Los Angeles County Office of Education Management Letter

April 17, 2009 Kenneth Shelton, Assistant Superintendent, Business Services Los Angeles County Office of Education 9300 Imperial Highway Downey, CA 90242 Dear Assistant Superintendent Shelton: The purpose of this letter is to provide the findings and recommendations identified by the Fiscal Crisis and Management Assistance Team (FCMAT) following completion of fieldwork conducted at the Wilsona Elementary School District. In February 2009, FCMAT was requested to perform the following as described in the study agreement: 1. Prepare cash flow projections of the Wilsona Elementary School District general fund for the remainder of the 2008-09 fiscal year and the 2009-10 fiscal year. The team will apply assumptions and factors directly related to the state budget bill signed by the governor on February 20, 2009; variables included in the School Services of California Dartboard, where applicable; and budgetary reductions approved by the Wilsona governing board on or before March 2, 2009. FCMAT visited the district in February and March 2009 to interview staff members, collect data, and review documents. Following the initial visit on February 25, it was determined that the cash flow projections would be completed based on the district’s 2008-09 second interim report which was presented to the governing board on March 19, 2009. Introduction The Wilsona Elementary School District is located in Los Angeles County and serves approximately 1,700 kindergarten through eighth grade students in two elementary, one middle, and one community day school. The district has experienced a decline in enrollment for the last six years. In addition, when closing the financial records for the 2007-08 fiscal year, the district staff discovered that some prior-year accounts receivable accruals were uncollectible and had to be written off. This FCMAT Joel D. Montero, Chief Executive Officer . . 1300 17th Street - CITY CENTRE, Bakersfield, CA 93 . 301-4533 Telephone 661-6 . 36-4611 Fax 661-63 . 6-4647 422 Petaluma Blvd North, Suite. C, Petaluma, CA 94952 Telephone: 707-775-2850 Fax: 707-775-2854 www.fcmat.org Administrative Agent: Larry E. Reider - Office of Kern County Superintendent of Schools reduced the district’s 2007-08 general fund ending balance less than the recommended three percent minimum reserve for economic uncertainties. These factors, coupled with the economic crisis at the state and federal level, required the district to make difficult decisions to balance its budget. When completing its review of the district’s cash flow, the county office of education projected that the district would have a negative cash balance prior to the end of the 2008-09 fiscal year. FCMAT projections show that the district will have negative cash balances in the following months: June 2009 $1,025,816 July 2009 $328,708 August 2009 $872,931 September 2009 $725,181 June 2010 $596,872 In an effort to mitigate its projected cash flow shortages, the district issued a 2008-09 Tax and Revenue Anticipation Note (TRAN). In addition, the district indicates that it is working with the county office to obtain a 2008-09 midyear TRAN. Cash Flow Projections The purpose of a cash flow statement is to project the timing of receipts and expenses so an organization can understand its cash needs monthly or even daily. The cash flow statement reflects the district’s liquidity and ability to meet its current payroll and other required obligations. As an analytical tool, the cash flow analysis should not be confused with the district’s budget and fund balance; it excludes transactions that do not directly affect cash receipts and payments. Any forecast of financial data for cash flow purposes has inherent limitations, including issues such as unanticipated changes in enrollment trends and changing economic conditions at the state, federal and local levels. Therefore, the cash flow forecasting model should be evaluated as a trend based on certain criteria and assumptions rather than a prediction of exact numbers. Multiyear cash flow projections help provide for more informed decision making and the ability to forecast the fiscal impact of current decisions. The cash flow projections should be updated each month to accurately account for all revenues, expenditures and other changes related to cash. In preparing cash flow projections for the district, FCMAT used the district’s 2008-09 second interim report as the basis for the 2008-09 and 2009-10 projections. The assumptions used by the district in preparing the second interim report are included as an attachment to this letter. 