Yuba Community College District Report

Michael H. Fine Chief Executive Officer TFARD TFARD TFARD Fiscal Health Risk Analysis and Budget Review September 24, 2024 Yuba Community College District September 24, 2024 Kuldeep Kaur, Vice Chancellor, Administrative Services Yuba Community College District 3301 E. Onstott Road Yuba City, CA 95991 Dear Vice Chancellor Kaur: In February 2024, the Yuba Community College District, in coordination with the California Commu- nity Colleges Chancellor's Office, and the Fiscal Crisis and Management Assistance Team (FCMAT) entered into an agreement for FCMAT to perform a fiscal health risk analysis, as well as review the district's budgeting practices and multiyear projections. The agreement stated that FCMAT would perform the following: 1. Fiscal Health Risk Analysis Prepare an analysis using FCMAT's Fiscal Health Risk Analysis tool to identify the district's fiscal health and risk of insolvency in the current and two subsequent fiscal years. 2. District Budget Review Review the district's 2023-24 budget and multiyear projections to determine the reasonableness of the assumptions used to develop its revenue and expenditure projections, including economic factors, operational conditions and other factors affecting the district. Make recommendations if appropriate. This final report contains the study team’s findings and recommendations. FCMAT appreciates the opportunity to serve the Yuba Community College District and extends our thanks to the district 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 Study Team ................................................................................................................5 Score Breakdown by Section ................................................................................6 Fiscal Health Risk Analysis .......................................................................... 7 Annual Independent Audit Report ....................................................................................7 Budget Development and Adoption ................................................................................7 Budget Monitoring and Updates .......................................................................................8 Cash Management ................................................................................................................9 Collective Bargaining Agreements ...................................................................................9 Intrafund and Interfund Transfers ...................................................................................10 Deficit Spending ..................................................................................................................10 Employee Benefits ...............................................................................................................11 Enrollment and Attendance ...............................................................................................11 Facilities .................................................................................................................................12 Fund Balance and Reserve for Economic Uncertainty ..............................................12 Unrestricted General Fund – Current Year ..................................................................14 Information Systems and Data Management ..............................................................14 Internal Controls and Fraud Prevention ........................................................................15 Leadership and Stability ....................................................................................................16 Multiyear Projections ..........................................................................................................16 Non-Voter-Approved Debt and Risk Management ....................................................16 Position Control ...................................................................................................................17 Total Risk Score, All Areas ....................................................................................17 Fiscal Crisis and Management Assistance Team Yuba Community College District 1 Fiscal Health Risk Analysis Fiscal Health Risk Analysis Summary ............................................................................18 Additional Findings and Recommendations ..........................................19 Budget Development .........................................................................................................19 Multiyear Budget Projections ..........................................................................................29 Salaries and Benefits ........................................................................................................32 Collective Bargaining ........................................................................................................32 Faculty Release and Reassigned Time ........................................................................33 Enrollment ............................................................................................................................33 Integrated Systems ............................................................................................................34 Facilities ................................................................................................................................34 Position Control ..................................................................................................................35 Internal Controls .................................................................................................................36 Appendices ....................................................................................................39 Appendix A ..........................................................................................................................39 Appendix B .........................................................................................................................40 Fiscal Crisis and Management Assistance Team Yuba Community College District 2 Fiscal Health Risk Analysis About FCMAT FCMAT’s primary mission is to assist California’s local TK-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. 