Chawanakee Unified School District Report

Fiscal Health Risk Analysis August 7, 2025 Chawanakee Unified School District Michael H. Fine Chief Executive Officer August 7, 2025 Jamie Nino, Superintendent Chawanakee Unified School District 26065 Outback Industrial Way O’Neals, CA 93645 Dear Superintendent Nino: In May 2025, the Chawanakee Unified School District and the Fiscal Crisis and Management Assistance Team (FCMAT) entered into an agreement for FCMAT to conduct a FCMAT Fiscal Health Risk Analysis of the district. The agreement stated that FCMAT would perform the following: 1. Prepare an analysis using the 20 factors in FCMAT’s Fiscal Health Risk Analysis (FHRA) and identify the Client’s specific risk rating for fiscal insolvency. This report contains the fiscal health risk analysis with the study team’s findings and recommendations. FCMAT appreciates the opportunity to assist the Chawanakee Unified School District and extends thanks to all the staff for their assistance during fieldwork. Sincerely, Michael H. Fine Chief Executive Officer Michael H. Fine • Chief Executive Officer 1300 17th Street – City Centre, Bakersfield, CA 93301-4533 • Tel. 661-636-4611 • Fax 661-636-4647 www.fcmat.org Fiscal Health Risk Analysis Contents About FCMAT ..................................................................................................3 Introduction ......................................................................................................5 Background ...............................................................................................................5 Fiscal Health Risk Analysis Guidelines ...............................................................5 Study Team ................................................................................................................6 Fiscal Health Risk Analysis .......................................................................... 7 Summary .................................................................................................................... 7 Subsequent Event ....................................................................................................8 About the Analysis ...................................................................................................9 Areas of High Risk....................................................................................................9 Budget and Fiscal Status ....................................................................................................9 Material Weakness Questions ...........................................................................................9 Score Breakdown by Section ................................................................................11 Fiscal Health Risk Analysis Questions ...............................................................12 Annual Independent Audit Report ..................................................................................12 Budget Development and Adoption ..............................................................................12 Budget Monitoring and Updates .....................................................................................13 Cash Management ..............................................................................................................13 Charter Schools ...................................................................................................................14 Collective Bargaining Agreements .................................................................................14 Contributions and Transfers .............................................................................................15 Deficit Spending (Unrestricted General Fund) ............................................................16 Employee Benefits ..............................................................................................................16 Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 1 Fiscal Health Risk Analysis Enrollment and Attendance ...............................................................................................17 Facilities ..................................................................................................................................17 Fund Balance and Reserve for Economic Uncertainties ..........................................18 General Fund – Current Year ...........................................................................................18 Information Systems and Data Management ..............................................................19 Internal Controls and Fraud Prevention ........................................................................19 Leadership and Stability ...................................................................................................20 Multiyear Projections ..........................................................................................................21 Non-Voter-Approved Debt and Risk Management ....................................................21 Position Control ..................................................................................................................22 Special Education ...............................................................................................................22 Risk Score, 20 numbered sections only ...........................................................23 District Fiscal Solvency Risk Level, all FHRA factors: ...................................23 Appendix ........................................................................................................24 Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 2 Fiscal Health Risk Analysis About FCMAT Purpose and Services FCMAT was created by the California Legislature to help California’s transitional kindergarten through grade 14 (TK-14) local educational agencies (LEAs) avoid fiscal insolvency. Today, FCMAT helps LEAs iden- tify, prevent and resolve financial, management, program, data, and oversight challenges; provides pro- fessional learning; produces and provides software, checklists, manuals and other tools; and offers other related school business and data services. FCMAT may be asked to provide fiscal crisis or management assistance by a school district, charter school, community college, county superintendent of schools, the state superintendent of public instruction, or the Legislature. When FCMAT is asked for help with