offices of education on their fiscal management and oversight responsibilities. Since
the enactment of AB 1200 in 1992, fewer districts have experienced fiscal crisis. From 1993
through 2000, no state emergency loans were requested and the number of qualified and
negative certifications decreased. However, in recent years, requests for state emergency loans
and the number of negative certifications have both increased. A number of factors have
contributed to these increases: the state’s economy, declining enrollment trends, escalating
general fund encroachment, and a shortage of skilled personnel at multiple management levels. County superintendents of schools and school districts continue to play a critical role in
the fiscal health of local educational agencies (LEAs). The first level of fiscal oversight remains
with the local elected board of education and their administration. The county superintendent of schools, as the intermediate agent between the state and the LEAs, is responsible for
the fiscal oversight of the school districts in his or her county. As the fiscal oversight agency,
the county superintendent of schools provides management assistance and progressive intervention to local school districts.
In addition to increasing the authority and responsibilities given to county offices, AB 1200
created the Fiscal Crisis and Management Assistance Team (FCMAT) to serve California’s
LEAs by providing fiscal crisis intervention and management assistance. As part of that responsibility, FCMAT provides information, services, professional development, software and
products to the state’s local educational agencies and policy makers, and includes the California School Information Services (CSIS). Ninety percent of FCMAT’s work is a result of
an LEA inviting FCMAT to perform proactive, preventive services. Ten percent of FCMAT’s
work is fiscal crisis intervention assigned by the state Legislature and oversight agencies.
Under AB 1200, the county superintendent is responsible for reviewing district budgets and
interim reports and determining whether or not the district can meet its financial obligations in the current and two subsequent fiscal years. Additionally, county offices of education
(COEs) review public disclosures of collective bargaining agreements, and non-voter-approved debt. Beginning in 2014-15, Local Control Accountability Plan (LCAP) review and
approval is also tied to AB 1200 because a county office may not approve a district’s budget
until the LCAP is approved.
As a response to AB 1200 and subsequent fiscal oversight legislation, FCMAT, in collaboration with other interested parties, developed and released the AB 1200 & Related Responsibilities guide in February 2000. That guide was made possible with the assistance of staff from
the California Department of Education (CDE), county superintendents of schools’ staff, the
Business Administration Steering Committee (BASC) of the California County Superintendents Educational Services Association (CCSESA), and the External Services Subcommittee
(ESSCO) of CCSESA. Many agencies and individuals made valuable contributions to this
document.
In June 2004, the state Legislature approved and the governor signed AB 2756 (Daucher),
which made substantive changes to the financial accountability and oversight process of a
school district’s fiscal condition, and clarified the process for oversight and monitoring of
districts that obtain emergency state loans. AB 2756 was an urgency measure and became effective on June 21, 2004. FCMAT’s Fiscal Oversight Guide was updated in September 2006.
Fiscal Oversight Guide • December 2015 1
Introduction
This latest version of the Fiscal Oversight Guide provides local educational agencies and state
policy makers with updated information and useful documentation clarifying the roles and
responsibilities of fiscal oversight agencies. With Education Code (E.C.) section 52070, et
seq., county superintendents are now responsible for the oversight and approval of district
LCAPs; this both complicates and reinforces the importance of communication and oversight. FCMAT’s hope is that this guide will allow all agencies to better understand their roles.
Education Code section 1240 grants county superintendents oversight of districts within their
county. Under AB 1200, that role expanded significantly to include a progressive method
of oversight aimed at ensuring fiscal solvency. Over the years, AB 1200 has evolved into a
multidimensional practice, often referred to as the art and science of AB 1200. In addition,
county offices have been involved in supporting districts in data-driven, educationally-related
planning and implementation under Williams oversight, and Program Improvement under
the No Child Left Behind Act (NCLB). Similarly, the district LCAP review and oversight
process will develop over time. FCMAT fully expects that future versions of this manual will
continue to better define and expand the process as LCAP support and oversight is expanded
and enhanced. County office support and oversight as a whole will also continue to expand.
The Fiscal Oversight Guide does not replace any document or advisory from the California
Department of Education on this subject. Rather, it is intended to provide current information relative to the roles and responsibilities of county superintendents of schools, as well as
other governing entities. When using the Fiscal Oversight Guide, please be sure to always reference the Education Code, Government Code (G.C.), new legislation, and CDE advisories
related to these matters. FCMAT also welcomes suggestions for improvements or changes to
this guide.
FCMAT has found that guides such as this continually evolve. As new legislation is passed
and statutory regulations are enacted, the guide will continue to require revision.
This guide uses paraphrased sections of pertinent Education Codes when they are referenced.
For a more meaningful understanding and thorough review, readers will need to consult the
entire code section in context.
2 Fiscal Crisis and Management Assistance Team • www.fcmat.org
FCMAT Services
FCMAT Services
As referenced in the Introduction, AB 1200 created an independent and external entity
known as the Fiscal Crisis and Management Assistance Team (FCMAT). The Legislature
intended FCMAT to help LEAs avert fiscal insolvency and to provide management assistance
upon an LEA’s request. Since 1992, FCMAT has been engaged more than 1,100 times to assist school districts, county offices of education, charter schools and community colleges.
This guide focuses on the oversight authority and responsibilities of county superintendents.
Because many superintendents are new to their positions since the last Fiscal Oversight Guide
was published in 2006, this section provides a summary of the circumstances under which
FCMAT’s services may be used.
Accessing FCMAT services
FCMAT can be invited into a county office of education, school district, charter school
or community college to provide management assistance related to the fiscal health of the
LEA. FCMAT can also be assigned by the Superintendent of Public Instruction (SPI), the
county superintendent of schools, the FCMAT Governing Board, the California Community
Colleges Board of Governors or the state Legislature to provide management assistance and/
or fiscal crisis intervention. Ninety percent of FCMAT’s work is a result of an LEA inviting
FCMAT to perform proactive, preventive services, or professional development. Ten percent
of FCMAT’s work is a result of assignments by the state Legislature and oversight agencies to
conduct fiscal crisis intervention.
FCMAT Staff
The Fiscal Crisis and Management Assistance Team is a resource for the state Legislature,
SPI, county offices of education, school districts, charter schools and California community
colleges. The internal and external team includes members with expertise and experience at
county offices of education, school districts, charter schools and community colleges. These
experts come from both the public and private sectors. These professionals have an established
record of expertise in serving school districts, county offices of education, charter schools and
community colleges.
When its services are requested, FCMAT assembles a study team that best meets the specific
demands and scope of the requested study. The team works in close collaboration with the
client throughout the study.
Superintendent of Public Instruction
The SPI may request FCMAT’s assistance in the following instances:
• Disapproved county office of education budgets [E.C. 1624].
• Fiscal expert and budget review study for county office of education budgets [E.C.
1630].
• Standards and criteria noncompliance review [E.C. 33129].
• Disapproved LEA budget [E.C. 42127.3(b)].
• Assist with LEA budget review and revision [E.C. 42127.6(c)].
Fiscal Oversight Guide • December 2015 3
FCMAT Services
• Appeal procedures [E.C. 42127.9].
• Closure of military facility [E.C. 42238.2].
• To review the fiscal and administrative condition of any county office of education,
school district, or charter school [E.C. 42127.8(c)].
County Superintendent of Schools
The county superintendent of schools may request FCMAT’s assistance in the following tasks:
• Review the fiscal or administrative condition of a school district or charter school under
his or her jurisdiction [E.C. 42127.8(c)(2)].
• Provide fiscal management assistance [E.C. 42127.8(d)(1)].
• Facilitate training for the county superintendent related to fiscal accountability and
expanding the fiscal competency of local agencies [E.C. 42127.8(d)(2)].
• Facilitate fiscal management training through the 11 county service regions to county
office of education staff to ensure that they develop the technical skills needed to
perform their fiduciary duties [E.C. 42127.8(d)(3)].
• Review teacher hiring practices; teacher retention rate; percentage of highly qualified
teachers provided; and extent of teacher misassignment, as well as other provisions [E.C.
42127.6(a)(1)(G)].
Local Educational Agency
A local educational agency may request FCMAT’s assistance in the following areas:
• Fiscal management assistance [E.C. 42127.8(d)(1)].
• Facilitate training which shall emphasize efforts to improve fiscal accountability and
expand the fiscal competency of local agencies [E.C. 42127.8(d)(2)].
FCMAT Governing Board
The FCMAT governing board may ask the team to provide contracts and professional services
as management assistance to school districts, charter schools, or county superintendents of
schools in which the board determines that a fiscal emergency exists [E.C. 42127.8(e)].
State Legislature
The state Legislature has assigned FCMAT to various school districts that have received state
emergency appropriations due to cash insolvency to conduct comprehensive assessments in
five operational areas: financial management, facilities management, personnel management,
community relations/governance, and pupil achievement. These assignments typically
require FCMAT to report on the district’s progress over time related to the assessment. These
progress reports are submitted to the district, county office of education and various state
policy makers at designated periods specified by the legislation.
4 Fiscal Crisis and Management Assistance Team • www.fcmat.org
FCMAT Services
Charter Schools
A charter school may request FCMAT’s assistance in the following areas:
• Fiscal management assistance [E.C. 42127.8(d)(1)].
• Facilitate training which shall emphasize efforts to improve fiscal accountability and
expand the fiscal competency of local agencies [E.C. 42127.8(d)(2)].
Board of Governors (California Community Colleges)
The board of governors may request that FCMAT assist a community college district in
accordance with E.C. 84041 to establish or maintain sound financial and budgetary conditions and to comply with principles of sound fiscal management, as follows:
• Conduct a management review of the district and its educational programs.
• Audit the financial condition of the district.
• Provide management assistance or fiscal crisis intervention when a crisis presents an
imminent threat to the fiscal integrity and security of that district.
• FCMAT shall have the authority, subject to regulations adopted by the
board of governors, to stay or rescind any action of the district’s governing
board that is inconsistent with the district’s fiscal integrity and security.
• FCMAT shall submit a progress report to the affected district, to the board
of governors, and to the chancellor at least every six months, or more
frequently if that is required by the chancellor.
If the board of governors requests the assistance of FCMAT, the chancellor shall provide the
board of governors with a report that includes all of the following:
• An assessment of which events or activities led to the crisis.
• An action plan for addressing the deficiencies of the district.
• A process for assessing district progress in correcting deficiencies.
• Benchmarks that indicate the presence of local capacity to manage the fiscal responsibilities of the district.
Community College District
A community college district may request that FCMAT do the following [E.C. 84041]:
• Provide fiscal management assistance.
• Facilitate training for members of the district’s governing board and for any district
employee whose responsibilities include addressing fiscal issues. Training services shall
emphasize efforts to improve fiscal accountability and to expand the fiscal competency of
the trainees.
Fiscal Oversight Guide • December 2015 5
6 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Budget Adoption Process
Budget Adoption Process
•
On or before July 1 of each year, the governing board of each school district shall
hold a public hearing on the budget to be adopted for the subsequent fiscal year. The
budget to be adopted shall be prepared in accordance with Education Code section
42126. The agenda for that hearing shall be posted at least 72 hours before the public
hearing and shall include the location where the budget will be available for public
inspection. Notice of the date and location of the public hearing shall be posted in
a newspaper of general circulation no earlier than 45 days and no later than 10 days
prior to the hearing by the county superintendent of schools. The hearing must be
held not less than three working days following the availability of the budget for
public inspection [E.C. 42103].
Beginning with the 2015-16 adopted budgets, E.C. 42127 has been amended by Senate Bill
(SB) 858 (Chapter 32 / Statues of 2014) to require that, when a district’s budget includes a
combined assigned and unassigned ending fund balance in excess of the minimum recommended reserve for economic uncertainties adopted by the state board, the district’s public
hearing for budget adoption shall include the following for review and discussion:
•
The minimum recommended reserve for economic uncertainties for each fiscal year
identified in the budget.
•
The combined assigned and unassigned ending fund balances that are in excess of
the minimum recommended reserves for economic uncertainties for each fiscal year
identified in the budget, pursuant to Education Code section 33128(a). The fund
balances included are Fund 01, General Fund, and Fund 17, Special Reserve Fund for
Other Than Capital Outlay Projects.
•
A statement of reasons that substantiates the need for an assigned and unassigned
ending fund balance in excess of the minimum recommended reserve for economic
uncertainties for each fiscal year.
•
The governing board of a school district shall include this information each time it
files an adopted or revised budget with the county superintendent of schools. The
county superintendent of schools shall determine whether a school district’s adopted
or revised budget complied with these requirements.
•
The public meeting at which a school district’s governing board adopts an LCAP
and a budget must be held after, but not on the same day as, the public meeting at
which the governing board holds the required public hearings on the LCAP and the
proposed budget [E.C. 52062(b)(2)].
•
School districts shall adopt a budget on or before July 1 of each year [E.C. 42127(a)
(2)].
•
The governing board shall file the budget with the county superintendent
of schools within five days of adoption or by July 1, whichever occurs first
[E.C. 42127(a)(2)].
•
The budget and supporting data shall be maintained and made available for
public review [E.C. 42127(a)(2)].
Fiscal Oversight Guide • December 2015 7
Budget Adoption Process
•
•
The governing board of the school district shall not adopt a budget before
the governing board of the school district adopts a local control and
accountability plan (LCAP), if an existing LCAP or annual update to an
LCAP is not in effect for the budget year. The governing board of a school
district shall not adopt a budget that does not include the expenditures
necessary to implement the LCAP or the annual update to an LCAP that is
in effect during the subsequent fiscal year.
For budgets submitted on July 1, the county superintendent shall:
•
Examine the adopted budget for compliance with the state standards
and criteria adopted by the State Board of Education (SBE) and identify
technical corrections necessary to bring the budget into compliance. [E.C.
42127(c)(1)].
•
Determine if the budget allows the district to meet its financial obligations
and is consistent with a financial plan that will enable the district to satisfy
its multiyear financial commitments [E.C. 42127(c)(2)].
•
Ensure that the budget reflects the estimated unaudited actual revenues and
expenditures for the year just ended [E.C. 42103].
•
Ensure that the budget reflects complete plan and itemized statement of
all estimated revenues and expenditures for the next fiscal year as well as a
comparison of revenue and expenditures for the current year [E.C. 42122].
•
Ensure that the budget for the applicable fiscal year adopted by the
governing board of the school district includes expenditures sufficient to
implement the specific actions and strategies included in the LCAP adopted
by the governing board of the school district, based on the projections of the
costs included in the plan [E.C. 42127(c)(3) and 52070(d)(2)].
•
Ensure that the budget complies with the standards and criteria for fiscal accountability and stability adopted by the SBE pursuant to Education Code sections
33127 and 33128 [E.C. 42127(c)(1).
•
Ensure that the budget is on forms prescribed by the SPI [E.C. 42123].
•
Ensure that the budget includes a general reserve to meet cash requirements
[E.C. 42124].
•
Ensure that the budget includes designations of fund balance. The
designated funds are available for appropriation by a majority vote of the
governing board [E.C. 42125].
•
Determine whether the budget includes a combined assigned and unassigned ending fund balance that exceeds the minimum recommended
reserve for economic uncertainties, and if so, verify that the district
complied with the requirements of Education Code section 42127(a)(2)(B)
and (C) [E.C. 42127(c)(4)].
•
Review and consider studies, reports, evaluations, or audits of the district
that contain evidence of fiscal distress under the standards and criteria or
8 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Budget Adoption Process
reflect three or more of the 15 most common predictors of a district needing
intervention1 [E.C. 42127(c)(2)].
•
Either conditionally approve or disapprove a budget that does not provide
assurances that the district will meet its current and future obligations
and resolve problems identified in studies, reports, evaluations, or audits
described above. [E.C. 42127(c)(2)].
•
A county office may not approve a district’s budget until its LCAP or update to an
existing LCAP for the budget year is approved [E.C. 42127(d)(2)]. To approve a
district’s budget, a county office must ensure compliance with the three criteria for
LCAP approval [E.C. 52070(d)].
•
On or before September 15, the county superintendent shall approve, conditionally
approve or disapprove the adopted budget for each school district [E.C. 42127(d)(1)].
•
If a county superintendent does not approve a district’s LCAP on or before
September 15, the county superintendent may not approve a district’s annual
budget.
•
Conditional budget approval may be an option [E.C. 42127(c) and
(d)].
•
May be used to reference a lack of sufficient LCAP expenditures in the
budget.
*
If the county superintendent determines that the budget does not
include the expenditures necessary to implement an LCAP, the county
superintendent shall disapprove the budget [E.C. 42127(d)(1)].
•
If the sole reason for disapproval of a budget is the lack of an approved
LCAP or annual update, the requirement to form a budget review
committee is waived [E.C. 42127(f)(2)].
•
The budget is readopted only if it is disapproved pursuant to E.C. 42127(d)
or as needed; and no later than 45 days after the state budget is signed
by the Governor, the district must make available for public review any
revisions made necessary by the Budget Act [E.C. 42127(h)].
•
If a school district budget is not submitted to the county superintendent
of schools, the county superintendent, at district expense, shall develop a
budget for that district by September 15 and transmit that budget to the
governing board of the school district. This budget is deemed adopted. This
approved budget shall be a guide for the district’s priorities. The SPI shall
review and certify the district budget approved by the county superintendent [E.C. 42127(d)(1)].
•
If the governing board of any school district neglects or refuses to make a
budget, the county superintendent of schools shall not make any apportionment of state or county school money to the district or approve any warrant
issued by the school district [E.C. 42128].
1. FCMAT has revised the Indicators of Risk or Potential Insolvency document and this information has now changed, including the total
number of indicators. The document is available in Appendix C and at www.fcmat.org.
Fiscal Oversight Guide • December 2015 9
Budget Adoption Process
•
Not later than September 15th, if the budget is conditionally approved or
disapproved by the county superintendent because it failed to meet the
standards outlined in E.C. 42127(c)(1), (2), (3) or (4), the county superintendent shall transmit to the governing board, in writing, recommendations
regarding revision of the budget and the reasons for those recommendations, including, but not limited to, the amount of any budget adjustments
needed before the budget can be approved.
•
On or before October 8, the governing board of the school district
shall revise the adopted budget to include changes in projected income
or expenditures subsequent to July 1, and to include any response to
the recommendations of the county superintendent of schools, shall
adopt the revised budget, and shall file the revised budget with the
county superintendent of schools. Before revising the budget, the
governing board of the school district shall hold a public hearing
regarding the proposed revisions, to be conducted in accordance with
section 42103 [E.C. 42127(d)(1)].
•
The county superintendent may assign a fiscal adviser to assist the
district with budget development in compliance with those revisions,
or appoint a committee to examine and comment on the county
superintendent’s review and recommendations. If appointed, the
committee must report its findings no later than September 20 [E.C.
42127(d)(1)].
•
If the adopted budget is conditionally approved or disapproved
pursuant to Education Code 42127(d)(1), the governing board and the
county superintendent shall review the county superintendent’s recommended budget revisions at a regular meeting of the governing board
of the district [E.C. 42127(d)(3)].
•
Any recommendations made by the county superintendent pursuant
to Education Code section 42127(d)(1) shall be made available by the
district for public inspection in a district facility or some other place
conveniently accessible to residents of the district [E.C. 42103, E.C.
42127].
•
No later than October 22, the county superintendent shall provide a
list to the SPI identifying all school districts for which budgets may be
disapproved [E.C. 42127(e)].
•
No later than November 8, the county superintendent shall provide
a list to the SPI identifying all school districts for which budgets
have been disapproved or budget review committees waived [E.C.
42127(g)].
10 Fiscal Crisis and Management Assistance Team • www.fcmat.org
• COE calls for the formation of a budget
review committee (BRC). {E.C. 42127.1}
• Notifies SPI by Nov. 8 {E.C. 42127(g)}
• Recommendations to LEA.
• COE may assign fiscal advisor and/
or appoint a committee to review and
make recommendations. {E.C. 42127(d)}
• Notifies SPI by Oct. 22. {E.C. 42127(e)}
• LEA responds to COE recommendations/
conditional approval.
• Files budget with COE by Oct. 8.
{E.C. 42127(d)(3)}
County superintendent of schools performs
criteria and standards review and either
approves, conditionally approves, or disapproves
the budget by Sept. 15. {E.C. 42127(c) and (d)}
Budget Cycle
Approval path
Disapproval path
• County superintendent
examines budget and
LCAP by Nov. 8.
• Budget and LCAP
approved.
• Process ends.
Budget revisions due no later
than 45 days after governor
signs Budget Act.
{E.C. 42127(h)}
• Notify LEA
• County superintendent reviews
revised board-approved
LCAP and either approves,
conditionally approves, or seeks
further clarification.
• Notifies SPI by Oct. 22.
District LCAP fails in any of the three
criteria. Budget authority reverts to prior
year spending or current year boardapproved budget, whichever is less. COE
shall provide technical assistance, academic
expert, or request the SPI to assign the
California Collaborative for Educational
Excellence (CCEE) to provide advice and
assistance.
The governing board of a district shall consider the COE
recommendations in a public meeting within 15 days.
Within 15 days of receiving response, the county
superintendent of schools may submit recommendations
in writing.
Within 15 days, district governing board shall respond
in writing to request for clarification.
County superintendent of schools performs review of LCAP
for the three criteria for approval; approves or requests
clarification on or before Sept. 15. {E.C. 42127}
LCAP Cycle
If a district does not submit a budget, the county superintendent shall, at
district expense, develop a budget by September 15. {E.C. 42127(d)}
Nonsubmittal
LCAP approval process and budget approval are interdependent.
District governing board holds public hearings and adopts LCAP and budget (with criteria and standards) and submits to COE
not later than five days after that adoption or July 1, whichever occurs first. {E.C. 42127(a)(l) and (2), 42127(i)}
BUDGET ADOPTION PROCESS
Budget Adoption Process
Fiscal Oversight Guide • December 2015 11
12 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Local Control and Accountability Plan Approval
Local Control and Accountability Plan (LCAP)
Approval
A county office may not approve a district’s budget until its LCAP is approved [E.C.
42127(d)(2)].
Before a school district adopts an LCAP, Education Code section 52062 requires the district
to present its LCAP to the parent advisory and English learner parent advisory committees,
provide public notification, and hold a public hearing before the district’s governing board of
education. Education Code section 52070 requires that a district’s LCAP be approved by the
county superintendent of schools. The county superintendent of schools may not approve an
LCAP if the school district’s budget does not include expenditures sufficient to implement the
strategies in the LCAP.
In addition, E.C. section 52062(b)(2) requires that the public meeting at which a school
district governing board adopts an LCAP and a budget be held after, but not on the same day
as, the public meeting at which the governing board holds the required public hearings on the
LCAP and the proposed budget.
To approve a district’s budget, a county office must ensure compliance with the three criteria
for LCAP approval [E.C. 52070(d)], which are as follows:
1.
The LCAP or annual update to the LCAP adheres to the template adopted by the
SBE, pursuant to Education Code section 52064.
2.
The budget for the applicable fiscal year adopted by the governing board of the school
district includes expenditures sufficient to implement the specific actions and strategies included in the LCAP adopted by the governing board of the school district,
based on the projections of the costs included in the plan (budgeted expenditures
sufficient to implement the plan).
3.
The LCAP or annual update to the plan adheres to the expenditure requirements
adopted pursuant to Education Code section 42238.07 for funds apportioned on the
basis of the number and concentration of unduplicated pupils pursuant to Education
Code sections 42238.02 and 42238.03 (minimum proportionality).
Beginning with the 2015-16 LCAP, revised regulations include expanded oversight responsibilities for county offices in approving district LCAPs under E.C. 52070(d)(3), including a
review of any descriptions of districtwide or schoolwide services provided pursuant to California Code of Regulations (CCR) sections 15496(b)(1) through (b)(4) when determining
whether the school district has fully demonstrated that it will increase or improve services for
unduplicated pupils pursuant to CCR section 15496(a).
The county office’s review will need to include additional bases for determination required in
the description of how selected services provided are the most effective use of funds to meet
the district’s goals for its unduplicated pupils. Bases shall include, but not be limited to, the
following:
•
Alternatives considered
•
Supporting research
Fiscal Oversight Guide • December 2015 13
Local Control and Accountability Plan Approval
•Experience
•
Educational theory
If the LCAP is not approved because proportionality requirements have not been met, the
county office is to provide technical assistance to the district.
