FCMAT
Amador County Office of Education Report
fiscal health risk analysis (FHRA)
Read the report at Amador County Office of Education ↗
Amador County Office of Education
Fiscal Health Risk Analysis
October 29, 2019
Michael H. Fine
Chief Executive Officer
FCMAT FISCAL HEALTH RISK ANALYSIS
Fiscal crisis & ManageMent assistance teaM
TABLE OF CONTENTS
Contents
About FCMAT .......................................................................................................................3
Introduction .........................................................................................................................5
Study Guidelines .............................................................................................................................5
Study Team........................................................................................................................................5
District Overview ...............................................................................................................6
Fiscal Health Risk Analysis ...............................................................................................7
Annual Independent Audit Report ...........................................................................................7
Budget Development and Adoption .......................................................................................7
Budget Monitoring and Updates ...............................................................................................8
Cash Management .......................................................................................................................10
Charter Schools..............................................................................................................................11
Collective Bargaining Agreements .........................................................................................11
Contributions and Transfers ......................................................................................................12
Deficit Spending ............................................................................................................................13
Employee Benefits ........................................................................................................................13
Enrollment and Attendance ......................................................................................................13
Facilities ............................................................................................................................................14
Fund Balance and Reserve for Economic Uncertainty .....................................................14
General Fund - Current Year ......................................................................................................15
Information Systems and Data Management .....................................................................16
Internal Controls and Fraud Prevention ................................................................................16
Leadership and Stability .............................................................................................................17
Multiyear Projections ...................................................................................................................18
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TABLE OF CONTENTS
Non-Voter-Approved Debt and Risk Management ...........................................................18
Position Control .............................................................................................................................19
Special Education ..........................................................................................................................19
Total Risk Score, All Areas ..........................................................................................................20
Key to Risk Score ...........................................................................................................................20
Summary ..........................................................................................................................................21
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ABOUT FCMAT
About FCMAT
FCMAT’s primary mission is to assist California’s local K-14 educational agencies to identify, prevent, and resolve financial, human
resources and data management challenges. FCMAT provides fiscal and data management assistance, professional development
training, product development and other related school business and data services. FCMAT’s fiscal and management assistance
services are used not just to help avert fiscal crisis, but to promote sound financial practices, support the training and development
of chief business officials and help to create efficient organizational operations. FCMAT’s data management services are used to
help local educational agencies (LEAs) meet state reporting responsibilities, improve data quality, and inform instructional program
decisions.
FCMAT may be requested to provide fiscal crisis or management assistance by a school district, charter school, community college,
county office of education, the state Superintendent of Public Instruction, or the Legislature.
When a request or assignment is received, FCMAT assembles a study team that works closely with the LEA to define the scope of
work, conduct on-site fieldwork and provide a written report with findings and recommendations to help resolve issues, overcome
challenges and plan for the future.
FCMAT has continued to make adjustments in the types of support provided based on the changing dynamics of K-14 LEAs and the
implementation of major educational reforms.
Studies by Fiscal Year
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80
70
60
50
40
30
20
10
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95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18
FCMAT also develops and provides numerous publications, software tools, workshops and professional development opportunities
to help LEAs operate more effectively and fulfill their fiscal oversight and data management responsibilities. The California School
Information Services (CSIS) division of FCMAT assists the California Department of Education with the implementation of the California
Longitudinal Pupil Achievement Data System (CALPADS). CSIS also hosts and maintains the Ed-Data website (www.ed-data.org) and
provides technical expertise to the Ed-Data partnership: the California Department of Education, EdSource and FCMAT.
FCMAT was created by Assembly Bill (AB) 1200 in 1992 to assist LEAs to meet and sustain their financial obligations. AB 107 in 1997
charged FCMAT with responsibility for CSIS and its statewide data management work. AB 1115 in 1999 codified CSIS’ mission.
AB 1200 is also a statewide plan for county offices of education and school districts to work together locally to improve fiscal
procedures and accountability standards. AB 2756 (2004) provides specific responsibilities to FCMAT with regard to districts that have
received emergency state loans.
In January 2006, Senate Bill 430 (charter schools) and AB 1366 (community colleges) became law and expanded FCMAT’s services
to those types of LEAs.
On September 17, 2018 AB 1840 became effective. This legislation changed how fiscally insolvent districts are administered once an
emergency appropriation has been made, shifting the former state-centric system to be more consistent with the principles of local
control, and providing new responsibilities to FCMAT associated with the process.
Since 1992, FCMAT has been engaged to perform more than 1,000 reviews for LEAs, including school districts, county offices of
education, charter schools and community colleges. The Kern County Superintendent of Schools is the administrative agent for
FCMAT. The team is led by Michael H. Fine, Chief Executive Officer, with funding derived through appropriations in the state budget
and a modest fee schedule for charges to requesting agencies.
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seidutS
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rebmuN
ABOUT FCMAT
AB 1200 is also a statewide plan for county offices of education and school districts to work together locally to improve
fiscal procedures and accountability standards. AB 2756 (2004) provides specific responsibilities to FCMAT with regard
to districts that have received emergency state loans.
In January 2006, Senate Bill 430 (charter schools) and AB 1366 (community colleges) became law and expanded
FCMAT’s services to those types of LEAs.
On September 17, 2018 AB 1840 became effective. This legislation changed how fiscally insolvent districts are admin-
istered once an emergency appropriation has been made, shifting the former state-centric system to be more consistent
with the principles of local control, and providing new responsibilities to FCMAT associated with the process.
Since 1992, FCMAT has been engaged to perform more than 1,000 reviews for LEAs, including school districts, county
offices of education, charter schools and community colleges. The Kern County Superintendent of Schools is the admin-
istrative agent for FCMAT. The team is led by Michael H. Fine, Chief Executive Officer, with funding derived through
appropriations in the state budget and a modest fee schedule for charges to requesting agencies.