management assistance or a fiscal crisis, FCMAT management and staff work closely with the requesting LEA to meet their needs. Often this means conducting a formal study using a FCMAT study team that coordinates with the LEA for on-site fieldwork to evaluate specified operational areas and subsequently produces a written report with findings and recommendations for improvement. For more immediate needs in a specific area, FCMAT offers short-term technical assistance from a FCMAT staff member with the required expertise. To help meet the need for qualified chief business officials (CBOs) in LEAs, FCMAT offers four different CBO training and mentoring programs that consist of 11 or 12 diverse two-day training sessions over the course of a full year. For agencies with professional learning needs, FCMAT offers workshops on specific topics. Popular topics include associated student body operations, use of FCMAT’s Projection-Pro online financial forecasting software, use of FCMAT’s Local Control Funding Formula (LCFF) Calculator, and data reporting for the California Longitudinal Pupil Achievement Data System (CALPADS). FCMAT staff and management also frequently make presentations at various professional conferences. The California School Information Services (CSIS) service of FCMAT helps the California Department of Education (CDE) operate CALPADS; helps LEAs learn about CALPADS, resolve data issues and meet reporting requirements; and provides LEAs with training and leadership in data management. CSIS also developed and continues to host and improve the Standardized Account Code Structure (SACS) web-based financial reporting system for all California LEAs, and provides ed-data.org, which gives educators, policy- makers, the Legislature, parents and the public quick access to timely and comprehensive data about TK-12 education in California. Since it was formed, FCMAT has provided LEAs with the types of help described above on more than 2,000 occasions. FCMAT’s administrative agent is the Kern County Superintendent of Schools. FCMAT is led by Michael H. Fine, Chief Executive Officer, and is funded by appropriations in the state budget and modest fees to requesting agencies. Workshop schedules, manuals, presentation slide decks, Projection-Pro software, LCFF calculators, past reports, an online help desk, and many other resources are available for download or use at no charge on FCMAT’s website. Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 3 Fiscal Health Risk Analysis History FCMAT was created by Assembly Bill 1200 (Chapter 1213, Statutes of 1991) and Education Code 42127.8. Assembly Bill 107 (Chapter 282, Statutes of 1997) added Education Code 49080, which charged FCMAT with responsibility for CSIS and its statewide data management work, and Assembly Bill 1115 (Chapter 78, Statutes of 1999) codified CSIS’ mission. Assembly Bill 1200 created a statewide plan for county offices of education and school districts to work together locally to improve fiscal procedures and accountability standards. Assembly Bill 2756 (Chapter 52, Statutes of 2004) gave FCMAT specific responsibilities for districts that have received emergency state loans. In January 2006, Senate Bill 430 (Chapter 357, Statutes of 2005) amended Education Code 42127.8, and Assembly Bill 1366 (Chapter 360, Statutes of 2005) amended Education Codes 42127.8 and 84041. These new laws expanded FCMAT’s services to include charter schools and community colleges, respectively. Assembly Bill 1840 (Chapter 426, Statutes of 2018) changed how fiscally insolvent districts are administered once an emergency appropriation has been made, shifting oversight responsibilities from the state to the local county superintendent to be more consistent with the principles of local control, and giving FCMAT new responsibilities associated with the process. Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 4 Fiscal Health Risk Analysis Introduction Background Located in Eastern Madera County, the Chawanakee Unified School District is governed by a five-member board of trustees and educates 1,057 students from transitional kindergarten (TK) through grade 12 at three elementary schools, two high schools, and one continuation high school. The district spans 867 square miles and serves the communities of O’Neals, North Fork, Tesoro Viejo, Millerton Preserve, and surround- ing areas. In addition to its regular TK-12 programs, the district operates an adult education program and two char- ter schools — one a TK-12 independent study program and the other a charter high school. The combined charter school enrollment is 352 students. As of the 2024-25 first principal apportionment (the most recent data available), 52.4% of district students were identified as English learners, foster youth, and/or eligible for free or reduced-price meals. The district certified its 2024-25 second interim financial report as positive, indicating that, based on pro- jections, it would be able to meet its financial obligations for the current and two subsequent fiscal years. The district projected unrestricted general fund deficit spending of $469,401 in 2024-25 and $158,001 in 2025-26. The general fund reserve is projected to be approximately 3% in the current and two subsequent fiscal years, meeting the minimum reserve requirement. The minimum reserve requirement will increase to 4% if the district’s average daily attendance (ADA) falls below 1,000. As reported at the 2024-25 second attendance reporting period (P-2), ADA is projected to be 1,006, which places the district close to the addi- tional reserve threshold. In April 2025, in accordance with Education Code (EC) 42131(a)(2), the Madera County superintendent of schools downgraded the governing board’s certification of the district’s 2024-25 second interim financial report from positive to qualified, indicating that the district may not meet its financial obligations in the two subsequent fiscal years. The downgrade was due to continued operating deficits that reduce reserve levels, continuing contributions from the unrestricted general fund (Fund 01) to support the charter fund (Fund 09), and cash availability. To assess the district’s risk of insolvency, FCMAT conducted a fiscal health risk analysis using financial data from the 2024-25 second interim report as the basis for its analysis. Fiscal Health Risk Analysis Guidelines FCMAT entered into a study agreement with the Chawanakee Unified School District on May 9, 2025. A study team conducted interviews virtually on May 29, 2025 and visited the district on July 15-16, 2025 to conduct further interviews, collect data and review documents. Following fieldwork, the study team con- tinued to analyze documents and data. This report summarizes the team’s findings and conclusions from those activities. FCMAT’s reports focus on systems and processes that may need improvement. Those that may be func- tioning well are generally not commented on in FCMAT’s reports. In writing its reports, FCMAT uses the Associated Press Stylebook and its own short internal style guide, which emphasize plain language, capital- ize relatively few terms, and strive for conciseness, clarity and simplicity. Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 5 Fiscal Health Risk Analysis Study Team The team was composed of the following members: Jennifer Nerat, CFE Jeffrey B. Potter, CFE Intervention Specialist Intervention Specialist John Lotze FCMAT Technical Writer Each team member reviewed the draft report to confirm its accuracy and to achieve consensus on the analysis. Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 6 Fiscal Health Risk Analysis Fiscal Health Risk Analysis For TK-12 School Districts Date(s) of fieldwork: May 29, 2025, July 15-16, 2025 School District: Chawanakee Unified School District Summary As of the 2024-25 second interim financial report, the district has projected unrestricted general fund defi- cit spending in the current and subsequent fiscal year, which will continue to erode the district’s reserves. The multiyear projection included as part of the second interim financial report shows adjustments to reduce unrestricted salary expenditures in 2025-26 and 2026-27. These adjustments enable the district to meet the minimum 3% reserve requirement; however, the district does not have a specific board-approved plan to reduce and/or eliminate deficit spending to ensure fiscal solvency. Budget balancing solutions should be identified and implemented to address the district’s ongoing operating deficits. The second interim report also projects that the district’s Charter School Special Revenue Fund (09), Child Development Fund (12), and Capital Facilities Fund (25) will receive incoming transfers from the unrestricted general fund totaling $297,000 in 2024-25. Additional outgoing transfers from the unrestricted general fund are projected to continue in 2025-26 and 2026-27. These transfers contribute to ongoing deficit spending in the unrestricted general fund. The unrestricted general fund reserve percentage is projected to be 3% in the current and each of the two subsequent years, thereby meeting the minimum reserve requirement. Maintaining a reserve at the 3% minimum creates a highly risky financial condition for the district and leaves few resources with which to respond to unanticipated events and changes in the financial landscape. The average reserve levels for unified school districts in the state was 24.36% in 2023-24 (the most recent data available from School Services of California). The governing board has primary oversight of the district’s financial stability and holds a fiduciary responsi- bility to safeguard the district’s financial health, which includes ensuring a balanced budget and maintaining adequate reserves. It is critical that the board attend training on budget and governance at least every two years to ensure they are equipped with the fundamental knowledge to carry out their fiduciary duties. Currently, board members do not have a consistent approach to attending training on these important topics. The district’s administration is responsible for upholding the integrity of the district’s systems, protecting its assets, and providing accurate and reliable information to support the board’s decision making to ensure the district’s long-term fiscal solvency. The district’s current superintendent has been in her role since October 2024, and the CBO began in July 2024. Regular turnover in these critical roles can create instabil- ity and uncertainty in fiscal operations. FCMAT’s analysis resulted in a score of 19.2% across the 20 numbered sections, indicating a low fiscal health risk. However, because FCMAT identified risk factors related to material weakness questions, and because this review was initiated following the county superintendent of schools’ downgrade of the dis- trict’s 2024-25 second interim report certification from positive to qualified, the district’s overall risk level was elevated from low to high. District Fiscal Solvency Risk Level: High Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 7 Fiscal Health Risk Analysis Subsequent Event The district adopted its 2025-26 budget and Local Control and Accountability Plan (LCAP) on June 30, 2025. Deficit spending of $182,638 is projected for 2025-26, while 2026-27 and 2027-28 show improve- ment to the unrestricted general fund balance in both years as compared to the district’s second interim report. FCMAT did not use the district’s 2025-26 adopted budget as the basis for this report, because fieldwork began before its adoption. In addition, as of the date of this report, the county superintendent had not yet completed a review of the adopted budget and LCAP in accordance with AB 1200 oversight requirements. Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 8 Fiscal Health Risk Analysis About the Analysis The Fiscal Crisis and Management Assistance Team (FCMAT) developed the Fiscal Health Risk Analysis (FHRA) to help evaluate a school district’s fiscal health and risk of insolvency in the current and two subse- quent fiscal years. The FHRA consists of 20 sections, each including specific questions related to essential functions and processes. These sections and questions are based on FCMAT’s extensive work since the inception of Assembly Bill 1200 in 1991 and represent common indicators of fiscal risk or potential insolvency observed in school districts that have neared insolvency and required external assistance. Each analysis section affects fiscal stability and neglecting any of these areas will ultimately lead to the district’s fiscal failure. The analysis aims to determine the district’s level of risk at the time of evaluation. A higher number of “No” responses in the analysis indicates an increased risk of insolvency or other fiscal issues for the district. Not all sections or questions carry equal weight; some areas pose a higher risk and thus have a greater impact on the district’s fiscal stability. To help