2008-09 Cash Flow Projection The 2008-09 cash flow projection includes the district’s actual cash transactions through February 2009. The projection also includes the final payment for the 2008-09 Tax and Revenue Anticipation Note (TRAN) in April, 2009. The projection assumes that at this point in the year, all the prior year accounts receivable and accounts payable transactions have been received and paid. The district should review each prior year transaction and verify this assumption. 2 A comparison of the monthly cash transactions for employee benefits with the second interim report found that the 2008-09 budget may be insufficient to support the remainder of the cost for this fiscal year. The district should review the 2008-09 budget for object range 3000-3999, employee benefits and analyze the projected budget compared with actual costs year to date. If the budget for employee benefits is insufficient to meet current year costs, this will have a negative impact on the projected cash flow. The district reported that an increase of $223,617.50 was made to the expense budget following the second interim reporting period for the one-time payment of an insurance settlement. This adjustment has been included in the cash flow projection. As the state struggles with its own cash flow crisis, school district apportionments will be directly affected in 2008-09 and future fiscal years. The following deferrals have been enacted into state legislation and are included in the 2008-09 cash flow projection: 50% principal apportionment February 2009 to July 2009 100% principal apportionment June 2009 to July 2009 50% K-3 class-size reduction funding February 2009 to July 2009 The projection on the following page shows that the district will have a negative cash balance of approximately $1 million in June 2009. 3 4 tcirtsiD loohcS yratnemelE anosliW wolF hsaC 90-8002 9002 ,yraurbeF hguorht slautcA dnoceS detcejorP detcejorP detcejorP detcejorP detcejorP ecnereffiD miretnI latoT slaurccA enuJ yaM rpA raM beF naJ ceD voN tcO tpeS guA yluJ seuneveR 63.433,94 62.936,472 87.198,038 41.780,467 24.902,190,1 28.762,666,1 94.609,639 80.283,657 07.911,079 10.270,955 81.305,763 06.991- ecnalaB hsaC gninnigeB edoC tcejbO detcirtsernU - seuneveR 00.0 00.760,125,9 00.760,125,9 00.357,530,1 00.0 00.578,715 00.578,715 00.578,715 00.677,496 00.560,977 00.560,977 00.560,977 00.670,584 00.348,324,1 00.482,403,1 00.515,686 9108-0108 diA etatS 00.0 00.599,5 00.599,5 00.0 16.249 03.830,2 00.0 60.961 00.0 62.310,2 77.138 00.0 00.0 00.0 00.0 00.0 9308-0208 noitnevbuS feileR xaT 00.0 00.176,227 00.176,227 00.0 96.682,71 24.354,41 02.435,441 24.354,41 34.743,44 08.076,69 01.199,733 31.306,11- 00.0 00.0 33.405,63 47.230,82 9708-0408sexaT ytreporP tcirtsiD & ytnuoC 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9808-0808 sdnuF suoenallecsiM 00.0 00.298,874- 00.298,874- 00.0 00.298,874- 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9908-0908 refsnarT timiL euneveR 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9928-0018 euneveR laredeF 00.0 00.782,497 00.782,497 00.152,102 33.063,301 78.249,7 53.417,93 78.391,902 00.737,21- 85.253,06 00.695,322 00.660,61- 15.529,5- 00.0 00.654,91- 15.060,3 9958-0038 euneveR etatS rehtO 00.0 00.628,08 00.628,08 31.312,6 00.0 43.472,7 80.664,6 20.981,03 95.018,6 00.0 55.901,6 78.060,4 72.875,31 00.0 00.0 51.421 9978-0068 euneveR lacoL rehtO 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9988-0088 denifednU 00.0 00.567,15 00.567,15 00.567,15 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9298-0198 nI srefsnarT dnufretnI 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9798-0398 secruoS gnicnaniF rehtO 00.0 20.850,226- 20.850,226- 00.0 20.850,226- 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9998-0898 