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INTRODUCTION
Introduction
Historically, FCMAT has not engaged directly with school districts showing distress until it has been invited to do so by the district or
the county superintendent. The state’s 2018-19 Budget Act provides for FCMAT to offer more proactive and preventive services to
fiscally distressed school districts by automatically engaging with a district under the following conditions:
• Disapproved budget
• Negative interim report certification
• Three consecutive qualified interim report certifications
• Downgrade of an interim certification by the county superintendent
• “Lack of going concern” designation
Under these conditions, FCMAT will perform a fiscal health risk analysis to determine the level of risk for insolvency. FCMAT has
updated its Fiscal Health Risk Analysis (FHRA) tool that weights each question based on high, medium and low risk. The analysis
will not be performed more than once in a 12-month period per district, and the engagement will be coordinated with the county
superintendent and build on their oversight process and activities already in place per AB 1200. There is no cost to the county
superintendent or to the district for the analysis.
The FHRA tool was developed for review of a district with oversight provided by the COE. In this study, the reviewed entity
is the county office of education (COE) and the oversight agency is the California Department of Education (CDE). Most of
the review remains applicable and relevant; however, when a question refers to “district,” this report will mean the COE and
when the question refers to “COE,” this report will mean the CDE.
Study Guidelines
FCMAT entered into the study agreement with the Amador County Office of Education on May 15, 2019.
FCMAT visited the county office on May 23-24, 2019 to conduct interviews, collect data and review documents. Supporting
documentation was received from the county office through August 29, 2019. This report is the result of those activities.
FCMAT’s reports focus on systems and processes that may need improvement. Those that may be functioning well are generally not
commented on in FCMAT’s reports. In writing its reports, FCMAT uses the Associated Press Stylebook, a comprehensive guide to
usage and accepted style that emphasizes conciseness and clarity. In addition, this guide emphasizes plain language, discourages
the use of jargon and capitalizes relatively few terms.
Study Team
The team was composed of the following members:
John Von Flue Debbie Riedmiller, CFE
FCMAT Chief Analyst FCMAT Intervention Specialist
Scott Sexsmith Laura Haywood
FCMAT Intervention Specialist FCMAT Technical Writer
Each team member reviewed the draft report to confirm accuracy and achieve consensus on the analysis.
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AmAdor County offiCe of eduCAtion
DISTRICT OVERVIEW
District Overview
Located in the Sierra Nevada foothills approximately 45 miles southeast of Sacramento, the Amador County Office of Education
and the Amador County Unified School District serve the students of Amador County. The county covers 593 square miles and
includes the cities of Jackson, Ione, Sutter Creek, and several other small, rural communities. The district and the county office serve
approximately 4,100 students in two comprehensive high schools, one alternative high school, two middle schools, six elementary
schools, one charter school, and one county community school. In addition, state preschool, career technical education, independent
study, adult education, and special education programs are provided. Amador is one of only seven single-district counties in the state.
The district and the county office are governed by a single five-member board of trustees, and a single superintendent served both
agencies until January 2019, when a newly elected county superintendent took office. The agencies also share business services,
human resources, and other administrative and support staff.
The county office has experienced deficit spending in the unrestricted general fund over the 2016-17 and 2017-18 fiscal years.
The 2017-18 unaudited actuals report indicated that the county office had not met the required minimum reserve for economic
uncertainties. The district and the county office each filed a qualified certification for their 2018-19 first interim financial reports. The
CDE concurred with the district’s qualified certification; however, it changed the county office’s certification from qualified to negative.
The district filed a qualified certification and the county office filed a negative certification for their 2018-19 second interim reports.
Under the 2018-19 State Budget Act, because the county office had a negative 2018-19 second interim report certification, FCMAT
performed an FHRA to determine the level of risk for insolvency. Because the district’s and the county office’s finances are so
intertwined, FCMAT performed an FHRA for the district as well. This report is a result of the FHRA analysis for the COE. Another
FHRA analysis report will be issued for the district.
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FCMAT FISCAL HEALTH RISK ANALYSIS
Fiscal Health Risk Analysis
For K-12 Local Educational Agencies
The Fiscal Crisis and Management Assistance Team (FCMAT) has developed the Fiscal Health Risk Analysis (FHRA) as a tool to help
evaluate a school district’s fiscal health and risk of insolvency in the current and two subsequent fiscal years.
The FHRA includes 20 sections, each containing specific questions. Each section and specific question is included based on
FCMAT’s work since the inception of AB 1200; they are the common indicators of risk or potential insolvency for districts that have
neared insolvency and needed assistance from outside agencies. Each section of this analysis is critical to an organization, and
lack of attention to these critical areas will eventually lead to financial insolvency and loss of local control. The analysis focuses on
essential functions and processes to determine the level of risk at the time of fieldwork; however, it is not a detailed review of all
systems and finances, nor does it consider subsequent events.
The greater the number of “no” answers to the questions in the analysis, the higher the score, which points to a greater potential
risk of insolvency or fiscal issues for the district. Not all sections in the analysis and not all questions within each section carry equal
weight; some areas carry higher risk and thus count more heavily toward or against a district’s fiscal stability percentage. For this tool,
100% is the highest total risk that can be scored. A “yes” or “n/a” answer is assigned a score of 0, so the risk percentage increases
only with a “no” answer.
To help the district, narratives are included for responses that are marked as “no” so the district can better understand the reason for
the response and actions that may be needed to obtain a “yes” answer.
Identifying issues early is the key 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 and overall solvency. A district should consider completing the
FHRA annually to assess its own fiscal health risk and progress over time.
District or LEA Name: Amador County Office of Education
Dates of Fieldwork: May 23-24, 2019
1. Annual Independent Audit Report Yes No N/A
1.1 Can the district correct prior year audit findings without affecting its fiscal health
✓ ☐ ☐
(e.g., material apportionment or internal control findings)?
1.2 Has the independent audit report for the most recent fiscal year been completed
and presented to the board within the statutory timeline? (Extensions of the timeline
✓ ☐ ☐
granted by the State Controller’s Office should be explained.)
✓ ☐ ☐
1.3 Was the district’s most recent independent audit report free of material findings?
☐ ✓ ☐
1.4 Has the district corrected all reported audit findings from the current and past two audits?
The 2015-16 audit report contained a finding related to ongoing deficit spending and decline
in available reserves. The county office has not corrected its pattern of deficit spending.