the district, narratives are provided for each “No” response, explaining the reasoning behind the response and outlining the actions needed to achieve a “Yes” in the future. Identifying issues early is the key to maintaining fiscal health. Diligent planning allows school districts to better understand their financial objectives and implement strategies that sustain fiscal efficiency and long- term solvency. School districts should consider completing the FHRA annually to assess their fiscal health and track their progress. Areas of High Risk The following sections on this page and the next repeat certain questions and answers found in the “Fiscal Health Risk Analysis Questions” section later in this report. These questions identify conditions that create a significant risk of fiscal insolvency. A “No” response to any of these questions will supersede all other scoring and elevate the district’s overall risk level. Budget and Fiscal Status: Is the district currently without the following? Yes No 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 ✓ ☐ Material Weakness Questions Yes No N/A 2 5 Has the district’s budget been approved unconditionally by September 15th by the county superintendent of schools in the current and two prior fiscal years ☐ ✓ ☐ 3 4 Following board approval of collective bargaining agreements, does the district make necessary budget revisions in the financial system to reflect settlement costs in accordance with EC 42142? ☐ ✓ ☐ Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 9 Fiscal Health Risk Analysis 3 6 Has the district addressed any deficiencies the county superintendent of schools has identified in its oversight letters to the district in the most recent and two prior fiscal years? ☐ ✓ ☐ 4 3 Does the district forecast its general fund cash flow for the current and subsequent year and update it as needed to ensure cash flow needs are known? ✓ ☐ ☐ 4 4 If the district’s cash flow forecast shows insufficient cash in its general fund to support its current and projected obligations, does the district have a reasonable plan to meet its cash flow needs for the current and subsequent year? ☐ ☐ ✓ 5 2 Has the district fulfilled, and does it have evidence showing fulfillment of, its oversight responsibilities in accordance with EC 47604 32? ✓ ☐ ☐ 5 3 Are all charters authorized by the district going concerns and not in fiscal distress? ✓ ☐ ☐ 6 3 Does the district accurately quantify the effects of collective bargaining agreements and include complete disclosure documents that show the impact on its budget and multiyear projections? ✓ ☐ ☐ 6 4 Based on the presettlement analysis, did the district identify related costs or savings, and did it identify ongoing revenue sources or expenditure reductions to support the agreement in the current and subsequent years? ✓ ☐ ☐ 7 2 If the district has deficit spending in funds other than the general fund, has it included in its multiyear projection sufficient transfers from the unrestricted general fund to cover any projected negative fund balance? ✓ ☐ ☐ 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 to ensure fiscal solvency? ☐ ✓ ☐ 10 5 Are the district’s enrollment projections and assumptions based on historical data, industry-standard methods, and other reasonable factors? ✓ ☐ ☐ 11 2 Does the district have sufficient and available resources to cover all contracted obligations for capital facilities projects? ✓ ☐ ☐ 12 1 Is the district able to maintain the minimum reserve for economic uncertainties in the current year (including Fund 01 and Fund 17) as defined by the State Standards and Criteria for Fiscal Solvency? ✓ ☐ ☐ 12 2 Is the district able to maintain the minimum reserve for economic uncertainties in the two subsequent years? ✓ ☐ ☐ 12 3 If the district is not able to maintain the minimum reserve for economic uncertainties, does the district’s multiyear projection include a board-approved plan to restore the reserve? ☐ ☐ ✓ 19 1 Does the district account for all positions and costs (including substitutes, overtime, stipends, and employer-paid benefits) in position control? ✓ ☐ ☐ Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 10 Fiscal Health Risk Analysis Score Breakdown by Section Because the score is not calculated by category, category values provided are subject to minor rounding and are provided for information only. 1. Annual Independent Audit Report 0.0% 2. Budget Development and Adoption 1.2% 3. Budget Monitoring and Updates 2.0% 4. Cash Management 0.0% 5. Charter Schools 0.0% 6. Collective Bargaining Agreements 2.2% 7. Contributions and Transfers 1.0% 8. Deficit Spending (Unrestricted General Fund) 3.0% 9. Employee Benefits 1.2% 10. Enrollment and Attendance 0.0% 11. Facilities 0.2% 12. Fund Balance and Reserve for Economic Uncertainty 0.0% 13. General Fund - Current Year 1.4% 14. Information Systems and Data Management 0.0% 15. Internal Controls and Fraud Prevention 1.4% 16. Leadership and Stability 4.2% 17. Multiyear Projections 0.0% 18. Non-Voter-Approved Debt and Risk Management 0.0% 19. Position Control 1.0% 20. Special Education 0.4% Score 19 2% Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 11 Fiscal Health Risk Analysis Fiscal Health Risk Analysis Questions 1. Annual Independent Audit Report Yes No N/A 1 1 Has the district recorded findings from the most recent and prior two years’ audits without negatively affecting its fiscal health? ✓ ☐ ☐ 1 2 Has the audit report for the most recent fiscal year been completed and presented to the board within the statutory timeline per Education Code (EC) 41020? ✓ ☐ ☐ 1 3 Were the district’s most recent and prior two audit reports free of findings of material weakness? ✓ ☐ ☐ 1 4 Has the district corrected all audit findings from the most recent and prior two 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 superintendent of schools’ instructions, and have been clearly articulated? ✓ ☐ ☐ 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 reviewing prior year estimated actuals by major object code and removing one-time revenues and expenses? ✓ ☐ ☐ 2 3 Does the district use position control data for budget development? ✓ ☐ ☐ 2 4 Does the district calculate its Local Control Funding Formula (LCFF) revenue correctly? ✓ ☐ ☐ 2 5 Has the district’s budget been approved unconditionally by September 15th by the county superintendent of schools in the current and two prior fiscal years? ☐ ✓ ☐ The district’s 2024-25 budget was conditionally approved, contingent upon the district’s closure of fiscal year 2023-24. The district subsequently met the conditions, and the 2024-25 budget was approved unconditionally on November 14, 2024. 