90 80 70 60 50 40 30 20 10 0 FCMAT has continued to make adjustments in the types of support provided based on the changing dynamics of TK-14 LEAs and the implementation of major educational reforms. FCMAT also develops and provides numerous publications, software tools, workshops and professional learning 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 1991 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 was signed into law. 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. Fiscal Crisis and Management Assistance Team Yuba Community College District 3 seidutS fo rebmuN Studies by Fiscal Year 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 18/19 19/20 20/21 21/22 22/23 Fiscal Health Risk Analysis Since 1992, FCMAT has been engaged to perform more than 1,400 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 sched- ule for charges to requesting agencies. Fiscal Crisis and Management Assistance Team Yuba Community College District 4 Fiscal Health Risk Analysis Introduction Background The Yuba Community College District was established in 1927. It spans eight counties and more than 4,000 square miles in north-central California. The district has two colleges, Yuba College and Woodland Community College, which serve more than 13,000 students in the northern Sacramento Valley. In February 2024, the California Community Colleges Chancellor's Office (CCCCO) asked the Fiscal Crisis and Management Assistance Team (FCMAT) to perform a Fiscal Health Risk Analysis (FHRA) and to review the district's budget and multiyear projections. Study and Report Guidelines FCMAT visited the district on March 25-26, 2024 to conduct interviews, collect data and review documents. This report is the result of those activities and is divided into the following sections: • Fiscal Health Risk Analysis. • Fiscal Health Risk Analysis Summary. • Additional Findings and Recommendations. • Appendices. 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, a comprehensive guide to usage and accepted style that emphasizes con- ciseness and clarity. In addition, this guide emphasizes plain language, discourages the use of jargon and capitalizes relatively few terms. Study Team The study team was composed of the following members: Jeffrey B. Potter, CFE Cambridge West Partnership FCMAT Intervention Specialist FCMAT Consultant John Lotze FCMAT Technical Writer Each team member reviewed the draft report to confirm accuracy and achieve consensus on the final recommendations. Fiscal Crisis and Management Assistance Team Yuba Community College District 5 Fiscal Health Risk Analysis About the Analysis FCMAT has developed the Fiscal Health Risk Analysis (FHRA) as a tool to help evaluate a community college district’s fiscal health and risk of insolvency in the current and two subsequent fiscal years. The FHRA assesses a community college district’s ability to develop and execute a sustainable financial plan. The FHRA includes 18 sections, each containing specific questions. Each section and specific question is included based on FCMAT’s work since its inception; 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 a district’s failure. The greater the number of “no” answers to the questions in the analysis, the higher the score, which indicates a greater risk of insolvency or fiscal issues. 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. Identifying five-year historical trends for enrollment, staffing, salary and benefits, and revenue, including information on how each contributes to obstacles and issues early on, is critical to maintaining fiscal health. Multiyear planning, risk assessment, and cash flow projections will enable a district to better understand 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, especially if it is at risk or in fiscal distress. Score Breakdown by Section Because the score is not calculated by category, category values provided are subject to minor rounding errors and are provided for information only. 1. Annual Independent Audit Report 0.0% 2. Budget Development and Adoption 2.2% 3. Budget Monitoring and Updates 1.0% 4. Cash Management 0.0% 5. Collective Bargaining Agreements 1.8% 6. Intrafund and Interfund Transfers 1.0% 7. Deficit Spending 0.0% 8. Employee Benefits 0.0% 9. Enrollment and Attendance 0.0% 10. Facilities 0.2% 11. Fund Balance and Reserve for Economic Uncertainty 0.0% 12. Unrestricted General Fund – Current Year 1.0% 13. Information Systems and Data Management 2.0% 14. Internal Controls and Fraud Prevention 1.8% 15. Leadership and Stability 1.0% 16. Multiyear Projections 0.0% 17. Non-Voter-Approved Debt and Risk Management 0.0% 18. Position Control 4.7% Score 16.3% Fiscal Crisis and Management Assistance Team Yuba Community College District 6 Fiscal Health Risk Analysis Fiscal Health Risk Analysis For Community College Districts Dates of fieldwork: March 25-26, 2024 District: Yuba Community College District 1. Annual Independent Audit Report Yes No N/A 1.1 Has the independent audit report for the most recent fiscal year been completed and presented to the board by the statutory timeline of December 31? ✓ ☐ ☐ (Extensions of the timeline granted by the Chancellor’s Office should be explained.) . . . 1.2 Were the district’s most recent and prior two independent audit reports free of material ✓ ☐ ☐ findings of weakness? . . . . . . . . . . . . . . . . . . . . . . . . . ☐ ☐ ✓ 1.3 Has the district corrected all audit findings from the most recent and prior two audits? . . 1.4 Has the district corrected the most recent and prior two years’ audit findings without ☐ ☐ ✓ affecting its fiscal health (e.g., material apportionment or internal control findings)? . . . 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, clearly articulated, and aligned with the signed state budget and the ✓ ☐ ☐ Student-Centered Funding Formula (SCFF)? . . . . . . . . . . . . . . . . . 