☐ ✓ ☐
1.5 Has the district had the same audit firm for at least three years?
Stephen Roatch Accountancy Corporation completed the 2015-16 audit and Crowe
Horwath LLP completed the 2016-17 and 2017-18 audits.
2. Budget Development and Adoption Yes No N/A
2.1 Does the district develop and use written budget assumptions and multiyear projections
that are reasonable, are aligned with the county office of education instructions, and have
☐ ✓ ☐
been clearly articulated?
The county office did not provide written budget assumptions to FCMAT and detailed
assumptions were not included in the 2018-19 adopted budget board presentations.
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FCMAT FISCAL HEALTH RISK ANALYSIS
2.2 Does the district use a budget development method other than a prior-year rollover budget, and if so, does that
method include tasks such as review of prior year estimated actuals by major object code and removal of one-time
✓ ☐ ☐
revenues and expenses?
✓ ☐ ☐
2.3 Does the district use position control data for budget development?
☐ ✓ ☐
2.4 Does the district calculate the Local Control Funding Formula (LCFF) revenue correctly?
The county office did not provide an LCFF calculation to FCMAT for the county office or the
charter school.
2.5 Has the district’s budget been approved unconditionally by its county office of
☐ ✓ ☐
education in the current and two prior fiscal years?
The county office did not provide documentation requested to support a response to this
question.
2.6 Does the budget development process include input from staff, administrators, the
✓ ☐ ☐
governing board, the community, and the budget advisory committee (if there is one)?
☐ ✓ ☐
2.7 Does the district budget and expend restricted funds before unrestricted funds?
The county office’s restricted program carryover amounts and restricted ending fund
balances have increased from 2015-16 to 2016-17 and then decreased in 2017-18, indicating
that the COE is not strategically spending restricted funds before unrestricted funds.
2.8 Have the LCAP and the budget been adopted within statutory timelines established by
Education Code sections 42103 and 52062 and filed with the county superintendent
of schools no later than five days after adoption or by July 1, whichever occurs first,
✓ ☐ ☐
for the current and past two fiscal years?
✓ ☐ ☐
2.9 Has the district refrained from including carryover funds in its adopted budget?
2.10 Other than objects in the 5700s and 7300s and appropriate abatements in accordance
with the California School Accounting Manual, does the district avoid using negative
✓ ☐ ☐
or contra expenditure accounts?
2.11 Does the district have a documented policy and/or procedure for evaluating the proposed
acceptance of grants and other types of restricted funds and the potential multiyear impact
☐ ✓ ☐
on the district’s unrestricted fund?
The county office did not provide evidence that grants are evaluated for their potential
multiyear impact on the county office’s unrestricted general fund prior to acceptance.
2.12 Does the district adhere to a budget calendar that includes statutory due dates,
major budget development tasks and deadlines, and the staff member/department
☐ ✓ ☐
responsible for completing them?
The county office does not have a budget calendar that includes statutory due dates,
major budget development tasks and deadlines, and the staff member/department
responsible for completing them.
3. Budget Monitoring and Updates Yes No N/A
☐ ✓ ☐
3.1 Are actual revenues and expenses consistent with the most current budget?
Several expenditure categories, including administrator salaries, classified support
salaries, retiree benefits, other benefits, supplies, services, and communications are
underbudgeted and revenues may be overbudgeted.
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FCMAT FISCAL HEALTH RISK ANALYSIS
3.2 Are budget revisions posted in the financial system at each interim report,
✓ ☐ ☐
at a minimum?
3.3 Are clearly written and articulated budget assumptions that support budget revisions
☐ ✓ ☐
communicated to the board at each interim report, at a minimum?
The county office does not include budget assumptions with interim report board
presentations.
3.4 Following board approval of collective bargaining agreements, does the district make
necessary budget revisions in the financial system to reflect settlement costs
☐ ✓ ☐
before the next financial reporting period?
Budget revisions for 2017-18 first interim following settlement do not align with
calculated costs from disclosure documents.
3.5 Does the district provide a complete response to the variances identified in the
☐ ✓ ☐
criteria and standards?
The county office provided incomplete responses to the variances identified in the criteria
and standards as follows:
2018-19 Adopted Budget
Not Met Criteria District Response Issue
4B. Other State Revenues Other state revenue continues to exceed past pro- Response addresses an increase in other state revenue; however, a de-
Decrease of 7.83% in 2018-19. jections. crease is projected in 2018-19.
4B. Books and Supplies 2017-18 carryover and one-time expenses removed Response addresses the decrease in budgeted expenditures for 2018-19
Decrease of 38.11% in 2018-19. for the budget year. but does not address the decrease in 2019-20.
Decrease of 11.69% in 2019-20.
S8. Status of Labor Agreements Response not complete. The response indicated status of negotiations but did not provide any of
the additional detail required in the section.
2018-19 First Interim
Not Met Criteria District Response Issue
4A. Books and Supplies 2017-18 carryover amounts included in first interim Response addresses the increase in 2018-19 but does not address
Increase of 107% in 2018-19; increase of 64.7% in projection. the increases in 2019-20 and 2020-21.
2019-20; increase of 86.5% in 2020-21.
4A. Services and Other Operating Expenditures 2017-18 carryover amounts included in first interim Response addresses the increase in 2018-19 but does not address
Increase of 32.3% in 2018-19; 27.3% in 2019-20; projection. the increases in 2019-20 and 2020-21.
and 31.2% in 2020-21.
S8. Status of Labor Agreements Response not complete. The response indicated status of negotiations but did not provide
any of the additional detail required in the section.
2018-19 Second Interim
Not Met Criteria District Response Issue
S8. Status of Labor Agreements Response not complete. The response indicated status of negotiations but did not
provide any of the additional detail required in the section.
3.6 Has the district addressed any deficiencies the county office of education has
☐ ✓ ☐
identified in its oversight letters in the current and prior two fiscal years?
The county office did not provide the requested documentation to support whether
deficiencies were identified and addressed.