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? ✓ ☐ ☐ 2 8 Have the district’s Local Control and Accountability Plan (LCAP) and budget been adopted within the statutory timelines established by EC 42103 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 prior fiscal year? ✓ ☐ ☐ 2 9 Has the district refrained from including carryover funds in its adopted budget? ✓ ☐ ☐ 2 10 Other than objects in the 5700s and 7300s, does the district avoid using negative expense or contra expenditure accounts in its budget? ✓ ☐ ☐ 2 11 Does the district have and follow a documented standard procedure for evaluating both the proposed acceptance of grants and other restricted funds and the potential multiyear impact on the district’s unrestricted general fund? ✓ ☐ ☐ Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 12 Fiscal Health Risk Analysis 2 12 Does the district adhere to a budget calendar that includes statutory due dates, major budget development tasks and deadlines, and the staff members and departments responsible for completing them? ☐ ✓ ☐ The district does not have a detailed budget calendar to organize and direct its budget development process. 3. Budget Monitoring and Updates Yes No N/A 3 1 Are actual revenues and expenses consistent with the most current budget? ✓ ☐ ☐ 3 2 Are budget revisions posted in the financial system at each interim reporting period, at a minimum? ✓ ☐ ☐ 3 3 Are clearly written and articulated budget assumptions that support budget revisions communicated to the board at each interim reporting period, at a minimum? ✓ ☐ ☐ 3 4 Following board approval of collective bargaining agreements, does the district make necessary budget revisions in the financial system to reflect settlement costs in accordance with EC 42142? ☐ ✓ ☐ According to the county superintendent of schools, the district failed to submit budget revisions within 45 days; both the revisions and timely submission of them were necessary to fulfill the terms of the 2-year collective bargaining agreement with the Chawanakee Teachers Association for fiscal years 2022-23 and 2023-24, which was approved by the board on January 10, 2023. 3 5 Do the district’s responses fully explain the variances identified in the SACS Criteria and Standards Review form? ✓ ☐ ☐ 3 6 Has the district addressed any deficiencies the county superintendent of schools has identified in its oversight letters to the district in the most recent and two prior fiscal years? ☐ ✓ ☐ The county superintendent of schools did not identify any deficiencies in the 2022-23 and 2023-24 fiscal years. However, beginning with the 2024-25 adopted budget, the county superintendent noted concerns with the district’s projected operating deficits and fiscal stability. As of the 2024-25 second interim report, the deficiencies were not resolved. 3 7 Does the district prohibit processing of requisitions or purchase orders when the budget is insufficient to support the expenditure? ✓ ☐ ☐ 3 8 Does the district encumber funds for salaries and benefits and adjust those encumbrances as needed? ✓ ☐ ☐ 3 9 For the most recent and two prior fiscal years, have the district’s interim financial reports and unaudited actuals been adopted and filed with the county superintendent of schools within the timelines established in 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 (COE) reports monthly? ✓ ☐ ☐ Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 13 Fiscal Health Risk Analysis 4 2 Does the district reconcile all bank (cash and cash equivalent) accounts with each statement in a timely manner? ✓ ☐ ☐ 4 3 Does the district forecast its general fund cash flow for the current and subsequent year and update it as needed to ensure cash flow needs are known? ✓ ☐ ☐ 4 4 If the district’s cash flow forecast shows insufficient cash in its general fund to support its current and projected obligations, does the district have a reasonable plan to meet its cash flow needs for the current and subsequent 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 the district uses interfund borrowing, is it complying with EC 42603? ✓ ☐ ☐ 4 7 If the district is managing cash in any fund(s) through external borrowing, does the district’s cash flow projection include repayment based on the terms of the loan agreement? ☐ ☐ ✓ 5. Charter Schools Yes No N/A 5 1 Does the district have a board policy, memorandum of understanding (MOU), or other written document(s) regarding charter oversight? ✓ ☐ ☐ 5 2 Has the district fulfilled, and does it have evidence showing fulfillment of, its oversight responsibilities in accordance with EC 47604 32? ✓ ☐ ☐ 5 3 Are all charters authorized by the district going concerns and not in fiscal distress? ✓ ☐ ☐ 5 4 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? ✓ ☐ ☐ 5 5 Does the district monitor charter school audits for timeliness, completeness, and exceptions? ✓ ☐ ☐ 6. Collective Bargaining Agreements Yes No N/A 6 1 Has the district settled with all its bargaining units for the past two fiscal years? ✓ ☐ ☐ 6 2 Has the district settled with all its bargaining units for the current year? ☐ ✓ ☐ As of the date of FCMAT’s fieldwork, the district had not yet settled with the certificated bargaining unit for 2024-25. 6 3 Does the district accurately quantify the effects of collective bargaining agreements and include complete disclosure documents that show the impact on its budget and multiyear projections? ✓ ☐ ☐ 6 4 Based on the presettlement analysis, did the district identify related costs or savings, and did it identify ongoing revenue sources or expenditure reductions to support the agreement in the current and subsequent years? ✓ ☐ ☐ Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 14 Fiscal Health Risk Analysis 6 5 In the current and prior two fiscal years, has the total cost of the district’s bargaining agreement settlements, including step-and-column increases, been at or under the funded cost-of-living adjustment (COLA)? ☐ ✓ ☐ The district’s most recent settlement with the certificated bargaining unit resulted in a total increase of 13.16% to salaries and benefits in 2022-23. The state cost-of-living increase (COLA) for the same year was 6.56%. The settlement also resulted in a total increase of 13.57% to certificated salaries and benefits in 2023-24, while state COLA in the same year was 8.22%. 