2.2 Does the district use a budget development method other than a prior-year rollover budget, and if so, is there a procedure to evaluate prior year and future expenses (nonfixed expenditures, supplies, adjunct and other hourly positions) and removal ✓ ☐ ☐ of one-time revenues and expenses? . . . . . . . . . . . . . . . . . . . . ☐ ✓ ☐ 2.3 Does the district use position control data for budget development? . . . . . . . . . The district does not use a documented position control system. 2.4 Does the district coordinate program review as part of the budget development process and include input from faculty/staff, administrators, the governing board, and the budget ✓ ☐ ☐ committee in accordance with a documented planning model? . . . . . . . . . . . 2.5 Does the budget development process include an explanation of the calculation of the SCFF (base full time equivalent students [FTES], supplemental low income and student ✓ ☐ ☐ success portions of the funding) with reasonable assumptions? . . . . . . . . . . . 2.6 Does the district budget and expend restricted funds as authorized by the funding source ✓ ☐ ☐ before expending unrestricted funds? . . . . . . . . . . . . . . . . . . . . 2.7 Does the district have a documented policy and/or procedure for evaluating the proposed acceptance of grants and other types of restricted funds to assess their congruence with the institution’s strategic plan and the potential multiyear impact on the district’s ✓ ☐ ☐ unrestricted general fund? . . . . . . . . . . . . . . . . . . . . . . . . Fiscal Crisis and Management Assistance Team Yuba Community College District 7 Fiscal Health Risk Analysis 2.8 Are expected revenues (not based on actuals) more than or equal to expected expenditures (not based on actuals) in the district’s adopted budget (budget is not ✓ ☐ ☐ dependent on carryover funds to be balanced)? . . . . . . . . . . . . . . . . 2.9 Has the district refrained from using negative or contra expenditure accounts (excluding appropriate abatements in accordance with the Budget and Accounting Manual ✓ ☐ ☐ [BAM]) in its budget? . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10 Does the district have a board-adopted budget calendar that includes statutory due/closing dates (accounts receivable, accounts payable, closing of purchase orders, journal entries, etc.), major budget development tasks and deadlines, and the staff ☐ ✓ ☐ member/department responsible for completing them? . . . . . . . . . . . . . The district does not have a board-adopted budget calendar. ☐ ☐ ✓ 2.11 Did the district close its books with the county office of education on time? . . . . . . 3. Budget Monitoring and Updates Yes No N/A 3.1 Are actual revenues and expenses consistent with the most current budget ✓ ☐ ☐ projection of each major object code? . . . . . . . . . . . . . . . . . . . . 3.2 Are revenue and expenditure budget revisions posted at least quarterly in the financial ✓ ☐ ☐ system? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Are quarterly financial status reports, 311Q, submitted to the board quarterly with a ✓ ☐ ☐ clearly written summary of the report, budget assumptions and budget revisions? . . . . 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? . . . . . . . . . . . . . . . . . . . . . 3.5 Has the district addressed any budget-related deficiencies identified in the most recent Accrediting Commission for Community and Junior Colleges (ACCJC) ☐ ☐ ✓ Annual Fiscal Report? . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 If a college in the district has been notified that it is on enhanced monitoring or watch-list status based on the college’s ACCJC Annual Fiscal Report, have the district and college(s) created a written plan to address the issues of concern ☐ ☐ ✓ identified by the ACCJC? . . . . . . . . . . . . . . . . . . . . . . . . 3.7 Does the district’s enterprise software system include hard budget blocks that prevent the processing of requisitions or purchase orders when the budget is ✓ ☐ ☐ insufficient to support the expenditure? . . . . . . . . . . . . . . . . . . . ☐ ✓ ☐ 3.8 Does the district encumber and adjust encumbrances for salaries and benefits? . . . . . The district does not encumber salaries and benefits. 3.9 Are all balance sheet accounts in the general ledger reconciled each quarter, at a ✓ ☐ ☐ minimum, and at year-end close? . . . . . . . . . . . . . . . . . . . . . Fiscal Crisis and Management Assistance Team Yuba Community College District 8 Fiscal Health Risk Analysis 4. Cash Management Yes No N/A 4.1 Does the district balance all cash and investment accounts with bank statements ✓ ☐ ☐ monthly? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Are outstanding amounts in the cash and investment account reconciliations less than ✓ ☐ ☐ one year old, or if older, have a resolution? . . . . . . . . . . . . . . . . . . 4.3 Are accounts held by the county treasurer reconciled and balanced with the district’s ✓ ☐ ☐ and county office of education’s reports monthly? . . . . . . . . . . . . . . . 4.4 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? . . . . . . . . . 4.5 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 address its cash flow needs for the current and subsequent year? . . . . . . . 4.6 Does the district have sufficient cash resources in its other funds to support its ✓ ☐ ☐ current and projected obligations in those funds? . . . . . . . . . . . . . . . . 4.7 If interfund borrowing is occurring, does the district comply with Object Code 7300 ✓ ☐ ☐ requirements in the BAM? . . . . . . . . . . . . . . . . . . . . . . . . 4.8 If the district is managing cash in any funds through external borrowing, such as a TRANS, has the district provided a written plan for repayment attributable to the ☐ ☐ ✓ same year the funds were borrowed? . . . . . . . . . . . . . . . . . . . . 