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FCMAT FISCAL HEALTH RISK ANALYSIS
3.7 Does the district prohibit processing of requisitions or purchase orders when the
☐ ✓ ☐
budget is insufficient to support the expenditure?
County office staff reported that there is a hard stop in the financial system to prevent
processing requisitions or purchase orders when the budget is insufficient to support
the expenditure. However, staff indicated that they are able to override the hard stop and
complete the transaction. As of the 2018-19 second interim reporting period, there were
168 account lines with negative balances totaling -$747,328.
☐ ✓ ☐
3.8 Does the district encumber and adjust encumbrances for salaries and benefits?
The county office encumbers and adjusts encumbrances for salaries and benefits for
regular positions; however, salaries and benefits for substitute, overtime, and extra time
are not encumbered.
3.9 Are all balance sheet accounts in the general ledger reconciled at each interim report,
☐ ✓ ☐
at a minimum?
FCMAT reviewed the general ledger reports for 2017-18 and 2018-19 through January 31,
2019 and found that several payroll and benefit accounts in multiple funds and resources
have not been reconciled.
3.10 Have the interim reports and the unaudited actuals been adopted and filed
with the county superintendent of schools within statutory timelines established
✓ ☐ ☐
by Education Code?
4. Cash Management Yes No N/A
4.1 Are accounts held by the county treasurer reconciled with the district’s and
✓ ☐ ☐
county office of education’s reports monthly?
4.2 Does the district reconcile all bank (cash and investment) accounts with bank statements
☐ ✓ ☐
monthly?
The county office did not provide supporting documentation for the reconciliation of all
accounts.
4.3 Does the district forecast its cash receipts and disbursements at least 18 months out,
updating the actuals and reconciling the remaining months to the budget monthly
☐ ✓ ☐
to ensure cash flow needs are known?
The county office prepares cash flow projections covering 12 months out.
4.4 Does the district have a reasonable plan to address cash flow needs during the current
✓ ☐ ☐
fiscal year?
4.5 Does the district have sufficient cash resources in its other funds to support its current
✓ ☐ ☐
and projected obligations in those funds?
4.6 If interfund borrowing is occurring, does the district comply with Education Code
✓ ☐ ☐
section 42603?
4.7 If the district is managing cash in any funds through external borrowing, has the district
✓ ☐ ☐
set aside funds for repayment attributable to the same year the funds were borrowed?
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FCMAT FISCAL HEALTH RISK ANALYSIS
5. Charter Schools Yes No N/A
✓ ☐ ☐
5.1 Are all charters authorized by the district going concerns?
5.2 If the district has any charters in fiscal distress, has the district performed its statutory
fiscal and operational oversight functions, including the issuance of formal communication
☐ ✓ ☐
to the charter, such as Notices of Violation?
The county office provided no evidence of oversight of the Shenandoah Valley Charter
School; however, the school was closed on June 30, 2019.
5.3 Has the district fulfilled and does it have evidence showing fulfillment of its oversight
☐ ✓ ☐
responsibilities in accordance with Education Code section 47604.32?
The county office provided no evidence of oversight of the Shenandoah Valley Charter
School; however, the school was closed on June 30, 2019.
5.4 Does the district have a board policy or other written document(s) regarding charter
☐ ✓ ☐
oversight?
The county office provided no evidence of a policy or other documentation regarding
charter oversight procedures.
5.5 Has the district identified specific employees in its various departments (e.g., human
resources, business, instructional, and others) to be responsible for oversight of all
☐ ✓ ☐
approved charter schools?
The county office provided no evidence of oversight of the Shenandoah Valley Charter
School; however, the school was closed on June 30, 2019.
6. Collective Bargaining Agreements Yes No N/A
✓ ☐ ☐
6.1 Has the district settled with all its bargaining units for the prior two fiscal year(s)?
☐ ✓ ☐
6.2 Has the district settled with all its bargaining units for the current year?
For the 2018-19 fiscal year: Tentative agreements with the classified unit are currently
under review. No formal negotiations have occurred with the certificated bargaining unit.
6.3 Does the district accurately quantify the effects of collective bargaining agreements
☐ ✓ ☐
and include them in its budget and multiyear projections?
Budget revisions for 2017-18 first interim following settlement do not align with calculated
costs from disclosure documents.
6.4 Did the district conduct a presettlement analysis and identify related costs or savings,
if any (e.g., statutory benefits, and step and column salary increase), for the current and
subsequent years, and did it identify ongoing revenue sources or expenditure reductions
☐ ✓ ☐
to support the agreement?
The 2017-18 bargaining agreement disclosure documents state that the cost of salary
schedule increases will be paid for with ending fund balance, a one-time source of funds.
6.5 In the current and prior two fiscal years, has the district settled the total cost of the
☐ ✓ ☐
bargaining agreements at or under the funded cost of living adjustment (COLA)?
The 2017-18 statutory COLA was 1.56%.
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FCMAT FISCAL HEALTH RISK ANALYSIS
For the special educators bargaining unit, the county office’s AB 1200 disclosure identifies
settling at 1.5% salary increase and a 5.24% increase in health/welfare plans for a total
increase of 1.88%. However, the settlement was actually a 3% salary increase effective
midyear (1/1/18). The health/welfare increase was effective retroactively to 7/1/17.
For the classified bargaining unit, the county office’s AB 1200 disclosure identifies settling
at the same 1.5% salary and 5.24% health/welfare increase; however, this is calculated
at a total increase of 1.98%. Again, the increase in salary was applied as a midyear 3%
increase.
Unrepresented employees received the same increases to salary and health/welfare with
the total increase calculated at 1.92%.
While the midyear application of salary increases has a 1.5% effect on the budget, the
impact on future budgets will be the full 3%.
6.6 If settlements have not been reached in the past two years, has the district identified
☐ ☐ ✓
resources to cover the estimated costs of settlements?
6.7 Did the district comply with public disclosure requirements under Government Code
✓ ☐ ☐
sections 3540.2 and 3547.5 and Education Code section 42142?
6.8 Did the superintendent and CBO certify the public disclosure of collective bargaining
✓ ☐ ☐
agreement prior to board approval?