snoitubirtnoC 00.0 89.066,570,01 89.066,570,01 31.289,492,1 93.063,979- 39.385,945 36.985,807 73.088,177 20.791,337 46.101,839 24.395,743,1 47.654,557 67.827,294 00.348,324,1 33.233,123,1 04.237,717 detcirtsernU - latotbuS detcirtseR - seuneveR 00.0 00.513,745 00.513,745 00.0 00.513,745 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9908-0908 refsnarT timiL euneveR 00.0 00.568,969,1 00.568,969,1 92.207,503 03.207,503 06.767,274 05.689,691 02.985,751 00.434,791- 00.579,09 00.710,835 11.486,92 00.967,672- 00.152,01 00.815,662 00.578,96 9928-0018 euneveR laredeF 00.0 00.385,949,1 00.385,949,1 23.848,841 23.848,841 66.199,83 51.974,79 03.859,491 00.098,23 00.079,29 19.993,681 00.094,143 32.476,205 00.603,701 00.647,91 11.189,63 9958-0038 euneveR etatS rehtO 00.0 00.582,828 00.582,828 56.222,301 56.222,301 00.0 58.282,8 58.939,371 00.833,36 00.0 00.815,36 00.746,482 00.0 00.411,82 00.0 00.0 9978-0068 euneveR lacoL rehtO 00.0 20.850,226 20.850,226 00.0 20.850,226 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9998-0898 snoitubirtnoC 00.0 20.601,719,5 20.601,719,5 62.377,755 92.641,727,1 62.957,115 05.847,203 53.784,625 00.602,101- 00.549,381 19.439,787 11.128,556 32.509,522 00.176,541 00.462,682 11.658,601 detcirtseR - latotbuS 00.0 00.767,299,51 00.767,299,51 93.557,258,1 09.587,747 91.343,160,1 31.833,110,1 27.763,892,1 20.199,136 46.640,221,1 33.825,531,2 58.772,114,1 99.336,817 00.415,965,1 33.695,706,1 15.885,428 SEUNEVER LATOT serutidnepxE 00.0 00.158,761,7 00.158,761,7 46.014,921 43.762,906 43.762,906 39.595,085 87.367,785 16.941,665 14.561,965 70.569,585 29.681,795 44.169,406 90.977,465 90.485,206 53.457,065 9991-0001 seiralaS detacifitreC 00.0 00.156,254,2 00.156,254,2 37.195,181 83.711,102 83.711,102 86.220,602 99.729,012 35.055,812 93.522,702 33.890,012 36.071,322 84.263,322 87.193,512 74.065,241 32.415,11 9992-0002 seiralaS deifissalC 00.0 00.006,441,3 00.006,441,3 00.0 76.330,561 04.513,113 08.071,803 04.513,113 39.368,613 94.636,513 50.152,023 14.189,623 75.141,733 73.921,962 67.399,79 51.767,46 9993-0003 stifeneB eeyolpmE 00.0 00.707,660,1 00.707,660,1 24.752,682 24.752,682 38.531,66 70.766,01 31.960,56 47.317,12 09.433,82 90.452,6 11.017,21 28.658,351 76.780,09 17.293,26 19.920,32- 9994-0004 seilppuS dna skooB 00.0 05.485,697,1 05.485,697,1 74.584,071 84.584,071 51.218,89 67.627,341 08.660,07 67.153,07 95.586,903 22.481,813 79.781,31 75.697,751 58.932,67 32.905,561 66.250,23 9995-0005 sesnepxE gnitarepO & secivreS 00.0 00.000,11 00.000,11 00.0 00.086,9 00.0 00.023,1 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9996-0006 yaltuO latipaC 00.0 00.004,351 00.004,351 03.658,57 03.658,57 00.0 04.786,1 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9927-0007 ogtuO rehtO 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9937-0037 stsoC tceridnI 00.0 00.932,503 00.932,503 00.0 00.932,503 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9267-0067 tuO srefsnarT dnufretnI 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9967-0367 sesU/secruoS rehtO 10.0 05.230,890,61 15.230,890,61 65.106,348 95.639,228,1 01.846,682,1 56.091,252,1 90.341,542,1 75.926,391,1 87.740,034,1 67.257,044,1 40.732,371,1 88.811,774,1 67.726,512,1 62.040,170,1 84.850,646 SERUTIDNEPXE LATOT stessA 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9419-1119 hsaC rehtO 70.395,499 00.0 70.395,499 00.0 00.0 00.0 00.0 01.060,861 14.677,442 17.914,8 17.111,04- 55.277,3 49.799,054 07.071,331 63.331,41 10.473,11 9939-0029 elbavieceR stnuoccA 70.395,499 00.0 70.395,499 00.0 00.0 00.0 00.0 01.060,861 14.677,442 17.914,8 17.111,04- 55.277,3 49.799,054 07.071,331 63.331,41 10.473,11 STESSA LATOT seitilibaiL 64.096,298- 00.0 64.096,298- 00.0 00.0 00.0 00.0 90.082,18- 68.937,26 30.320,51 74.796,47 59.882,16- 33.947,39 52.900,67- 06.021,953- 62.102,165- 0459-0059 elbayaP stnuoccA 00.001,31- 00.0 00.001,31- 00.0 00.0 00.0 00.004,513- 00.002,37- 00.000,37- 00.005,092- 00.0 00.0 00.0 00.0 00.0 00.000,937 9569-1459 )NART( seitilibaiL rehtO 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9669-0669 seitilibaiL mret-gnoL 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9979-0079 ecnalaB dnuF 