6 6 If settlements have not been reached in the past two years, has the district identified resources to cover the costs of the district’s proposal(s)? ☐ ☐ ✓ 6 7 Did the district comply with public disclosure requirements under Government Codes 3540 2 and 3547 5, and EC 42142? ☐ ✓ ☐ The district did not comply with EC 42142 regarding its 2022-23 and 2023-24 settlement with the Chawanakee Teachers Association, which included salary schedule changes and a health and welfare benefits cap. The agreement was adopted by the board on January 10, 2023. EC 42142 requires the district to forward any necessary budget revisions to the county superintendent of schools within 45 days of adopting a collective bargaining agreement, but this was not done. 6 8 Did the superintendent and CBO certify the public disclosure of collective bargaining agreement before 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 an active, board-approved plan to eliminate, reduce or control any contributions/transfers from its unrestricted general fund to other restricted programs and funds? ☐ ✓ ☐ The district did not provide a board-approved plan to eliminate, reduce or control any contributions/transfers. A total of $2,316,809 in contributions and transfers from the unrestricted general fund to the following programs and funds was projected to occur in 2024-25: • Transportation program: $699,319 • Special Education: $753,923 • Indian Education: $1,800 • Agricultural Career Technical Education program: $35,847 • Routine Restricted Maintenance: $530,000 • Charter Schools Special Revenue Fund: $235,000 • Child Development Fund: $44,000 • Capital Facilities Fund: $16,920 7 2 If the district has deficit spending in funds other than the general fund, has it included in its multiyear projection sufficient transfers from the unrestricted general fund to cover any projected negative fund balance? ✓ ☐ ☐ Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 15 Fiscal Health Risk Analysis 7 3 If any contributions or transfers were required for restricted programs and/or other funds in either of the two prior fiscal years, and there is a need in the current year, did the district budget for them at reasonable levels? ✓ ☐ ☐ 8. Deficit Spending (Unrestricted General Fund) Yes No N/A 8 1 Is the district avoiding deficit spending in the current fiscal year? ☐ ✓ ☐ The unrestricted general fund is projected to have deficit spending of $469,401, inclusive of contributions and transfers, in the current fiscal year. 8 2 Is the district projected to avoid deficit spending in both of the two subsequent fiscal years? ☐ ✓ ☐ As of its 2024-25 second interim financial report, the district is projecting deficit spending of $158,001 in 2025-26. No deficit spending is projected to occur in 2026- 27. 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 to ensure fiscal solvency? ☐ ✓ ☐ FCMAT was not provided with a board-approved plan. The district acknowledges the need to balance the budget; however, no specific budget balancing solutions were identified as of the 2024-25 second interim report. 8 4 Has the district decreased deficit spending over the past two fiscal years and is there evidence of this in its unaudited actuals reports? ✓ ☐ ☐ 9. Employee Benefits Yes No N/A 9 1 Has the district completed an actuarial valuation in accordance with Governmental Accounting Standards Board requirements to determine its unfunded liability for other post-employment benefits (OPEB)? ✓ ☐ ☐ 9 2 Does the district have a plan to fund its OPEB liabilities for the current and two subsequent years such that the total of annual required service payments (whether legally or contractually required, or locally defined such as pay-as-you-go premiums, trust agreement obligations or a board adopted commitment) are no greater than 2% of the district’s unrestricted general fund revenues? ✓ ☐ ☐ 9 3 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? ☐ ✓ ☐ The district did not provide FCMAT with evidence that a study has occurred in the last five years. 9 4 Does the district track, reconcile and report employees’ compensated leave balances? ✓ ☐ ☐ 9 5 Has the district followed a policy or collectively bargained agreement to limit accrued vacation balances? ☐ ✓ ☐ Although the district maintains and follows a policy to limit accrued vacation for classified employees, no policy was provided to FCMAT that applies to management and confidential employees. FCMAT identified at least one employee in the Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 16 Fiscal Health Risk Analysis management and confidential groups who has accrued vacation significantly more than the annual carryover cap of 40 hours that would otherwise be allowable for classified employees. 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 (P-2)? ✓ ☐ ☐ 10 3 Does the district track historical enrollment and ADA data to project future trends? ✓ ☐ ☐ 10 4 Do schools maintain an accurate record of daily enrollment and attendance that is reconciled monthly at the school and district levels? ✓ ☐ ☐ 10 5 Are the district’s enrollment projections and assumptions based on historical data, industry-standard methods, and other reasonable factors? ✓ ☐ ☐ 10 6 Has the district planned for enrollment losses to any charter schools? ☐ ☐ ✓ 10 7 Do all applicable schools and departments review and verify their respective California Longitudinal Pupil Achievement Data System (CALPADS) data and correct it as needed before the report submission deadlines? ✓ ☐ ☐ 10 8 Has the district certified its CALPADS data (most recent Fall 1, Fall 2, and end-of-year reports) by the required deadlines? ✓ ☐ ☐ 10 9 Does the district follow established board policy to limit outgoing interdistrict transfers and ensure that only students who meet the required qualifications are approved? ✓ ☐ ☐ 10 10 Does the district adhere to the average TK-3 class enrollment limits at each school, the adult-to-student ratio for each TK class, and the credentialing requirements for teachers assigned to TK classes as defined in the Education Code? ✓ ☐ ☐ 11. Facilities Yes No N/A 11 1 If the district participates in the state’s School Facility Program, has it made the required contribution to its Routine Restricted Maintenance Account? ✓ ☐ ☐ 11 2 Does the district have sufficient and available resources 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 (districtwide) in accordance with the Office of Public School Construction’s loading standards? ☐ ✓ ☐ The district provided FCMAT with a demographic and enrollment analysis completed in April 2025. The analysis shows that the district’s schools are operating at between 46% and 70% of capacity. During interviews, staff also indicated that some schools may not be operating at or near capacity, supporting the analysis. However, because of the large geographical area the district serves, any consolidation of school sites may be impracticable. Additionally, the district is anticipating eventual enrollment increases at some schools because of recent community development. Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 17 Fiscal Health Risk Analysis 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? ✓ ☐ ☐ 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 a board-approved long-range facilities master plan completed within the last five years that reflects its current and projected facility needs? ☐ ✓ ☐ The district lacks a board-approved long-range facilities master plan, but it did provide FCMAT with a less formal list of priorities and planned facilities expenditures for the next five years. 12. Fund Balance and Reserve for Economic Uncertainties Yes No N/A 12 1 Is the district able to maintain the minimum reserve for economic uncertainties in the current year (including Fund 01 and Fund 17) as defined by the State Standards and Criteria for Fiscal Solvency? ✓ ☐ ☐ 12 2 Is the district able to maintain the minimum reserve for economic uncertainties in the two subsequent years? ✓ ☐ ☐ 12 3 If the district is not able to maintain the minimum reserve for economic uncertainties, does the district’s multiyear projection include a board-approved plan to restore the reserve? ☐ ☐ ✓ 12 4 Is the district’s projected unrestricted fund balance stable or increasing in the two subsequent fiscal years without unsubstantiated revenue increases or expenditure reductions? ✓ ☐ ☐ 12 5 If the district has unfunded or contingent liabilities or one-time costs other than post-employment benefits, does the unrestricted general fund balance include sufficient assigned or committed reserves above the recommended reserve level to cover these costs? ☐ ☐ ✓ 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? ✓ ☐ ☐ 13 2 Is the percentage of the district’s general fund unrestricted expenditure budget that is allocated to salaries and benefits at or below the prior year statewide average? ✓ ☐ ☐ 13 3 Is the percentage of the district’s general fund unrestricted expenditure budget that is allocated to salaries and benefits at or below that of the prior two years? ☐ ✓ ☐ As of the district’s 2024-25 second interim financial report, the unrestricted general fund expenditure budget allocated to salaries and benefits was 81.7%. This was an increase from 78.9% in 2023-24 and 76.6% in 2022-23. 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 prior two years, is the district addressing the complaint(s)? ☐ ☐ ✓ Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 18 Fiscal Health Risk Analysis 13 5 For positions supported with one-time or restricted funding, does the district either ensure that these funds are sufficient to pay for these staff or have a plan to pay for the positions with unrestricted funds? ✓ ☐ ☐ 13 6 Is the district using its restricted dollars fully by expending allocations for restricted programs within the required time? ☐ ✓ ☐ The district did not expend $57,243 of its 2022-23 Comprehensive Support and Improvement (CSI) program allocation of $178,351 for Mountain Oaks High School by the required deadline of September 30, 2024. 13 7 Does the district account for all program costs, including the maximum allowable indirect costs, for each restricted resource and other funds? ☐ ✓ ☐ The 2023-24 unaudited actuals report shows that although the district does charge the maximum allowable indirect cost rate for some restricted programs, it does not charge indirect costs to federal Title I and Title IV programs, the Career Partnership Academies program, or any special education programs. Additionally, indirect costs were not charged to Fund 12 (Child Development), Fund 13 (Cafeteria), Fund 25 (Capital Facilities), Fund 40 (Special Reserve for Capital Outlay), or Fund 49 (Capital Project Fund) in 2023-24. 13 8 Are all balance sheet accounts in the general ledger reconciled at least at each interim reporting period and at year-end close? ✓ ☐ ☐ 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 Does the district use the system(s) to 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 COE? ✓ ☐ ☐ 14 5 If the district is using a separate financial system from its COE, is there an automated interface that allows data to be sent and received by both the district’s and COE’s financial systems? ☐ ☐ ✓ 14 6 If the district is using a separate financial system from its COE, has the district provided the COE with direct access so the COE can provide 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 authorization? ✓ ☐ ☐ 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?: Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 19 Fiscal Health Risk Analysis • Accounts payable (AP) ✓ ☐ ☐ • Accounts receivable (AR) ✓ ☐ ☐ • Purchasing and contracts ✓ ☐ ☐ • Payroll ✓ ☐ ☐ • Human resources (i e , duties related to position control and payroll processes) ✓ ☐ ☐ 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? ✓ ☐ ☐ 15 5 Does the district review and work to clear prior year accruals throughout the year? ✓ ☐ ☐ 15 6 Has the district reconciled and closed the general ledger (books) within the time prescribed by the county superintendent of schools? ✓ ☐ ☐ 15 7 Does the district have processes and procedures to discourage and detect fraud? ☐ ✓ ☐ Although the district has board policy and an administrative regulation specifically addressing fraud (BP/AR 3400), interviewees indicated that staff were unaware of the processes and procedures outlined in the policy and administrative regulation. 15 8 Does the district have a process for collecting reports of possible fraud (such as an anonymous fraud reporting hotline) and for following up on such reports? ☐ ✓ ☐ The district retains a hotline on its main website to encourage the reporting of potential criminal activity (including fraud); however, interviewees indicated that most staff, including district leaders, were unaware of the hotline and would therefore not be likely to use it. 15 9 Does the district have an internal audit process? ☐ ✓ ☐ The district lacks a formal internal auditing process or department. 