5. Collective Bargaining Agreements Yes No N/A 5.1 Does the district accurately quantify the effects of collective bargaining agreements and include them in its budget and multiyear projections by conducting a presettlement analysis and identifying ongoing revenue sources or expenditure reductions to support ✓ ☐ ☐ the agreement? . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 In the current and prior two years has the district settled all new employee compensation costs (salary, benefits, load factoring, etc.) in the bargaining agreements at or under the ✓ ☐ ☐ funded cost of living adjustment (COLA)? . . . . . . . . . . . . . . . . . . 5.3 If settlements have not been reached in the past two years, has the district identified ✓ ☐ ☐ resources to cover the estimated costs of district proposals? . . . . . . . . . . . . 5.4 Has the district’s board of governors approved and certified collective bargaining ☐ ✓ ☐ agreements with all its bargaining units for the current and the prior two years? . . . . . At the time of FCMAT’s fieldwork, the collective bargaining agreement with full-time and part-time faculty had expired on June 30, 2022 and no successor agreement was in place. Fiscal Crisis and Management Assistance Team Yuba Community College District 9 Fiscal Health Risk Analysis 5.5 Has the district conducted a faculty release and reassign time analysis in the last two years and determined how it may impact the overall cost to the district as it relates to ☐ ✓ ☐ collective bargaining? . . . . . . . . . . . . . . . . . . . . . . . . . Although FCMAT recognizes that at the time of fieldwork for this study a new collective bargaining agreement had not been reached within the last two years, FCMAT was not provided with evidence that the district analyzes the fiscal impact of faculty release and reassigned time as it relates to collective bargaining. 6. Intrafund and Interfund Transfers Yes No N/A 6.1 Does the district have a board-approved plan to eliminate, reduce or control intrafund transfers from the general fund unrestricted subfund to the general fund restricted ☐ ✓ ☐ subfund? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The district has no board-approved plan to eliminate, reduce or control intrafund transfers from the unrestricted to the restricted general fund. Without such a plan, programs that are not self-supporting can place increasing pressure on unrestricted funds and may require large and/or unexpected transfers as the fiscal year progresses. 6.2 Does the board approve any intrafund or interfund transfers (contributions/encroachments) from or to the unrestricted general fund prior ✓ ☐ ☐ to occurrence? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 If the district has deficit spending in funds other than the unrestricted general fund, has it included in its multiyear projection any transfers from the unrestricted general ✓ ☐ ☐ fund to any resulting negative fund balance (e.g., interfund transfers)? . . . . . . . . 6.4 If any interfund transfers were required for other funds in either of the prior two fiscal years, and the need is recurring in the current year, did the district budget for them at ✓ ☐ ☐ reasonable levels? . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. Deficit Spending Yes No N/A 7.1 Is the district avoiding a structural deficit in the current and two subsequent fiscal years? (A structural deficit is when ongoing unrestricted expenditures and contributions exceed ongoing unrestricted revenues.) If no, has the board approved and implemented ✓ ☐ ☐ a plan to reduce and/or eliminate deficit spending? . . . . . . . . . . . . . . . 7.2 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? . . . . . . . . . . . . . . . . . . . . . . . . ✓ ☐ ☐ 7.3 Has the district decreased deficit spending over the past two fiscal years? . . . . . . . Fiscal Crisis and Management Assistance Team Yuba Community College District 10 Fiscal Health Risk Analysis 8. Employee Benefits Yes No N/A 8.1 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)? . . . . . . . . . . . . . . . . . 8.2 Is the district funding a board-adopted plan to fund its projected liabilities for retiree ✓ ☐ ☐ health benefits? . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 Is the district funding a board-adopted plan to fund its projected employer contributions ✓ ☐ ☐ to CalSTRS and CalPERS? . . . . . . . . . . . . . . . . . . . . . . . . ✓ ☐ ☐ 8.4 Is the district following a board-adopted policy to limit faculty banked hours? . . . . . . 8.5 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? . . . . . . 8.6 Does the district track, reconcile and report employees’ compensated leave balances ✓ ☐ ☐ on the balance sheet? . . . . . . . . . . . . . . . . . . . . . . . . . 9. Enrollment and Attendance Yes No N/A 9.1 Has the district’s enrollment been increasing or remained stable for the current and ✓ ☐ ☐ two prior years? . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2 Does the district monitor and analyze enrollment, weekly student contact hours (WSCH) and full-time equivalent students (FTES) data at least monthly through the ✓ ☐ ☐ second reporting period (P2)? . . . . . . . . . . . . . . . . . . . . . . ✓ ☐ ☐ 9.3 Does the district track historical WSCH and FTES data to establish future trends? . . . . 9.4 Do colleges within a multi-college district maintain a record of WSCH or FTES that is reconciled monthly at the college and district levels at least through the second ✓ ☐ ☐ reporting period? . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5 Are the district’s enrollment projections and assumptions based on historical data, demographic trend analysis, high school enrollments, community participation rates ✓ ☐ ☐ and other industry standards, in addition to any board policies that limit enrollment? . . . 9.6 Do the institutional research staff and business/fiscal staff work together to develop ✓ ☐ ☐ enrollment and FTES predictions? . . . . . . . . . . . . . . . . . . . . . 9.7 Do the colleges’ comprehensive enrollment plans set goals for the funding elements ✓ ☐ ☐ in the SCFF? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ✓ ☐ ☐ 9.8 Does the comprehensive enrollment plan establish academic productivity goals? . . . . Fiscal Crisis and Management Assistance Team Yuba Community College District 11 Fiscal Health Risk Analysis 10. Facilities Yes No N/A 10.1 Does the district have sufficient and available capital outlay and/or bond funds to cover ✓ ☐ ☐ all contracted obligations for capital facilities projects? . . . . . . . . . . . . . ✓ ☐ ☐ 10.2 Does the district properly track and account for facility-related projects? . . . . . . . 10.3 Does the district use lecture classrooms for at least 48 or 53 hours per 70-hour week ☐ ✓ ☐ as defined by the Board of Governors (BOG) policy on Utilization and Space Standards? . . Because instruction was shifted to online delivery during the pandemic and many classes continue to be offered online, the district is not meeting the minimum standard for lecture space. The district needs to determine the long-term implications of not fully using its lecture space. 10.4 Does the district use laboratory classrooms for at least 27.5 hours per 70-hour week ☐ ✓ ☐ as defined by the BOG policy on Utilization and Space Standards? . . . . . . . . . The district is not meeting the utilization standard for laboratory space. The district has 54% more lab space than is needed for the applicable FTES it is serving. 10.5 Does the district include facility needs (maintenance, repair and operating requirements) ✓ ☐ ☐ when adopting a budget? . . . . . . . . . . . . . . . . . . . . . . . . 10.6 Has a quantitative Facilities Condition Index assessment been conducted sometime ✓ ☐ ☐ in the last three years through the Foundation for California Community Colleges? . . . . ✓ ☐ ☐ 10.7 Does the district have a five-year scheduled maintenance plan? . . . . . . . . . . 10.8 If the district passed a Proposition 39 general obligation bond, has it met the ✓ ☐ ☐ requirements for audit, reporting, and a citizens’ bond oversight committee? . . . . . . 10.9 If the district has passed a Proposition 39 general obligation bond or a parcel tax and it has received any legal challenges or program audit findings concerning the ✓ ☐ ☐ use of those funds, has it resolved those complaints and/or findings? . . . . . . . . 10.10 Does the district have a long-range facilities master plan that reflects its current ✓ ☐ ☐ and projected facility needs and aligns with the five-year capital outlay plan? . . . . . . 10.11 Is the district following an Americans with Disabilities Act (ADA) transition plan that ☐ ✓ ☐ was developed within the past 5 to 10 years? . . . . . . . . . . . . . . . . . The district’s last ADA transition plan was developed in 2008. 11. Fund Balance and Reserve for Economic Uncertainty Yes No N/A In this section, all questions refer to the unrestricted general fund. 11.1 Has the district adopted policies to maintain sufficient unrestricted reserves with a suggested minimum of two months of general fund operating expenditures or revenues, consistent with Budgeting Best Practices published by the Government Finance Officers ✓ ☐ ☐ Association, which they have followed? . . . . . . . . . . . . . . . . . . . 11.2 Did the district’s adopted budgets for the subsequent two years include at least two ✓ ☐ ☐ months of operating expenditures in the Reserve for Economic Uncertainty? . . . . . . Fiscal Crisis and Management Assistance Team Yuba Community College District 12 Fiscal Health Risk Analysis 11.3 Does the district have at least a minimum of two months of general fund operating expenditures or revenues in the Reserve for Economic Uncertainty in its budget ✓ ☐ ☐ projections for the two subsequent years? . . . . . . . . . . . . . . . . . . 11.4 If the district’s budget projections for the subsequent two years do not include at least a minimum of two months of general fund operating expenditures or revenues in the Reserve for Economic Uncertainty, does the district’s multiyear fiscal plan include a board-approved plan to restore at least the Reserve for Economic Uncertainty to at least ☐ ☐ ✓ a minimum of general fund operating expenditures or revenues? . . . . . . . . . . 11.5 Is the district’s projected unrestricted general fund ending balance stable or increasing ✓ ☐ ☐ in the two subsequent fiscal years? . . . . . . . . . . . . . . . . . . . . . 11.6 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 reserves above the recommended minimum reserve level of two months of operating ✓ ☐ ☐ expenditures? . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fiscal Crisis and Management Assistance Team Yuba Community College District 13 Fiscal Health Risk Analysis 12. Unrestricted General Fund – Current Year Yes No N/A ✓ ☐ ☐ 12.1 Does the district ensure that one-time revenues do not pay for ongoing expenditures? . . 12.2 Is the percentage of the district’s general fund unrestricted budget that is allocated to salaries and benefits, instructional service agreement, backfill of categorical to employee compensation, and pay as you go retiree health benefit expenses at or ✓ ☐ ☐ below 85% for the three prior years as reported by the CCCCO? . . . . . . . . . . 12.3 Is the district in compliance with the Fifty Percent Law (Education Code Section 84362) ✓ ☐ ☐ for the last three years? . . . . . . . . . . . . . . . . . . . . . . . . . 12.4 Is the district at or above its Full-Time Obligation Number (FON)? If the district is over ☐ ✓ ☐ its FON, is it within 3% of the published FON? . . . . . . . . . . . . . . . . . The district's fall 2023 published FON is 94, and its total full-time equivalent faculty is 120.6, so it is exceeding the published FON by 28%. 12.5 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? . . . . . . . . . . . . . . . . . . . . . . . . . . 12.6 Is the district using its restricted dollars fully by expending allocations for restricted ✓ ☐ ☐ programs within the required time? . . . . . . . . . . . . . . . . . . . . . 12.7 Does the district consistently account for all program costs, including maximum allowable ✓ ☐ ☐ indirect costs, for each restricted resource? . . . . . . . . . . . . . . . . . . 