6.9 Is the governing board’s action consistent with the superintendent’s and CBO’s
✓ ☐ ☐
certification?
7. Contributions and Transfers Yes No N/A
7.1 Does the district have a board-approved plan to eliminate, reduce, or control any
contributions/transfers from the unrestricted general fund to other restricted
☐ ✓ ☐
programs and funds?
The county office makes contributions from the unrestricted general fund to the routine
restricted maintenance account (RRMA), special education, and to a locally restricted
resource. The county office’s 2018-19 second interim report projects contributions to
increase in the two subsequent years. The county office contribution to the RRMA is
greater than the required amount. There is no board-approved plan to eliminate, reduce,
or control any contributions/transfers.
7.2 If the district has deficit spending in funds other than the general fund, has it included
in its multiyear projection any transfers from the unrestricted general fund to cover any
☐ ✓ ☐
projected negative fund balance?
The 2018-19 county office second interim report projects deficit spending of $139,196 in
Fund 12 in the 2018-19 fiscal year. If this level of deficit spending continues in the 2019-20
fiscal year, the fund balance will be negative. The county office has not included transfers
from the unrestricted general fund to Fund 12 in its multiyear projection to cover any
negative fund balance.
7.3 If any contributions/transfers were required for restricted programs and/or other funds
in either of the prior two fiscal years, and there is a need in the current year, did the district
✓ ☐ ☐
budget for them at reasonable levels?
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FCMAT FISCAL HEALTH RISK ANALYSIS
8. Deficit Spending Yes No N/A
☐ ✓ ☐
8.1 Is the district avoiding deficit spending in the current fiscal year?
The county office’s 2018-19 second interim report projects a deficit of $642,910 in its
combined unrestricted and restricted resources.
☐ ✓ ☐
8.2 Is the district projected to avoid deficit spending in both of the two subsequent fiscal years?
The county office’s 2018-19 second interim report projects a deficit of $311,432 in 2019-20
and a deficit of $450,754 in 2020-21 in its combined unrestricted and restricted resources.
8.3 If the district has deficit spending in the current or two subsequent fiscal years, has the
☐ ✓ ☐
board approved and implemented a plan to reduce and/or eliminate deficit spending?
The board has not approved and implemented a plan to reduce and/or eliminate deficit
spending.
☐ ✓ ☐
8.4 Has the district decreased deficit spending over the past two fiscal years?
The 2016-17 unaudited actuals report showed an unrestricted general fund deficit
of $136,737; the 2017-18 unaudited actuals report showed an unrestricted deficit of
$550,950; and the 2018-19 second interim report projects an unrestricted deficit of
$188,952. The county office decreased deficit spending from the 2017-18 fiscal year to
2018-19, but deficit spending in 2018-19 increased over the 2016-17 fiscal year.
9. Employee Benefits Yes No N/A
9.1 Has the district completed an actuarial valuation in accordance with Governmental
Accounting Standards Board (GASB) requirements to determine its unfunded liability
✓ ☐ ☐
for other post-employment benefits (OPEB)?
✓ ☐ ☐
9.2 Does the district have a plan to fund its liabilities for retiree health and welfare benefits?
9.3 Has the district followed a policy or collectively bargained agreement to limit accrued
✓ ☐ ☐
vacation balances?
9.4 Within the last five years, has the district conducted a verification and determination of
✓ ☐ ☐
eligibility for benefits for all active and retired employees and dependents?
✓ ☐ ☐
9.5 Does the district track, reconcile and report employees’ compensated leave balances?
10. Enrollment and Attendance Yes No N/A
10.1 Has the district’s enrollment been increasing or remained stable for the current and two
✓ ☐ ☐
prior years?
10.2 Does the district monitor and analyze enrollment and average daily attendance (ADA)
✓ ☐ ☐
data at least monthly through the second attendance reporting period (P2)?
✓ ☐ ☐
10.3 Does the district track historical enrollment and ADA data to predict future trends?
10.4 Do school sites maintain an accurate record of daily enrollment and attendance that
✓ ☐ ☐
is reconciled monthly at the site and district levels?
10.5 Has the district certified its California Longitudinal Pupil Achievement Data System
(CALPADS) data by the required deadlines (Fall 1, Fall 2, EOY) for the current and two
✓ ☐ ☐
prior years?
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10.6 Are the district’s enrollment projections and assumptions based on historical data,
✓ ☐ ☐
industry-standard methods, and other reasonable considerations?
10.7 Do all applicable sites and departments review and verify their respective CALPADS
✓ ☐ ☐
data and correct it as needed before the report submission deadlines?
☐ ☐ ✓
10.8 Has the district planned for enrollment losses to charter schools?
10.9 Does the district follow established board policy to limit outgoing interdistrict transfers
☐ ☐ ✓
and ensure that only students meeting the required qualifications are approved?
10.10 Does the district meet the average class enrollment for each school site of no more
than 24-to-1 class size ratio in TK-3 classes or does it have an alternative collectively
☐ ☐ ✓
bargained agreement?
11. Facilities Yes No N/A
11.1 If the district participates in the state’s School Facilities Program, has it met the 3%
✓ ☐ ☐
Routine Restricted Maintenance Account requirement?
11.2 Does the district have sufficient and available capital outlay and/or bond funds to cover
✓ ☐ ☐
all contracted obligations for capital facilities projects?
✓ ☐ ☐
11.3 Does the district properly track and account for facility-related projects?
11.4 Does the district use its facilities fully in accordance with the Office of Public School
☐ ☐ ✓
Construction’s loading standards?
11.5 Does the district include facility needs (maintenance, repair and operating requirements)
✓ ☐ ☐
when adopting a budget?
11.6 Has the district met the facilities inspection requirements of the Williams Act and
☐ ✓ ☐
resolved any outstanding issues?
No evidence was provided to verify that Williams inspections were completed.
11.7 If the district passed a Proposition 39 general obligation bond, has it met the
☐ ☐ ✓
requirements for audit, reporting, and a citizens’ bond oversight committee?