If a county superintendent does not approve a district’s LCAP on or before September 15, the
county superintendent may not approve a district’s annual budget.
• Conditional budget approval may be an option [E.C. 42127(c) and (d)].
• May be used to reference a lack of sufficient LCAP expenditures in the
budget.
If the county superintendent determines that the budget does not include the expenditures
necessary to implement an LCAP, the county superintendent shall disapprove the budget.
[E.C. 42127(d)(1)]
• If the sole reason for a budget being disapproved is the lack of an approved
LCAP or annual update, the requirement to form a budget review
committee is waived.
If a district’s LCAP fails in any of the three criteria, the county superintendent shall provide
technical assistance including but not limited to:
• Identifying the school district’s strengths and weaknesses with regard to the state
priorities.
• Assigning an academic expert(s).
• Requesting that the SPI assign the California Collaborative for Educational Excellence
(CCEE) to provide advice and assistance (not available for 2014-15).
The BASC LCAP Manual is included in Appendix E.
14 Fiscal Crisis and Management Assistance Team • www.fcmat.org
No
Does the LCAP adhere
to the template adopted
by the State Board of
Education (SBE)?
LCAP submitted to COE
not later than July 1
or five days after local
board adoption
Clarification provided
is inadequate. COE
requires revision and
resubmittal of LCAP.
COE contacts
district for
clarification
Clarification
provided is
adequate. Review
continues.
Yes
No
Does the budget include
expenditures sufficient to
implement the specific
actions and strategies
included in the LCAP?
Yes
Do the descriptions
of districtwide or
schoolwide services
demonstrate that
they will increase or
improve services to
unduplicated pupils?
Is the proportionality
calculation accurate?
Does the LCAP adhere
to the expenditure
requirements for
funds apportioned
based on the number
and concentration of
unduplicated pupils?
No
COE program
and fiscal staff
collaborate
County Office Review of District LCAP
Approval path
Disapproval path
Yes
COE continues budget
approval and notifies
district of budget
approval.
COE approves the LCAP
and notifies the district.
Local Control and Accountability Plan Approval
Fiscal Oversight Guide • December 2015 15
16 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Budget Review Committee Process: Review of the Budget
Budget Review Committee Process: Review of
the Budget
I.
Upon the disapproval of a district budget by the county superintendent of schools,
the county superintendent shall call for the formation of a budget review committee
(BRC), unless the district governing board and the county superintendent of schools
agree to waive the requirement. CDE approval to accept the waiver is contingent
on the department determining that a budget review team is not necessary. Upon
the grant of a waiver, the county superintendent has the authority and responsibility
provided to a BRC in Education Code section 42127.3. Upon the approval of a
waiver, the CDE shall ensure that a balanced budget is adopted for the district by
December 31 and include fiscal and educational aspects of LEA management [E.C.
42127.1(a) and 42127(f)(1)].
A.
B.
The BRC shall consist of three persons selected by the district’s board from a
list of candidates provided by the SPI. The candidates shall have expertise in
the management of a school district or county office of education, including
fiscal and educational aspects of LEA management [E.C. 42127.1(b)].
1.
The district board has five working days after receiving a list of candidates from the SPI to select the BRC [E.C. 42127.2(a)].
2.
The SPI shall convene the committee no later than five working days
following the selection of the committee by the district board [E.C.
42127.2(a)].
3.
If the district board fails to select a committee, the SPI has 10 working
days from the date the board received the candidate list to convene a
BRC [E.C. 42127.2(a)].
Alternatively, the BRC may be a regional review committee, consisting of
persons having expertise in fiscal and educational aspects of LEA management. The regional review committee is convened by the county superintendent with the approval of the district board and the SPI [E.C. 42127.1(c)].
1.
C.
II.
The members of the committee shall be reimbursed for their services
and associated expenses by the CDE at rates established by the SBE
[E.C. 42127.1(d)].
The county superintendent may request that the controller’s office conduct
an audit or review of the fiscal condition of the district to assist a BRC or
regional review committee [E.C. 42127.2(e)].
No later than November 30, the BRC shall complete its review of the proposed
budget and the underlying fiscal policies of the district and transmit to the county
superintendent, the SPI, and the district board either the recommendation that the
school district budget be approved or a report disapproving the budget and providing
recommended revisions to the budget that would allow the district to meet its
financial obligations [E.C. 42127.2(b)].
Fiscal Oversight Guide • December 2015 17
Budget Review Committee Process: Review of the Budget
A.
The SPI may extend the deadline noted above for no more than 15 working
days [E.C. 42127.2(c)].
B.
If the budget is approved by the BRC, the county superintendent of schools
shall accept the recommendations and approve the budget [E.C. 42127.3(a)].
C.
If the budget is disapproved by the BRC, the district board has five working
days to respond to the SPI. The response should include any revisions to
the budget and other proposed actions to be taken as a result of the BRC’s
recommendations. Based on the recommendations of the BRC and the
response provided by the district board, the SPI shall either approve or
disapprove the revised budget [E.C. 42127.3(b)].
18 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Budget Review Committee Process: Disapproved Budget
Budget Review Committee Process: Disapproved
Budget
I.
Based on the recommendations of the BRC and any response to those recommendations provided by the governing board of the school district, the SPI shall either
approve or disapprove the budget. If the SPI disapproves the budget under E.C.
42127.3(b), the SPI will notify the district governing board in writing of the reasons
for the disapproval. For the remainder of the current fiscal year, the county superintendent of schools shall do the following as necessary:
A.
No later than December 31, the county superintendent shall develop and
adopt, in consultation with the SPI and governing board of the school
district, a fiscal plan and budget that will allow the district to meet its
financial obligations, both in the current fiscal year and with regard to the
district’s multiyear financial commitments. The SPI may extend the date
noted above. The governing board shall govern the operation of the district
for the current fiscal year in accordance with that adopted budget [E.C.
42127.3(b)(1)].
B.
Cancel purchase orders, prohibit the issuance of nonsalary warrants, and
otherwise stay or rescind any action that is inconsistent with the budget
adopted under E.C. 42127.3(b)(1). The county superintendent shall inform
the district school board in writing of the justification for exercising this
authority [E.C. 42127.3(b)(2)].
C.
Monitor and review the operation of the school district [E.C. 42127.3(b)(3)].
D.
Determine the need for additional staff and employ, subject to approval by
the SPI, short-term analytical assistance or expertise to validate financial
information if the district staff does not have the expertise or staff [E.C.
42127.3(b)(4)].
E.
Require the school district to encumber all contracts and other obligations,
to prepare appropriate cash-flow analyses and monthly or quarterly budget
revisions, and to appropriately record all receivables and payables [E.C.
42127.3(b)(5)].
F.
Determine whether there are any financial problem areas and employ,
subject to approval by the SPI, a certified public accounting firm to investigate financial problem areas [E.C. 42127.3(b)(6)].
G. Withhold compensation of the members of the governing board and the
district superintendent for failure to provide requested financial information
[E.C. 42127.3(b)(7)].
H. If during the selection of the BRC or during the BRC’s review of the
budget, an agreement is reached between the governing board of the school
district and the county superintendent of schools, and the school district
revises its budget to comply with this agreement, the county superintendent
Fiscal Oversight Guide • December 2015 19
Budget Review Committee Process: Disapproved Budget
of schools shall approve the district budget and the BRC selection, or its
review of the budget, shall be canceled [E.C. 42127.3(c)].
I.
The school district shall pay 75 percent and the county office of education
shall pay 25 percent of the actual administrative expenses incurred or costs
associated with improving the district’s financial management practices
pursuant to Education Code section 42127.3(d). County offices of education
are eligible to request their 25% costs through a FCMAT reimbursement
with the approval of the CDE and Department of Finance (DOF) [per the
annual State Budget Act].
SPI DISAPPROVED DISTRICT BUDGET
SPI Disapproved Budget
The SPI notifies the LEA board, in writing, of reasons for disapproval. The county
superintendent, for the remainder of the current fiscal year,* shall do the following as
necessary:
• Assume expanded authority.
• Consult with SPI* and the LEA’s* board to develop and adopt a fiscal plan and
budget that allows the district to meet its financial obligations.
• Consider current fiscal year and multiyear financial commitments.
• Cancel purchase orders, prohibit nonsalary warrants, stay or rescind any LEA action
that is inconsistent with the newly adopted budget. The county superintendent
shall inform the governing board in writing of the justification for his/her
authority under this section.
• Monitor and review the operation of the district.
• May employ short-term analytical assistance.
• Require all contracts and other obligations be encumbered, to prepare cash flow
analyses and monthly or quarterly budget revisions.
• LEA board shall govern the district in accordance with the newly adopted budget.
Pending budget approval, E.C. 42127.4 requires the LEA to continue to operate on the lowest
total spending authority of either:
• Last budget adopted or revised by the governing board for prior fiscal year. (or)
• The unapproved budget for the current fiscal year, as adopted and revised by the
governing board of the school district.
* County superintendent cannot abrogate any prior collective bargaining provisions {E.C. 42127.3 (e)}.
* LEA shall pay 75 percent and the COE 25 percent {E.C. 42127.3 (d)}.
20 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Approved Imposed
Budget
Every school district will
have an adopted and
approved or imposed
budget by December 31.
Approval path
Disapproval path
Going Concern
Going Concern
The term “going concern,” when applied to an agency, business or organization, means that
the entity is fiscally healthy and able to meet its financial obligations. An organization is not a
going concern when its fiscal health is suspect or it is deemed to have risk of insolvency. This
latter circumstance would be considered “not a going concern” or “lack of a going concern.”
The AB 1200 section of the Education Code does not use the term “going concern.” However, Education Code 42127.6 has often been referred to as the “going concern” section. The
term “going concern” does appear in the state controller’s K-12 Audit Guide under “other
issues.” The guide’s statement on auditing standards (SAS) No. 59 states:
The Auditor’s Consideration of an Entity’s Ability to Continue as a Going
Concern addresses the auditor’s responsibilities and considerations when
questions arise concerning an organization’s ability to meet its obligations as
they become due without substantial disposal of assets, restructuring of debt,
externally forced revision of its operation, or similar actions. The ability to
meet payment obligations as they become due is the key concept that causes
SAS No. 59 to be directly applicable to government entities, including LEAs.
Although it is possible to mix different kinds of opinions in an auditor’s report, there are basically five (5) ways an auditor can express an opinion on financial statements:
• Unmodified opinion — this is the standard report, or “clean” opinion and may be issued
when generally accepted accounting and auditing standards are conformed to, and no
further explanations are needed.
• Unmodified opinion with explanatory language — this is a standard report which adds
an explanation about such things as a change in accounting practices, the presence of
additional auditors, emphasis of a matter, or in some cases, an uncertainty about the
LEA as a going concern based on negative cash flows, a risk problem, labor problems, or
pending legal proceedings.
Modified Opinions include the following three options:
• Qualified opinion —this means that the auditor, having obtained sufficient audit
evidence, concludes that misstatements, individually or in the aggregate, are material to
the financial statements but not pervasive.
• Adverse opinion — this means that the auditor, having obtained sufficient audit
evidence, concludes that misstatements, individually or in the aggregate, are both
material to the financial statements and pervasive.
• Disclaimer of opinion —this means that the auditor was unable to obtain sufficient
appropriate audit evidence on which to base an opinion, and the auditor concludes that
the possible effects on the financial statements of undetected misstatements, If any, could
be both material and pervasive.
Education Code section 42127.6 was amended in 2004 to include the provisions of AB 2756.
These provisions include the following:
I.
A district shall, pursuant to E.C. 42127.6, provide the county superintendent of
schools with a copy of any study, report, evaluation, or audit that contains evidence
Fiscal Oversight Guide • December 2015 21
Going Concern
that the school district is showing fiscal distress under the standards and criteria
adopted in E.C. 33127, or a report on the district by FCMAT or any regional team
created pursuant to subdivision (i) of E.C. 42127.8.
II.
The county superintendent of schools shall review and consider these studies, reports,
evaluations or audits that contain evidence that the district is demonstrating fiscal
distress under the standards and criteria, or that contain a finding by an external
reviewer that more than three of the 15 most common predictors of a school
district needing intervention, as determined by the County Office Fiscal Crisis and
Management Assistance Team,2 are present [E.C. 42127(c)(2)].
III. The county superintendent of schools shall investigate the financial condition of the
school district and determine if the school district may be unable to meet its financial
obligations for the current or two subsequent fiscal years, or should receive a qualified
or negative interim financial certification pursuant to Education Code section 42131.
A.
If at any time during the fiscal year the county superintendent of schools
determines that a school district may be unable to meet its financial obligations for the current or two subsequent fiscal years, or if the district has a
qualified or negative certification, the county superintendent shall notify
the governing board and the SPI in writing of that determination and the
reasons for the determination. The notification shall include the assumptions
used and shall be available to the public. The county superintendent shall
report to the SPI on the financial condition of the district and proposed
remedial actions. The county superintendent shall adhere to E.C. 42127.6 in
assisting the school district by doing at least one of the following (This is a
paraphrased narrative of the code section. Please refer to E.C. 42127.6 for a
complete listing):
1.
Assign a fiscal expert, paid for by the county superintendent, to advise
the district on its financial problems.
2.
Conduct a study of the financial and budgetary conditions of the
district. If expertise is needed for the study, the county office of
education may hire staff with the approval of the SPI. The school
district shall pay 75 percent and the county office of education shall
pay 25 percent of those staff costs. County offices of education are
eligible to request their 25 percent of costs through a FCMAT reimbursement with the approval of the CDE and DOF.
3.
Direct the school district to submit a financial projection of all fund
and cash balances of the district for the current and subsequent fiscal
years.
4.
Require the district to encumber all contracts and other obligations,
to prepare appropriate cash flow analyses and budget revisions, and to
record all receivables and payables.
2. FCMAT has revised the Indicators of Risk or Potential Insolvency document and this information has now changed, including the total
number of indicators. The document is available in Appendix C and at www.fcmat.org.
22 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Going Concern
5.
Direct the district to submit a proposal for addressing its fiscal
condition.
6.
Withhold compensation of the members of the governing board
and district superintendent for failure to provide requested financial
information. This action may be appealed to the SPI.
7.
Assign FCMAT to review teacher hiring practices, teacher retention
rate, percentage of provision of highly qualified teachers, and the
extent of teacher misassignment in the school district. If a review team
is assigned, the district shall follow the recommendations of the team.
Any contract entered into by the county superintendent of schools for the
purposes of this subdivision is subject to the approval of the SPI.
B.
If, after taking any or all of the actions cited in E.C. 42127.6(a)(1)(A)
through (G), the county superintendent determines that a district will be
unable to meet its financial obligations for the current or subsequent fiscal
year, the county superintendent shall notify the governing board and SPI in
writing. The notification shall include the county superintendent’s assumptions in making the determination and shall be provided to the superintendent of the school district and the parent and teacher organization of
the district. Within five days of the determination, the district may appeal
the determination to the SPI. Within 10 days of the appeal, the SPI shall
sustain or deny any or all parts of the appeal. During the appeal process,
the county superintendent may stay any action of the governing board that
is inconsistent with the district’s ability to meet its financial obligations in
the current or subsequent fiscal year until resolution of the appeal by the SPI
[E.C. 42127.6(b), (c) and (d)].
C. If the appeal is denied or not filed, or if the district has a negative certification, the county superintendent, in consultation with the SPI, shall take at
least one of the actions described below, and all actions that are necessary to
ensure that the district meets its financial obligations. These actions include
the following [E.C. 42127.6(e)(1) through (5):
1.
Develop and impose, in consultation with the SPI and the governing
board, a budget revision.
2.
Stay or rescind any action that is determined to be inconsistent with
the school district’s ability to meet its obligations for the current or
subsequent fiscal year.
3.
Assist in developing, in consultation with the governing board of the
school district, a financial plan that will enable the district to meet its
future obligations.
4.
Assist in developing, in consultation with the governing board of the
school district, a budget for the subsequent fiscal year.
5.
As necessary, appoint a fiscal advisor to perform any or all of the
duties required of the county superintendent under this section.
Fiscal Oversight Guide • December 2015 23
Going Concern
D.
No later than five days after receipt of the notice that the county superintendent of schools is proposing changes to the district’s budget pursuant
to Education Code section 42127.6(e), the district may appeal the change
to the SPI on the basis of impact to programs, requirement of unnecessary
reductions, or conflict with state and federal law. The SPI has five days to
deny or uphold the appeal [E.C. 42127.9].
E. Any action taken by the county superintendent of schools under this subdivision shall be accompanied by a notification that shall include the actions
to be taken, the reasons for the actions, and the assumptions used to support
the necessity for these actions.
F.
The school district shall pay 75 percent and the county office of education
shall pay 25 percent of the administrative expenses incurred pursuant to
Education Code section 42127.6(e) or costs associated with improving the
district’s financial management practices. County offices of education are
eligible to request their 25 percent of costs through a FCMAT reimbursement with the approval of the CDE and DOF [E.C. 42127.6(h)].
IV. This section does not authorize the county superintendent to abrogate any provisions
of a collective bargaining agreement that was entered into by a school district prior to
the date upon which the county superintendent of schools assumed authority [E.C.
42127.6(g)].
V.
The SPI is required to monitor the efforts of county superintendents and may exercise
any of that authority if the actions of the county superintendent are not effective in
resolving the school district’s financial problems. If the SPI decides to exercise the
powers of the county superintendent, the county superintendent is relieved of those
powers. The SPI shall take further actions to ensure the long-term fiscal stability of
the district. The county office of education is required to reimburse the SPI for all
costs in exercising this authority [E.C. 42127.6(k)].
24 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Going Concern
GOING CONCERN
Education Code section 42127.6
If at any time during the fiscal year the County Superintendent of Schools determines
that the school district may be unable to meet its financial obligation in the current or
two subsequent fiscal years, the County Superintendent shall notify the district governing
board and SPI in writing {E.C. 42127.6(a)}.
The written notice shall include the basis for the determination, and assumptions used in
this notice shall be made available to the public {E.C. 42127.6(a)}.
The county superintendent shall do any or all of the following: E.C. 42127.6(a)(1)(A)(B)(C)
(D)(E)(F) or (G). These code sections apply to a qualified certification as well.
If the county superintendent determines that the LEA will be unable to meet financial
obligations for the current or subsequent fiscal year:
• COE notifies SPI and district board in writing.
• In consultation with SPI and LEA, COE shall take at least one action
described in paragraphs 1 to 5.
1. Develop and impose revisions to budget.
2. Stay and rescind action inconsistent with revisions.
3. Develop a financial plan.
4. Develop a budget for the subsequent fiscal year.
5. Appoint a fiscal advisor.
LEA Appeal
E.C. 42127.6(b)(d)(e)
Within five days of the county
superintendent of schools’
determination, a school district may
appeal to the SPI. The SPI shall deny
or uphold the appeal within 10 days.
LEA Appeal
E.C. 42127.9
Within five days of receipt of notice that
the county superintendent is proposing
changes to the district’s budget, a school
district may appeal to the SPI. The SPI
shall deny or uphold the appeal within
five days.
This section does not authorize the county superintendent to abrogate any prior
provision of a collective bargaining agreement {E.C. 42127.6(g)}.
The school district shall pay 75% and the COE shall pay 25% of the administrative
expenses or costs associated with improving the district’s financial management practices.
Approval path
Disapproval path
Fiscal Oversight Guide • December 2015 25
26 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Interim Reports
Interim Reports
Districts shall submit two reports to the governing board during each fiscal year. The first report (first interim) shall cover the financial and budgetary status of the district for the period
ending October 31. The second report (second interim) shall cover the period ending January
31. Both reports shall be approved by the district board no later than 45 days after the close
of the report period (approximately December 15 and March 15) [E.C. 42130]. All reports
shall be in a format or on forms prescribed by the SPI and shall be based on standards and
criteria for fiscal stability.
I.
School districts shall certify in writing (within 45 days after the close of the period
being reported) whether or not the district is able to meet its financial obligations for
the remainder of the fiscal year and, based on current forecasts, for the subsequent
fiscal year. A positive certification shall be assigned to any school district that, based
upon current projections, will meet its financial obligations for the current fiscal
year and subsequent two fiscal years. A qualified certification will be assigned to any
district that may not meet its financial obligations for the current fiscal year or two
subsequent fiscal years. A negative certification will be assigned to any district that
will be unable to meet its financial obligations for the remainder of the fiscal year or
the subsequent fiscal year [E.C. 42131].
II.
If a county office of education receives a positive certification when it determines a
negative or qualified certification should have been filed, or receives a qualified certification when it determines a negative certification should have been filed, the county
superintendent shall change the certification to negative or qualified as appropriate
and shall so notify the governing board and the SPI within 75 days after the close of
the period being reported [E.C. 42131(a)(2)].
A.
No later than five days after receipt of the notice of a change to negative or
qualified, the governing board of the school district may submit an appeal
to the SPI [E.C. 42131(a)(2)].
B.
The SPI shall determine the certification to be assigned to the district no
later than 10 days after receiving the appeal and notify the school board and
county superintendent of schools [E.C. 42131(a)(2)].
C.
As to any school district having a negative or qualified certification, the
county superintendent of schools shall exercise authority pursuant to
Education Code section 42127.6.
D.
Within 75 days of the close of a reporting period, all certifications classified
as qualified or negative shall be transmitted by the county superintendent
to the SPI and state controller, along with the county superintendent’s
comments and report of actions proposed or taken [E.C. 42131(a)(2)(B)].
E.
Within 75 days after the close of each reporting period, each county superintendent shall report to the state controller and the SPI as to whether each
school district under the county’s jurisdiction has submitted the certification
required [E.C. 42131(c)].
Fiscal Oversight Guide • December 2015 27
Interim Reports
F.
The controller’s office may conduct an audit or review of the fiscal condition
of any district having a negative or qualified certification [E.C. 42131(d)].
III. Whenever a district has a qualified or negative certification, the county superintendent of schools may exercise authority granted in Education Code sections 42127.6
and 42131(b).
IV. If the second interim report transmitted by a school district each fiscal year is
qualified or negative, the governing board of that school district shall provide the
county superintendent, the SPI and the controller with a financial statement, no later
than June 1 of that fiscal year, that projects the district’s fund and cash balances
through June 30 for the period ending April 30 [E.C. 42131(e)]. This report is
sometimes referred to as the “third interim report.” The Education Code is silent on
the issue of whether a COE can change a district’s second interim certification based
on the data in the required financial statement. A district is not required to self-certify
to a “positive,” “qualified,” or “negative” certification when submitting their June 1
financial statement.
V.
A school district that has a qualified or negative certification in any fiscal year may
not issue, in that year or in the next fiscal year, certificates of participation, tax
anticipation notes, revenue bonds, or any other debt instruments that do not require
the approval of the voters of the district, unless the county superintendent of schools
determines that the district’s repayment of that indebtedness is probable [E.C. 42133].
VI. The SPI or the county superintendent of schools can revoke/suspend its approval of
a district drawing warrants on the County Treasury if the district has a qualified or
negative interim report certification [E.C. 42652
VII. If the governing board of any school district neglects or refuses to make a budget, or
neglects to file interim reports, the county superintendent of schools shall not make
any apportionment of state or county school money to the district for the current year,
and the county superintendent shall notify the appropriate county official that he or
she will not approve any warrants issued by the school district [E.C. 42128].
28 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Process ends
Approval path
Disapproval path
COE shall notify SPI and controller of comments on
certifications {E.C. 42131(a)(2)(B)}.
No later than 10 days after the receipt of district appeal,
the SPI shall determine the certification assigned to the
district {E.C. 42131(a)(2)}.
No later than 5 days from notification, district may appeal
to SPI {E.C. 42131(a)(2)}.
If the county office receives a positive certification when
a qualified or negative should have been filed, the County
Superintendent shall:
• Change the certification to qualified or negative as
appropriate.
• Notify the governing board and the SPI no later
than 75 days after the close of the period
{E.C. 42131(a)(2)}.
POSITIVE
(Current and two
subsequent fiscal years)
The SPI, in cooperation with the controller, shall:
• Review the certification with the County Superintendent’s comments and
actions proposed or taken.
• Conduct an on-site review, direct the County Superintendent to exercise
the authority granted in sections 42127.6 and 42637.
County Superintendent:
Process ends
• School district shall provide to the county superintendent, the
controller and the SPI, no later than June 1, financial statement
projections of the fund and cash balances of the district through
June 30, for the period ending April 30.
