Assembly Bill (AB) 1200 Information

1. Assembly Bill (AB) 1200 Information Butte County Office of Education Fiscal Oversight Role

2. AB 1200 InformationBCOE Fiscal Oversight Role • Overview • The first level of fiscal oversight remains with local boards of education and their administration within the Local Education Agency (LEA) • A County Office of Education (COE) is the intermediary agent between the state and the district and is responsible for fiscal oversight • Provide management assistance • Provide progressive intervention if needed

3. AB 1200 InformationBCOE Fiscal Oversight Role • AB 1200 • Assembly Bill 1200 was enacted in 1992 • Provided the authority and responsibility for COE’s fiscal oversight • Created the Financial Crises and Management Assistance Team (FCMAT)

4. AB 1200 InformationBCOE Fiscal Oversight Role • FCMAT • Purpose is to serve LEA’s by providing fiscal crises intervention and management assistance • Provides information to LEA’s and policymakers • FCMAT predictors of LEA’s needing intervention • FCMAT fiscal health risk analysis questions • Provides proactive, preventative services • Fiscal crises intervention and oversight services

5. AB 1200 InformationBCOE Fiscal Oversight Role • Budget Review • Districts submit their original and interim budgets to BCOE for review • Original Budget: district adopts budget through board action • BCOE evaluates budget and issues a letter either approving, conditionally approving, or disapproving the budget • 1st & 2nd Interim Budgets: districts certify budget through board action as either positive, qualified, or negative • BCOE evaluates budget and either agrees with certification or may change certification

6. AB 1200 InformationBCOE Fiscal Oversight Role • Interim Certifications • Positive: LEA will meet its financial obligations for the current fiscal year and subsequent two fiscal years • Qualified: LEA may not meet its financial obligations for the current fiscal year or two subsequent years • Negative: LEA will not meets its financial obligations for the remainder of the current fiscal year or for the subsequent fiscal year

7. AB 1200 InformationBCOE Fiscal Oversight Role • Collective Bargaining Review • AB 2756 added this requirement if a district is either qualified or negative • BCOE has ten days to comment on tentative agreements before they are approved by the board of education • BCOE often provides this service for districts not in AB 1200 review as additional assistance

8. AB 1200 InformationBCOE Fiscal Oversight Role • Education Code 42127.6 (a) “Qualified Certification” • The county superintendent of schools shall report to the Superintendent of Public Instruction on the financial condition of the school district and his or her proposed remedial actions and shall do at least one of the following and all actions that are necessary to ensure that the district meets its financial obligations (A) Assign a fiscal expert, paid for by the county superintendent (B) Conduct a study (C) Direct the school district to submit a Multi-Year Projections (MYP) (D) Require the district to encumber all contracts and obligations (E) Direct the district to submit a proposal for addressing its financial condition (F) Withhold compensation of the governing board and district superintendent for failure to provide requested information (G) Assign FCMAT to review teacher staffing practices

9. AB 1200 InformationBCOE Fiscal Oversight Role • Education Code 42127.6 (e) “Negative Certification” • … the county superintendent, in consultation with the Superintendent of Public Instruction, shall take at least one of the actions described in paragraphs (1) to (5), inclusive, and all actions that are necessary to ensure that the district meets its financial obligations and shall make a report to the Superintendent about the financial condition of the district and remedial actions proposed by the county superintendent. (1) Develop and impose a budget revision (2) Stay or rescind any action of the district’s board of trustees (3) Assist in developing a financial plan (4) Assist in developing a budget for the subsequent year (5) Appoint a fiscal advisor (district pays 75%, COE pays 25%)

10. AB 1200 InformationBCOE Fiscal Oversight Role • What happens to a district once it is in AB 1200 status • Qualified Certification • Regular, documented meetings with board, administration, and BCOE staff • District must submit collective bargaining agreements for review • BCOE review of board agendas & minutes • Possible appointment of “fiscal expert” • Negative Certification • Regular, documented meetings with board, administration, and BCOE staff • District must submit collective bargaining agreements for review • BCOE review of board agendas & minutes • BCOE has “stay and rescind” authority regarding any item on the LEA’s board agenda • Most likely appointment of “fiscal advisor”

11. Cash is King Cash flow projections a priority Multi-year cash flows needed to determine if and when cash deficits are realized Cash Management Spending reductions and reserves Tax Revenue and Anticipation Notes (TRANs) Interfund borrowing Short-term loan from County Office of Education Short-term loan from Butte County Treasury Cash Insolvency At the point an LEA runs out of cash and is unable to repay short term debt (cash management) the LEA would be cash insolvent and state receivership required 35 AB 1200 InformationBCOE Fiscal Oversight Role

12. AB 1200 InformationBCOE Fiscal Oversight Role Questions?