☐ ✓ ☐
11.8 Does the district have an up-to-date long-range facilities master plan?
The facilities master plan was last completed and updated in 2013. The process has just
begun to review and update the plan.
12. Fund Balance and Reserve for Economic Uncertainty Yes No N/A
12.1 Is the district able to maintain the minimum reserve for economic uncertainty in the
☐ ✓ ☐
current year (including funds 01 and 17) as defined by criteria and standards?
The county office’s 2018-19 second interim report projects a reserve for economic
uncertainties of -0.82%. The required minimum reserve for the county office is 4%. The
required reserve amount is $532,537 and the projected reserve is negative $109,624. The
county office falls short of the reserve requirement by $642,161.
12.2 Is the district able to maintain the minimum reserve for economic uncertainty in the
☐ ✓ ☐
two subsequent years?
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The county office’s 2018-19 second interim report projects a reserve of -3.25% in 2019-20
and -6.56% in 2020-21. The required minimum reserve for the county office is 4%. The
required reserve for 2019-20 is $518,328 and the county office’s available reserve is
-$421,057, a shortfall of $939,385. The required reserve for 2020-21 is $531,268 and the
county office’s available reserve is -$871,810, a shortfall of $1,403,078.
12.3 If the district is not able to maintain the minimum reserve for economic uncertainty,
does the district’s multiyear financial projection include a board-approved plan
☐ ✓ ☐
to restore the reserve?
The county office board has not yet approved a plan to restore the reserve.
12.4 Is the district’s projected unrestricted fund balance stable or increasing in the two
☐ ✓ ☐
subsequent fiscal years?
The projected unrestricted fund balance is decreasing from -$109,621 in 2018-19 to
-$421,057 in 2019-20, and to -$871,810 in 2020-21.
12.5 If the district has unfunded or contingent liabilities or one-time costs, does the
unrestricted fund balance include any assigned or committed reserves above
☐ ☐ ✓
the recommended reserve level?
13. General Fund - Current Year Yes No N/A
☐ ✓ ☐
13.1 Does the district ensure that one-time revenues do not pay for ongoing expenditures?
The county office did not provide evidence of a process to ensure one-time revenues
are not committed to ongoing expenditures. The county office’s 2015-16 audit report
contained a finding regarding deficit spending and the use of one-time funds for ongoing
expenditures and noted a similar finding from 2014-15. The 2017-18 bargaining agreement
disclosure documents state that the cost of ongoing salary schedule increases will be paid
for with ending fund balance, a one-time source of funds.
13.2 Is the percentage of the district’s general fund unrestricted budget that is allocated
☐ ☐ ✓
to salaries and benefits at or below the statewide average for the current year?
13.3 Is the percentage of the district’s general fund unrestricted budget that is allocated
☐ ☐ ✓
to salaries and benefits at or below the statewide average for the two prior years?
13.4 If the district has received any uniform complaints or legal challenges regarding
local use of supplemental and concentration grant funding in the current or two prior years,
☐ ☐ ✓
is the district addressing the complaint(s)?
13.5 Does the district either ensure that restricted dollars are sufficient to pay for staff
assigned to restricted programs or have a plan to fund these positions with
✓ ☐ ☐
unrestricted funds?
13.6 Is the district using its restricted dollars fully by expending allocations for restricted
✓ ☐ ☐
programs within the required time?
13.7 Does the district consistently account for all program costs, including the maximum
☐ ✓ ☐
allowable indirect costs, for each restricted resource?
The county office’s 2017-18 unaudited actuals report indicates that the maximum allowable
indirect cost was not charged to the following restricted resources: 3385, 6500, 6520, and
7338. The 2018-19 adopted budget indicates indirect costs are not budgeted at the full
maximum allowable rate in the following restricted resources: 3310, 3385, and 6500.
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14. Information Systems and Data Management Yes No N/A
✓ ☐ ☐
14.1 Does the district use an integrated financial and human resources system?
14.2 Can the system(s) provide key financial and related data, including personnel
✓ ☐ ☐
information, to help the district make informed decisions?
14.3 Has the district accurately identified students who are eligible for free or
reduced-price meals, English learners, and foster youth, in accordance with the
✓ ☐ ☐
LCFF and its LCAP?
☐ ✓ ☐
14.4 Is the district using the same financial system as its county office of education?
The COE is on a financial system different and separate from its oversight agency, the
California Department of Education (CDE).
14.5 If the district is using a separate financial system from its county office of education
and is not fiscally independent, is there an automated interface with the financial
☐ ✓ ☐
system used by the county office of education?
The COE is on a financial system different and separate from its oversight agency, the
CDE. Further, there is no automated interface with the financial system used by the CDE.
14.6 If the district is using a separate financial system from its county office of education,
has the district provided the county office with direct access so the county office
☐ ✓ ☐
can provide oversight, review and assistance?
The COE is on a financial system different and separate from its oversight agency, the
CDE. Further, no direct access is provided to the CDE to allow for oversight, review and
assistance.
15. Internal Controls and Fraud Prevention Yes No N/A
15.1 Does the district have controls that limit access to its financial system and include
✓ ☐ ☐
multiple levels of authorizations?
15.2 Are the district’s financial system’s access and authorization controls reviewed and
updated upon employment actions (e.g., resignations, terminations, promotions or
✓ ☐ ☐
demotions) and at least annually?
15.3 Does the district ensure that duties in the following areas are segregated, and that they
are supervised and monitored?
✓ ☐ ☐
• Accounts payable (AP)
✓ ☐ ☐
• Accounts receivable (AR)
✓ ☐ ☐
• Purchasing and contracts
✓ ☐ ☐
• Payroll
✓ ☐ ☐
• Human resources
☐ ☐ ✓
• Associated student body (ASB)
✓ ☐ ☐
• Warehouse and receiving
15.4 Are beginning balances for the new fiscal year posted and reconciled with the
✓ ☐ ☐
ending balances for each fund from the prior fiscal year?
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☐ ✓ ☐
15.5 Does the district review and clear prior year accruals by first interim?
In 2017-18, prior year accruals were cleared by year end. As of 2018-19 second interim,
accruals have not been cleared and balances remain in multiple funds and resources.