• Direct district to submit a proposal to County Superintendent
addressing conditions {E.C. 42127.6(a)(1)(E) and 42637}.
Second interim report is qualified
Second interim report is positive
Process ends
• School district shall provide to the County Superintendent, the controller and
the SPI, no later than June 1, financial statement projections of the fund and
cash balances of the district through June 30, for the period ending April 30.
• Direct district to submit a proposal to County Superintendent addressing
conditions {E.C. 42127.6(a)(1)(E) and 42637}.
Second interim report is Qualified/Negative
Second interim report is Positive
County Superintendent
• Shall submit comments to the controller and SPI within 75 days
{E.C.42131(a)(2)}.
• Shall exercise authority granted in section 42637.
• May, in consultation with SPI, do any and all of E.C. 42127.6(e).
• Controller may conduct an audit or review the fiscal condition
{E.C. 42131(d)}.
County office of education transmits copy of certification to controller and SPI {E.C.
42131(a)(2)(B)}.
County office of education transmits copy of certification to controller
and SPI {E.C. 42131(a)(2)(B)}
• Shall submit comments to the controller and SPI within 75
days {E.C. 42131(a)(2)(B)}.
• Shall exercise authority granted in E.C. 42127.6.
• May exercise authority granted in E.C. sections 42637 and
42652.
• Controller may conduct an audit or review the fiscal
condition {E.C. 42131(d)}.
NEGATIVE
(Current or subsequent fiscal year)
QUALIFIED
(Current and/or two subsequent fiscal years)
Education Code section 42131
INTERIM REPORTS
Interim Reports
Fiscal Oversight Guide • December 2015 29
30 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Response and Appeal Procedures
Response and Appeal Procedures
This section is intended to provide a summary of the response and appeal procedures related
to various aspects of the budget approval and interim reporting process. For more information, code references and timelines related to a specific area, refer to those sections contained
in this guide.
I.
II.
No later than five days after the district receives notice of change(s) in the district’s
budget to be imposed pursuant to Education Code sections. 42127.3(b), 42127.6(e) or
42131(b), the LEA board may respond or appeal.
A.
The district governing board may submit an appeal and a response to the
SPI, including any revisions to the adopted final budget and any proposed
actions to be taken by the district as a result of the BRC [E.C. 42127.3(b)].
B.
The district governing board may submit an appeal to the SPI based on the
contention that the change(s) would do one or more of the following [E.C.
42127.9(a)]:
1.
Exceed the financial and program changes that are necessary.
2.
Require reductions that are unnecessary.
3.
Force changes that are inconsistent with state or federal law.
No later than five days after receiving the LEA appeal, the SPI shall deny or uphold
the appeal [E.C. 42127.9(b)].
A.
If the appeal is upheld, the SPI may revise changes adopted by the county
office or offer guidelines to the LEA and COE on changing the budget
[E.C. 42127.9(b)].
B.
If the appeal is denied, the LEA shall implement changes adopted by the
county superintendent of schools [E.C. 42127.9(b)].
Fiscal Oversight Guide • December 2015 31
Response and Appeal Procedures
Changes In School District Budget
APPEAL PROCEDURES
Education Code 42127.9
LEA Appeal {E.C. 42127.9}
• No later than five days after the LEA receives notice of changes to budget
pursuant to E.C. sections 42127.3(b), 42127.6(e) and 42131(b), LEA board may
submit appeal to SPI, based on the premise that changes would:
1. Exceed financial or program changes necessary.
2. Require reductions that are unnecessary.
3. Be inconsistent with state and federal law.
• No later than five working days after receiving LEA appeal, SPI shall deny or
uphold the appeal.
Denied
E.C. 42127.9(b)
• LEA shall implement the changes adopted by the county superintendent.
32 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appeal Upheld
E.C. 42127.9(b)
SPI may revise the changes adopted
by the county superintendent or issue
guidelines governing how the LEA or county
superintendent are required to change the
budget.
Approval path
Disapproval path
Charter School Oversight by Chartering Authority
Charter School Oversight by Chartering Authority
Charter schools in California are a unique part of the public education system. While the
Charter School Act exempts charter schools from many of the Education Code provisions
that pertain uniquely to school districts, other laws that govern public entities apply equally
to them—most notably, federal statutes. Greater definitions of specific charter school functions are contained in the petition used to create them and generally in a memorandum of
understanding (MOU) that is cooperatively developed with their authorizing entity. As such,
the general attributes of AB 1200 do not apply to charter schools; however, a charter school
and its authorizing entity can agree in an MOU that AB 1200 and related standards will be
followed as part of fiscal oversight.
Fiscal oversight of charter schools is primarily the responsibility of the authorizing entity,
which can be a school district, a county office of education, or the California State Board of
Education (SBE). The authorizing agency is responsible for adequate and appropriate oversight, including determining if a charter school is following prudent business practices and
generally accepted accounting principles for revenues and expenditures and preparing financial reports. Charter schools may be revoked by the authorizing agency for material violations
including gross financial mismanagement that jeopardizes the financial stability of the charter;
illegal or substantially improper use of charter school funds for the personal benefit of any
officer, director or fiduciary of the charter school; substantial and sustained departure from
measurably successful academic practices that would deny the educational development of the
school’s pupils; or any violation of any provision of the law.
Education Code section 47604 states that an agency approving a petition to operate a charter school that is operated by a nonprofit public benefit corporation shall not be liable for
the debts or obligations of the charter school, if the agency has complied with all oversight
responsibilities required by law. Thus, failure to fulfill oversight responsibilities can subject a
school district or other authorizer to legal liability for the charter school’s acts, errors or omissions.
Oversight responsibilities include but are not limited to:
I.
Each charter school shall annually prepare and submit the following reports to its
chartering authority and the county superintendent of schools, or only to the county
superintendent of schools if the county board of education is the chartering agency
[E.C. 47604.33(a)].
A.
On or before July 1, a preliminary budget. For a charter school in its first
year of operation, the information submitted pursuant to Education Code
section 47605(g) satisfies this requirement.
B.
On or before July 1, a charter school must prepare and submit the LCAP or
the annual update to the chartering authority and the county superintendent of schools [E.C. 47604.33].
Charter schools are required to develop an LCAP focused on the eight
key state priority areas that apply for the grade levels served at the charter
school, or the nature of the program operated. The charter school must also
consult with its school community in developing and annually revising
Fiscal Oversight Guide • December 2015 33
Charter School Oversight by Chartering Authority
its LCAP, including teachers, principals, administrators, other school
personnel, parents and pupils [E.C. 47606.5].
The inclusion and description of goals for state priorities in the LCAP may
be modified to meet the grade levels served and the nature of the programs
provided, including modifications to reflect only the statutory requirements
explicitly applicable to charter schools in the Education Code.
The LCAP must be reviewed and revised annually by the charter school’s
governing body and submitted to its authorizer. There is no explicit requirement in law that the authorizer approve the LCAP; rather, the chartering
authority will review the LCAP as part of its regular oversight duties [E.C.
47604.32].
C.
On or before July 1, an annual update of goals and annual actions (LCAP
or annual update of such) [E.C. 47606.5].
D.
On or before December 15, an interim financial report. This report shall
reflect changes through October 31 [E.C. 47064.33(a)(3)].
E.
On or before March 15, a second interim financial report. This report shall
reflect changes through January 31 [E.C. 47064.33(a)(4)].
F.
On or before September 15, a final unaudited report for the full prior year
[E.C. 42100(b) and 47064.33(a)(5)].
G. Any other reports as required by the charter petition or the MOU.
II.
A charter school shall submit a copy of its annual independent financial audit report
for the preceding fiscal year to its chartering authority, the county superintendent of
schools of the county in which the charter is located, the State Controller’s Office and
the CDE by December 15 of each year. This subdivision shall not apply if the audit
of the charter school is encompassed in the audit of the chartering entity pursuant to
Education Code section 41020 [E.C. 47605.6(m)]. There is no provision in law for an
extension of a charter school audit, as there is for a school district.
III. A charter school shall respond promptly to all reasonable inquiries, including but
not limited to inquiries regarding its financial records, from its chartering authority,
from the county office of education that has jurisdiction over the school’s chartering
authority, or from the SPI, and shall consult with the chartering authority, the county
office of education or the SPI regarding any inquiries [E.C. 47604.3].
The chartering authority shall use any financial information it obtains from the
charter school to assess the fiscal condition of the charter school pursuant to subdivision (d) of Education Code section 47604.32 [E.C. 47604.33(b)].
IV. Each chartering authority shall, in addition to any other duties imposed, do all of the
following with respect to each charter school under its authority [E.C. 47604.32]:
A.
Identify at least one staff member as a contact person for the charter school.
B.
Visit each charter school at least annually.
34 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Charter School Oversight by Chartering Authority
V.
C.
Ensure that each charter school under its authority complies with all reports
required of charter schools by law, including the annual update required
pursuant to Education Code section 47606.5.
D.
Monitor the fiscal condition of each charter school under its authority.
E.
Provide timely notification to the state department if any of the following
circumstances occur or will occur with regard to a charter school for which
it is the chartering authority:
1.
A renewal of the charter is granted or denied.
2.
The charter is revoked.
3.
The charter school will cease operation for any reason.
The cost of performing the duties required above by the chartering authority shall be
funded with supervisorial oversight fees collected pursuant to Education Code section
47613 [E.C. 47604.33(c)].
VI. A county superintendent of schools may, based on written complaints by parents or
other information that justifies the investigation, monitor the operations of a charter
school located within that county and conduct an investigation into the operation of
that charter school. If a county superintendent of schools monitors or investigates a
charter school pursuant to this section, the county office of education shall not incur
any liability beyond the cost of the investigation [E.C. 47604.4(a)].
V.
A charter school shall notify the county superintendent of schools of the county in
which it is located of the location of the charter school, including the location of each
site, if applicable, prior to commencing operations [E.C. 47604.4(b)].
VI. At any time during a fiscal year, a county superintendent may review or audit the
expenditures and internal controls of any charter school in his or her county if he or
she has reason to believe that fraud, misappropriation of funds, or other illegal fiscal
practices have occurred that merit examination. The county superintendent shall,
within 45 days of completing the review, audit or examination, report the findings
and recommendations to the governing board of the charter school at a regularly
scheduled meeting, and provide a copy of the information to the chartering authority
of the charter school. The charter school shall, no later than 15 calendar days after
receipt of the report, notify the county superintendent and its chartering authority of
its proposed response to the recommendations [E.C. 1241.5(c)].
VII. A county superintendent of schools may ask the Fiscal Crisis and Management
Assistance Team (FCMAT) to review the fiscal or administrative condition of a school
district or charter school under his or her jurisdiction [E.C. 42127.8(c)(2)].
Fiscal Oversight Guide • December 2015 35
36 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Public Disclosure Responsibilities
Public Disclosure Responsibilities
Collective Bargaining
Statute requires that the provisions, including costs, associated with a tentative collective
bargaining agreement in the current and subsequent fiscal years be disclosed at a public
meeting before the agreement becomes binding on the district or county office of education.
This provision ensures that the public is aware of the costs associated with a tentative
collective bargaining agreement before it becomes binding on the school district or county
office of education. Government Code section 3547.5(a) states:
Before a public school employer enters into a written agreement with an exclusive
representative covering matters within the scope of representation, the major provisions of the agreement, including, but not limited to, the costs that would be incurred
by the public school employer under the agreement for the current and subsequent
fiscal years, shall be disclosed at a public meeting of the public school employer in a
format established for this purpose by the Superintendent of Public Instruction.
The superintendent of the school district and the chief business official shall certify in writing
that the district can meet the costs it is incurring under the agreement during the term of the
agreement. This certification shall itemize any budget revision necessary to meet the costs of
the agreement in each year of its term [G.C. 3547.5(b)].
If a school district does not adopt all of the revisions to its budget needed in the current fiscal year to meet the costs of a collective bargaining agreement, the county superintendent
of schools shall issue a qualified or negative certification for the district on the next interim
report pursuant to Education Code section 42131 [G.C. 3547.5(c)].
A school district shall provide the county superintendent of schools, upon request, with all
information relevant to provide the understanding of the financial impact of any final collective bargaining agreement reached pursuant to Government Code 3543.2 [G.C. 3540.2(d)].
In Management Advisory 92-01, entitled “Public Disclosure of Collective Bargaining Agreements” (issued May 15, 1992), the California Department of Education provided advice on
the minimum amount of information that should be included in collective bargaining public
disclosure documents, and advised that such minimum amount of information would also
serve to satisfy the requirements of the salary settlement notification component in the Criteria and Standards. The Criteria and Standards require that when employee negotiations are
not settled, upon settlement, the reviewing agency (county superintendent for districts and
SPI for county offices) must be provided with a salary settlement notification that includes an
analysis of the cost of the settlement and its impact on the operating budget.
AB 3141 (Chapter 650 / Statues of 1994) added Education Code section 42142, which
states:
Within 45 days of adopting a collective bargaining agreement, the superintendent of
the school district shall forward to the county superintendent of schools any revisions
to the school district’s current year budget that are necessary to fulfill the terms of
that agreement. The school district must include any additional costs that may result
Fiscal Oversight Guide • December 2015 37
Public Disclosure Responsibilities
from the terms of the collective bargaining agreement in any interim fiscal reports or
multiyear fiscal projections.
Essentially, any budget revisions showing the impact of the collective bargaining agreements
must be forwarded to the county superintendent within 45 days of board adoption of the
contract settlement.
Districts with Qualified or Negative Certifications
Government Code section 3540.2 provides added oversight related to the collective
bargaining process. A school district with a qualified or negative certification pursuant to
Education Code section 42131 must allow the county office of education at least 10 working
days to review and comment on any proposed agreement between the exclusive representative
and the public school employer before it is ratified. The school district shall provide the
county superintendent with all information relevant to an understanding of the financial
impact(s) of the agreement, pursuant to Government Code section 3543.2. The county
superintendent shall notify the school district, the county board of education, the district
superintendent, the governing board of the school district, and each parent and teacher
organization of the district within those 10 days if, in his or her opinion, the agreement
would endanger the fiscal well-being of the school district.
A county office of education, or a school district for which the county board of education
serves as the governing board, that has a qualified or negative certification pursuant to Education Code section 1240 must allow the SPI at least 10 working days to review and comment
on any proposed agreement or contract made between the exclusive representative and the
public school employer or designated representative of the employer.
Before entering into a written agreement with an exclusive representative covering matters
within the scope of representation, the public school employer must, at a public meeting and
in a format prescribed by the SPI or county office of education, disclose the major provisions
of the agreement including, but not limited to, the costs that would be incurred by the public
school employer under the agreement for the current and subsequent fiscal years.
The superintendent and the chief business official of the school district must certify in writing
that the district can meet the costs it is incurring under the agreement during the term of the
agreement.
The district must prepare the certification in a format similar to that of the reports required
pursuant to Education Code sections 42130 and 42131 and must itemize any budget revision
necessary to meet the costs of the agreement in each year of its term.
If the school district does not adopt all of the revisions to its budget needed in the current
fiscal year to meet the costs of a collective bargaining agreement, the county superintendent
of schools will issue a qualified or negative certification for the district on the next interim
report.
A school district shall, upon request, provide the county superintendent of schools with all
information relevant to provide an understanding of the financial impact of any final collective bargaining agreement reached [G.C. 3540.2(d)].
38 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Public Disclosure Responsibilities
Non-Voter-Approved Debt
For districts with qualified or negative interim certification reports, the county superintendent of schools must approve the issuance of any non-voter-approved debt instruments
(e.g., certificates of participation (COPs), lease purchases secured by real property, revenue
bonds, qualified zone academy bonds (QZABs) or other similar funding mechanisms such
as qualified school construction bonds (QSCBs), any other debt instrument secured by
real property and not subject to voter approval, or tax and revenue anticipation notes) and
determine that the repayment is probable per Education Code section 42133(a).
AB 2197 (Chapter 128 / Statues of 2008) requires, in part, the following:
• Regardless of the certification of the budgetary status of a school district, a school
district is required to disclose all issuances of non-voter-approved debt to the county
superintendent of schools and the county auditor at least 30 days prior to the district’s
governing board’s approval of any such issuances, for items such as certificates of participation (COPs), revenue bonds, lease purchases secured by real property, qualified zone
academy bonds (QZABs) or other similar funding mechanisms such as qualified school
construction bonds, or QSCBs, or any other debt instrument secured by real property
and not subject to voter approval [E.C. 17150(a) and 17150.1(a)].
• The district is required to provide the county auditor, county superintendent, governing
board, and the public with information about the debt issuance including repayment
schedules and other information needed to assess the anticipated effect of the debt
issuance, including the cost of the issuance, and evidence of the school district’s ability to
repay that obligation.
• Within 15 days of the receipt of the information, the county superintendent of schools
and the county auditor may comment publicly to the district’s governing board regarding
the district’s capacity to repay that debt obligation, based on the information provided.
Whenever possible, the county office of education should work with the county auditor
to ensure that both entities are requesting the same information from local school
districts.
• The proceeds from certificates of participation (COPs) and other non-voter-approved
debt secured by real property cannot be used for a district’s general operations, regardless
of the district’s budget certification [E.C. 42133.5].
• County boards of education have a similar disclosure obligation, and the state SPI has a
similar ability to comment publicly. County offices of education are required to notify
the SPI at least 30 days before the county board of education’s approval of the issuance
of COPs or other non-voter-approved debt instruments secured by real property. County
offices of education are required to furnish information regarding the debt issuance,
including repayment schedules, evidence of ability to repay, and information needed to
assess the anticipated effect of the debt issuance, including the cost of issuance. Within
15 days of receipt of the information, the SPI is authorized to comment publicly to
the county board of education regarding the county office’s capacity to repay the debt
obligation, based on the information provided [E.C. 17150(b) and 17150.1(b)].
Fiscal Oversight Guide • December 2015 39
Public Disclosure Responsibilities
Requirement to Accrue Full Liability for Post-Employment Health Benefits
School districts and county offices of education are required by the Governmental
Accounting Standards Board (GASB) to disclose the financial obligations regarding their
offering of other post-employment benefits (OPEBs), including medical, dental, vision,
hearing, prescription drugs, long-term care, long-term disability, death benefits, and life
insurance.
GASB was established in 1984 and has responsibility for establishing and improving accounting and financial reporting standards for state and local governments. GASB addresses this
responsibility in part through the issuance of GASB statements. In June 2004, GASB issued
two related pronouncements in Statements No. 43 and 45. Statement No. 45 applies to any
employer that pays all or part of the cost of an OPEB plan (other than pension benefits).
Statement No. 43 applies to a trustee or administrator of an OPEB plan. The two new standards were phased in over a three-year period, based on the governmental unit’s size.
GASB Statement No. 45 has had a significant impact on how districts deal with the financial
aspects of the post-retirement health benefits program and the district’s ending fund balance.
The standard requires school districts to record the liability for post-retirement health benefits
when they are earned rather than as a cash outlay after retirement (known as a “pay as you go”
method).
Effective Dates/Financial Statements
The amount of the accrual must be reported in the financial statements of all public sector
employers. This standard was first implemented in three phases: 2006-07, 2007-08, and
2008-09. At this time, all LEAs should be reporting this liability.
GASB Statement No. 45 requires the following:
• Actuarial studies to measure the amount of the post-employment benefit liability.
• Accounting for the post-employment benefit liability.
• Disclosure, in the annual audit report, of the liability, the funding progress and the
funded status.
• The statement does not address funding methodologies or require funding the postemployment benefit liability.
Actuarial Evaluation
Education Code section 17566(e) requires districts that are self-insured/funded for health
and welfare benefits to have an actuary evaluate the annual cost of those benefits every three
years. A copy must be filed with the county superintendent.
Statement No. 45 requires that an actuarial study for other post-employment benefits be
completed within 24 months prior to the initial implementation.
Once an LEA has implemented GASB No. 45, an actuarial valuation will be required every
two to three years, depending on the size of the plan.
40 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Public Disclosure Responsibilities
Fiscal Oversight Considerations
• The state criteria and standards require all school districts to estimate at budget adoption
all unfunded other post-employment benefits as well as the unfunded portion of any selfinsured benefits program. Changes to these unfunded liabilities are disclosed at interim
reporting periods. In addition, districts disclose all long-term commitments and identify
their funding streams. This Information should be taken from the actuarial report that
has been produced for this purpose.
• AB 2756 (Chapter 52 / Statutes of 2004) requires all school districts to provide to the
county superintendent of schools copies of any reports “showing fiscal distress.” This
includes any actuarial report showing an unfunded liability.
• FCMAT’s Indicators of Risk or Potential Insolvency list inattention to and/or high levels
of debt as risk factors for potential insolvency.
Workers’ Compensation Claims
Education Code section 42141 requires, in part, the following:
• If a school district or county office of education, either individually or as a member of
a joint powers authority, is self-insured for workers’ compensation claims, the school
district superintendent or the county superintendent of schools shall annually provide
information to the governing board(s), as appropriate, regarding the estimated accrued
but unfunded cost of those claims.
• The estimated costs shall be based on an actuarial report that includes annual fiscal
information and is completed at least every three years.
• If the school district or county office of education regularly contracts for an actuarial
report for other fiscal matters, and if that report separately and clearly sets forth the
estimate of workers’ compensation costs required by this subdivision, a separate actuarial
report on these costs is not required.
• The actuarial report shall be performed by an actuary who is a member of the American
Academy of Actuaries.
• The cost information and a copy of the actuarial report shall be presented by the superintendent at a public meeting of the governing board.
• At that meeting, the governing board shall disclose, as a separate agenda item, whether
or not it will reserve a sufficient amount of money in its budget to fund the present value
of the accrued but unpaid workers’ compensation claims, or if it instead will decrease the
amount of its workers’ compensation reserve fund.
• The governing board annually shall certify to the county superintendent of schools the
amount of money, if any, that it has decided to reserve in its budget for the cost of those
claims and shall submit to the county superintendent of schools any budget revisions
that may be necessary to account for the budget reserve.
Fiscal Oversight Guide • December 2015 41
Public Disclosure Responsibilities
• The county board of education annually shall certify to the SPI the amount of money, if
any, that has been reserved in the budget of the county office of education for the cost of
those claims.
42 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Requirement for Annual Audit
Requirement for Annual Audit
I.
Education Code section 41020 requires each LEA, including K-12 school districts,
most joint powers authorities (JPAs), and regional occupational centers/programs
(ROC/Ps), to contract for an audit of their books and accounts, including an audit
of income and expenditures by source of funds, or make arrangements with the
county superintendent of schools having jurisdiction over the LEA to provide for
that auditing by April 1 of each year. For this requirement, LEA does not include
community colleges or JPAs established per E.C. 17567 (health benefits, workers’
compensation and insurance losses and payments).
II.
If the LEA fails to contract for the audit by April 1, it is the responsibility of the
county superintendent of schools to contract with an audit firm on behalf of the
LEA by May 1 of each fiscal year to audit all funds under his or her jurisdiction and
control at the district’s cost [E.C. 41020(b)(1) and E.C. 41020(b)(3)].
III. It is unlawful for a public accounting firm to provide audit services to an LEA if the
lead audit partner, or coordinating audit partner, having primary responsibility for the
audit, or the audit partner responsible for reviewing the audit, has performed audit
services for that local agency in each of the six previous fiscal years (E.C. 41202(f)(2).
The Education Audit Appeals Panel (EAAP) may waive this requirement if the panel
finds that no otherwise eligible auditor is available to perform the audit.
IV. For school districts that receive an emergency apportionment from the state,
Education Code section 41320.1(d) allows the SCO or its designee to conduct an
audit in lieu of the audit required under E.C. section 41020. At the SCO’s discretion,
the SCO may conduct the audit or approve the auditor selected by the district. These
audits are required until the SCO determines, in consultation with the SPI, that the
district is fiscally solvent.
V.
A contract to perform the audit of an LEA that has a disapproved budget or has
received a negative certification on any budget or interim financial report during the
current fiscal year or either of the two preceding fiscal years, or for which a county
superintendent of schools has otherwise determined that a lack of going concern
exists, is not valid unless approved by the responsible county superintendent of schools
and the district’s governing board [E.C. 41020(b)(2)].
