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The Art of School District Fiscal OversightThe Art of School District Fiscal Oversight CCSESACCSESA
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Stan Mantooth, Ventura County Superintendent of Schools
Misty Key, Merced COE Assistant Superintendent
Damon Smith, Alameda COE Associate Superintendent
Stan Mantooth, Ventura County Superintendent of Schools
Misty Key, Merced COE Assistant Superintendent
Damon Smith, Alameda COE Associate Superintendent
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Presentation OutlinePresentation Outline
Our Responsibilities
Our Tools
The Art
Our Responsibilities
Our Tools
The Art
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Our ResponsibilitiesOur Responsibilities
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Education Code 1240Education Code 1240
(a) Superintend the schools of his or
her county
(b) Maintain responsibility for the
fiscal oversight of each school district
in his or her county pursuant to the
authority granted by this code
(a) Superintend the schools of his or
her county
(b) Maintain responsibility for the
fiscal oversight of each school district
in his or her county pursuant to the
authority granted by this code
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District Fiscal OversightDistrict Fiscal Oversight
AB 1200 – Effective January 1st, 1992
At least 39 subsequent bills have been passed that amend or alter our responsibilities for fiscal oversight
As economic times evolve, the process and necessary legislation continues to be refined and defined
And the art changes too…
AB 1200 – Effective January 1st, 1992
At least 39 subsequent bills have been passed that amend or alter our responsibilities for fiscal oversight
As economic times evolve, the process and necessary legislation continues to be refined and defined
And the art changes too…
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We have many dutiesWe have many duties
Education Code
Government Code
Public Contract Code
Education Code
Government Code
Public Contract Code
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Budget approvalBudget approval
We examine the budgets for compliance with the state standards and criteria (adopted by the SBE)
Determine if the budget allows the district to meet its financial obligations
We may either approve, conditionally approve, or disapprove the submitted budget
We examine the budgets for compliance with the state standards and criteria (adopted by the SBE)
Determine if the budget allows the district to meet its financial obligations
We may either approve, conditionally approve, or disapprove the submitted budget
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If we disapprove a budgetIf we disapprove a budget
We must recommend to the district’s governing board revisions to the budget and reasons for the revisions
We may assign a fiscal adviser (at our expense) or we may appoint a committee to review our recommendations
We must recommend to the district’s governing board revisions to the budget and reasons for the revisions
We may assign a fiscal adviser (at our expense) or we may appoint a committee to review our recommendations
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Many technicalities Many technicalities
If the district makes budget modifications and the COE approves, all is well
If we are not satisfied with the district’s revised budget then steps continue…Leading up to budget review committeesSPI involvementPossible severe measures against the
district including an imposed budget
If the district makes budget modifications and the COE approves, all is well
If we are not satisfied with the district’s revised budget then steps continue…Leading up to budget review committeesSPI involvementPossible severe measures against the
district including an imposed budget
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We review Interim reportsWe review Interim reports
Districts certify financial health:PositiveQualifiedor Negative
We may change a certificationAppeal process through SPI / CDE
Districts certify financial health:PositiveQualifiedor Negative
We may change a certificationAppeal process through SPI / CDE
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PositivePositive
A positive certification is assigned to any district that, based upon current projections, will meet its financial obligations for the current and subsequent two fiscal years
A positive certification is assigned to any district that, based upon current projections, will meet its financial obligations for the current and subsequent two fiscal years
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QualifiedQualified
A qualified certification is assigned to any district that, based upon current projections, may not meet its financial obligations for the current fiscal year or two subsequent years
Often viewed as a budget dilemma
A qualified certification is assigned to any district that, based upon current projections, may not meet its financial obligations for the current fiscal year or two subsequent years
Often viewed as a budget dilemma
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NegativeNegative
A negative certification is assigned to any district that, based upon current projections, will not meet its financial obligations for the current fiscal year or subsequent fiscal year
Often viewed as a cash dilemma
A negative certification is assigned to any district that, based upon current projections, will not meet its financial obligations for the current fiscal year or subsequent fiscal year
Often viewed as a cash dilemma
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We also reviewWe also review
Unaudited Actuals (year-end financial statements) for mathematical accuracy
Audits for exceptions and corrective plans of
actions
Unaudited Actuals (year-end financial statements) for mathematical accuracy
Audits for exceptions and corrective plans of
actions
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Collective BargainingAgreements
Collective BargainingAgreements