13. Information Systems and Data Management Yes No N/A 13.1 Does the district use a human resources system and position control system that is ☐ ✓ ☐ integrated with the financial reporting system? . . . . . . . . . . . . . . . . The human resources and position control systems are not integrated with the financial reporting system. ✓ ☐ ☐ 13.2 Does the district have an emergency data recovery system? . . . . . . . . . . . . ☐ ✓ ☐ 13.3 Are enrollment class schedule software and budget development systems integrated? . . The district does not have enrollment class scheduling software that integrates with budget development. 13.4 Does the district conduct regularly scheduled evaluation tests of the security measures ✓ ☐ ☐ that protect student and employee personal information? . . . . . . . . . . . . . 13.5 Does the district use reports from its management information systems to validate the ✓ ☐ ☐ supplemental and success outcomes funded in the SCFF? . . . . . . . . . . . . Fiscal Crisis and Management Assistance Team Yuba Community College District 14 Fiscal Health Risk Analysis 14. Internal Controls and Fraud Prevention Yes No N/A 14.1 Does the district have controls that limit access to and include multiple levels ✓ ☐ ☐ of authorizations within its financial system? . . . . . . . . . . . . . . . . . 14.2 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? . . . . . . . . . . . . . . . . . . . . . The district lacks a process to monitor access to, and authorization controls for, its financial system. 14.3 Is there a desk manual that segregates duties in the following areas, and are staff supervised and monitored accordingly? ✓ ☐ ☐ a. Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . ✓ ☐ ☐ b. Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . ✓ ☐ ☐ c. Cash management . . . . . . . . . . . . . . . . . . . . . . . . . . ✓ ☐ ☐ d. Budget monitoring and review . . . . . . . . . . . . . . . . . . . . . ✓ ☐ ☐ e. Purchasing and contracts . . . . . . . . . . . . . . . . . . . . . . . ✓ ☐ ☐ f. Payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ✓ ☐ ☐ g. Human resources (i.e., duties relative to position control and payroll processes) . . . . ✓ ☐ ☐ h. Associated student body . . . . . . . . . . . . . . . . . . . . . . . ✓ ☐ ☐ i. Warehouse and receiving . . . . . . . . . . . . . . . . . . . . . . . 14.4 Are beginning balances for the new fiscal year posted and reconciled with the ✓ ☐ ☐ ending balances for each fund from the prior fiscal year? . . . . . . . . . . . . . ✓ ☐ ☐ 14.5 Does the district review and work to clear prior year accruals by October 31? . . . . . . 14.6 Does the district reconcile all suspense accounts, including salaries and benefits, at ✓ ☐ ☐ least each quarter and at the close of the fiscal year? . . . . . . . . . . . . . . 14.7 Has the district reconciled and closed the general ledger (books) within the time ✓ ☐ ☐ prescribed by the county office of education? . . . . . . . . . . . . . . . . . ✓ ☐ ☐ 14.8 Does the district have processes and procedures to discourage and detect fraud? . . . . 14.9 Does the district maintain an independent fraud reporting hotline or other ✓ ☐ ☐ reporting service(s)? . . . . . . . . . . . . . . . . . . . . . . . . . . 14.10 Does the district have a process for collecting and following up on reports of ☐ ✓ ☐ possible fraud (such as an anonymous fraud reporting hotline)? . . . . . . . . . . The district lacks policies and procedures for following up on reports of suspected fraud, abuse, or waste of district resources. ☐ ✓ ☐ 14.11 Does the district have an internal audit department or dedicated staff? . . . . . . . . Because the district is small, it has no dedicated internal audit department or staff. However, because it is a fiscally accountable/independent district, it is required to have an identified disbursement officer, yet there is no evidence of this function. Fiscal Crisis and Management Assistance Team Yuba Community College District 15 Fiscal Health Risk Analysis 14.12 Does the district limit the issuance of Cal-Cards (credit cards) and have procedures ✓ ☐ ☐ in place for appropriate use (e.g., allowable expenses, daily limit, etc.)? . . . . . . . . 15. Leadership and Stability Yes No N/A 15.1 Does the district have a chief business official (CBO) who has been with the ✓ ☐ ☐ district as CBO for more than two years? . . . . . . . . . . . . . . . . . . . 15.2 Does the district have a chief executive officer (CEO) who has been with the ☐ ✓ ☐ district as CEO for more than two years? . . . . . . . . . . . . . . . . . . . The CEO has been with the district since June 15, 2023. 15.3 Does the CEO meet on a scheduled and regular basis with all members of their ✓ ☐ ☐ administrative cabinet? . . . . . . . . . . . . . . . . . . . . . . . . . 15.4 Is training on the financial procedure manual, budget, and procurement development provided to district, college and department administrators who ✓ ☐ ☐ are responsible for budget management? . . . . . . . . . . . . . . . . . . 15.5 Does the governing board follow an approved schedule to review and revise ✓ ☐ ☐ policies and administrative regulations? . . . . . . . . . . . . . . . . . . . 15.6 Are newly adopted or revised board policies and administrative regulations formally ✓ ☐ ☐ implemented, communicated and available to staff? . . . . . . . . . . . . . . . 15.7 Do all board members attend training on the budget and governance at least every ✓ ☐ ☐ two years? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ✓ ☐ ☐ 15.8 Is the CEO’s evaluation performed according to the terms of the contract? . . . . . . . 16. Multiyear Projections Yes No N/A 16.1 Has the district developed multiyear projections that include detailed assumptions ✓ ☐ ☐ aligned with industry standards, including CCCCO and ACCJC? . . . . . . . . . . 16.2 Did the district include the calculation of SCFF breakdown (base FTES, supplemental low income, and student success portions) with multiyear considerations to help ✓ ☐ ☐ calculate its multiyear projections? . . . . . . . . . . . . . . . . . . . . . 16.3 Does the district use its most current multiyear projection when making financial ✓ ☐ ☐ decisions? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17. Non-Voter-Approved Debt and Risk Management Yes No N/A 17.1 Are the sources of repayment for non-voter-approved debt (such as certificates of participation (COPs), bridge financing, bond anticipation notes [BANS] and tax revenue anticipation notes TRANS]) predictable and stable, and not from the ✓ ☐ ☐ unrestricted general fund? . . . . . . . . . . . . . . . . . . . . . . . . Fiscal Crisis and Management Assistance Team Yuba Community College District 16 Fiscal Health Risk Analysis 17.2 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? . . . . . . . . . . 17.3 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? . . . . . . . . . . . . . . . 17.4 If the district has non-voter-approved debt (such as COPs, bridge financing, BANS, TRANS and others), is the total of annual debt service payments no greater than 2% ✓ ☐ ☐ of the district’s unrestricted general fund revenues? . . . . . . . . . . . . . . 18. Position Control Yes No N/A 18.1 Does the district use a documented position control system that ties all positions and ☐ ✓ ☐ costs data to eliminate disparities between human resources, payroll, and budget? . . . The district does not use a documented position control system. ☐ ✓ ☐ 18.2 Does the district analyze and adjust permanent staffing based on enrollment? . . . . . FCMAT found no evidence that staffing levels are adjusted consistently based on enrollment trends. 18.3 Does the district reconcile budget, payroll and position control regularly, meaning at ✓ ☐ ☐ least at budget adoption and quarterly reporting periods? . . . . . . . . . . . . 18.4 Does the governing board approve all new positions and extra assignments with a ☐ ✓ ☐ budget source identified before positions are posted? . . . . . . . . . . . . . . Although interviews indicated that new positions may be approved by the governing board, FCMAT found no evidence that the board also approves extra assignments before they are given to employees. 18.5 Is the approval of hiring staff using categorical or other restricted dollars subject ✓ ☐ ☐ to adequate program funding? . . . . . . . . . . . . . . . . . . . . . . 18.6 Are there standing meetings for managers and staff responsible for the district’s human ☐ ✓ ☐ resources, payroll and budget functions to discuss and improve processes? . . . . . . According to staff interviews, there are no regular joint meetings of human resources and fiscal staff and managers to discuss and improve processes. Total Risk Score, All Areas 16.3% Key to Risk Score High Risk: 40% or more Moderate Risk: 25-39% Low Risk: 24% and lower Fiscal Crisis and Management Assistance Team Yuba Community College District 17 Fiscal Health Risk Analysis Fiscal Health Risk Analysis Summary The overall FHRA score for the Yuba Community College District is 16.3%, which indicates a low risk of insolvency. This score is based on several factors outlined in the FHRA. Although the overall risk is low, the college lacks some important elements of the operational process. This report gives details on those defi- cient elements and the risks they pose. Fiscal Crisis and Management Assistance Team Yuba Community College District 18 Additional Findings and Recommendations Budget Development Additional Findings and Recommendations In addition to the FHRA portion of this report, FCMAT was asked to review the district's budget and multi- year projections. This portion of the report presents the results of the FHRA, including observations about policies and procedures. It is based on a review of financial data, supporting documents, and interviews with individual district employees, and it details the findings described in the FHRA. In addition, FCMAT identified further challenges facing the district’s budget development process, which are outlined in this report. Budget Development Basic Budgeting Principles A plan that accurately projects revenues and expenses is the first step in the budgeting process. To gen- erate projections, certain assumptions need to be made using the best and most recent information avail- able when the budget is developed. This includes using data from communications and analyses from the CCCCO, as well as information about any anticipated changes in employee salaries and benefits, expected increases in operating costs such as utilities and contractual agreements, and historical trends that help guide the development of various expenditure assumptions. In the participatory governance and representative environment of California community colleges, a budget plan's underlying assumptions must be shared with education partners and constituents. Maintaining transparency throughout this process is essential to building confidence and trust in the plan. Budget planning does not always produce positive results. When planned expenses exceed anticipated income, a budget deficit results. To adequately explain the rationale behind any projected budget deficit, it is vital to make accurate assumptions that support the budget. It is also imperative that any projected deficit spend- ing include a corrective action plan to avoid any further erosion of the ending fund balance and existing reserves. The district’s budget plan for the current year is strongly influenced by the actual revenue and expenses of the prior fiscal year. However, using prior year or historical figures as the sole foundation for budgeting is risky. When actual prior year expenses exceed prior year revenues, an organization must proceed cau- tiously to determine if the budget condition is temporary and isolated, or if it indicates a more problematic and ongoing structural deficit. Using projections that combine prior year actuals, the current year's budget plan, and projections for the subsequent three to five years can help show how the organization's goals and related activities may affect its fiscal outlook. A district's ability to navigate periods of fiscal and eco- nomic difficulty increases if it is equipped and prepared to manage potential reductions in revenue and/or increases in expenses. Budget Calendar Community college districts are required to create