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9999 tnuoccA rorrE 64.097,509- 00.0 64.097,509- 00.0 00.0 00.0 00.004,513- 90.084,451- 41.062,01- 79.674,572- 74.796,47 59.882,16- 33.947,39 52.900,67- 06.021,953- 47.897,771 SEITILIBAIL LATOT 38.351,900,1 96.051,570,1- 19.403,522- 25.252,655- 46.408,66 82.221,723- 04.850,575- 33.163,927 14.425,081 26.737,312- 96.740,114 38.865,191 87.207,763 )esaerceD(/esaercnI teN 38.351,900,1 33.618,520,1- 63.433,94 62.936,472 87.198,038 41.780,467 24.902,190,1 28.762,666,1 94.609,639 80.283,657 07.911,079 10.270,955 81.305,763 hsaC gnidnE 2009-10 Cash Flow Projection The 2009-10 cash flow projection is based on the second interim report. The following deferrals have been enacted into state legislation and are included in the projection: 60% principal apportionment July 2009 to October 2009 55% principal apportionment August 2009 to October 2009 50% principal apportionment February 2010 to July 2010 100% principal apportionment June 2010 to July 2010 50% K-3 class-size reduction funding February 2010 to July 2010 The projection on the following page shows that the district will have a negative cash balance at the end of July, August, and September 2009 and in June 2010. 5 6 tcirtsiD loohcS yratnemelE anosliW wolF hsaC 01-9002 dnoceS detcejorP detcejorP detcejorP detcejorP detcejorP detcejorP detcejorP detcejorP detcejorP detcejorP detcejorP detcejorP detcejorP ecnereffiD miretnI latoT slaurccA enuJ yaM rpA raM beF naJ ceD voN tcO tpeS guA yluJ seuneveR 31.129,314 56.149,273 94.151,253 50.963,062 12.733,692 39.463,366 65.008,624 90.000,581 39.181,527- 27.139,278- 56.807,823- 33.618,520,1- ecnalaB hsaC gninnigeB edoC tcejbO detcirtsernU - seuneveR 00.0 99.913,135,8 99.913,135,8 04.683,491,1 00.0 00.291,795 00.291,795 00.291,795 00.291,795 06.505,286 06.505,286 06.505,286 06.007,255,1 06.505,286 04.196,064 02.157,402 9108-0108 diA etatS 00.0 00.599,5 00.599,5 00.0 52.998 03.830,2 00.0 58.971 00.0 03.830,2 03.938 00.0 00.0 00.0 00.0 00.0 9308-0208 noitnevbuS feileR xaT 00.0 00.176,227 00.176,227 00.0 24.354,41 24.354,41 02.435,441 24.354,41 62.063,34 32.749,39 73.556,933 17.622,7 00.0 00.0 48.609,82 31.086,12 9708-0408sexaT ytreporP tcirtsiD & ytnuoC 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9808-0808 sdnuF suoenallecsiM 00.0 00.452,192- 00.452,192- 00.0 00.452,192- 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9908-0908 refsnarT timiL euneveR 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9928-0018 euneveR laredeF 00.0 00.416,464 00.416,464 00.152,102 82.292,9 41.646,4 48.678,72 41.646,4 41.207,53 89.225,23 82.292,9 82.292,9 08.229,29 07.032,32 41.646,4 82.292,9 9958-0038 euneveR etatS rehtO 00.0 00.000,05 00.000,05 00.000,4 00.0 00.005,4 00.000,4 00.005,81 00.000,4 00.0 00.000,4 00.005,2 00.005,8 00.0 00.0 00.0 9978-0068 euneveR lacoL rehtO 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9988-0088 denifednU 00.0 00.567,15 00.567,15 00.567,15 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9298-0198 nI srefsnarT dnufretnI 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9798-0398 secruoS gnicnaniF rehtO 00.0 00.438,065- 00.438,065- 00.0 00.438,065- 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9998-0898 snoitubirtnoC 00.0 99.672,479,8 99.672,479,8 04.204,154,1 50.344,728- 68.928,226 40.306,377 14.179,436 04.452,086 11.410,118 55.292,630,1 95.425,107 04.321,456,1 03.637,507 83.442,494 16.327,532 detcirtsernU - latotbuS detcirtseR - seuneveR 00.0 00.452,192 00.452,192 00.0 00.452,192 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9908-0908 refsnarT timiL euneveR 00.0 00.948,736,1 00.948,736,1 88.145,691 88.145,691 67.380,393 09.487,361 29.720,131 34.946,411 94.873,61 48.550,262 00.0 94.873,61 29.720,131 00.0 94.873,61 9928-0018 euneveR laredeF 00.0 00.259,534,1 00.259,534,1 61.678,411 61.678,411 40.917,82 06.797,17 02.595,341 40.917,82 06.797,17 02.595,341 48.111,442 00.889,853 06.797,17 25.953,41 40.917,82 9958-0038 euneveR etatS rehtO 00.0 00.171,008 00.171,008 73.120,001 83.120,001 00.0 17.100,8 19.530,861 86.310,46 00.0 86.310,46 41.850,272 00.0 31.500,42 00.0 00.0 9978-0068 euneveR lacoL rehtO 00.0 00.960,905 00.960,905 00.0 00.960,905 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9998-0898 