15.6 Does the district reconcile all suspense accounts, including salaries and benefits, at
☐ ✓ ☐
least at each interim reporting period and at the close of the fiscal year?
A review of the general ledger reports for 2017-18 and 2018-19 through January 31,
2019 indicates that salary and benefit suspense accounts in multiple funds and resources
have not been reconciled.
15.7 Has the district reconciled and closed the general ledger (books) within the time
✓ ☐ ☐
prescribed by the county office of education?
✓ ☐ ☐
15.8 Does the district have processes and procedures to discourage and detect fraud?
15.9 Does the district maintain an independent fraud reporting hotline or other
☐ ✓ ☐
reporting service(s)?
No independent and/or anonymous reporting process is in place.
15.10 Does the district have a process for collecting and following up on reports of
☐ ✓ ☐
possible fraud?
No formal process is in place to follow up on questionable activities
☐ ✓ ☐
15.11 Does the district have an internal audit process?
Neither the district nor the county office has an internal audit process. A system of internal
controls and segregation of duties limits the exposure to errors, omissions and fraud.
16. Leadership and Stability Yes No N/A
16.1 Does the district have a chief business official who has been with the district
☐ ✓ ☐
more than two years?
The current CBO started in the position in July 2017. Having no prior CBO experience, the
CBO has enrolled in professional development programs and trainings.
16.2 Does the district have a superintendent who has been with the district more
☐ ✓ ☐
than two years?
The county superintendent was elected into the position effective January 2019. Prior
experience reportedly included administrative roles in special education, K-12 school sites,
and higher education; auditor for the Department of Defense; and five years as a special
education teacher.
16.3 Does the superintendent meet on a scheduled and regular basis with all members of the
☐ ✓ ☐
administrative cabinet?
Due to schedule conflicts with the superintendent also holding a teaching position and
a shared administration with the county school district, meetings with staff are random,
impromptu and ad hoc in nature.
16.4 Is training on financial management and budget provided to site and department
✓ ☐ ☐
administrators who are responsible for budget management?
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16.5 Does the governing board adopt and revise policies and administrative regulations
✓ ☐ ☐
annually?
16.6 Are newly adopted or revised policies and administrative regulations implemented,
✓ ☐ ☐
communicated and available to staff?
16.7 Is training on the budget and governance provided to board members at least
✓ ☐ ☐
every two years?
☐ ☐ ✓
16.8 Is the superintendent’s evaluation performed according to the terms of the contract?
17. Multiyear Projections Yes No N/A
17.1 Has the district developed multiyear projections that include detailed assumptions
☐ ✓ ☐
aligned with industry standards?
The county office did not provide detailed assumptions to FCMAT and detailed
assumptions were not included in the 2018-19 first or second board presentations.
17.2 To help calculate its multiyear projections, did the district prepare an LCFF
☐ ✓ ☐
calculation with multiyear considerations?
The county office did not provide an LCFF calculation.
☐ ✓ ☐
17.3 Does the district use its most current multiyear projection in making financial decisions?
The county office did not provide evidence that the most current multiyear projection is
used in making financial decisions. The 2018-19 second interim multiyear projection shows
ongoing deficit spending, but the board has not yet implemented a plan to eliminate
deficit spending. Although the multiyear projection shows ongoing deficit spending, the
superintendent came to agreement with the bargaining unit for salary increases; however,
the fiscal agent assigned by the CDE rescinded the agreement.
17.4 If the district utilizes a broad adjustment category in its multiyear projection such as line B10,
Other Adjustments, in the SACS form MYP/MYPI, is there a detailed list of what is included
☐ ☐ ✓
in the adjustment amount?
18. Non-Voter-Approved Debt and Risk Management Yes No N/A
18.1 Are the sources of repayment for non-voter-approved debt {such as certificates
of participation (COPs), bridge financing, bond anticipation notes (BANS), revenue
anticipation notes (RANS) and others}, stable, predictable, and other than unrestricted
☐ ✓ ☐
general fund?
As of July 2019, the COE has a capital lease balance (principal and interest) of $621,041
for which payments are budgeted through 2027 out of the unrestricted general fund.
18.2 If the district has issued non-voter-approved debt, has its credit rating remained
✓ ☐ ☐
stable or improved in the current or prior two fiscal years?
18.3 If the district is self-insured, does the district have a recent (every two years) actuarial
☐ ☐ ✓
study and a plan to pay for any unfunded liabilities?
18.4 If the district has non-voter-approved debt (such as COPs, bridge financing,
BANS, RANS and others), is the total of annual debt service payments no greater
✓ ☐ ☐
than 2% of the district’s unrestricted general fund revenues?
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19. Position Control Yes No N/A
☐ ✓ ☐
19.1 Does the district account for all positions and costs?
The county office does not use the position control module within its financial system to
maintain salary and benefit cost data. Instead, that data is maintained on a spreadsheet.
Costs for substitute, overtime, and extra duty are not accounted for.
☐ ✓ ☐
19.2 Does the district analyze and adjust staffing based on staffing ratios and enrollment?
The county office did not provide documentation or evidence that it analyzes and adjusts
staffing based on staffing ratios and enrollment.
19.3 Does the district reconcile budget, payroll and position control regularly, meaning at
✓ ☐ ☐
least at budget adoption and interim reporting periods?
19.4 Does the district identify a budget source for each new position before the position
☐ ✓ ☐
is authorized by the governing board?
The county office did not provide evidence or documentation to substantiate that it
identifies a budget source for each new position before the position is authorized by the
governing board.
19.5 Does the governing board approve all new positions and extra assignments (e.g., stipends)
☐ ✓ ☐
before positions are posted?
The county office did not provide evidence or documentation to substantiate that the
governing board approves all new positions and extra assignments before positions are
posted.
19.6 Has the district adopted staffing ratios for certificated, classified and administrative positions
☐ ✓ ☐
in the past three years, and is the district following those ratios?
The county office has not adopted staffing ratios for classified or administrative positions.
