FINANCIAL RISK ASSESSMENT

FINANCIAL RISK ASSESSMENT

Was required by act 7 of the 2005 legislature • Made up of 20 evaluation criteria to show the local districts trends or current standing • Used to make the state aware of potential financial risks of local school districts What is the purpose of the Financial Risk Assessment

Public school enrollment Non-public school enrollment Local property & sales tax collections Fiscal conditions & district performance scores Future obligations Certified school business officials Submittal of general fund budget forms What are the evaluation criteria

Submittal of Annual Financial Report (AFR) Audit opinion on internal controls Consecutive audit findings Fraud Single audit report (A-133) Program monitoring Fiscal monitoring What are the evaluation criteria (con’t)

General purpose financial statements Expenditures of federal programs Compliance with laws and regulations on federal programs General fund deficit spending General fund balance as % of general fund revenues Major events What are the evaluation criteria (con’t)

Uses five year period Looks for declining enrollment If enrollment is declining might suggest adjustments need to be made in staffing Public School Enrollment

Looks at percentage of non-public enrollment to public enrollment • Looks for change greater than 15% Non-Public School Enrollment

Looks at the prior five years Looks at whether revenues are increasing or declining Also looks at collections per student vs state average Local Property & Sales tax collections

Looks at expenditures per pupil Ranks in relation to % below state average Looks at district performance score Fiscal Conditions and district performance score

Looks at percent of teachers with more than15 years experience Due to future retiree benefit costs (health ins) Future obligations

Is the district’s business manager certified by LASBO Does the business manager have CPA license Certified school business official

Was the budget submitted to DOE on time Was it 1-14 days late or greater Submittal of general fund budget forms

Was the annual financial report submitted to DOE on time Was it 1-14 days late or greater Submittal of Annual Financial Report

Does the auditor list any weakness on internal controls If there are internal controls was it a material weakness Audit opinion on internal controls

Are the auditors finding the same problems year after year Rated excellent, good, needs improvement or unacceptable Consecutive audit findings

Was there any evidence of fraud discovered by auditors Was there more than one case Was it a material case of fraud Fraud

Based on district’s external audit • Looks for questioned costs • What percentage of expenditures were questioned • Less than 5% good • Greater than 10% unacceptible Single audit report (a-133)

Based on LDOE program monitoring • Looks at the use of funds related to program • Based on questioned costs by LDOE monitoring • Same percentages as single audit report Program monitoring

Based on LDOE monitoring Looks for questioned costs in relation to fiscal issues (attached backups to checks, ect.) Fiscal monitoring

This is based on external auditors opinion Looking for unqualified opinion Do not want an adverse opinion General purpose financial statements

This is based on the opinion the external auditors gave on the expenditures of federal programs Expenditures of federal programs

This is based on separate opinion the external auditors give on compliance with laws & regulations Again looking for unqualified opinion Compliance with laws & regulations of federal programs

The looks at a five year period Critical that district address continuous deficit spending General fund deficit spending

This looks at the district’s fund balance as related to revenues Excellent is 7.5% or greater (GFOA recomments a fund balance of at least 12%) Less than five percent is considered unacceptable General fund balance as percentage of general fund revenues

New school systems will be monitored by the state • Events such as districts impacted by hurricanes cause districts to be monitored by the state • Going concern opinion by the external auditor means there is concern that the district cannot meet its financial obligations Major events

This document can be used as a positive in bond rating the financial risk analysis can also be used with your stakeholders to show how well the district is operated Who else uses the financial risk analysis

questions

FINANCIAL RISK ASSESSMENT