snoitubirtnoC 00.0 00.592,476,4 00.592,476,4 14.934,114 24.267,112,1 08.208,124 12.485,342 30.956,244 51.283,702 90.671,88 27.466,964 89.961,615 94.663,573 56.038,622 25.953,41 35.790,54 detcirtseR - latotbuS 00.0 99.175,846,31 99.175,846,31 18.148,268,1 73.913,483 66.236,440,1 52.781,710,1 44.036,770,1 55.636,788 02.091,998 72.759,505,1 75.496,712,1 98.984,920,2 59.665,239 09.306,805 41.128,082 SEUNEVER LATOT serutidnepxE 00.0 00.328,266,5 00.328,266,5 46.395,701 69.933,184 69.933,184 66.886,854 94.153,464 20.363,744 20.363,744 94.153,464 13.410,074 31.776,574 20.363,744 31.776,574 91.007,144 9991-0001 seiralaS detacifitreC 00.0 00.950,935,1 00.950,935,1 70.591,601 48.202,621 48.202,621 69.082,921 70.953,231 52.679,631 52.679,631 70.953,231 73.450,041 73.450,041 91.734,531 24.562,98 03.596,7 9992-0002 seiralaS deifissalC 00.0 00.559,824,2 00.559,824,2 55.982,42 95.730,832 95.730,832 46.806,532 95.730,832 55.664,042 46.806,532 59.506,812 28.298,522 68.364,322 85.006,481 25.551,08 51.051,64 9993-0003 stifeneB eeyolpmE 00.0 00.407,947 00.407,947 81.395,08 81.395,08 56.184,64 40.794,7 85.179,17 40.794,7 20.484,04 45.232,44 61.107,321 15.912,77 90.632,53 01.027,57 19.674,85 9994-0004 seilppuS dna skooB 00.0 00.039,820,2 00.039,820,2 01.304,89 11.304,89 51.195,111 04.413,261 72.821,97 58.103,19 00.687,504 68.348,904 44.132,61 00.398,202 75.714,99 56.730,312 06.875,04 9995-0005 sesnepxE gnitarepO & secivreS 00.0 00.000,11 00.000,11 00.0 00.086,9 00.0 00.023,1 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9996-0006 yaltuO latipaC 00.0 00.004,351 00.004,351 03.658,57 03.658,57 00.0 04.786,1 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9927-0007 ogtuO rehtO 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9937-0037 stsoC tceridnI 00.0 00.000,582 00.000,582 00.0 00.000,582 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9267-0067 tuO srefsnarT dnufretnI 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9967-0367 sesU/secruoS rehtO 00.0 00.178,858,21 00.178,858,21 48.039,294 79.211,593,1 81.356,300,1 90.793,699 00.848,589 07.406,329 29.712,662,1 19.293,962,1 90.498,579 78.703,911,1 54.450,209 28.558,339 51.106,495 SERUTIDNEPXE LATOT stessA 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9419-1119 hsaC rehtO 93.557,258,1 00.0 93.557,258,1 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 24.527,481 24.527,481 65.403,384,1 9939-0029 elbavieceR stnuoccA 93.557,258,1 00.0 93.557,258,1 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 24.527,481 24.527,481 65.403,384,1 STESSA LATOT seitilibaiL 65.106,348- 00.0 65.106,348- 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 21.884,76- 65.696,303- 78.614,274- 0459-0059 elbayaP stnuoccA 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9569-1459 )NART( seitilibaiL rehtO 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9669-0669 seitilibaiL mret-gnoL 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9979-0079 ecnalaB dnuF 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 9999 tnuoccA rorrE 65.106,348- 00.0 65.106,348- 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 00.0 21.884,76- 65.696,303- 78.614,274- SEITILIBAIL LATOT 79.019,963,1 06.397,010,1- 84.979,04 61.097,02 44.287,19 51.869,53- 27.720,763- 63.465,632 84.008,142 20.281,019 97.947,741 70.322,445- 86.701,796 )esaerceD(/esaercnI teN 79.019,963,1 84.278,695- 31.129,314 56.149,273 94.151,253 50.963,062 12.733,692 39.463,366 65.008,624 90.000,581 39.181,527- 27.139,278- 56.807,823- hsaC gnidnE Cash Management Strategies The district has made some difficult decisions to balance its budget in future fiscal years, but given current available budget information, the district will need to make additional decisions to ensure that its monthly cash balance is sufficient to meet required obligations and maintain financial solvency. Following are actions the district should evaluate and consider taking to meet payroll and other financial obligations. Exemption from the July and August 2009 Deferrals Districts may request an exemption from the July and August 2009 deferrals of the advance principal apportionment if they meet the criteria as specified in the application from the California Department of Education (CDE). Information regarding the exemption process is available from the CDE at http://www.cde.ca.gov/fg/fi/ir. The application deadline is May 15, 2009. 