VI. Not later than December 15, the CPA firm that performed the audit shall file an
electronic report of each LEA’s audit for the preceding fiscal year with the county
superintendent of schools in which the LEA is located, the CDE, and the SCO [E.C.
41020(h)]. The audit shall comply fully with the Government Auditing Standards
issued by the Comptroller General of the United States. [E.C. 41020(b)(4)].
VII. Education Code section 14504.2 authorizes the county superintendent or the county
board of education to refer an independent auditor of an LEA to the California Board
of Accountancy for action if an audit of an LEA was conducted in a manner that
may constitute unprofessional conduct as defined by section 5100 of the Business
and Professions Code, including but not limited to gross negligence resulting in a
material misstatement in the audit. The county superintendent is required to notify
the certified public accountant or public accountant and the California Board of
Fiscal Oversight Guide • December 2015 43
Requirement for Annual Audit
Accountancy in writing if the audits of school districts in the county were not
performed in substantial conformity with the audit guide [E.C. 41020.5]. Although
there is an appeal process, if the determination by the county superintendent becomes
final, the CPA or the public accountant will be ineligible to perform school audits for
a period of three years.
VIII.By January 31, the governing board of each school district shall review at a public
meeting the annual audit, any audit exceptions, recommendations or findings issued
by the auditor, and any description of correction or plans to correct any exceptions or
management letter issue [E.C. 41020.3].
IX. Each county superintendent of schools shall be responsible for reviewing the audit
exceptions in the annual LEA audit report and shall determine whether each audit
exception has been corrected or whether the LEA has developed an acceptable plan of
correction in the following areas [E.C. 41020(i) and (j), 41020(i)(1)]:
a.Attendance.
b.
Inventory of equipment.
c.
Internal control.
d.
Instructional materials program funds.
e.
Teacher misassignments pursuant to Education Code section 44258.9.
f.
Information reported on the school accountability report card (SARC)
pursuant to Education Code section 33126.
g.
Miscellaneous items.
The CDE is responsible for reviewing the audit exceptions related to federal and state
compliance.
The auditor is required to review the correction or plan of correction to determine
if the exceptions have been resolved in the subsequent year audit. If not, the auditor
immediately notifies the county office of education and the CDE. After receiving
the notification, the CDE either consults with the LEA to resolve the exception or
requires the county superintendent to follow up with the LEA.
X.
If a description of the correction or the plan of correction has not been provided
as part of the audit, the county superintendent of schools shall notify the LEA and
request the governing board of the LEA to provide this information by March 15
[E.C. 41020(j)(2)].
XI. Each county superintendent of schools will certify to the SPI and the SCO by May 15
that the county staff have reviewed the audits and the audit exceptions, and that all
exceptions that the county superintendent was required to review were reviewed, and
that all of those exceptions, except as noted in the certification, have been corrected or
the district has submitted an acceptable correction plan [E.C. 41020(k)].
XII. The county superintendent of schools shall identify, by LEA, any attendance-related
audit exception or exceptions involving state funds, and require the LEA to submit to
the SPI the appropriate reporting forms to resolve the exceptions [E.C. 41020(k)].
44 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Requirement for Annual Audit
XIII.The county superintendent of schools shall adjust future local property tax requirements if there are audit exceptions that have a fiscal impact on local property taxes
[E.C. 41020(o)].
XIV. If an annual audit report is not filed with the county superintendent of schools on or
before December 15, the county superintendent may investigate the cause of the delay
and take action to obtain the annual audit report in the most effective manner. The
CDE and SCO may also contact the county office if the audit reports are not received
by December 15. The actions that the county superintendent of schools can take
include [E.C.41020.2(a) (1), (2) or (3)]:
• Granting an extension for the audit, after consultation with the district’s
governing board and the auditors, and with the consent of the SCO and
the SPI. The K-12 Audit Guide explains that the CDE’s guidelines state
that extensions will be granted only under extraordinary circumstances.
The request must be received by both the SCO and the CDE no later
than December 1. Prior to December 15, the SCO and CDE will review
the request and accompanying justification and provide notification as to
whether the extension is granted or denied.
• Contracting with another audit firm to complete the work, after consultation with the district’s governing board, the auditors, and the SCO.
• Requesting that the SCO investigate the situation and initiate action.
XV.If the county superintendent has determined that the district may not be able to meet
its obligations for the current or subsequent fiscal year, the district’s auditor shall,
upon request, provide the county superintendent or SPI with fiscal information on
that school district. This shall not constitute a violation of auditor-client confidentiality [E.C. 41020.8].
Fiscal Oversight Guide • December 2015 45
46 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Fiscal Oversight Responsibilities of Specific Entities
Fiscal Oversight Responsibilities of Specific
Entities
School District Governing Boards
I.
By July 1, the governing board of a school district shall hold a public hearing on the
budget and the local control accountability plan (LCAP), post the agenda for the
public hearing 72 hours in advance, and adopt a budget and an LCAP [E.C. 42127,
52062(b)(2)].
• Education Code section 52062(b)(2) requires that the public meeting at
which a school district’s governing board adopts an LCAP and a budget
must be held after, but not on the same day as, the public meeting at which
the governing board holds the required public hearings on the LCAP and
the proposed budget.
II.
The governing board of the school district shall file the adopted budget and the LCAP
with the county superintendent of schools not later than five days after the adoption
or July 1, whichever comes first [E.C. 42127].
III. Not later than 45 days after the governor signs the Budget Act, the district must
make available to the public any budget revisions made to include the funding made
available by that Budget Act [E.C. 42127].
IV. If a budget is disapproved by the BRC, the district’s governing board has five working
days to respond to the SPI. The response should include any revisions to the budget
and other proposed actions to be taken as a result of the BRC’s recommendations.
Based on the recommendations of the BRC and the response provided by the district
board, the SPI shall either approve or disapprove the revised budget [E.C. 42127.3(b)].
V.
On or before September 15, the governing board of each district must approve, on a
form prescribed by the SPI, a statement of all receipts and expenditures of the district
for the preceding fiscal year, and shall file the statement (and any charter school statements if it is the authorizing entity) with the county superintendent of schools [E.C.
42100(a)].
VI. For districts with emergency appropriations, the governing board shall act as an
advisory body reporting to the state administrator and has no rights, duties or powers,
and is not entitled to any stipend, benefits or other compensation from the district
[E.C. 41326(c)(1)].
Fiscal Oversight Guide • December 2015 47
Fiscal Oversight Responsibilities of Specific Entities
County Superintendents of Schools
Fiscal Oversight
I.
The county superintendent shall maintain responsibility for the fiscal oversight of each
school district in his or her county [E.C. 1240(b)].
II.
The county superintendent is not responsible for the fiscal oversight of the community
colleges in the county; however, he or she may perform financial services on behalf of
those community colleges [E.C. 1240(l)(4)].
Adopted Budget and LCAP
III. Examine each LEA’s budget and determine whether it complies with the standards
and criteria adopted by the SBE [E.C. 33127].
IV. Determine whether the budget allows the LEA to meet its financial obligations
(budget year and multiyear) [E.C. 42127].
V.
Determine whether each district’s LCAP or annual update to the LCAP adheres to
the template adopted by the SBE pursuant to Education Code section 52064; whether
the adopted budget includes expenditures sufficient to implement the specific actions
and strategies included in the district’s adopted LCAP based on the projections of
the costs included in the plan; and whether the LCAP or annual update to the plan
adheres to the expenditure requirements adopted pursuant to Education Code section
42238.07 for funds apportioned on the basis of the number and concentration of
unduplicated pupils pursuant to Education Code sections 42238.02 and 42238.03
[E.C. 52070 et seq.].
VI. Provide technical support to all districts with LCAPs that it did not approve. Ensure
that this support includes identification of strengths and weaknesses or the assignment
of an academic expert or experts.
VII. On or before September 15, the county superintendent of schools shall approve,
conditionally approve, or disapprove the adopted budget for each school district [E.C.
42127(d)].
• The county superintendent of schools shall either conditionally approve
or disapprove a budget that does not provide adequate assurance that
the district will meet its current and future obligations, and resolve any
problems identified in the referenced studies, reports, evaluations, or audits
[E.C. 42127(c)(2)].
• On or before September 15, the county superintendent of schools shall
transmit to the governing board of the school district, in writing, recommendations regarding revision of the budget and the reasons for the recommendations. These recommendations include budget adjustments needed
before the budget can be approved [E.C. 42127(d)].
48 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Fiscal Oversight Responsibilities of Specific Entities
• The county superintendent of schools may assign a fiscal adviser to assist the
district to develop a budget that complies with the recommended revisions
[E.C. 42127(d)].
• The county superintendent may appoint a committee to examine and comment on
the county superintendent’s review and recommendations, subject to the requirement that the committee report its findings to the superintendent no later
than September 20 [E.C. 42127(d)].
VIII.If a school district does not adopt all of the revisions needed to its budget in the
current fiscal year to meet the costs of a collective bargaining agreement, the county
superintendent of schools shall issue a qualified or negative certification for the district
on the next interim report [G.C. 3547.5(c)].
IX. If a school district does not submit a budget to the county superintendent of schools,
the county superintendent of schools shall, at district expense, develop a budget for
that school district by September 15 and transmit that budget to the school district’s
governing board [E.C. 42127(d)].
• The budget prepared by the county superintendent will be deemed adopted,
unless the county superintendent approves any modifications made by the
school district’s governing board.
• The approved budget will be used as a guide for the district’s priorities.
• The SPI will review and certify the budget approved by the county.
X.
The county superintendent shall review the revised budget to determine whether it: 1)
complies with the standards and criteria adopted by the SBE pursuant to Education
Code section 33127; 2) allows the district to meet its financial obligations during
the fiscal year; 3) satisfies all conditions established by the county superintendent of
schools in the case of a conditionally approved budget; and 4) is consistent with a
financial plan that will enable the district to satisfy its multiyear financial commitments [E.C. 42127(f)(1)].
XI. No later than October 22, the county superintendent shall provide a list to the SPI
identifying all school districts for which budgets may be disapproved [E.C. 42127(e)].
XII. No later than November 8, the county superintendent shall approve or disapprove the revised
budget [E.C. 42127(f)(1)].
• If the county superintendent disapproves the revised budget, they will call for a
BRC under Education Code section 42127.1 unless the school district’s governing
board and the county superintendent agree to waive the requirement for a
committee and the CDE approves the waiver.
• Alternatively, the BRC may be a regional review committee consisting of
persons with expertise in fiscal and educational aspects of LEA management. The regional review committee is convened by the county superintendent with the approval of the school district’s governing board and the SPI
[E.C. 42127.1(c)].
Fiscal Oversight Guide • December 2015 49
Fiscal Oversight Responsibilities of Specific Entities
•
The members of the committee shall be reimbursed for their services
and associated expenses by the CDE at rates established by the SBE
[E.C. 42127.1(d)].
• The county superintendent may request that the SCO conduct an audit
or review of the fiscal condition of the district to assist a BRC or regional
review committee [E.C. 42127.2(e)].
• If the budget is approved by the BRC, the county superintendent of schools
shall accept the recommendations and approve the budget [E.C. 42127.3(a)].
Disapproved Budget, Qualified or Negative Certification, or Other Fiscal Uncertainty
XIII.The county superintendent shall annually present a report to the school district’s
governing board and the SPI regarding the fiscal solvency of any school district with
a disapproved budget, qualified interim certification, or negative interim certification,
or that is determined at any time to be in a position of fiscal uncertainty pursuant to
Education Code section 42127.6 [E.C. 1240(e)].
Unaudited Actuals
XIV..On or before September 15, the governing board of each school district in the county
shall file a statement of all receipts and expenditures of the district for the preceding
fiscal year, and any statements for charter schools the district has authorized, once
each statement has been approved by the district’s governing board. On or before
October 15, the county superintendent of schools shall verify the mathematical
accuracy of all of the statements (also known as the unaudited actuals) and shall
transmit a copy to the SPI [E.C. 42100(a)].
XV. At any time during a fiscal year, the county superintendent may audit the expenditures and internal controls of fiscally accountable school districts, and shall conduct
this audit in a timely and efficient manner. The county superintendent shall report the
findings and recommendations to the school district’s governing board within 45 days
of completing the audit [E.C. 1241.5(a)].
Suspicion of Fraud, Misappropriation of Funds, or Other Illegal Practices
XVI.At any time during a fiscal year, the county superintendent may review or audit the
expenditures and internal controls of any school district in his or her county if he or
she has reason to believe that fraud, misappropriation of funds, or other illegal fiscal
practices have occurred that merit examination. The county superintendent shall
report the findings and recommendations to the school district’s governing board at
a regularly scheduled school district board meeting within 45 days of completing the
review, audit, or examination [E.C. 1241.5(b)].
• If the county superintendent determines that there is evidence that fraud
or misappropriation of funds has occurred, the county superintendent shall
notify the governing board of the school district, the state controller, the
SPI, and the local district attorney [E.C. 42638(b)].
50 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Fiscal Oversight Responsibilities of Specific Entities
• The governing board of the district shall, no later than 15 calendar days
after receipt of the report, notify the county superintendent of its proposed
actions. Upon review of the board’s report, the county superintendent may
disapprove an order for payment of funds, consistent with Education Code
42638 [E.C. 1241.5(b)].
Miscellaneous Duties
XVII.The county superintendent of schools shall review and consider studies, reports, evaluations, or audits of the school district that contain evidence of fiscal distress under the
state standards and criteria and that were commissioned by [E.C. 42127(c)(2)]:
• The district
• The county superintendent
• The SPI
• State control agencies
The county superintendent of schools shall consider findings by an external reviewer
that more than three of the 15 most common FCMAT predictors of a school district
needing intervention3 are present [E.C. 42127(c)(2)].
• If these findings are made, the county superintendent of schools shall
investigate the financial condition of the school district and determine if the
school district may be unable to meet its financial obligations for the current
or two subsequent fiscal years, or should receive a qualified or negative
certification [E.C. 42127.6(a)(1)].
• For a district with a qualified or negative certification, the county superintendent of schools has 10 working days to review and comment on the
district’s proposed collective bargaining agreement, to determine if the
proposed agreement would endanger the fiscal well-being of the school
district. The county superintendent of schools shall notify the following
regarding that opinion within those 10 days [G.C. 3540.2(a)(c)]:
•
The school district
•
The county board of education
•
The district superintendent and governing board
•
Each parent and teacher organization of the district
If the SPI assumes the fiscal oversight responsibilities of the county superintendent of
schools, the county superintendent shall reimburse the SPI for all costs in exercising
this authority [E.C. 42127.6(k)].
The county superintendent of schools may determine whether a school district’s audit
has been performed in substantial conformity with the provisions of the audit guide
[E.C. 41020.5(a)].
3. FCMAT has revised the Indicators of Risk or Potential Insolvency document and this information has now changed, including the total
number of indicators. The document is available in Appendix C and at www.fcmat.org.
Fiscal Oversight Guide • December 2015 51
Fiscal Oversight Responsibilities of Specific Entities
Emergency Appropriation Districts
XVIII.The appointment of a state administrator to a school district that has received an
emergency apportionment does not remove any statutory rights, duties, or obligations
from the county superintendent of schools. The county superintendent of schools
retains the responsibility to superintend school districts under their jurisdiction [E.C.
41327.2(a)].
XIX.Subsequent to county office of education’s review of the budget and interim reports of
a district that has received an emergency apportionment, the county superintendent of
schools shall document the fiscal and administrative status of the district, particularly
in regard to the implementation of the fiscal and management recovery plans. Each
report shall include a determination of whether the district’s revenue streams appear
consistent with its expenditure plan according to the most recent data at the time
of the report. These reports are required until six months after all rights, duties, and
powers are returned to the school district and shall be submitted to the following
[E.C. 41327.2(b)]:
• The state superintendent of public instruction
• Appropriate fiscal and policy committees of the Legislature
• The state director of finance
52 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Fiscal Oversight Responsibilities of Specific Entities
State Board of Education
I.
The SBE shall adopt standards and criteria pursuant to Education Code section 33127
[E.C. 33128(a)].
II.
The SBE shall adopt and may periodically update a comprehensive list of professional
and legal standards that all districts are encouraged to use as a guide to conduct
effective educational programs and fiscal and management practices. These standards
shall be used as the basis for evaluating the improvement of school districts that have
received an emergency apportionment (commonly known as an emergency loan).
These standards shall, at a minimum, address all of the following operational areas
[E.C. 41327.1(a)]:
1. Financial management
2. Pupil achievement
3. Personnel management
4. Facilities management
5. Community relations and governance
Fiscal Oversight Guide • December 2015 53
Fiscal Oversight Responsibilities of Specific Entities
State Superintendent of Public Instruction
The SPI has significant authority in improving the fiscal oversight of, and intervention in, the
state’s public schools. Specifically, the SPI must perform the following:
I.
The SPI, the controller, and the director of finance shall revise and update, as
necessary, the standards and criteria used by local educational agencies in the development and management of the annual budgets. The revisions or updates shall specify
the fiscal year in which the revisions or updates are applicable [E.C. 33127(d)].
II.
The SPI shall review and certify any district budget approved by the county superintendent [E.C. 42127(d)].
III. The SPI shall approve any budget that the county superintendent of schools develops
for a school district that does not submit an adopted budget to the county superintendent of schools [E.C. 42127(d)].
IV. The SPI may extend to no more than 15 working days after November 30 the
deadline for the BRC to complete its review of the proposed budget and the underlying fiscal policies of the district and transmit to the county superintendent, the SPI
and the district board either the recommendation that the school district budget be
approved or a report disapproving the budget and providing recommended revisions
to the budget that would allow the district to meet its financial obligations [E.C.
42127.2].
V.
Upon approving a BRC waiver, the SPI must ensure that by December 31 a balanced budget
is adopted for the school district that initially did not have an approved adopted
budget [E.C. 42127.1].
• If a budget is not adopted by December 31, the SPI may adopt a budget for the
district. [E.C. 42127(f)(1)]
VI. The SPI must report to the Legislature and the director of finance by January 10
if any district does not have an adopted budget by December 31. The report must
include the reasons a budget has not been adopted by the deadline, the steps being
taken to finalize budget adoption, the date the adopted budget is anticipated, and
whether the SPI has or will exercise the authority to adopt a budget for the district.
[E.C. 42127.1(a)]
VII. The SPI may request that FCMAT review the fiscal and administrative conditions of
any [E.C. 42127.8(c)]:
• County office of education
• School district
• Charter school
54 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Fiscal Oversight Responsibilities of Specific Entities
For Districts in State Receivership
VIII.The SPI shall assume all of the legal rights, duties and powers of the governing board
for a district under state receivership. The SPI, in consultation with the county superintendent, shall appoint an employee of the state or of the county superintendent of
schools office to act as administrator for any district under state receivership for up to
the duration of the receivership, to act on the SPI’s behalf [E.C. 41326(b)(4)].
IX. The SPI, in consultation with FCMAT, shall review options for resolving the fiscal
problems of a district in state receivership [E.C. 41326.1(f), 41326(k)(1)].
X.
The SPI, in consultation with FCMAT, shall review the fiscal oversight of the district
by the county superintendent of schools [E.C. 41326 (k)(1)].
XI. The SPI shall monitor the efforts of a county office of education in exercising its fiscal
oversight authority, and may exercise any of that authority if the SPI finds that the
actions of the county superintendent of schools are not effective in resolving a school
district’s financial problems [E.C. 42127.6(k)].
XII. If the SPI assumes authority, the SPI shall take further actions to ensure the long-term
fiscal stability of the district [E.C. 42127.6(k)].
XIII.If the SPI assumes the fiscal oversight authority of the county superintendent of
schools, the SPI shall promptly notify the following: [E.C. 42127.6(k)]:
• The county superintendent of schools
• The county board of education
• The superintendent and governing board of the school district
• Appropriate policy and fiscal committees of each house of the Legislature
• The Department of Finance
XIV. Within three months of assuming control of a school district that has received an
emergency state apportionment, the SPI shall report to the Legislature and the
Department of Finance his or her findings regarding the fiscal oversight actions
taken by the oversight agency. Recommendations may include appropriate legislative
responses to improve fiscal oversight [E.C. 41326(k)(2)].
XV. If the SPI determines that the county superintendent of schools failed to provide the
required fiscal oversight, the SPI may assume the fiscal oversight authority of the COE
for the district that received an emergency state apportionment. The SPI shall further
investigate the COE oversight responsibilities regarding other districts with a negative
or qualified certification. The SPI shall provide additional reports to the following
[E.C. 41326(k)(3)]:
• The policy and fiscal committees of each house of the Legislature
• The Department of Finance
XVI.Before local authority will be returned to a district that has received an emergency
apportionment, the SPI shall, in consultation with FCMAT and the county superFiscal Oversight Guide • December 2015 55
Fiscal Oversight Responsibilities of Specific Entities
intendent of schools, determine the level of improvement needed in the standards
adopted by the SBE [E.C. 41327.1(c)].
XVII.The SPI will receive from FCMAT the improvement plans specified in Education
Code 41327.1 for a district that has received an emergency apportionment.
• The SPI will receive a minimum of two reports from FCMAT identifying
the progress of a district that has received an emergency apportionment in
implementing the improvement plans [E.C. 41326(e)(2)].
XVIII.The SPI shall report to the Legislature and the director of finance by January 10 if any
district, including a district that has received a waiver of the BRC process, does not
have an adopted budget by December 31. This report shall include the following [E.C.
42127(f)(1)]:
• The reasons a budget has not been adopted by the deadline.
• The steps being taken to finalize budget adoption.
• The date the adopted budget is anticipated.
• Whether the SPI has or will exercise the authority to adopt a budget for the
school district.
XIX.The SPI may return power to the governing board for one of the five operational areas
if the SPI has determined that the district has performed satisfactorily [E.C. 41326(e)
(1)(B)]
56 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Fiscal Oversight Responsibilities of Specific Entities
State Administrators, for School Districts Receiving Emergency
Apportionments
An appointed state administrator shall have recognized expertise in management and finance.
The local governing board is advisory with no legal rights, powers or duties. The state administrator has the following specific responsibilities [E.C. 41326(b)(2), 41326(c)(1)]:
I.
Within 30 days of being appointed by the SPI, the state administrator shall discuss
with all of the following groups the options for resolving the district’s fiscal problems
and shall consider, on a monthly basis, information from one or more of these groups
[E.C. 41326.1]:
• The governing board
• Any district advisory council
• Any district parent-teacher organization
• District community members
• The district administrative team
• The Fiscal Crisis and Management Assistance Team
• Representatives of employee bargaining units
• The county superintendent of schools
II.
The state-appointed administrator shall prepare or obtain the following reports and
plans [E.C. 41327(a)] and submit them to the SPI for approval after consulting with
the county superintendent [E.C. 41327(b)].
• A management review and recovery plan [E.C. 41327(a)(1)]
• A multiyear financial recovery plan, which will include an annual plan to
repay to the state any and all loans owed by the district. This plan will be
submitted on or before July 1 [E.C. 41327(a)(2)].
• An annual report on the financial condition of the district, including but
not limited to:
a.
Specific action taken to reduce district expenditures or increase district
income, and the amount of cost savings or incomes increases resulting
from those actions.
b.
A copy of the district’s current year adopted budget.
c.
Amount of district’s budgeted reserve.
d.
Status of employee contracts.
e.
Obstacles to implementing the approved recovery plan.
III. With approval of the SPI, the state administrator may enter into agreements on behalf
of the district and, subject to any contractual obligation of the district, change any
Fiscal Oversight Guide • December 2015 57
Fiscal Oversight Responsibilities of Specific Entities
existing district rules, regulations, policies or practices as needed to implement the
recovery plans [E.C. 41327(c)].
IV. The salary and benefits of the state administrator shall be established by the SPI and
paid by the district [E.C. 41326(b)(8)].
58 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Fiscal Oversight Responsibilities of Specific Entities
Legislative Budget Subcommittee, for Districts Receiving an
Emergency Apportionment
I.
The Legislative Budget Subcommittee is to annually conduct a review of each school
district that has received an emergency state apportionment. The review is to include
the following [E.C. 41326(i)]:
• An evaluation of the financial condition of the district.
• The impact of the recovery plan on the district’s educational program.
• The efforts made by the state-appointed administrator to obtain input from
the community and the governing board.
Fiscal Oversight Guide • December 2015 59
Fiscal Oversight Responsibilities of Specific Entities
FCMAT, for School Districts Receiving an Emergency
Apportionment
I.