16. Leadership and Stability Yes No N/A 16 1 Does the district have a chief business official who has been in this position with the district for more than two years? ☐ ✓ ☐ The district’s CBO has held the position since July 1, 2024. 16 2 Does the district have a superintendent who has been in this position with the district for more than two years? ☐ ✓ ☐ The district’s superintendent has held the position since October 9, 2024. 16 3 Does the superintendent schedule and hold meetings regularly with all members of their administrative cabinet? ✓ ☐ ☐ 16 4 Is training on financial management and budget provided to school and department administrators who are responsible for budget management? ☐ ✓ ☐ Interviews with staff indicated that training on financial management and budget does not occur regularly. Rather, training is provided to individuals as needed upon their request. 16 5 Does the governing board adopt and revise policies and administrative regulations annually? ✓ ☐ ☐ Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 20 Fiscal Health Risk Analysis 16 6 Are newly adopted or revised policies and administrative regulations implemented, communicated, and available to staff? ☐ ✓ ☐ Some staff indicated that policy updates and revisions are usually communicated districtwide, but the district did not provide any formal or written evidence to support this practice. 16 7 Do all board members attend training on the budget and governance at least every two years? ☐ ✓ ☐ Although the board held a facilitated training on January 30, 2025, no evidence was provided demonstrating that budget and governance was included. In interviews, board members indicated that, because of time constraints, not all board members seek training. 16 8 Is the superintendent’s evaluation performed according to the terms of the contract? ✓ ☐ ☐ 16 9 Is the district avoiding relying on consultants to prepare financial reports (e g SACS) or other primary fiscal activities? ✓ ☐ ☐ 17. Multiyear Projections Yes No N/A 17 1 Has the district developed multiyear projections that include detailed assumptions aligned with industry standards? ✓ ☐ ☐ 17 2 To help calculate its multiyear projections, did the district prepare an accurate LCFF calculation that includes multiyear considerations? ✓ ☐ ☐ 17 3 Does the district use its most current multiyear projection when making financial decisions? ✓ ☐ ☐ 17 4 If the district uses a broad adjustment category in its multiyear projection (such as line B10, B1d, B2d Other Adjustments, in the SACS Form MYP/MYPI), is there a detailed list of what is included in the adjustment amount and are the adjustments reasonable? ✓ ☐ ☐ 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 the unrestricted general fund? ✓ ☐ ☐ 18 2 If the district has issued non-voter-approved debt, has its credit rating remained stable or improved during the current and two prior fiscal years? ✓ ☐ ☐ 18 3 If the district is self-insured, has it completed an actuarial valuation as required and does it have a plan to pay for any unfunded liabilities? ☐ ☐ ✓ Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 21 Fiscal Health Risk Analysis 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? ✓ ☐ ☐ 19. Position Control Yes No N/A 19 1 Does the district account for all positions and costs (including substitutes, overtime, stipends, and employer-paid benefits) in position control? ✓ ☐ ☐ 19 2 Does the district analyze and adjust staffing based on staffing ratios and enrollment? ☐ ✓ ☐ The district uses staffing ratios for certificated staff; however, interviewees indicated that similar ratios are not being used for most classified positions, such as custodians. 19 3 Does the district reconcile budget, payroll and position control regularly, at least at budget adoption and interim financial reporting periods? ✓ ☐ ☐ 19 4 Does the district identify 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? ✓ ☐ ☐ 19 6 Do managers and staff responsible for the district’s human resources, payroll and budget functions meet at least monthly to discuss issues and improve processes? ✓ ☐ ☐ 20. Special Education Yes No N/A 20 1 For special education classrooms and support services, does the district use staffing ratios that align with statutory requirements and industry standards, and are students’ support needs also considered? If so, are those needs documented and evaluated at each budget cycle? ✓ ☐ ☐ 20 2 Does the district access all available funding sources for costs related to special education (e g , state 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)? ✓ ☐ ☐ 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)? ☐ ✓ ☐ The district is accounting for all costs appropriately, except for indirect costs, which are not being charged to special education. 20 5 Does the district monitor contributions from the unrestricted general fund and adjust to trends in the special education program? ✓ ☐ ☐ 20 6 Is the district’s rate of identification of students as eligible for special education at or below the countywide and statewide average rates? ✓ ☐ ☐ 20 7 Does the district analyze whether it will meet the maintenance of effort requirement at each interim financial reporting period? ✓ ☐ ☐ Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 22 Fiscal Health Risk Analysis Risk Score, 20 numbered sections only: 19 2% Key to Risk Score from 20 numbered sections only: High Risk: 40% or more Moderate Risk: 25-39.9% Low Risk: 24.9% and lower District Fiscal Solvency Risk Level, all FHRA factors: High (The existence of any condition from the “Budget and Fiscal Status” section, and/or a material weakness, will supersede the score above because it elevates the district’s risk level.) Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 23 Fiscal Health Risk Analysis Appendix Study Agreement Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 24 Fiscal Health Risk Analysis Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 25 Fiscal Health Risk Analysis Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 26 Fiscal Health Risk Analysis Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 27 Fiscal Health Risk Analysis Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 28 Fiscal Health Risk Analysis Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 29 Fiscal Health Risk Analysis Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 30 Fiscal Health Risk Analysis Michael H. Fine Digitally signed by Michael H. Fine Date: 2025.05.09 11:07:42 -07'00' Fiscal Crisis and Management Assistance Team Chawanakee Unified School District 31