All districts must disclose the costs of an agreement with an exclusive representative at a public meeting
Districts with Qualified or Negative certifications must give us 10 days to comment on the agreement
We must notify the district within those 10 days if the agreement would endanger the fiscal well-being of the district
All districts must disclose the costs of an agreement with an exclusive representative at a public meeting
Districts with Qualified or Negative certifications must give us 10 days to comment on the agreement
We must notify the district within those 10 days if the agreement would endanger the fiscal well-being of the district
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Charter SchoolsCharter Schools
All charter schools must send us the following reports:BudgetInterimsUnaudited actuals year-end reportAnnual audit
We are not required to do anything with these reports
All charter schools must send us the following reports:BudgetInterimsUnaudited actuals year-end reportAnnual audit
We are not required to do anything with these reports
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Community CollegesCommunity Colleges
County Offices of Education may offer financial services to Community Colleges
Oversight authority is the responsibility of the Chancellor’s office
County Offices of Education may offer financial services to Community Colleges
Oversight authority is the responsibility of the Chancellor’s office
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Non-voter Approved DebtNon-voter Approved Debt
Districts with qualified or negative
certifications may not issue such
debt without us first determining
that the repayment of the debt is
probable
Districts with qualified or negative
certifications may not issue such
debt without us first determining
that the repayment of the debt is
probable
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Commercial WarrantsCommercial Warrants
We may audit commercial warrants issued by districts
If we determine there is evidence of fraud or misappropriation we are required to notify the governing board, the State Controller, SPI, and the local district attorney
We may audit commercial warrants issued by districts
If we determine there is evidence of fraud or misappropriation we are required to notify the governing board, the State Controller, SPI, and the local district attorney
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More WorkMore Work
Set the payroll processEmployer of record for PERS and
STRS for all districts in your countyCertify attendance, deferred
maintenance and other reportsDistribute apportionments
Set the payroll processEmployer of record for PERS and
STRS for all districts in your countyCertify attendance, deferred
maintenance and other reportsDistribute apportionments
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No RestNo Rest
Calculate revenue limitsWaive bid requirements in
emergenciesReconcile county treasurer cash to
school recordsReport local tax collections
Calculate revenue limitsWaive bid requirements in
emergenciesReconcile county treasurer cash to
school recordsReport local tax collections
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The ToolsThe Tools
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Lack of Going ConcernLack of Going Concern
Lack of Going Concern = troubleEducation Code 42127.6
If at any time during the fiscal year the CSS determines a school district may be unable to meet its financial obligations for the current or two subsequent years….
Triggers an array of options almost identical to a qualified certification
Lack of Going Concern = troubleEducation Code 42127.6
If at any time during the fiscal year the CSS determines a school district may be unable to meet its financial obligations for the current or two subsequent years….
Triggers an array of options almost identical to a qualified certification
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Receive / Give ReportsReceive / Give Reports
All districts are required to give you a copy of any study, report, evaluation, or audit that contains evidence of fiscal distress
We are required to give an annual report addressing the fiscal status to the district governing board of a qualified or negative district
All districts are required to give you a copy of any study, report, evaluation, or audit that contains evidence of fiscal distress
We are required to give an annual report addressing the fiscal status to the district governing board of a qualified or negative district
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Authority to InvestigateAuthority to Investigate
Extraordinary audit - any time With reason to believe fraud,
misappropriation, or other illegal fiscal practices have occurred…
Any district or charter
Audit the expenditures and internal controls
Extraordinary audit - any time With reason to believe fraud,
misappropriation, or other illegal fiscal practices have occurred…
Any district or charter
Audit the expenditures and internal controls
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Criteria and StandardsCriteria and Standards
These standards help identify signs that a district is in danger of experiencing fiscal distress
Ensure a degree of uniformity across the state in interpretation of fiscal distress
These standards help identify signs that a district is in danger of experiencing fiscal distress
Ensure a degree of uniformity across the state in interpretation of fiscal distress
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AuditorsAuditors
School district auditors are required to provide us information on qualified, negative or “lack of going concern” districts as requested
Will not violate auditor – client confidentiality
School district auditors are required to provide us information on qualified, negative or “lack of going concern” districts as requested
Will not violate auditor – client confidentiality
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Financial SystemsFinancial Systems
Districts are not required to be on COE systems, but it sure helps!