FCMAT shall conduct comprehensive assessments of school districts that are in state
receivership. The assessments shall evaluate the district in the five major operational
areas (community relations and governance, personnel management, pupil achievement, financial management, and facilities management). FCMAT shall complete
a minimum of two reports identifying the district’s progress in implementing the
improvement plans [E.C. 41326(e)(2), 41327.1].
II.
Once the comprehensive assessments are complete, and based on the level of improvement needed for local control to be returned as determined by the SPI, in consultation
with FCMAT and the county office of education, FCMAT shall complete improvement plans in the five operational areas that focus on the agreed upon standard and
that are consistent with the financial improvement plan [E.C. 41327.1(c)].
III. FCMAT shall complete and file written status reports every six months after a loan
has been approved, indicating the progress the district is making in meeting the
recommendations of the improvement plans. The reports shall be submitted to the
following [E.C. 41327.1(d)]:
• The appropriate fiscal and policy committees of the Legislature
• The members of the Legislature that represent the district
• Any advisory council of the school district
• The superintendent of public instruction
• The county superintendent
• The director of finance
IV. FCMAT shall request and review applications to establish regional teams of education
finance experts throughout the state [E.C. 42127.8(i)(1)].
60 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Fiscal Oversight Responsibilities of Specific Entities
School Districts Receiving an Emergency Apportionment
I.
Before applying for an emergency apportionment, the governing board of the school
district shall discuss the need for that apportionment at a regular or special meeting
of the governing board and, at that meeting, shall receive testimony regarding the
emergency appropriation from parents, exclusive representatives of employees of the
school district, and other members of the community [E.C. 41326(a)].
II.
The district shall bear 100 percent of all costs associated with implementing the
provisions of an emergency apportionment, including the activities of the Fiscal Crisis
and Management Assistance Team. The SPI will withhold the costs from the district’s
apportionment [E.C. 41328].
III. A school district shall provide the county superintendent of schools with a copy of a
study, report, evaluation, or audit that contains evidence of fiscal distress under the
state’s standards and criteria and that was commissioned by [E.C. 42127.6(a)(1)]:
• The district
• The county superintendent
• The superintendent of public instruction
• State control agencies
• Fiscal Crisis and Management Assistance Team
• Regional teams
IV. A school district that has a qualified or negative certification shall allow the county
office of education at least 10 working days to review and comment on any proposed
agreement made between the exclusive employee representative and the public school
employer or designated representatives of the employer [G.C. 3540.2(a)].
The district superintendent and chief business official shall certify in writing that the
costs incurred by the school district under the agreement can be met by the district
during the term of the agreement [G.C. 3547.5(b)].
• The certification shall be prepared in a format similar to the interim reports
required in Education Code sections 42130 and 42131 [G.C. 3547.5(b)].
• The certification shall itemize any budget revision necessary to meet the
costs of the agreement in each year of its term [G.C. 3547.5(b)].
Fiscal Oversight Guide • December 2015 61
62 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Sample Letters
Sample Oversight Letters
Sample letters are posted online and downloadable individually in Microsoft Word format, or
collectively as a single Adobe Acrobat (PDF) file.
Click on any of the titles below to view and download the corresponding letter or letters.
All Letters in a single Adobe Acrobat (PDF) file
Budget and LCAP
2014-15 Adopted Budget and LCAP, Approval (a)
2014-15 Adopted Budget and LCAP, Approval (b)
2014-15 Adopted Budget, Conditional Approval
2014-15 Budget and LCAP, Conditional Approval
2014-15 Adopted Budget and LCAP, Warning of Disapproval
First Interim
2013-14 First Interim Report, Concurring with the District’s Positive Certification
2013-14 First Interim Report, Concurring with the District’s Qualified Certification
2013-14 First Interim Report, Concurring with the District’s Negative Certification
2013-14 First Interim Report, Changing the District’s Qualified Certification to Negative
Second Interim
2013-14 Second Interim Report,Concurring with the District’s Positive Certification (a)
2013-14 Second Interim Report, Concurring with the District’s Positive Certification (b)
2013-14 Second Interim Report, Concurring with the District’s Qualified Certification
Lack of Going Concern, Change Status after 2013-14 Second Interim Report Certified as Positive
Fiscal Oversight Guide • December 2015 63
Sample Letters
Third Interim
2013-14 Third Interim Report Technical Review Memo
Collective Bargaining
Collective Bargaining Agreement Disclosure
Approval of Collective Bargaining Agreement
Borrowing
AB 2197 Debt Disclosure Review — Not Probable
AB 2197 Debt Disclosure Review — Probable
64 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
Appendices
Fiscal Oversight Guide • December 2015 65
Appendices
66 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
Appendix A: California Department of Education Guidance
Click on any title below to access that CDE guidance document online.
Elimination of Dual Budget Adoption Process
Prescribed Format for 2014-15 Proposed Budgets in the Standardized Account Code
Structure
Overview of Criteria and Standards for Fiscal Solvency
Revised Criteria and Standards for Fiscal Solvency for Budget and Interim Financial Reports,
Effective 2014-15
Summary Accompanying Revised Criteria and Standards
Criteria and Standards for School Districts
Criteria and Standards for Reviewing School District 2015-16 Budgets
Criteria and Standards for Reviewing School District 2015-16 Interim Reports
Criteria and Standards for County Offices of Education
Criteria and Standards for Reviewing County Office of Education 2015-16 Budgets
Criteria and Standards for Reviewing County Office of Education
2015-16 Interim Reports
New Requirements for Reporting Fund Balance in Governmental Funds
New Financial Reporting Requirements for Post-Employment Benefits Other Than Pensions
Observations on the Financial Accountability and Reporting Process
Fiscal Oversight Guide • December 2015 67
Appendices
68 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
Appendix B: Disclosure of Collective Bargaining
Agreement Document
Fiscal Oversight Guide • December 2015 69
Appendices
70 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
DISCLOSURE OF PROPOSED COLLECTIVE BARGAINING AGREEMENT
For submission to the governing board and the county superintendent of schools, and in accordance
with the public disclosure requirements of AB 1200 (Statutes of 1991, Chapter 1213), as revised by
AB 2756 (Statutes of 2004), and G.C. 3547.5 (Statutes of 2004, Chapter 25)
__________________ School District
Name of Bargaining Unit: __________________________ Certificated _______ Classified________
The proposed agreement covers the period beginning______________ and ending___________ and will be
acted upon by the governing board at its meeting on_______________ .
The proposed date of the governing board approval of the budget revisions in accordance with Education
Code section 42142 and Government Code section 3547.5 is ______________. Copies of the boardapproved budget revisions and board minutes must be submitted within 45 days. If the board-approved
revisions are different from the proposed budget adjustments in Column 3 of the “Financial Impact of
Proposed Agreement on Current Year General Fund” form, please provide a detailed report upon approval
by the district’s governing board.
A. Proposed Change in Compensation
Please provide a brief narrative of the proposed changes in compensation, including any off schedule
bonuses, stipends, etc.____________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
Fiscal Impact of Proposed Agreement
Current
Year
Year 2
Year 3
2___-__
2___-__
2___-__
Compensation
1.
Current year salary cost before
agreement (based on year-to-date
actuals through 6/30)
2.
Step & Column – Increase
(Decrease) due to movement plus
any changes due to settlement
3.
Salary Schedule – Increase
(Decrease) due to settlement
4.
Other Compensation – Increase
(Decrease) (Stipends, bonuses, retro
pay, etc.)
5.
6.
Statutory Benefits – Increase
(Decrease) in STRS, PERS, FICA,
WC, UI, Social Security, Medicare,
etc.
Health/Welfare Plans – Increase
(Decrease) (Medical, dental, vision,
life insurance, etc.)
Cost (+/-)
$
Percent
Cost (+/-)
%
$
Percent
Cost (+/-)
$
%
$
%
$
Percent
$
%
$
%
$
%
%
%
%
%
Description
Cost (+/-)
$
Percent
$
%
$
%
%
Description
Cost (+/-)
$
Percent
$
%
$
%
%
Description
Cost (+/-)
7.
Total Compensation – Increase
(Decrease) (Total Lines 1-5)
8.
Total Number of Represented Employees
Percent
$
$
%
$
%
%
Fiscal Oversight Guide • December 2015 71
Appendices
9.
Total Compensation Cost for
Average Represented Employee Increase (Decrease)
10.
Cost of 1% after above compensation
(salary and statutory benefits)
Cost (+/-)
$
Percent
$
%
$
%
$
%
$
%
%
$
%
Please include comments and explanations as necessary to explain above, including any off-schedule
stipends, bonuses, and whether benefits will be capped. If there will be composite rates, or any other
specifics on any compensation changes, include specifics such as amount saved, staff affected, and total
cost. __________________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
B.
C.
D.
Proposed Negotiated Changes in Non-Compensation Items (class size adjustments, staff
development days, teacher prep time, furlough days, etc.). Include specifics such as amount
saved, staff affected, and total cost._____________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
What are the specific impacts on instructional and support programs to accommodate
the settlement? Include the impact of non-negotiated change such as staff reductions and
program reductions/eliminations. ______________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Is contingency or restoration language included in the proposed agreement? If so,
include specific areas identified________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
E.
Source of Funding for Proposed Agreement (both unrestricted and restricted amounts). general fund revenues • special reserve • expenditure reductions • other (please explain)
1. Current Year _________________________________________________________________
____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________
____________________________________________________________________________
72 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
2. How will the ongoing cost of the proposed agreement be funded in future years?
general fund revenues • special reserve • expenditure reductions • other (please explain)
____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________
____________________________________________________________________________
3. If multiyear agreement, what is the source of funding, including assumptions used, to fund
these obligations in future years? Also indicate which years this agreement will cover.
(Remember to include compounding effects in meeting obligations.) (please explain).
general fund revenues • special reserve • expenditure reductions • other
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________ ____________________________________________________________________________
____________________________________________________________________________
4. What is the impact of this agreement on deficit spending in the current or future years?
____________________________________________________________________________
____________________________________________________________________________ ____________________________________________________________________________
____________________________________________________________________________
5. Is this agreement part of a multiyear contract? If so, what specific years are covered?
____________________________________________________________________________
____________________________________________________________________________ ____________________________________________________________________________
____________________________________________________________________________
6. Does this agreement have reopeners? If so, in what areas?
____________________________________________________________________________
____________________________________________________________________________ ____________________________________________________________________________
____________________________________________________________________________
F. Impact of Proposed Agreement on Current Year Unrestricted Reserves
1. State Minimum Reserve Calculation (including the cost of the proposed collective
bargaining agreement).
a. Total expenditures, transfers out, and other uses
$
b. State standard minimum reserve percentage for this district
c. State standard minimum reserve amount for this district
(line 1 times line 2 or $50,000 for a district with less than 1,001 ADA)
3%
$
2. Budgeted Unrestricted Reserve (After Impact of Proposed Agreement)
a. General Fund Budgeted Unrestricted Designated for Economic Uncertainties
$
b. General Fund Budgeted Unrestricted Unappropriated Amount
$
c. Special Reserve Fund (207) – Budgeted Designated for Economic Uncertainties
$
d. Special Reserve Fund (207) – Budgeted Unappropriated Amount
$
e. Article XIII-B Fund (241) – Budgeted Designated for Economic Uncertainties
$
f. Article XIII-B Fund (241) – Budgeted Unappropriated Amount
$
g. Total District Budgeted Unrestricted Reserves
$
Fiscal Oversight Guide • December 2015 73
Appendices
3. Do unrestricted reserves meet the state standard minimum reserve amount?
Yes ____ No _____
G. Certification
To be signed by the district superintendent and chief business official upon submission to the
governing board and by the board president upon formal board action on the proposed agreement.
Signatures of the district superintendent and the chief business official must accompany the copy
of the disclosure sent to the county superintendent for review at least five days prior to the board
meeting at which the agreement will be ratified.
The information provided in this document summarizes the financial implications of the proposed
agreement and is submitted to the governing board for public disclosure of the major provisions of
the agreement (as provided in the Public Disclosure of Proposed Collective Bargaining Agreement)
in accordance with the requirements of AB 1200, AB 2756, and Government Code section 3547.5.
We hereby certify that the costs incurred by the school district under this agreement can be met by
the district during the term of this agreement:
District Superintendent
(Signature)
District Chief Business Official
(Signature)
Date
Date
After public disclosure of the major provisions contained in this document, the
governing board, at the following meeting, took action to approve the proposed
Agreement with the Bargaining Unit.
Date of board meeting:__________________
President, Governing Board
(Signature)
74 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Date
Appendices
Impact of Proposed Agreement on Current Year General Fund
(Col. 1)
Latest BoardApproved Budget
Before Settlement
(as of _______)
(Col. 2)
Adjustments
as a
Result of
Settlement
(Col. 3)
(Col. 4)
Total Impact
Other
on
Revisions
Budget
(Cols.
1+2+3)
Revenues
LCFF/Revenue Limit Sources
(8010-8099)
Remaining Revenues (8100-8799)
Total Revenues
Expenditures
1000 Certificated Salaries
2000 Classified Salaries
3000 Employees’ Benefits
4000 Books & Supplies
5000 Services & Operating
Expenses
6000 Capital Outlay
7000 Other Outgo
Total Expenditures
Operating Surplus (Deficit)
Other Sources and Transfers In
Other Uses and Transfers Out
Current Year Increase (Decrease)
in Fund Balance
*
Beginning Balance
Current-Year Ending Balance
Components of Ending Balance:
Not spendable
Restricted
Committed
Assigned
Unassigned/Unappropriated
Reserve for Economic
Uncertainties
Unassigned/Appropriated
Fund 17
*If the total amount of the Adjustment in Col. 2 does not agree with the amount of the Total
Compensation Increase in Section A, Line 6, Page 1 (i.e., increase was partially budgeted, there
were revenue revisions as reflected in Col. 3., etc.), explain the variance below.
Fiscal Oversight Guide • December 2015 75
Appendices
Please include comments and explanations as necessary, including about LCFF, gap funding,
COLA, other revenues, added or reduced staffing, etc. ___________________________________ ______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
76 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
Impact of Proposed Agreement on First Subsequent Year General Fund
(Col. 1)
Latest BoardApproved Budget
Before Settlement
(as of _______)
(Col. 2)
Adjustments
as a
Result of
Settlement
(Col. 3)
Other
Revisions
(Col. 4)
Total
Impact on
Budget
(Cols.
1+2+3)
Revenues
LCFF/Revenue Limit Sources
(8010-8099)
Remaining Revenues (8100-8799)
Total Revenues
Expenditures
1000 Certificated Salaries
2000 Classified Salaries
3000 Employees’ Benefits
4000 Books & Supplies
5000 Services & Operating
Expenses
6000 Capital Outlay
7000 Other Outgo
Total Expenditures
Operating Surplus (Deficit)
Other Sources and Transfers In
Other Uses and Transfers Out
Current Year Increase (Decrease)
in Fund Balance
*
Beginning Balance
Current Year Ending Balance
Components of Ending Balance:
Not spendable
Restricted
Committed
Assigned
Unassigned/Unappropriated
Reserve for Economic
Uncertainties
Unassigned/Appropriated
Fund 17
Fiscal Oversight Guide • December 2015 77
Appendices
Impact of Proposed Agreement on Second Subsequent Year General Fund
(Col. 1)
Latest BoardApproved Budget
Before Settlement
(as of _______)
(Col. 2)
Adjustments
as a
Result of
Settlement
Revenues
LCFF/Revenue Limit Sources
(8010-8099)
Remaining Revenues (8100-8799)
Total Revenues
Expenditures
1000 Certificated Salaries
2000 Classified Salaries
3000 Employees’ Benefits
4000 Books & Supplies
5000 Services & Operating
Expenses
6000 Capital Outlay
7000 Other Outgo
Total Expenditures
Operating Surplus (Deficit)
Other Sources and Transfers In
Other Uses and Transfers Out
Current Year Increase (Decrease)
in Fund Balance
Beginning Balance
Current Year Ending Balance
Components of Ending Balance:
Not spendable
Restricted
Committed
Assigned
Unassigned/Unappropriated
Reserve for Economic
Uncertainties
Unassigned/Appropriated
Fund 17
78 Fiscal Crisis and Management Assistance Team • www.fcmat.org
*
(Col. 3)
Other
Revisions
(Col. 4)
Total
Impact on
Budget
(Cols.
1+2+3)
Appendices
Appendix C: FCMAT Indicators and Fiscal Health Risk
Analysis
For the most up-to-date versions of the Indicators and Fiscal Health Risk Analysis,
please visit www.fcmat.org
Fiscal Oversight Guide • December 2015 79
Appendices
80 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
Indicators of Risk or Potential Insolvency
The Fiscal Crisis and Management Assistance Team (FCMAT) has compiled the following indicators of risk or
potential insolvency based on approximately 25 years of extensive work with local education agencies (LEAs).
Although some of the indicators have been on the list from the beginning, others have been removed or added as
changes occurred, such as the evolution of funding models and changes in fiscal and education policy.
FCMAT will continue to update this document as additional changes occur. Each item listed indicates a lack of
function, focus, or attention to one or more critical elements of an organization’s operations, which may eventually
contribute to an LEA becoming insolvent. The existence of any one of the indicators increases risk. The more
indicators identified in any LEA, the greater the risk of collapse or failure.
1.
Leadership Breakdown
a.
Absence of a strong leadership team that includes at least the board and superintendent
b.
Micromanagement from board members
c. Systemsthatarefullyorpartiallycontrolledbyhighlyinfluentialspecialinterestgroups
d. Ineffectiveorlackofadequatepersonnelsupervision
e.
Spiraling litigation and/or settlements against the district
f.
Boardpoliciesandadministrativeregulationsthatareroutinelyignored,notupdated,andnotcommunicatedtostaff
g. Inabilitytoconsiderlong-termimpactsofcollectivebargainingagreements
2. IneffectiveCommunication
a. Staffunrestand/orlowmorale
b. Lackofcommunicationtostaff
c. Inadequateengagementofalleducationalconstituencies,particularlyparents
d. Lackofinteragencycooperation
3. CollapseofInfrastructure
a. Breakdownofinternalsystems(managementinformationsystems,datamanagement)
b. Unhealthy,unsafeandunmonitoredfacilities
c. Neglectofdeferredmaintenanceandlackofanimplementabledeferredmaintenanceplan
d. Lowbudgetpriorityforfacilityissues
e. Lackofalong-rangefacilitiesplan
4. InadequateBudgetDevelopment
a. InabilitytotransitionadequatelytotheregulationsthatgoverntheLocalControlFundingFormula(LCFF)
b. Flawedaveragedailyattendance(ADA),enrollment,revenue,andunduplicatedpupilcountprojections
c. Deficitspendingandfailuretomaintainadequatereservesandfundbalance
d. Manipulationofmultiyearprojectionsandignoranceoftrendanalyses
e. DisconnectionbetweenbudgetandtheLocalControlAccountabilityPlan(LCAP)
f.
Relianceontherolloverbudget
g.
Inability to accurately estimate the ending fund balance
5. LimitedBudgetMonitoring
a. Inattentiontocountyofficeofeducation(COE)information,analysisandoversightofthebudget,includingalackof
understanding of AB 1200
b. Lackofcontrolandmonitoringoftotalcompensationasapercentageoftotal
expenses
c. Actualexpendituresnotinlinewiththemostcurrentbudget
d. Failuretoreconcilethegeneralledgerbalancesheetaccountsregularly,
particularlyreceivablesandpayables
Fiscal Oversight Guide • December 2015 81
Appendices
Indicators of Risk or Potential Insolvency (continued)
e. Lackofinternalcontrols
f.
Lackofcontrolandmonitoringofcontributionstorestrictedprograms
g. Consistentlyfailingtoupdatebudgetassumptions
6. LackofDataAccuracy,Collection,andReporting
a. Inabilitytoadequatelycollect,assessandreportstudentdataviatheCaliforniaPupilAchievementDataSystem
(CALPADS)
b. Consistentlypoordataquality
c. DatanotusedtoinformdecisionmakingandtheLCAP
d.
Ignoring audit exceptions related to data collection and reporting
e. Limitedaccesstotimelypersonnel,payroll,budgetcontroldataandreports
f.
Failuretoaccuratelyidentifystudentseligibleforfreeandreduced-pricemeals,Englishlearners,andfosteryouth,in
accordwithLCFFandLCAPrequirements
7. HumanResourcesIssues
a. Poororlimiteduseofpositioncontrol,andlackofintegrationwithpayrollandfinancialsystem
b.
Unauthorized hiring
c. Overstaffing
d. Largenumbersofstaffworkingoutofassignment
e. Administratorswhoconsistentlycrisismanage
f.
Lackofprofessionaldevelopmentforallstaff
8. Inattentiontoand/orHighLevelsofDebt
a. Highlevelsofnon-voter-approveddebt(COPs,bridgefinancing,etc.)
b.
Inattention to unfunded liabilities
c. NotconformingtoGASB68requirementstorecognizeandreportthedistrict’sproportionateshareofnetliabilityfor
pension programs
d. Debtserviceand/orpayasyougoasapercentageofgeneralfundexpendituresisoutofcontrol
e. Parceltaxesallocatedandusedforongoingexpenditures
9. CashMonitoringandAccountingDeficiencies
a. Lackofmonitoringofcash
b. Lackofaplanforshort-termcashflowneeds
c.
Inability to balance cash
d. Notinformingtheboardofcashpositionregularly,andnotunderstandingandcommunicatingtotheboardand
superintendent that cash and fund balance are not the same thing
10. RelatedIssuesofConcern
a. NotunderstandingtheconnectionbetweenbudgetandprogramstaffasitrelatestotheLCAP
b. Misunderstandingtheeffectofthecostoflivingadjustment(COLA)intheLCFFera
c. Inattentionto,lackofcooperationwith,andinadequatemonitoringofcharterschoolsforwhichthedistrictorcounty
officeistheauthorizer
d. Consistentlylow-performingschoolsandaninabilitytoclosetheachievementgap
e. Chronicallyoverestimatingrevenuesandunderestimatingstaffingcosts
f.
InabilitytoadequatelyexplaintheconceptandimpactoftheGAPpercentagefactortotheboard,bargainingmembers,
and other constituents
These indicators are also available online at http://fcmat.org under Help and Services — Fiscal Tools
82 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
Fiscal Health Risk Analysis
Key Fiscal Indicators
The Fiscal Crisis and Management Assistance Team (FCMAT) has developed the
Fiscal Health Risk Analysis as a management tool to evaluate key fiscal indicators
that may help measure a school district’s risk of insolvency in the current and two
subsequent fiscal years.
The presence of any single criteria is not necessarily an indication of a district in fiscal crisis. However, districts that answer
“No” to seven or more of the 20 key indicators may have cause for concern and could require some level of fiscal intervention.
The more indicators identified, the greater the potential risk of insolvency or fiscal issues. Identifying issues early is the
key to success when it comes to maintaining fiscal health. Diligent planning will enable a district to better understand its
financial objectives and strategies to sustain a high level of fiscal efficiency. A district must continually update its budget as
new information becomes available both from within the district and from other funding and regulatory agencies. This is
particularly true in the era of the Local Control Funding Formula.
Each of the 20 key indicators below contains several questions. The response given to each key indicator (Yes, No, or N/A)
should be approximately the same as that given to a simple majority of its constituent questions.
FCMAT will continue to update this document as additional changes occur in education finance.
Is the district’s fiscal health acceptable in the following areas?
Yes
No
N/A
o
o
o
• Isthedistrictavoidingdeficitspendinginthecurrentyear?
o
o
o
• Isthedistrictavoidingdeficitspendinginthetwosubsequentfiscalyears?
o
o
o
• Hasthedistrictdecreasedoreliminateddeficitspendingoverthepasttwo
fiscalyears?
o
o
o
• Isdeficitspendingcoveredbyfundbalance,ongoingrevenues,
orexpenditurereductions?
o
o
o
o
o
o
• Isthedistrict’sfundbalanceatorconsistentlyabovetherecommended
reserveforeconomicuncertainty?
o
o
o
• Isthefundbalancestableorincreasingduetoongoingrevenuesand/or
expenditurereductions?
o
o
o
• Doesthefundbalanceincludeanydesignatedreservesforunfunded
liabilitiesorone-timecostsabovetherecommendedreservelevel?
o
o
o
o
o
o
• Isthedistrictabletomaintainitsreserveforeconomicuncertaintyinthecurrentand
twosubsequentyearsbasedoncurrentrevenueandexpendituretrends?
o
o
o
• DoesthedistricthaveadditionalreservesinFund17,SpecialReservefor
OtherThanCapitalProjects?
o
o
o
•Ifnot,doesthedistrict’smultiyearfinancialprojectionincludeaplantorestorethe
reserveforeconomicuncertainty?
o
o
o
1. DeficitSpending
- Hastheboardapprovedaplantoeliminatedeficitspending?