19.7 Do managers and staff responsible for the district’s human resources, payroll and
✓ ☐ ☐
budget functions meet regularly to discuss issues and improve processes?
20. Special Education Yes No N/A
20.1 Does the district monitor, analyze and adjust staffing ratios, class sizes and caseload sizes
☐ ✓ ☐
to align with statutory requirements and industry standards?
Teacher and aide staffing ratios and class sizes appear to be monitored and adjusted;
however, the class load document was undated and identified staffing at varying
caseloads. The document showed caseloads ranging from six to 18 for special day
classes (SDC), from 19 to 33 for resource specialist program (RSP)/SDC, from 42 to 54
for occupational therapists, and from 42 to 53 for speech-language pathologists. As only
one, undated staffing/caseload document was provided, FCMAT was unable to compare
staffing from period to period and determine if or when adjustments are made.
20.2 Does the district access available funding sources for costs related to special
✓ ☐ ☐
education (e.g., excess cost pool, legal fees, mental health)?
20.3 Does the district use appropriate tools to help it make informed decisions about whether
to add services (e.g., special circumstance instructional assistance process and form,
✓ ☐ ☐
transportation decision tree)?
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FCMAT FISCAL HEALTH RISK ANALYSIS
20.4 Does the district budget and account correctly for all costs related to special education
(e.g., transportation, due process hearings, indirect costs, nonpublic schools and/or
☐ ✓ ☐
nonpublic agencies)?
Financial records indicate that variations and inconsistencies occurred in position
funding whereas several positions such as occupational therapists, psychologists and
administration would change in and out of special education resources from one year to
the next.
The county office’s unaudited actuals report indicates that resources 3310 and 6500
were not charged full indirect costs for the 2016-17. The county office’s 2017-18 unaudited
actuals report indicates that the maximum allowable indirect cost was not charged to
the following restricted resources: 3385, 6500, 6520, and 7338. The 2018-19 adopted
budget indicates indirect costs are not budgeted at the full maximum allowable rate in the
following restricted resources: 3310, 3385, and 6500.
20.5 Is the district’s contribution rate to special education at or below the statewide
☐ ☐ ✓
average contribution rate?
20.6 Is the district’s rate of identification of students as eligible for special education
☐ ☐ ✓
comparable with countywide and statewide average rates?
20.7 Does the district analyze whether it will meet the maintenance of effort
✓ ☐ ☐
requirement at each interim reporting period?
Total Risk Score, All Areas 46.4%
Key to Risk Score
High Risk: 40% or more
Moderate Risk: 25-39%
Low Risk: 24% and lower
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FCMAT FISCAL HEALTH RISK ANALYSIS
Summary
County offices of education (COEs), inclusive of both the county board of education and the county superintendent
of schools, have the authority and/or responsibility to provide services to the district(s) in their county. The COE has
the duty to administer county programs, including county community and juvenile court schools, and may operate
special education classes, establish county charter schools, and provide other services to districts. In single-district
counties, such as Amador, the fiscal resources and staffs to perform activities of the COE are much entwined with
the district. Nonetheless, the Amador County Office of Education and the Amador County Unified School District are
separate entities and responsible for their own governance and fiscal solvency.
The overall fiscal health risk score for Amador County Office of Education places the COE at high risk of insolvency.
The score is in alignment with expectations as the county office 2018-19 second interim certification was negative.
Areas of concern attributed to fiscal risk are identified throughout the FHRA; however, the most impactful and
concerning of the findings are as follows:
• The county office’s 2018-19 second interim report projects significant deficit spending in the current year, and the deficit is
forecasted to continue in the out years. This follows two years of deficit spending in 2016-17 and 2017-18. As a result of the
deficit spending and failure to respond, the COE is unable to maintain its required reserve for economic uncertainties and
projects an increasingly negative reserve in the future fiscal years.
• Structure and prioritization practices are key to good budget development and monitoring. FCMAT found that the COE does not
adhere to a budget development calendar, does not produce detailed assumptions when developing its budget, and does not
evaluate the impact of accepting grants and other restricted funds. In addition, if these types of funds are accepted, the COE
does not prioritize the use of the restricted funds over unrestricted funds.
• Once the budget is developed, the COE must continue to monitor and update it to ensure the budget aligns with expected
revenues and that the expenditures are controlled within the budgeted allocations. FCMAT found several expenditure categories
out of alignment as budget adjustments were not identified, explained and made to the adopted budget; nor was the budget
used to limit expenditures.
• The budgeting issues continue in the multiyear projections. When developing the out year projections, no detailed assumptions
were identified, approved and recorded. Therefore, it appears the long-term effects of current decisions and trends are not fully
considered.
• At the time of this review, Amador COE had not finalized agreements with its bargaining units for 2018-19. In reviewing prior
settlements, FCMAT found no evidence that the COE had conducted a presettlement analysis of the effects of bargaining, nor
did it make accurate budget adjustments after the agreements were settled. The disclosure for the 2017-18 agreement identified
a total compensation increase higher than the funded COLA for the year, and the ongoing impact will be twice the funded COLA
for the year. Having accurate information as to the effects and impact of agreements is necessary for prudent fiscal planning.
• In addition to staff compensation, it is crucial for the county office to control staffing levels. FCMAT was provided no evidence
that staffing control systems are in place to identify appropriate staffing ratios, to account for positions and to adjust staffing
levels based on student enrollment and need.
• An increased risk of fiscal insolvency is also found when the overseeing agency does not have clear and ready access to review
the financial system. This situation is found at the Amador COE. The COE and the CDE do not share financial systems and there
is no ability for the CDE to interface with or access the county’s financial system.
The county office must take immediate measures to restore fiscal solvency. To do so, the county board and county
superintendent must address their deficit spending and create a plan to balance the budget and restore the fiscal
reserve. The county office must ensure that systems are in place to provide accurate and timely information to make
informed decisions and to ensure fiscal controls are implemented. Failure to act quickly and decisively may result
in fiscal insolvency; the consequences of becoming insolvent are severe and result in the loss of local control and
governance.
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AmAdor County offiCe of eduCAtion