Real-time information access
Many emergency loans are made to districts not on the COE system
Districts are not required to be on COE systems, but it sure helps!
Real-time information access
Many emergency loans are made to districts not on the COE system
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Access to ExpertsAccess to Experts
BASC
SFSS
COFS
FCMAT
Fiscal Experts / Fiscal Advisers
BASC
SFSS
COFS
FCMAT
Fiscal Experts / Fiscal Advisers
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$69,920 annually$69,920 annually
Every COE in the state receives at least $69,920 to support fiscal oversight Larger COEs receive a little more
TrainingBASC has an annual training session
on the technical aspects of fiscal oversight
Every COE in the state receives at least $69,920 to support fiscal oversight Larger COEs receive a little more
TrainingBASC has an annual training session
on the technical aspects of fiscal oversight
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The ArtThe Art
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District RelationsDistrict Relations
Most Important of All
Positive relationships are powerful
Districts are willing to disclose their
mistakes, problems, and concerns to
a COE they trust
Most Important of All
Positive relationships are powerful
Districts are willing to disclose their
mistakes, problems, and concerns to
a COE they trust
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CommunicationCommunication
CommunicateOften, honest, sincereRespond to budgets, interims,
collective bargaining agreementsEven when not technically requiredThe more often you say it, the greater
chance it will be heardKeep the Superintendent and CBO in
the loop even if communicating to the Board
Many of us give CBOs a chance to comment on district letters prior to official distribution
CommunicateOften, honest, sincereRespond to budgets, interims,
collective bargaining agreementsEven when not technically requiredThe more often you say it, the greater
chance it will be heardKeep the Superintendent and CBO in
the loop even if communicating to the Board
Many of us give CBOs a chance to comment on district letters prior to official distribution
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Provide TrainingsProvide Trainings
Host and provide trainings for districts in your county (or regionally)The more our district business officials
know, the better job they will perform A better job on their part makes our work
easier! Consider subsidizing the trainings if you can
find a wayIt’s a lot cheaper to train than to help a
district recover from fiscal distress!
Host and provide trainings for districts in your county (or regionally)The more our district business officials
know, the better job they will perform A better job on their part makes our work
easier! Consider subsidizing the trainings if you can
find a wayIt’s a lot cheaper to train than to help a
district recover from fiscal distress!
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Host MeetingsHost Meetings
Host monthly or quarterly meetings for district business officials and superintendents
Use these meetings to listen to your districts as well as share the latest information
Host monthly or quarterly meetings for district business officials and superintendents
Use these meetings to listen to your districts as well as share the latest information
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The HammerThe Hammer
Don’t be afraid to qualify a district
Much better to qualify a borderline
district than to let a district go under
We are routinely criticized by the
State when a district goes straight
from positive to negative
Don’t be afraid to qualify a district
Much better to qualify a borderline
district than to let a district go under
We are routinely criticized by the
State when a district goes straight
from positive to negative
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The Bully PulpitThe Bully Pulpit
Frank discussionOften a discreet, but frank
conversation with the CBO and Superintendent can prevent a simmering pot from boiling over
Most districts do not understand what happens to them when they are qualified or negativeEnlightenment is a powerful tool
Frank discussionOften a discreet, but frank
conversation with the CBO and Superintendent can prevent a simmering pot from boiling over
Most districts do not understand what happens to them when they are qualified or negativeEnlightenment is a powerful tool
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Support Each OtherSupport Each Other
When in doubtCall your colleagues
Someone in CCSESA has been down the road before
One big mistake affects us all
When in doubtCall your colleagues
Someone in CCSESA has been down the road before
One big mistake affects us all
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Thank YouThank You