2. Fund Balance
3. Reserve for Economic Uncertainty
Fiscal Oversight Guide • December 2015 83
Appendices
Is the district’s fiscal health acceptable in the following areas?
Yes
No
N/A
o
o
o
• Hasthedistrict’senrollmentbeenincreasingorstableformultipleyears?
o
o
o
• Isthedistrict’senrollmentprojectionupdatedatleastsemiannually?
o
o
o
• Arestaffingadjustmentsforcertificatedandclassifiedemployeegroups
consistentwiththeenrollmenttrends?
o
o
o
• Doesthedistrictanalyzeenrollmentandaveragedailyattendance(ADA)data?
o
o
o
• Doesthedistricttrackhistoricaldatatoestablishfuturetrendsbetween
P-1andP-2forprojectionpurposes?
o
o
o
•HasthedistrictimplementedanyattendanceprogramstoincreaseADA?
o
o
o
• Doschoolsitesmaintainanaccuraterecordofdailyenrollmentandattendance
thatisreconciledmonthly?
o
o
o
•Haveapprovedcharterschoolshadlittleornoimpactonthedistrict’s
studentenrollment?
o
o
o
•Doesthedistricthaveaboardpolicythatattemptstoreducetheeffect
thattransfersoutofthedistricthaveonthedistrict’senrollment?
o
o
o
•DidthedistrictcertifyitsCALPADSFall1submissionbytherequireddeadline?
o
o
o
o
o
o
• Doesthedistricthavearecentactuarialstudyandaplantosetfunds
asideforunfundedliabilities?
o
o
o
• Doesthedistrictmaintainlowlevelsofnon-voter-approveddebt
(suchasCOPs,bridgefinancing,BASN,RANSandothers)?
o
o
o
• IsthedistrictconformingtoGASB68requirementsbyrecognizingand
reportingitsproportionateshareofnetliabilityforpensionprograms?
o
o
o
o
o
o
• Canthedistrictmanageitscashinallfundswithoutinterfundborrowing?
o
o
o
• Ifinterfundborrowingisoccurring,doesthedistrictrepaythefundswithin
thestatutoryperiodinaccordancewithEducationCodeSection42603?
o
o
o
• Doesthedistrictforecastitscashreceiptsanddisbursementsandverifythemat
leastmonthlytoensurethatcashflowneedsareknownwithplentyofnotice?
o
o
o
• Doesthedistricthaveaplantoaddressshort-termcashflowneeds?
o
o
o
• Arecashbalancesreconciledtobankstatementsmonthly?
o
o
o
o
o
o
• Hasthedistrictsettledthetotalcostofthebargainingagreementsator
underCOLAduringthecurrentandpastthreeyears?
o
o
o
• Didthedistrictconductapre-settlementanalysis,includingmultiyearprojections,
identifyingongoingrevenuesourcesorexpenditurereductionstosupportthe
agreement,aswellasthelong-termeffectsonthedistrict?
o
o
o
4. Enrollment and Attendance
5. Debt
6.CashMonitoring
7.BargainingAgreements
84 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
Is the district’s fiscal health acceptable in the following areas?
Yes
No
N/A
• DidthedistrictcorrectlyidentifytherelatedcostsabovetheCOLA,
(i.e.statutorybenefits,stepandcolumn)?
o
o
o
• Didthedistrictaddressbudgetreductionsnecessarytosustainthetotal
compensationincrease,includingaboard-adoptedplan?
o
o
o
• DidthesuperintendentandCBOcertifytheagreementpriortoratification?
o
o
o
• Isthegoverningboard’sactionconsistentwiththesuperintendent’s/CBO’s
certification?
o
o
o
• Didthedistrictmeetthepublicdisclosurerequirements,includingdisclosureofthe
costsassociatedwithatentativecollectivebargainingagreement,beforeit
becomesbindingonthedistrict?
o
o
o
o
o
o
• Isthepercentageofthedistrict’sgeneralfundunrestrictedbudget
allocatedtosalariesandbenefitsatorunderthestatewideaverage?
o
o
o
• Isthedistrictmakingsurethatonlyongoingrestricteddollarspayfor
permanentstaff?
o
o
o
• Doesthebudgetincludereductionsinexpendituresproportionatetoone-time
revenuesources,suchasparceltaxes,thatwillterminateinthecurrentortwo
subsequentfiscalyears?
o
o
o
• Doesthedistrictensurethatparceltaxisnotpayingforongoingexpenditures?
o
o
o
• Isthedistrictensuringthatlitigationand/orsettlementsareminimized?
o
o
o
o
o
o
• Isthedistrictawareofthecontributionstorestrictedprogramsinthe
currentyear?(Identifycost,programsandfunds)
o
o
o
• Doesthedistricthaveareasonableplantoaddressincreasedencroachment
trends?
o
o
o
• Doesthedistrictmanageencroachmentinallfundsincludingthe
cafeteriafund?
o
o
o
o
o
o
• Isthedistrict’sfinancialdataaccurateandtimely?
o
o
o
• Arethemandatedcountyandstatereportsfiledinatimelymanner?
o
o
o
• Arekeyfiscalreports—includingthoseonpersonnel,payrolland
budget—accessible,timely,andunderstandable?
o
o
o
• Isthedistrictonthesamefinancialsystemasthecounty?
o
o
o
• Ifthedistrictisonaseparatefinancialsystem,isthereanautomated
interfacewiththefinancialsystemmaintainedbythecounty?
o
o
o
• Isthedistrictabletoaccuratelyidentifystudentswhoareeligibleforfreeand
reduced-pricemeals,Englishlearners,andfosteryouth,inaccordwithLocalControl
FundingFormula(LCFF)andLocalControlAccountabilityPlan(LCAP)requirements?
o
o
o
• Isthedistrictabletocollect,assess,andreportstudentdataintheCalifornia
PupilAchievementDataSystem(CALPADS)?
o
o
o
8. General Fund
9. Encroachment
10.ManagementInformationSystems
Fiscal Oversight Guide • December 2015 85
Appendices
Is the district’s fiscal health acceptable in the following areas?
Yes
No
N/A
o
o
o
•Doesthedistrictmaintainanduseaneffectiveandreliablepositioncontrol
systemthattrackspersonnelallocationsandexpenditures?
o
o
o
• Ispositioncontrolintegratedwithpayrollandthefinancialsystem?
o
o
o
•Doesthedistrictcontrolunauthorizedhiring?
o
o
o
• Isthedistrictabletocontroloverstaffing?
o
o
o
•Aretheappropriatelevelsofinternalcontrols(i.e.,checksandbalances)inplace
betweenthebusinessandpersonneldepartmentstopreventfraudulentactivity?
o
o
o
•Ispositioncontrolreconciledagainstthebudgetduringthefiscalyear?
o
o
o
• Doesthedistrictofferorensurethatstaffattendprofessionaldevelopment
regardingfinancialmanagementandbudget?
o
o
o
o
o
o
• Isabudgetcalendarusedthatcontainsstatutoryduedatesandthemajor
budgetdevelopmentmilestones?
o
o
o
• Arethereclearprocessesandpoliciesinplacetoanalyzeresourcesandallocations
toensurethattheyalignwithstrategicplanningobjectivesandthatthebudget
reflectstheLEA’sprioritiesandLCAP?
o
o
o
• IstheLCFFcorrectlycalculatedandunderstood?
o
o
o
• AreprojectionsforADA,enrollment,revenueandunduplicatedpupilcount
accurateandreasonable?
o
o
o
• Isthedistrictdecreasingdeficitspendingandmaintainingadequatereserves
andfundbalancewhencomparedwiththeprioryear?
o
o
o
• HasthedistrictensuredthattheLCAPisincorporatedinthebudget?
o
o
o
• Isthebudgetdevelopedusingazero-basedmethodratherthanbeinga
rolloverbudget?
o
o
o
• Doesthedistrictusepositioncontroldataforbudgetdevelopment?
o
o
o
• Doesthebudgetdevelopmentprocessincludeinputfromstaff,administrators,
boardandcommunity,aswellasthebudgetadvisorycommittee(ifthereisone)?
o
o
o
• AretheLCAPandthebudgetadoptedwithinstatutorytimelinesestablished
byEducationCodeSection42103,andarethedocumentsfiledwiththecounty
superintendentofschoolsnolaterthanfivedaysafteradoption,orbyJuly1,
whicheveroccursfirst?
o
o
o
o
o
o
• Hasthedistrictdevelopedmultiyearprojectionsthathavereasonable
assumptions?
o
o
o
• Areprojectedfundbalancereservesdisclosedandbasedonthemost
reasonableandaccurateinformationavailable?
o
o
o
• Ataminimum,arethemultiyearprojectionscompiledatbudgetadoption
andatthetimeofinterimreports?
o
o
o
11. Position Control and Human Resources
12.BudgetDevelopmentandAdoption
13. Multiyear Projections
86 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
Is the district’s fiscal health acceptable in the following areas?
Yes
No
N/A
• Forthepurposeofcalculatingmultiyearprojections,isthedistrictusingthe
latestLCFFgapclosurepercentagesthatshowtheamountoffundingnecessary
tomaintainpurchasingpowerfortheLCFFstatewide?
o
o
o
• IstheLCFFtargetforeachyearrecalculatedbasedonthegradespanADA,
andthencomparedtotheadjustedprioryearfunding,sothatthefundinggap
wouldthenbereducedbythefundinggappercentageforthegivenyear?
o
o
o
o
o
o
• Arebudgetassumptionsupdatedthroughouttheyearasupdatedinformation
becomesavailable?
o
o
o
• Areactualrevenueandexpensesinlinewiththemostcurrentbudget?
o
o
o
• Arebudgetrevisionscompletedinatimelymanner?
o
o
o
• Doesthedistrictopenlydiscusstheimpactofbudgetrevisionsatthe
boardlevel?
o
o
o
• DoesthedistrictabidebyEducationCode42127(i)(4)byinformingthe
boardofeducationandthepublic,within45daysofenactmentofthestate
budget,ofanychangesinthestatebudgetthatwouldaffecttheadopted
budget?
o
o
o
• Arebudgetrevisionsmadeorconfirmedbytheboardatthesametime
thecollectivebargainingagreementisratified?
o
o
o
• Hasthedistrict’slong-termdebtdecreasedfromthepriorfiscalyear?
o
o
o
• Arecontributionstorestrictedprogramscontrolledandmonitored?
o
o
o
• Hasthedistrictidentifiedtherepaymentsourcesforlong-termdebtor
non-voter-approveddebt(e.g.certificatesofparticipation,capitalleases)?
o
o
o
• Doesthedistrict’sfinancialsystemhaveahard-codedwarningregarding
insufficientfundsforrequisitionsandpurchaseorders?
o
o
o
• Doesthedistrictencumbersalariesandbenefits?
o
o
o
• Arethebalancesheetaccountsinthegeneralledgerreconciledregularly?
o
o
o
• Doesthedistrictcompleteandfileitsinterimbudgetreportswithinthestatutory
deadlinesestablishedbyEducationCodeSection42310andfollowing,inaformator
onformsprescribedbytheSuperintendentofPublicInstruction(SPI),andensurethat
theyarebasedonstandardsandcriteriaforfiscalstability?
o
o
o
o
o
o
• Hasthedistrictcompletedanactuarialvaluationtodeterminetheunfunded
liabilityunderGASB45requirements?
o
o
o
• Doesthedistricthaveaplanforaddressingtheretireebenefitsliabilities?
o
o
o
• Hasthedistrictconductedare-enrollmentprocesstoidentifyeligibleretirees?
o
o
o
14.BudgetMonitoringandUpdates
15.RetireeHealthBenefits
Fiscal Oversight Guide • December 2015 87
Appendices
Is the district’s fiscal health acceptable in the following areas?
Yes
No
N/A
o
o
o
• Doesthedistricthaveasuperintendentand/orchiefbusinessofficialwho
hasbeenwiththedistrictmorethantwoyears?
o
o
o
•Doesthegoverningboardadoptandreviseunderstandableandtimelypolicies
andsupporttheadministrationtoensureimplementation?
o
o
o
• Doesthesuperintendentadoptandreviseunderstandableandtimely
administrativeregulationsandensurethatadoptedboardpoliciesand
approvedadministrativeregulationsarecommunicatedtostaffandfollowed?
o
o
o
• Doesthegoverningboardrefrainfrommicromanagingdistrictadministration
andstaff?
o
o
o
o
o
o
• Hasthedistrictidentifiedaspecificemployeetoberesponsibleforensuring
thatadequateoversightoccursforallapprovedcharterschools?
o
o
o
•Hasthecharterschoolsubmittedthemandatedfinancialreportsontime?
o
o
o
• Hasthecharterschoolcommissionedanindependentaudit?
o
o
o
• Doestheauditreflectfindingsthatwillnotimpactthefiscalcertificationofthe
authorizingagency?
o
o
o
• Isthedistrictmonitoringandreportingthecurrentstatustotheboardto
ensurethataninformeddecisioncanbemaderegardingthe
reauthorizationofthecharter?
o
o
o
o
o
o
• Doesthedistrictimplementappropriatemeasurestodiscourageanddetect
fraud?
o
o
o
• Didthedistrictreceiveanindependentauditreportwithoutmaterialfindings?
o
o
o
• Cantheauditfindingsbeaddressedwithoutaffectingthedistrict’s
fiscalhealth?
o
o
o
•Hastheindependentauditreportbeencompletedandpresentedwithinthe
statutorytimeline?
o
o
o
•Areauditfindingsandrecommendationsreviewedwiththeboard?
o
o
o
•DidtheauditreportmeetbothGAAPandGASBstandards?
o
o
o
o
o
o
• Hasthedistrictpassedageneralobligationbond?
o
o
o
• HasthedistrictmettheauditandreportingrequirementsofProposition39?
o
o
o
• Isthedistrictparticipatinginthestate’sSchoolFacilitiesProgram?
o
o
o
• Doesthedistricthavesufficientpersonneltoproperlytrackandaccountfor
facility-relatedprojects?
o
o
o
• HasthedistrictmetthereportingrequirementsoftheWilliamsAct?
o
o
o
16.Leadership/Stability
17.CharterSchools
18.InternalControlsandAnnualIndependentAuditReport
19. Facilities
88 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
Is the district’s fiscal health acceptable in the following areas?
Yes
No
N/A
• Isthedistrictproperlyaccountingforthe3%RoutineRepairand
MaintenanceAccountrequirementatthetimeofbudgetadoption?*
o
o
o
• Doesthedistrictprioritizefacilityissueswhenadoptingabudget?
o
o
o
• Ifneeded,doesthedistricthavesurpluspropertythatmaybesold
orusedforleaserevenues?
o
o
o
• Ifneeded,arethereotherpotentialstatutoryoptions?
o
o
o
o
o
o
o
o
o
• Doesthedistrictrecordallfinancialactivityforallprogramsaccuratelyand
inatimelymanner,ensuringthatworkisproperlysupervisedandreviewed?
o
o
o
• Hasthedistrictclosedthegeneralledger(books)withinthetimeprescribed
bythecountyofficeofeducation?
o
o
o
• Doesthedistrictfollowayear-endclosingschedule?
o
o
o
• Havebeginningbalancesinthenewfiscalyearbeenrecordedcorrectlyfor
eachfundfromthepriorfiscalyear?
o
o
o
• Doesthedistrictadjustprioryearaccrualsiftheamountsactuallyreceived(A/R)
orpaid(A/P)aregreaterorlessthantheamountsaccrued?
o
o
o
• Doesthedistrictreconcileallsuspenseaccounts,includingpayroll,attheclose
ofthefiscalyear?
o
o
o
- JointUse:Canthedistrictenterintoajointuseagreementwithsomeentities
withoutdeclaringthepropertysurplusandwithoutbidding?
- JointOccupancy:TheEducationCodeprovidesforajointventurethatcan
authorizeprivatedevelopmentofdistrictpropertythatwillresultinsome
educationaluse.
• Doesthedistricthavealong-rangefacilitiesmasterplanthatwascompleted
orupdatedinthelasttwoyears?
* Although the requirement for a district to set aside monies for deferred maintenance has been eliminated as
part of LCFF, the requirement to set aside funds for routine repair and maintenance has not. Education Code
17070.75 requires a school district to deposit 3% of its total general fund expenditures into its routine restricted
maintenance account (RRMA), for the sole purpose of maintaining school facilities in good repair. Education
Code 17070.766 provides a temporary exemption to this requirement and allows districts to deposit 1% (the exemption expires on June 30, 2015).
20.GeneralLedger
RISK ANALYSIS
1. Total the number of component areas in which the district’s fiscal health is not acceptable (“No” responses).
2. Use the key below to determine the level of risk to the district’s fiscal health.
0–5
Low
6 – 10
Moderate
11 – 16
High
Total “No”
Responses
17 – 20
Extremely High
Rev. 10/2014
This risk analysis is also available online at http://fcmat.org under Help and Services — Fiscal Tools
Fiscal Oversight Guide • December 2015 89
Appendices
90 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
Appendix D: Sample Fiscal Oversight Review Checklists
Sample review checklists are posted online and downloadable individually in Microsoft Word
or Microsoft Excel format.
Click on any of the titles below to view and download the corresponding checklist.
Budget
Budget Review Checklist Template (Excel)
Adopted Budget Review Checklist (Word)
Budget Assumptions Checklist (Excel)
Budget Technical Review Checklist (Excel)
Interim
Interim Technical Review Checklist (Excel)
Second Interim Review Checklist (Word)
Year End
Year End Closing Checklist (Word)
Fiscal Oversight Guide • December 2015 91
Appendices
92 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
Appendix E: Business and Administration Steering
Committee LCAP Manual
Click here to view and download the CCSESA BASC Local Control and Accountability
Plan (LCAP) Approval Manual.
Fiscal Oversight Guide • December 2015 93
Appendices
94 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
Appendix F: A Glossary of School Finance Terms, with
some Education Terms
For a glossary with additional education terms for areas other than school finance, go to
www.ed-data.org and click on the glossary link.
Academic Performance Index (API)
The API was a part of the state accountability system enacted by the California State
Legislature in 1999. It is a number, used for school accountability, that summarizes the
performance of a group of students, a school, or a district on California’s standardized tests
and rates the academic performance and growth of schools using a variety of academic
measures. A school’s API score is used to rank it among schools of the same type (elementary,
middle, high) and among the 100 schools of the same type that are most similar in terms of
students served, teacher qualifications, and other factors. Schools and districts also receive
separate API scores for any demographic subgroup of more than 10 students with valid test
scores. These include ethnic subgroups, socioeconomically disadvantaged students, English
learners, and students with disabilities. Expected annual growth targets are calculated for all
schools based on their API baseline score; the minimum annual growth target is 5%.
Account Code
A number that classifies sources of revenues or purposes of expenditures in either an educational agency’s budget or the reports submitted to the California Department of Education.
The account code classifies expenditures according to the types of items purchased or services
obtained, and revenues by the general source and type of revenue.
Accounting Period
A period of time for which records are maintained and at the end of which financial statements are prepared covering the period.
Accrual Basis Accounting
An accounting system in which transactions are recorded when they have been reduced to a
legal or contractual right or obligation to receive or pay cash or other resources.
Actuals
The amount an educational agency actually spent in a given period as opposed to original
budget estimates.
Adequate Yearly Progress (AYP)
The measure of the extent to which all students in a school, as well as certain demographic
subgroups of students, demonstrate proficiency in at least reading/language arts and mathematics. It also measures the progress of schools based on other academic indicators, such as
the graduation rate or school attendance. The federal No Child Left Behind Act requires each
state to ensure that all schools and districts make adequate yearly progress based on assessments in the statewide accountability system. State definitions must reflect the objective that
all students will demonstrate proficiency by the year 2014.
Fiscal Oversight Guide • December 2015 95
Appendices
Apportionments
State or federal aid, district taxes, or other monies that are allocated to local education
agencies (LEAs) or other governmental entities according to certain formulas. Principal
Apportionments for LEAs are calculated three times during the school year: (1) the first
principal apportionment (P-1) is calculated in February of the school year, corresponding
to the P-1 ADA (see Attendance Reports); (2) the second principal apportionment (P-2) is
calculated in June, corresponding to the P-2 ADA; and (3) the annual recalculation of the
apportionment is made in February following the school year and is based on P-2 ADA
(except for programs that use the annual count of ADA).
Appropriation
Funds set aside, and authorized by the governing board, to make expenditures and to incur
obligations for a specific time and a special purpose. An appropriation is usually limited in
purpose, amount, and time during which it may be expended, and must be voted on every year.
Appropriation Bill
A bill before the Legislature that authorizes the expenditure of public money and stipulates
the amount, manner and purpose of the expenditure items.
Assembly Bill (AB) 1200
Legislation passed in 1991 (AB 1200 Chapter 1213/1991) that defined a system of fiscal
accountability for school districts and county offices of education to prevent bankruptcy. The
law requires districts to create multiyear financial projections; identify sources of funding
for substantial cost increases, and make public the cost implications of such increases before
approving employee contracts. County offices review district budgets, and the state reviews
countywide school districts. Education Code sections 1240 et seq. and 42131 et seq. contain
the major provisions of AB 1200.
Assessed Value
The value of land, homes, and businesses set by the county assessor for property tax purposes.
This is either the appraised value of any newly built or purchased property or, for continuously owned property, the value on March 1, 1975 plus annual increases. These increases, tied
to the California Consumer Price Index, may not exceed 2% annually (see Proposition 13).
Audit
An examination of documents, records, and accounts to (1) determine the propriety of
transactions; (2) ascertain whether all transactions are recorded properly; and (3) determine
whether statements drawn from accounts provide an accurate picture of financial operations
and financial status for a given period of time.
Audit Finding
A weakness in internal controls or an instance of noncompliance with laws and regulations.
Audit findings are presented in the audit report.
96 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
Average Class Size
The number of students in classes divided by the number of classes. Because some teachers,
such as reading specialists, have assignments outside the regular classroom, the average class
size is usually larger than the pupil-to-teacher ratio.
Average Daily Attendance (ADA)
The total number of days of student attendance in the LEA, divided by the total number of
days the LEA is in session for at least the required minimum day (refer to Education Code
section 46300 and California Code of Regulations, Title 5, Education, sections 400–424).
One student attending every day equals one unit of ADA. ADA is not the same as enrollment (see Enrollment). The state uses a school district’s ADA to determine various levels of
funding. Attendance is counted every day of the school year and is reported to the California
Department of Education three times a year.
Basic Aid
The minimum general-purpose aid that the California Constitution guarantees for each
school district in the state. The amount is $120 per pupil (ADA) or $2,400 per district,
whichever is greater.
Basic Aid School District
A district in which local property taxes equal or exceed the district’s funding from the state.
These districts are permitted to keep the money from local property taxes and still receive
constitutionally guaranteed state basic aid funding.
Benefit Assessment District
An area in which fees charged to property owners are used to provide a service of benefit to
all fee payers, such as the maintenance of public parks and recreation areas. Districts must
hold an election before fees are levied. It is also called a Maintenance Assessment District.
Bond
A certificate containing a written promise to pay a specified sum of money, called the face
value, at a fixed time in the future, called the date of maturity, and specifying interest at a
fixed rate, usually payable periodically.
Bond Interest and Redemption Fund
An account maintained on a local education agency’s behalf by the county auditor and used
for repayment of bonds.
Bond Measure
A method of borrowing employed by school districts to pay for a large capital investment,
used in much the same way as a person who takes out a mortgage to purchase a home. Since
2001, voters in a school district have been able to authorize a local general obligation bond
if 55% or more of voters approve it by vote. Before 2001, a two-thirds vote was required.
Districts can choose to seek bond passage with either a two-thirds vote or a 55% vote that
requires greater accountability measures. The principal and interest are repaid by local
property owners through an increase in property taxes. A simple majority of state voters can
Fiscal Oversight Guide • December 2015 97
Appendices
approve a state general obligation bond, which is repaid by state taxes and has no impact on
property tax rates.