2008-09 Midyear and 2009-10 Full Year Tax and Revenue Anticipation Notes (TRANs) TRANs consist of short-term borrowing, up to 15 months for maturity, and may be issued under tax-exempt status. A TRAN can be used for a single local education agency (LEA), or pooled with other LEAs to reduce costs. The notes can be sold competitively or negotiated, depending on market conditions and credit issues. A 2008-09 midyear TRAN should not be confused with a separate TRAN that may be needed to alleviate a 2009-10 cash flow deficit. A 2009-10 TRAN would be a completely separate legal obligation and would be calculated separately from a 2008- 09 midyear TRAN. Each TRAN is calculated and based on the financial status and cash flow needs of a particular fiscal year. Internal Borrowing between District Funds Borrowing between district funds is authorized by Education Code Section 42603, which allows LEAs to borrow temporarily between funds to address cash flow shortages. This is the most common method used by LEAs; however, it works only if cash is available in other funds. This type of borrowing has several limitations, including that no more than 75% of the money held in any fund during the current fiscal year may be transferred. In addition, if the transfer is completed prior to the last 120 days of the fiscal year, the funds must be repaid by June 30 of the same fiscal year. If funds are transferred in the last 120 days of the fiscal year, repayment must be made prior to June 30 of the subsequent fiscal year. The district is in the process of building a new elementary school and has received financial hardship funding from the state. However, it is unknown whether state funding will be sufficient to complete the new construction project. Borrow from the County Office of Education LEAs may borrow from the county office of education in accordance with Education Code Sections 42621 and 42622. However, this option depends on the county office being willing and able to provide funds. Based on the current economic outlook, this may not be an option because county offices are monitoring their own cash balances and are often unable to accommodate these requests. 7 Borrow from the County Treasurer Education Code Section 42620 allows LEAs to borrow from the county treasurer. Under Article XVI, Section 6 of the California Constitution, the county treasurer must provide funds to an LEA if the LEA is unable to meets its obligations. However, the county treasurer cannot loan districts money after the last Monday in April of the current fiscal year. In addition, this type of borrowing requires the approval of the governing board by formal resolution. The loan cannot exceed 85% of the amount of money that will accrue to the school district during the fiscal year, and repayment must be made from the first monies received by the LEA before any other obligation is paid. Recommendations The district should: 1. Update its cash flow projections monthly. 2. Review each prior year accounts receivable and accounts payable transaction that has not been received or paid and determine whether it is still valid or needs to be written off. 3. Review the 2008-09 budget for employee benefits and determine whether it is accurate. 4. Evaluate and consider taking action on available cash management strategies. On behalf of FCMAT, we appreciate the opportunity to serve the county office and the district and extend our thanks to the staff of the Los Angeles County Office of Education and the Wilsona Elementary School District for their assistance in providing information to the study team. Please contact me at (661) 821-0718 or dbranham@fcmat.org if you have any questions regarding the information contained in this letter. Sincerely, Diane Branham Fiscal Intervention Specialist C: Melvin Iizuka, Assistant Director, Los Angeles County Office of Education David Andreasen, Superintendent, Wilsona Elementary School District Jennifer Noga, Chief Business Official, Wilsona Elementary School District 8 9 10 11