Bonded Indebtedness
An obligation incurred by the sale of bonds to generate funds for school facilities or other
capital expenditures. Since 1986, districts have been able to levy a local property tax to
amortize bonded indebtedness, provided the taxes are approved by two-thirds of voters.
Budget
A plan of financial operation, consisting of an estimate of proposed revenues and expenditures for specified purposes for a given time, usually one fiscal year.
Budget Act
A constitutionally-established one-year statute specifying the state’s budget appropriations. It
is the only bill allowed to have more than one appropriation. The state constitution requires
that it be passed by a two-thirds vote of each house and sent to the governor by June 15 of
each year. The governor may reduce or delete, but not increase, individual items.
Budgetary Control
Managing financial transactions according to an approved plan of estimated revenues and
expenditures.
Budgeting
Allocating the resources of an organization among potential activities to achieve the organization’s objectives; planning for the use of resources.
Budget Revisions
Net increases and decreases to the budget. These may include increases from new grant funds
and decreases because of the need to reduce appropriations to prevent spending in excess of
available revenues.
Building Fund
A fund that districts must use only for buildings. The money comes from sources such as
bonds and the sale or rental of property.
Cafeteria Fund
A separate fund used by many districts to track the income and expenses related to food
service.
California Basic Educational Data System (CBEDS)
An annual data collection, distributed in October, that is used by the California Department
of Education (CDE) to collect data on the following from California public schools (K-12):
enrollment
graduates
dropouts
vocational education
alternative education
98 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
adult education
course enrollment
classified staff
certificated staff
technology
teacher shortage and demand
Three forms are used to collect these data: the County/District Information Form (CDIF),
the School Information Form (SIF), and the Professional Assignment Information Form
(PAIF).
California Code of Regulations (CCR)
Regulations that have been formally adopted by approximately 200 regulatory agencies in the
state, including the State Board of Education.
California Department of Education (CDE)
The CDE has several roles within the school finance system, including administering the
numerous categorical programs created by both state and federal lawmakers and maintaining
data on the funding received by districts and county offices and the way those funds are
spent. California’s elected superintendent of public instruction oversees the CDE, and the
State Board of Education acts as its policymaking body.
California Education Code
A collection of all the laws directly related to California K-12 public schools. Ed Code
sections are created or changed by the governor and Legislature when they make laws. Local
school boards and county offices of education are responsible for complying with these
provisions. The Ed Code is permissive, which means that school districts are free to take any
action not specifically prohibited. Additional regulations affecting education are contained
in the California Administrative Code, Titles 5 and 8, the Government Code, and general
statutes.
California High School Exit Exam (CAHSEE)
A state exam that California public high school students, beginning with the class of 2006,
must pass in order to graduate. The exit exam is not a college entrance or honors exam.
Instead, its purpose is to test whether students have mastered the academic skills necessary to
succeed in the adult world. It is a pass-fail exam divided into two sections: English language
arts (reading and writing) and mathematics. Sophomores, juniors, and seniors can take the
exam. Once students pass a section of the exam, they do not take that section again.
California Longitudinal Pupil Achievement Data System (CALPADS)
A statewide system that stores longitudinal data on individual students and district and
school certificated staff. LEAs use CALPADS to collect, maintain and report information on
pupil assessments, enrollment, student and teacher assignments, courses and program participation data, as well as data on graduation and dropout rates for state and federal reporting.
California Longitudinal Teacher Integrated Data Education System (CALTIDES)
A new, comprehensive system developed by the California Commission on Teacher
Credentialing and the California Department of Education. The system will combine existing
Fiscal Oversight Guide • December 2015 99
Appendices
databases to help retain longitudinal data to meet federal No Child Left Behind and other
state reporting requirements, help with assignment monitoring, and help conduct highquality evaluations of programs.
California School Information Services (CSIS)
A division of FCMAT responsible for developing, maintaining and implementing a data
management system that provides state reporting and student records transfer services to
California districts and county offices of education. CSIS assigns and maintains the statewide
student identifiers (SSIDs) for regular K-12 students, including those in charter schools, and
helps school districts complete state reporting and student records transfers.
California Work Opportunity and Responsibility to Kids (CalWORKs)
A welfare program that gives cash aid and services to eligible needy California families.
CalWORKs is a state program that is operated locally by county welfare departments.
California Public Employees’ Retirement System (CalPERS)
A retirement fund required by state law. Classified employees and their employers (such as
school districts and county offices of education) contribute. It is also referred to as Public
Employees’ Retirement System (PERS).
California State Teachers’ Retirement System (CalSTRS)
A retirement fund required by state law. Certificated employees and education agencies (such
as school districts and county offices of education) contribute to CalSTRS. It is also referred
to as State Teachers’ Retirement System (STRS).
Capital Outlay
Money spent for major physical changes to a school such as new land or buildings; building
construction, additions, remodeling, renovations, or reconstruction; or certain new
equipment. These investments in the physical structure of a school are expected to last for a
number of years.
Capital Projects Funds
Funds established to account for financial resources to be used to acquire or build major
facilities and other capital assets.
Cash Basis
Method of accounting in which revenues and expenditures are recorded only when cash is
actually received or disbursed. This accounting method is not acceptable for use in LEAs.
Categorical aid/Categorical programs
Funds from state or federal sources that are in addition to the general-purpose funding and
that are to serve a specific pupil population or to provide specific services and activities. These
funds have various fiscal and program compliance requirements.
100 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
Certificated/Credentialed Employees
School employees who are required by the state to hold some type of teaching credential. This
includes most full-time, part-time, substitute and temporary teachers, librarians, counselors,
and most administrators. The requirements for a fully credentialed teacher include having
a bachelor’s degree, completing additional required coursework, and passing the California
Basic Educational Skills Test (CBEST). However, teachers who have not yet acquired a
credential but have an emergency permit are allowed to teach in the classroom and are
counted in this category.
Certificates of Participation (COPs)
A financing technique that provides long-term financing through a lease (with an option to
purchase or a conditional sale agreement).
Chart of Accounts
A systematically arranged list of accounts applicable to a specific LEA. All account names and
numbers, if any, are listed in numerical order.
Charter School
A public school that may provide instruction in any combination of grades (kindergarten
through grade 12). Parents, teachers or community members may initiate a charter petition,
which is typically presented to and approved by a local school district governing board.
The law grants chartering authority to county boards of education and the State Board of
Education under certain circumstances, such as the appeal of a petition’s denial by a school
district’s governing board or the direct approval of countywide or statewide charter schools.
Charter schools are funded on a per-pupil basis, are freed from most state regulations that
apply to school districts and COEs, are usually able to hire their own teachers and other staff,
and are subject to closure if they fail to keep their promises for student outcomes. Charter
schools were originally authorized in California in 1992 (Senate Bill 1448).
Classified Employees
School employees in positions that do not require teaching credentials. This group
includes bus drivers, cafeteria staff, clerical staff, custodians, instructional aides, and some
management personnel.
Collective Bargaining
A process for establishing a contract between a school district and its employee organizations.
Senate Bill 160 (1975) defined the manner and scope of negotiations, and mandated a state
regulatory board (see Public Employment Relations Board).
Common Core State Standards (CCSS)
The Common Core State Standards, often referred to as Common Core, are a set of
educational standards that describe what students should know and be able to do in English
language arts and math in each grade from kindergarten through grade 12. California is
among the more than 40 states that have adopted the Common Core in an effort to establish
clear, consistent educational standards across state lines. California students will begin to take
standardized tests measuring their knowledge of the Common Core in spring 2015.
Fiscal Oversight Guide • December 2015 101
Appendices
Community College
A two-year college, also referred to as a junior college. California operates three separate
public systems for postsecondary education: two-year community colleges, the four-year
California State University (CSU) system, and the most selective University of California
(UC) system. California Community Colleges compose the largest system of higher
education in the nation, with 2.1 million students attending 112 colleges. Community
colleges provide students with the knowledge and background necessary to compete in
today’s economy. With a wide range of educational offerings, the colleges provide workforce
training, basic courses in English and math, certificate and degree programs, and preparation
for transfer to four-year institutions. Anyone who is 18 years old or holds a high school
diploma (or equivalent) is eligible to attend a community college. Students can transfer from
community colleges to either the CSU or UC systems.
Consolidation
The combining of two or more elementary or high school districts with adjoining borders into
a single district (see Unification and Unionization).
Consumer Price Index (CPI)
A measure of the average change over a short time in the prices paid for a set of consumer
goods and services. The United States Bureau of Labor Statistics compiles this measure.
Salary adjustments and other costs can be linked to the CPI, which is sometimes used to
measure inflation.
Contingent Liabilities
Items that may become liabilities as a result of conditions undetermined at a given time (e.g.,
guarantees, pending lawsuits, judgments and appeals, and unsettled disputed claims).
Core Academic Standards
The basic academic standards that are assessed in the statewide testing system for K-12 public
schools in California. They include English language arts, mathematics, science, and history/
social science. The state’s public universities’ core entrance requirements include foreign
languages and visual/performing arts as well as the subjects listed above.
Cost of Living Adjustment (COLA)
An increase in funding from the state or federal government to compensate for inflation. In
California, the law states that educational programs should receive a certain COLA based on
the annual percentage change in the Implicit Price Deflator for state and local government
purchases of goods and services (Education Code section 42238.1).
County Office of Education (COE)
The agency that provides educational programs for certain students; business, administrative,
and curriculum services to school districts; and financial oversight of districts. These services
are affected by the size and type of districts in the county, the geographic location and size of
the county, and the students who have special needs that are not met by the districts. Each of
California’s 58 counties has an office of education.
102 Fiscal Crisis and Management Assistance Team • www.fcmat.org
Appendices
Criteria and Standards
Local school agency budgets must meet state-adopted criteria and standards. These include
minimum fiscal standards, such as a minimum reserve level, that school districts, county
offices of education and the state use to monitor fiscal solvency and accountability (Education
Code sections 33127 et seq.).
Debt Service
Expenditures made to pay both principal and interest on borrowed funds, including bonds.
Deferred Maintenance
Major building and equipment repairs that school districts have postponed.
Debt Service Funds
Funds established to account for the money accumulated for, and used to pay, long-term debt
principal and interest.
Deficit
The amount by which a sum of money is less than the required amount (e.g., apportionment
deficits or budget deficits).
Deficit Factor
The percentage by which an expected allocation of funds to a school district or county office
of education is reduced. The state may apply deficit factors when the appropriation is insufficient based on the funding formulas specified by law.
Deficit Fund Balance
The amount by which a fund’s liabilities exceed its assets.
Deficit Spending
When actual expenditures exceed actual revenues (also referred to as an operating deficit).
Developer Fees
A charge per square foot on residential and commercial construction within a school district’s
geographic boundaries. These fees, charged to developers of new properties and to property
owners who remodel, are based on the premise that new construction will lead to more
students. Individual school districts decide whether to levy the fees and at what rate, up to
the maximum allowed by law. The maximum, adjusted for inflation every two years, is higher
for residential construction than for commercial. Districts are required to substantiate the
financial impact of new development and show that they have used the revenues to address
that impact. Proceeds are used to build or renovate schools and for portable classrooms.
Direct Services
Services that county offices of education provide at no cost for small school districts, which
are defined as elementary districts with fewer than 901 students, high school districts with
fewer than 301 students, and unified districts with fewer than 1,501 students, based on ADA.
Services provided may include business, attendance, health, guidance, library and, for K-8
only, supervision of instruction.
Fiscal Oversight Guide • December 2015 103
Appendices
Direct Support Costs
Services necessary to maintain instructional programs, including curriculum development,
library, pupil support, transportation, and maintenance. Most support costs not initially
identified with a program may be accumulated and then transferred at a later date as a direct
support cost.
District Governing Board
The official name for the local school board.
Education Code
The body of law that regulates education in California. Additional education regulations are
contained in the California Administrative Code, Titles 5 and 8, the Government Code, and
general statutes.
Education Revenue Augmentation Fund (ERAF)
The fund used to collect the property taxes transferred from cities, the county and special
districts within each county, before they are distributed to K-14 school agencies.
Elementary and Secondary Education Act (ESEA)
The principal federal law affecting K-12 education. The No Child Left Behind Act (NCLB)
is the most recent reauthorization of ESEA (see No Child Left Behind Act). Enacted in 1965
as part of the war on poverty, ESEA supports the education of the country’s poorest children.
Congress must reauthorize it every six years.
Encroachment
Spending a local education agency’s general-purpose unrestricted funds on restricted
programs, usually because the cost of providing these programs exceeds the state or federal
funding provided for them. Encroachment occurs in most districts and county offices that
provide special education and transportation. Other encroachment is caused by deficit factors
or local decisions to allocate general-purpose funds to special-purpose programs.
Encumbrances
Obligations in the form of purchase orders, contracts, salaries and other commitments that
can be charged to an appropriation and for which a part of the appropriation is reserved.
Enterprise Funds
Funds used to account for an LEA’s ongoing activities that are similar to private sector
activities because of their income-producing nature.
English Learners (EL)
Students whom the state-approved home language survey indicates have a primary language
other than English and who, based on state-approved oral language assessment (grades K-12)
or literacy (grades 3-12 only), lack the English language listening comprehension, speaking,
reading, and writing skills needed to succeed in the regular instructional program. EL
students were formerly known as limited English proficient (LEP).
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Enrollment
A count of the students enrolled in each school and district on a given day in October. The
number of enrolled students is usually higher than the average daily attendance (ADA) due to
factors such as students moving, dropping out, or staying home because of illness (see Average
Daily Attendance).
Entitlement
An apportionment that is based on specific qualifications or a formula defined in statute (this
term should not be used as a basis for determining how to account for unspent balances of
categorical aid).
Equalization Aid
Additional funds that the Legislature occasionally allocates to address perceived inequities,
typically by increasing funding to school districts with revenues lower than the statewide
average for districts of their size and type.
Expenditures Per Pupil
The amount of money a school district or the state spends on education, divided by the
number of students educated. In California the number of students is usually determined by
average daily attendance (ADA) (see Revenues per Pupil).
Fact-Finding
The culmination of the Impasse Procedures, Article 9, of the state’s collective bargaining
law. A tripartite panel, with the chairperson appointed and paid for by the Public Employees
Relations Board (PERB), considers several specific facts and makes findings of fact and
recommendations for settlement of a negotiating agreement. These recommendations are
advisory only and may be adopted or rejected in whole or in part by the parties.
Fees on New Development
A charge per square foot on residential and commercial construction within a school district.
See Developer Fees for more information. In addition to developer fees, districts can tax a
portion of their districts, often new housing developments, by establishing a Mello-Roos
Community Facility District or a School Facility Improvement District (SFID).
Fiscal Crisis and Management Assistance Team (FCMAT)
A state-funded agency that provides fiscal advice, management assistance, training, and
other school business services, with a particular emphasis on districts facing fiscal insolvency.
FCMAT operates from the office of the Kern County Superintendent of Schools and is under
contract with the California Department of Education and the governor’s office. Assembly
Bill 1200 (AB1200) created FCMAT in 1991. The team can help county offices of education
understand their fiscal monitoring duties required by AB1200, sometimes suggesting specific
methods of oversight. FCMAT also provides management studies for school districts, county
offices of education, charter schools and community colleges that request them.
Fiscal year
One year, the beginning and ending dates of which are fixed by statute. For LEAs, each fiscal
year begins July 1 and ends June 30.
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Free/Reduced-price Meals (F/RPM)
A federal program to provide food — typically lunch and/or breakfast — for students from
low-income families. The number of students participating in the National School Lunch
Program is often used as a measure of the poverty level in a school or district. The number of
children in this program can affect schools’ or districts’ eligibility for grants or other funding
aimed at helping lower-income families.
Full-Time Equivalent (FTE)
A unit typically used to measure the amount of employed labor in an organization. One
employee working full time is 1.0 FTE. Part-time employees are counted in the FTE
calculation but have an FTE of less than 1.0. For example, an employee who works half time
would be 0.5 FTE, an employee who works one quarter time would be 0.25 FTE, and so on.
Fund
A fiscal and accounting entity that consists of a number of accounts that record cash and
other financial resources, all related liabilities and residual equities or balances, and changes
therein. A fund serves to separate the accounts in it from others to carry out specific activities
or attain certain objectives in accord with special regulations, restrictions, or limitations.
Fund balance
The difference between assets and liabilities. The fund equity of governmental and trust
funds.
Gann Limit
A limit, or ceiling, on the amount of tax dollars that state and local governments, including
school districts, can legally spend. In November 1979, California voters approved Proposition
4, an initiative that added controls on appropriations in Article XIIIB of the California
Constitution. The implementing legislation, Senate Bill 1342, minimized the proposition’s
impact on K–12 education. Using 1978-79 as a base year, subsequent years’ limits have been
adjusted for: (1) an inflation increase equal to the change in the Consumer Price Index or per
capita personal income, whichever is smaller; and, (2) the change in population, which for
school agencies is the change in ADA. Proposition 111, adopted in June 1990, amended the
Gann limit inflation factor to be based only on the change in per-capita personal income.
General Fund
The primary, legally defined fund used to finance the ordinary operations of a local educational agency (LEA) and to distinguish general revenues and expenditures from those placed
in other funds for specific uses. The general fund is available for any legally authorized
purpose.
General Long-Term Debt
Long-term debt that is legally payable from general revenue and backed by the full faith and
credit of an LEA.
General Obligation Bond (G.O. Bond)
A form of borrowing commonly used to fund school facilities; these bonds are a general
obligation of the government agency that issues them. Local G.O. bonds, financed by an
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increase in local property taxes, can be used to renovate, reconstruct and build new facilities,
and for certain new equipment. School districts can seek either two-thirds or 55% voter
approval; the latter includes additional accountability requirements. A simple majority of state
voters can approve a state G.O. bond, which is repaid by state funds and has no impact on
property tax rates. Although both state and local bonds are G.O. bonds, people often use the
term “G.O. bond” to refer only to local bonds for school facilities.
General Purpose Funding
Money granted to school districts for general purposes. California school districts receive
general purpose money based on a per-pupil amount. They have discretion to spend this
money as they see fit for the day-to-day operation of schools — including everything from
salaries to the electric bill — within the constraints of certain laws and contracts with
employees.
Generally Accepted Accounting Principles (GAAP)
Uniform minimum standards and guidelines for financial accounting and reporting. These
govern the form and content of an entity’s financial statements, and include the conventions,
rules and procedures needed to define accepted accounting practices. Generally accepted
accounting principles provide a standard by which to measure financial presentations.
The primary authority on the application of these principles to state and local governments
is the Governmental Accounting Standards Board (GASB). GASB is the organization established to issue standards of financial accounting and reporting for the activities and transactions of state and local governmental entities. It is the successor organization to the National
Council on Governmental Accounting (NCGA).
Gifted and Talented Education (GATE)
A state program authorizing instructional services focused on and structured for students
identified as having advanced abilities or potential.
Impact Aid
The federal program that provides funds to districts that serve children whose families live
or work on federal property, such as military bases or Native American reservations. Funded
through Title VIII of the No Child Left Behind Act (NCLB), this program is also called
Public Law (PL) 81-874.
Implicit Price Deflator
A measure of inflation used to compare expenditures over a period of time.
Indirect Costs
Agencywide general administrative costs, including costs for fiscal, personnel/human, and
data processing services. Indirect costs benefit multiple objectives and cannot be readily
identified with a particular final cost objective.
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Individualized Education Program (IEP)
The written instruction plan for students with disabilities who are designated as special
education students under the Individuals With Disabilities Act (IDEA-Part B). The IEP
includes the following:
statement of present levels of educational performance of a child.
statement of annual goals, including short-term instructional objectives.
statement of specific educational services to be provided and the extent to which the
child will be able to participate in regular educational programs.
projected date for initiation and anticipated duration of services.
appropriate objectives, criteria and evaluation procedures.
schedules for determining, at least annually, whether instructional objectives are being
achieved.
Individuals with Disabilities Education Act (IDEA)
A reauthorization in 1977 of the federal Education For All Handicapped Children Act
of 1975, which guarantees children with exceptional needs a free and appropriate public
education and requires that each child’s education be determined individually and designed
to meet his or her unique needs in the least restrictive environment. It also establishes procedural rights for parents and children (see Special Education).
Inflation Factor
See Cost of Living Adjustment.
Interim Reports
Reports prepared as of a date or a period during the fiscal year. They include budget
estimates, financial transactions year to date, and end-of-year projections.
Internal Service Funds
Funds created to pay for services to other organizational units of the LEA on a costreimbursement basis. Such funds are usually intended to be self-supporting.
Inventory
A detailed list showing quantities and containing descriptions of an organization’s property at
a given time. It may also include units of measure, unit prices, and values.
J-200, J-380
Financial (J-200) and program cost accounting (J-380) reports that school districts and
county offices of education submit to the California Department of Education (CDE). When
all districts converted to the Standardized Account Code Structure (SACS) in 2003-04, the
CDE discontinued the J-200 and J-380 software.
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J-90
An optional salary information report that most districts and county offices of education
submit to the California Department of Education (CDE). The main focus is teachers’
salaries, but the J-90 also includes other certificated staff.
Joint Powers Agreement (JPA)
An agreement between local education agencies (LEAs) (and/or sometimes the California
Department of Education) to share services or responsibilities. A joint powers board, made up
of representatives of the LEAs, governs the JPA.
Joint School Districts
School districts with boundaries that cross county lines.
K-14
Kindergarten through community college.
Legislative Analyst’s Office (LAO)
A nonpartisan office in the state government that gives fiscal and policy advice to the
California Legislature. The LAO provides analyses of proposed and adopted state budgets and
also offers the public information about state initiatives and ballot propositions.
Limited English Proficient (LEP)
Students whom the state-approved Home Language survey indicates have a primary language
other than English and who, based on the state-approved oral language assessment procedures
(grades K-12) and literacy (grades 3-12), lack the English listening comprehension, speaking,
reading and writing skills needed to succeed in the school’s regular instructional programs.
This term was replaced with the term English learner beginning in 1998-99.
Local Control Accountability Plan (LCAP)
A key accountability requirement of the state’s Local Control Funding Formula (LCFF), the
LCAP is a three-year plan, which every county office of education (COE), school district and
charter school must develop, adopt and update annually with input from the community,
beginning July 1, 2014. The LCAP is intended to explain how the LEA will use state
funds to improve educational outcomes for all students based on eight state priorities, with
special attention to high-needs students who received additional money. The State Board of
Education approved a template for the LCAP in January 2014. The LCAP must focus on
services and outcomes for all students, with emphasis on English learners, low-income and
foster youth students. Education Code 52070 and following now make county superintendents responsible for overseeing and approving districts’ LCAPs.
Local Control Funding Formula (LCFF)
The LCFF was adopted as part of the 2013-14 California budget and dramatically reformed
California’s educational funding system by eliminating revenue limits and most categorical
funding and replacing them with a per-pupil base grant plus additional funds (supplemental
and concentration grants) for high-needs (low income, English learner, and foster youth)
students. For county offices of education, the LCFF includes separate funding for oversight
activities and instructional programs.
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Local Education Agency (LEA)
A public board of education or other public authority that maintains administrative control
of public elementary or secondary schools in a city, county, township, school district, or
other political subdivision of a state. School districts and county offices of education are both
LEAs. A charter school can be deemed an LEA for the purposes of special education (E.C.
47641).
Local Miscellaneous Revenues
School funding from locally generated sources, such as community contributions, interest
income, developer fees, and revenues from local voter-approved parcel taxes.
Lottery
Gambling games approved by California voters in November 1984. A minimum of 34%
of lottery revenues distributed to public schools, colleges and universities must be used
for educational purposes. Half of any increase in lottery income to school districts and
community colleges — as compared to funding from lottery income in the 1998-99 school
year — must be used only for instructional materials, such as textbooks. Lottery income
constitutes less than 2% of K–12 education funding annually.
Maintenance Assessment District or Benefit Assessment District
A method for local agencies, including school agencies, to charge property owners a fee
to provide a service that benefits all fee payers, such as maintenance of public parks and
recreation areas. Districts must hold an election before fees are levied. The Lighting and
Landscape Act of 1972, section 22500 of the Streets and Highways Code, provides more
information about this topic.
Mandated Costs
School district expenditures required by federal or state law, court decisions, administrative
regulations, or initiative measures. Costs that are mandated by state law or regulations must
be reimbursed by the state, while costs mandated by federal law, a court or an initiative do
not need to be reimbursed by the state (see SB 90, 1977). Since the passage of Proposition 4
in 1979 (the Gann Limit), the California constitution has required the state to repay school
districts for costs the state mandates.
Mello-Roos Community Facility District
A portion of a school district, often a new housing development, that can be taxed if
two-thirds of property owners vote to approve it. Under Mello-Roos, property owners pay a
special tax that is not based directly on the assessed value of the property.
Multiyear Financial Plan (MYFP)
A plan that presents financial estimates of programs in tabular form for a period of years.
These estimates show the future financial impact of current decisions. The data in the plan
should be organized along the lines of the program structure.
National School Lunch Program
A federal program to provide food — typically lunch and/or breakfast — for students from
low-income families. The number of students participating in this free/reduced price meal
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program is increasingly being used as a way to measure the poverty level of a school or district
population. The number of children in this program can affect schools’ or districts’ eligibility
for grants or other funding aimed at helping lower-income families.
Necessary Small Schools (NSS)
Funding provided to school districts with qualifying schools that serve a small population of
students and are geographically isolated, as defined in statute. NSS funding is provided In
lieu of the Local Control Funding Formula (LCFF) Grade Span Base Grant. Education Code
sections 42238.02, 42238.03 and 42280-42289 authorize such funding.
No Child Left Behind Act (NCLB)
The 2002 reauthorization of the Elementary and Secondary Education Act (ESEA).
Originally passed in 1965, ESEA programs provide much of the federal funding for K-12
schools. NCLB’s provisions represent a significant change in the federal government’s
influence in public schools and districts throughout the United States, particularly in the
areas of assessment, accountability, and teacher quality. NCLB increases the federal focus on
the achievement of disadvantaged pupils, including English learners and students who live in
poverty, provides funding for innovative programs such as charter schools, and supports the
right of parents to transfer their children to a different school if their school is low-performing
or unsafe.
No Child Left Behind (NCLB) Core Course
A course that an LEA has designated as providing instruction in one or more of the NCLB
core academic subject areas. NCLB defines core academic subject areas as English, reading/
language arts, mathematics, science, foreign languages, civics/government, economics,
arts, history, and geography. Courses in charter schools must meet the same NCLB core
requirements.
Nonpublic Schools (NPS)
According to California Education Code section 60010(o), “Nonpublic, nonsectarian
school” means a private, nonsectarian school that: 1) enrolls individuals with exceptional
needs pursuant to an IEP; 2) employs at least one full-time teacher who holds an appropriate
credential authorizing special education services; and 3) is certified by the California
Department of Education. It does not include an organization or agency that operates as a
public agency or offers public services, including, but not limited to, a state or local agency, or
an affiliate of a state or local agency, including a private, nonprofit corporation established or
operated by a state or local agency or a public university or college.
Object Codes
In school district budgets, object codes are used to classify revenues and expenditures. For
revenues, the object code identifies the general source and type of funds. For expenditures, it
identifies the type of item or service being purchased.
Office of Public School Construction (OPSC)
The OPSC is under the authority of the State of California’s Department of General Services
(DGS). As staff to the State Allocation Board (SAB), OPSC implements and administers a
$35 billion voter-approved school facilities construction program.
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OPSC also verifies that all school districts applying for state funding to modernize or build
new facilities meet specific criteria based on the type of funding requested.
Other Outgo
Outlays for debt service, transfers between funds within a district, and transfers to other
agencies.
Parcel Tax
In California, a fixed assessment (not based on assessed value) on each parcel of property.
It must be approved by two-thirds of voters in a school district. When proposing parcel tax
elections, districts must indicate how the money will be used. Money from parcel taxes is
usually used for educational programs, not for school construction or renovation, which is
normally financed through a general obligation bond measure (see Government Code section
50079, et al.).
Parent Teacher Association (PTA)
A volunteer group of parents and teachers that works to promote the education and wellbeing
of all children and youth at home, in school and in the community. Many schools have a
parent club instead of a formal PTA.
Per Capita Personal Income
Total personal income in a specific area (e.g., county, city or state) prior to taxation, divided
by the number of residents in that specific area.
PL 81-874 (Public Law 81-874)
The federal program that provides funds to districts that serve children whose families live
or work on federal property, such as military bases or Native American reservations. Often
called Impact Aid (See Title VIII).
PL 94-142 (Public Law 94-142)
A federal law that mandates a free and appropriate education for all children with disabilities.
(Also see Individuals with Disabilities Education Act (IDEA)).
Position Control
A function that coordinates and authorizes positions in accordance with established district
policies and procedures. This function is useful for budget development and preparing salary
projections.
Preliminary Credential
A credential that can be earned by both administrators and teachers after they complete a
number of requirements. The Preliminary Credential is valid for five years, during which
time the teacher or administrator is expected to pursue a Professional Clear Credential.
Among other requirements for a Preliminary Credential, teachers must earn at least a
bachelor’s degree, pass the CBEST, and complete an approved teacher-preparation program.
Among other requirements for a Preliminary Credential, administrators must pass the
CBEST, complete at least three successful years in teaching or pupil services, and complete
an approved program of administrator preparation or internship. However, in 2002 the
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state offered administrators a fast-track alternative: the School Leaders Licensure Assessment
(SLLA). In addition, administrative services interns can obtain a Preliminary Credential by
participating in an approved one-year in-service training program.
Principal Apportionment
Funding from the State School Fund for school districts, county offices of education, and
charter schools. The advance principal apportionment is certified by the Superintendent of
Public Instruction in July of each school year, followed by the first principal apportionment
(P1) in February, and the second principal apportionment (P2) in June.
Program Improvement
An intervention under the No Child Left Behind Act (NCLB). Schools and districts that
receive federal Title I funds enter Program Improvement when, for two years in a row, they
do not make adequate yearly progress (AYP) toward the goal of having all students become
proficient in English language arts and mathematics by 2013-14. Each state, with federal
approval, sets AYP goals each year. Once a school makes AYP for two years in a row, it can
leave Program Improvement. NCLB imposes a series of increasingly serious interventions
for schools that remain in Program Improvement. These begin with revising a plan for the
school and giving parents the option to transfer their students to schools that are not in
Program Improvement, with transportation provided. The second year adds providing professional development to teachers and staff and offering tutoring to students from low-income
families. If a school does not make AYP in four years, it can face significant restructuring or
takeover in the fifth year. Schools that do not receive Title I funds are not subject to Program
Improvement even if they do not make AYP.
Property Tax
A tax on local residential and commercial property that is part of a school district’s income
based on a formula set by the Legislature and signed by the governor in 1978. These taxes,
which vary by district, are part of the district’s Local Control Funding Formula income.
Proposition 13
An initiative amendment to the California constitution, passed by voter initiative in June
1978, that added Article XIII A, which limits property tax rates on secured property to no
more than 1% of the full assessed value (plus any additional rate approved by local voters,
such as general obligation bonds). Annual increases in assessed value are capped at 2% or the
percentage growth in the state’s consumer price index (CPI), whichever is less. For individual
properties, the assessed value is also raised when new construction or sale of the property
occurs (with a few exceptions). Proposition 13 and implementing legislation shifted support
for schools from local property taxes to state general funds. Local voters can levy a uniform
dollar tax per parcel of land; however, they cannot increase property taxes based on value,
except by issuing general obligation bonds for school construction or renovation.
Proposition 30
A California ballot measure approved by voters on November 6, 2012 by a margin of 55% to
45%. Prop. 30 helped prevent further cuts to education by temporarily raising the personal
income tax for California residents with an annual income of more than $250,000 and
increasing the state sales tax by 0.25%.
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Proposition 39
An amendment to the California constitution, passed by voter initiative in November 2000.
It added the option of a lower voter approval threshold (55% vs. two-thirds) for local school
district general obligation bonds. Districts that seek 55% approval must meet added financial
and performance accountability requirements.
Proposition 49
An amendment to the California constitution, passed by voter initiative in November 2002.
It modified and expanded state after-school programs. Beginning in 2004-05, any funding
increases to the After School Education and Safety Program must come from funds other
than Proposition 98 funds. Without voter approval, lawmakers can reduce funding to the
program only if they also reduce Proposition 98 funds by the same percentage.
Propositions 98 and 111
Voter-approved initiatives that amended the California constitution in 1988 and 1990 to
guarantee a minimum amount of annual state funding from property and state taxes for
K–14 (kindergarten through community college) education. The propositions included
formulas for calculating the guarantee under different economic conditions, and a formula
for allocating any state tax revenues in excess of the state’s Gann Limit. Proposition 98 also
mandated School Accountability Report Cards (SARCs) for every school. The minimum
funding base is determined by whichever of two formulas (commonly called Test 1 and Test
2) results in the greater amount, unless an alternative formula, known as Test 3, applies.
Public Employees’ Retirement System (PERS)
A public retirement fund for classified employees, required by state law. Classified employees,
their employers (such as school districts and county offices of education) and the state
contribute to this retirement fund, unless exempted by state law. It is also referred to as
California Public Employees’ Retirement System (CalPERS).
Public Employment Relations Board (PERB)
A five-person board appointed by the governor that regulates collective bargaining between
public employees (including school district and county office of education employees) and
employee organizations (see Government Code sections 3541, et seq.).
Pupil-to-Teacher Ratio
The total student enrollment divided by the number of full-time equivalent teachers.
This ratio is usually smaller than average class size because some teachers, such as reading
specialists, work outside the classroom. The pupil-to-teacher ratio is the most common
statistic used to compare data across states.
Reserves
Funds set aside in a budget to provide for estimated future expenditures, to offset future
losses, for working capital, or for other purposes.
Reserve for Economic Uncertainties
The portion of the fund balance designated (set aside) by the governing board for emergencies
or other unanticipated adverse economic events, such as revenue shortfalls.
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Restricted Funds
Money the use of which use is restricted by legal requirement or by the donor.
Revenues per Pupil
The total amount of revenues from all sources allocated to K-12 education, divided by the
number of students, as determined most often by average daily attendance (ADA). The
formula for revenues per pupil is based on the amount budgeted by the state rather than on
what is actually spent by districts and the state to provide services (See Expenditures Per
Pupil).
School Accountability Report Card (SARC)
An annual report on specific aspects of a school’s operation, which is required by Proposition
98. Other state legislation and the federal No Child Left Behind Act (NCLB) also require
SARCs (see Propositions 98 and 111).
School Board
A locally elected group, usually consisting of three to seven members, that sets fiscal,
personnel, instructional, and student-related policies. A school district governing board also
provides direction for the district, hires and fires the district superintendent, and approves
the budget and contracts with employee unions. By law, every school district in California is
governed by a locally-elected school board.
School District
A local education agency directed by an elected local board of education that exists primarily
to operate public schools. In California, there are three types of school districts: elementary,
high school, and unified. An elementary district is usually kindergarten through eighth grade
(K-8); high school is usually grades 9 through 12; and unified is kindergarten through grade
12 (K-12).
School Facility Improvement District (SFID)
A portion of a school district that is taxed through a general obligation bond based on the
value of the property and approved by the voters in that portion of the district being taxed.
Originally, SFIDs required two-thirds voter approval, but in July 2001 the Legislature added
the option of a 55% approval threshold with the additional accountability provisions of
Proposition 39. Typically, SFIDs involve new housing developments that create the need for
additional school district facilities.
School Foundation
A tax-exempt organization established to raise funds and receive gifts and grants in support of
a school district or individual school (also referred to as an education foundation).
School Site Council
Parents, students (high schools only), teachers, and other staff selected by their peers to
prepare a school improvement plan and to help see that the planned activities are carried out
and evaluated. Such a council is required when a school receives funding through Title I.
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Schoolwide Programs
A program that uses Title I money to support comprehensive school improvement efforts
and to help all students, particularly low-achieving and at-risk students, meet state standards
at particular schools. To qualify as a Title I schoolwide program, at least 40% of a school’s
students must be considered low-income. Schoolwide programs can provide Title I services
and support to all children in the school, regardless of income level. Schoolwide programs
have more flexibility than targeted assistance programs when using Title I funds. For
example, schools operating schoolwide programs can combine Title I funds with other
federal, state, and local funding to finance a more comprehensive approach to improving
student achievement.
Scope of Bargaining
The range of subjects negotiated between school districts and employee organizations during
collective bargaining. In California, these include wages, hours and working conditions. The
Public Employment Relations Board (PERB) is responsible for interpreting disputes about
scope.
Section 504
A section of the federal Rehabilitation Act of 1973 that protects handicapped individuals
from discrimination based on their handicap by employers, educational institutions, or
programs that receive federal funds. Section 504 defines an “individual with a handicap”
more broadly than the Individuals with Disabilities Education Act (IDEA), and in some
circumstances provides additional rights not available under IDEA.
Seniority
A statutory system for protecting the job security of employees with the longest periods
of service in a district. With few exceptions, the seniority list is used to determine which
employees will be the first to be laid off or rehired.
Serrano Bands
A specific range of per-pupil funding. Under the Serrano v. Priest case (see below), the courts
required the California Legislature to reduce differences in general-purpose funding to $100
per student, adjusted annually for inflation. This is called the Serrano band. The Serrano
band was about $350 per student in 2004.
Serrano v. Priest
A California court case — begun in 1968 and settled in the mid-1970s — that challenged
the inequities created by the U.S. tradition of using property taxes as the principal source
of revenue for public schools, saying the wide discrepancies in school funding because of
differences in district wealth constituted a denial of equal opportunity. In response, legislators
passed Senate Bill 90 in 1972, creating the revenue limit system that put a limit on the
amount of general-purpose money each district could receive (see Serrano Bands).
Shortfall
An insufficient allocation of money, requiring an additional appropriation or resulting in a
deficit.
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Single Plan for Student Achievement
A plan required for schools that participate in any state or federal program included in the
state’s consolidated application. The plan, which is developed by the school site council, must
describe how the school will spend the funds received through the consolidated application to
improve student achievement. The school district’s governing board must review and approve
the plan. The Single Plan for Student Achievement replaced the disparate plans required for
some state and federal programs.
Single Subject Credential
A credential required to teach middle or high school in California.
Small Districts
A small elementary district is defined as a district with fewer than 901 ADA. In California,
more than 40% of districts have fewer than 1,000 students.
Special Education
Programs to identify and meet the educational needs of children with emotional, learning,
or physical disabilities. Federal law requires that all children with disabilities be provided
a free and appropriate education according to an individualized education program (IEP)
from infancy until 21 years of age (see Individuals with Disabilities Education Act and
Individualized Education Program).
Special Education Local Plan Area (SELPA)
A regional group responsible for administering special education services effectively and
efficiently. Districts are organized into SELPAs; some are countywide, some are a single large
district or part of a district, and some combine several smaller districts.
Split Roll
A system of taxing business and industrial property at a different rate from residential
property.
Standardized Account Code Structure (SACS)
A comprehensive system of accounting for and reporting school district revenues and expenditures. As of 2003–04, all school districts use SACS, which provides a variety of ways to
track and report financial information, including by specific programs and functions.
State Allocation Board (SAB)
A regulatory agency that controls most state-aided capital outlay and deferred maintenance
projects, and that distributes funds for them.
State Education Agency (SEA)
The agency primarily responsible for supervising a state’s public elementary and secondary
schools. In California, it is the California Department of Education.
State Superintendent of Public Instruction (SPI)
Elected on a statewide, non-partisan ballot, the Superintendent of Public Instruction (also
called the state superintendent) is in charge of running the California Department of
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Education. County offices of education are required to inform the state superintendent of
their approval or disapproval of all school district budgets.
State Teachers’ Retirement System (STRS)
A retirement fund required by state law and funded by contributions from certificated
employees, their employing school agencies (such as school districts and county offices of
education), and direct payments by the state.
Sunsetting
The termination of statutes and regulations (but not necessarily the funding) for a categorical
program. The laws that create these state programs usually contain a schedule for the
Legislature to consider the sunset of the programs.
Supplemental Services (under NCLB)
Additional learning opportunities, such as tutoring services, that must be provided to
students from low-income families who are attending schools that have not met annual
performance goals for two years in a row under the No Child Left Behind Act (NCLB).
Parents can choose services for their child from a list of approved providers. The school
district pays for the services (see Adequate Yearly Progress).
Tax and Revenue Anticipation Notes (TRANs)
Notes issued in anticipation of collection of taxes; these notes can usually be paid only from
tax collections, and frequently only from the proceeds of the tax levy they anticipate.
Tenure
A system of due process and employment guarantee for teachers. After two years of probationary employment, teachers are ensured continued employment in the school district unless
carefully defined procedures for dismissal or layoff are successfully followed.
Titles I–X
Ten sections in the federal No Child Left Behind Act (NCLB).
Title I provides funds for educationally disadvantaged students, including the
children of migrant workers. Funding is based on the number of low-income children
in a school and is intended to supplement state and district funds, not replace them.
The funds are distributed to school districts, which make allocations to eligible
schools according to criteria in the federal law. Schools receiving Title I monies are
supposed to involve parents in deciding how those funds are spent and in reviewing
progress. Title I used to be called Chapter One. Part A provides basic grants for school
improvement, while Part B focuses on improving reading programs. Parts C through
I provide funding for a variety of purposes, including advanced placement programs
and dropout prevention.
Title II provides funding to prepare, train, and recruit high-quality teachers and
principals. It also includes grants to integrate technology into the classroom.
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Title III provides funding for language instruction for English learners (EL) and
immigrant students. This funding is in addition to any Title I funding a school might
receive. It includes specific assessment and parent notification requirements.
Title IV provides grants for out-of-school programs aimed at keeping students safe
and supporting academic achievement. Title IV includes funding for the 21st Century
Community Learning Centers and the Safe and Drug Free Schools and Communities
programs.
Title V promotes informed parental choice and innovative programs by providing
grants to support innovative programs (Part A) and public charter schools (Part B). It
also includes an incentive program to help charter schools meet their facility needs.
Title VI provides funding to promote flexibility and accountability. Part A provides
funds for states to improve the quality, validity and reliability of their testing systems.
It also allows districts to transfer funds among certain titles to most effectively meet
student needs. Part B provides extra grant funds and flexibility to school districts that
are located in rural areas and serve fewer than 600 students.
Title VII covers Native American, Native Hawaiian, and Alaska Native education.
Title VIII provides economic impact aid to school districts with children whose
families live or work on federal property, such as military bases or Native American
reservations.
Titles IX and X cover administrative issues.
Tuition Tax Credit
A reduction in state or federal income tax to offset a specified amount of money for private
education tuition.
Unaudited Actuals
An annual statement reporting the financial activities of an LEA, produced before the LEA’s
finances have been audited.
Unduplicated Count (LCFF)
The unduplicated count of pupils who (1) are English learners, (2) meet income eligibility
requirements for free or reduced-price meals under the National School Lunch Program, or
(3) are in foster care. Unduplicated count means that each pupil is counted only once even if
the pupil meets more than one of these criteria (EC sections 2574(b) (2) and 42238.02(b) (1)).
Unduplicated Count (Special Education)
The number of students receiving special education or special services under the Master Plan
for Special Education on the census dates of December 1 and April 1. Even though a pupil
may receive multiple services, each pupil is counted only once.
Unearned Revenue
Revenue received in a given period, but unearned as of June 30, which is set up as a liability
to be included as revenue in subsequent periods.
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Unification
Joining together all or part of an elementary school district (grades K–8) and high school
district (grades 9–12) to form a new unified school district (grades K–12) with a single
governing board.
Unionization
Joining together of two or more elementary or high school districts to form a single
elementary (grades K–8) or high school district (grades 9–12).
Waiver
Permission from the State Board of Education, and sometimes the Superintendent of Public
Instruction, to set aside the requirements of an education code provision or administrative
regulations, upon the request of a school agency. The code specifies which laws can be waived
(see Education Code section 33050).
Williams v. California
A class action lawsuit, originally filed in 2000, in which plaintiffs contended that California
failed to provide thousands of public school students — particularly low-income students and
students of color — with “bare minimum necessities.” In August 2004 a tentative settlement
was reached that included the following: accountability measures, such as empowering
county superintendents to intervene in the lowest-performing schools; a commitment to
provide highly qualified teachers in every core class by 2006; and approximately $1.2 billion
to make facilities repairs, buy textbooks, create a statewide facilities inventory, and continue
the High Priority Schools Grant Program.
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Appendix G: Acronyms
AB
Assembly Bill
CBEDS
California Basic Educational Data System
ADA
Average Daily Attendance
CBEST
California Basic Educational Skills Test
API
Academic Performance Index
CCR
California Code of Regulations
AYP
Adequate Yearly Progress
CCSS
Common Core State Standards
BANS
Bond Anticipation Notes
CDE
California Department of Education
CAASPP
California Assessment of Student
Performance and Progress
CDIF
County/District Information Form
CAHSEE
California High School Exit Exam
CALPADS
California Longitudinal Pupil Achievement
Data System
CalPERS
California Public Employees’ Retirement
System
CalSTRS
California State Teachers’ Retirement System
CALTIDES
California Longitudinal Teacher Integrated
Data Education System
CalWORKs
California Work Opportunity and
Responsibility to Kids
CCEE
California Collaborative for Educational
Excellence
CDS
County-District-School
CELDT
California English Language Development
Test
COE
County Office of Education
COLA
Cost-of-living Adjustment
COPs
Certificates of Participation
CPI
Consumer Price Index
CSR
Class Size Reduction
CSIS
California School Information
Services
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CSU
California State University
G.O. Bond
General Obligation Bond
CY
Current Year
HPSGP
High Priority Schools Grant Program
EIA
Economic Impact Aid
IDEA
Individuals with Disabilities Education Act
EL
English Learners
IEP
Individualized Education Program
ELA
English Language Arts
JPA
Joint Powers Authority
ERAF
Education Revenue Augmentation Fund
K–12
Kindergarten through 12th Grade
ERT
Economic Recovery Target
K–14
Kindergarten through Community College
ESEA
Elementary and Secondary Education Act
K–16
Kindergarten through Undergraduate
University
FCMAT
Fiscal Crisis and Management Assistance
Team
LAO
Legislative Analyst’s Office
F/RPM
Free and Reduced-Priced Meals
LCAP
Local Control and Accountability Plan
FTE
Full-Time Equivalent
LCFF
Local Control Funding Formula
FY
Foster Youth
LEA
Local Education Agency
GAAP
Generally Accepted Accounting Principles
LEP
Limited English Proficient
GASB
Governmental Accounting Standards Board
LI
Low Income
GATE
Gifted and Talented Education
MPP
Minimum Proportionality Percentage
122 Fiscal Crisis and Management Assistance Team • www.fcmat.org
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MPSE
Master Plan for Special Education
PSAA
Public Schools Accountability Act
MTYRE
Multitrack, Year-round Education
PTA
Parent Teacher Association
MYFP
Multiyear Financial Plan
PY
Prior Year
NCGA
National Council on Governmental
Accounting
ROC/ROP
Regional Occupational Center/Program
NCLB
No Child Left Behind Act
NSL
National School Lunch
NPA
Nonpublic Agency
NPS
Nonpublic Schools
NSS
Necessary Small School
OPSC
Office of Public School Construction
OTL
Opportunity To Learn
PAIF
Professional Assignment Information Form
PERB
Public Employment Relations Board
PERS
Public Employees’ Retirement System
PL
Public Law (federal)
RL
Revenue Limit
SAB
State Allocation Board
SACS
Standardized Account Code Structure
SARC
School Accountability Report Card
SB
Senate Bill
SBAC
Smarter Balanced Assessment Consortium
SBE
State Board of Education
SDC
Special Day Class
SEA
State Education Agency
SED
Socioecomically Disadvantaged
SELPA
Special Education Local Plan Area
SFID
School Facility Improvement District
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SIF
School Information Form
SIP
School Improvement Program
SPI
Superintendent of Public Instruction
STAR
Standardized Testing and Reporting
Program
STRS
State Teachers’ Retirement System
TIIBG
Targeted Instructional Improvement Block
Grant
TK
Transitional Kindergarten
TRAN
Tax and Revenue Anticipation Note
UC
University of California
124 Fiscal Crisis and Management Assistance Team • www.fcmat.org