a budget that complies with the California Community Colleges Budget and Accounting Manual and California Code of Regulations Title 5, Policies for Prerequisites, Corequisites and Advisories on Recommended Preparation, and to present it for adoption by their governing board. Accreditation standards require that districts distribute information and provide opportunities for education partners to participate in budget development. Fiscal Crisis and Management Assistance Team Yuba Community College District 19 Additional Findings and Recommendations Budget Development Districts can better manage their finances, align spending with their mission, vision and goals, and comply with state laws and standards when they have a budget calendar. An effective budget calendar includes critical dates and completion goals for budget creation, review, and approval. Internal processes and schedules that alert all involved to deadlines, assignments, and other events also need to be included in the calendar. The best practice is to have a budget calendar that shows expectations and deadlines and to have it approved by the governing board before budget development begins. Once approved, it needs to be made available to all constituencies in the district. The approved calendar should help the Finance Department meet various deadlines, including those for budget updates and adjustments. The district does not have a budget calendar. It needs to develop a comprehensive budget calendar and submit it to the governing board for approval each year before budget development begins (see Appendix A for a sample budget calendar). Revenue The state of California’s budget process begins with the annual release of the governor's budget proposal for the upcoming fiscal year, which is typically released on or before January 10. In May, the governor's May Revise budget proposal provides updated information and projections built on the initial January proposal. After considering the governor's May Revise, the Legislature passes a final budget by June 15 for the upcoming fiscal year. After reviewing the legislative budget, the governor typically signs it into law, assum- ing no veto authority is exercised. However, various trailer bills may be introduced subsequently to clarify or revise the budget following its passage, and these may require revisions to local budgets. The CCCCO distributes revenue allocations to community college districts through the CCCCO budget process, which runs concurrently with the state's budget development and adoption process. Typically, district budget development starts in January with revenue estimates based on the governor's January budget proposal. This eventually results in a tentative budget for board adoption in June, even though the state budget for the upcoming fiscal year has not yet been finalized. The tentative budget's primary goal is to give a district spending authority on July 1 as the new fiscal year begins. The summer months are then dedicated to closing the prior year's accounting books and continuing the district's budget development and revision. By September 15, a district’s governing board must approve its final budget proposal. Each district projects the total computational revenue (TCR) the CCCCO will provide, which includes fund- ing allocations from state general fund, education protection account (EPA), and local revenue sources. The CCCCO uses information on revenue collections from the state and data from the colleges to refine its esti- mates over multiple reporting periods. This includes the advance apportionment (ADV) which is reported in July, the first principal apportionment (P-1) reported in February, the second principal apportionment (P-2) reported in June, and a subsequent verification and recalculation of the annual apportionment (R-1), which occurs after year-end closing and is reported in February of the following fiscal year. Because of the volatility of the state’s economy, the CCCCO's estimates have varied dramatically over the last six years, making it difficult for districts to prepare a clear revenue estimate for the fiscal year. The primary cause has been the application of a deficit factor to the TCR, which may be applied for various reasons, such as a shortage in expected tax receipts, shortfalls in student enrollment, and lower-than-antic- ipated property tax receipts. Fiscal Crisis and Management Assistance Team Yuba Community College District 20 Additional Findings and Recommendations Budget Development The following tables and charts show the challenges the district has faced in matching its budgeted rev- enue to actual revenue received over the last six years (2018-19 through 2023-24); they also illustrate the magnitude of the deficit factors that can occur within a fiscal year. Table 1: 2018-19 Apportionment Revenue Deficits Date Reporting Period Deficit Factor % Revenue Reduction 2/26/2019 P-1 5.06% $2,807,353 4/26/2019 Revised P-1 5.77% $3,148,829 6/26/2019 P-2 2.34% $1,277,562 2/20/2020 R-1 0.14% $77,022 6/22/2020 Revised R-1 0.1% $75,129 Source: Adapted from Yuba CCD Apportionment Reports – California Community Colleges Chancellor’s Office. (https://www.cccco.edu/ About-Us/Chancellors-Office/Divisions/College-Finance-and-Facilities-Planning/Apportionment-Reports) Rounding applied to deficit factor percentages. 2018-19 Apportionment Revenue Deficits $3,500,000 5.77% $3,148,829 5.06% $3,000,000 $2,807,353 $2,500,000 $2,000,000 2.34% $1,500,000 $1,277,562 $1,000,000 $500,000 0.14% 0.14% $77,022 $75,129 $0 P-1: 2/26/19 P-1: 4/26/19 P-2: 6/26/19 R-1: 2/20/20 R-1: 6/22/20 Reporting Period Figure 1. Graph showing 2018-19 apportionment revenue deficits. Source: Adapted from Yuba CCD Apportionment Reports – California Community Colleges Chancellor’s Office. (https://www.cccco.edu/About-Us/ Chancellors-Office/Divisions/College-Finance-and-Facilities-Planning/Apportionment-Reports) Table 2: Fiscal Year 2019-20 Apportionment Revenue Deficits Date Reporting Period Deficit Factor % Revenue Reduction 7/29/2019 ADV 0.00% $0 2/24/2020 P-1 3.69% $2,128,923 6/26/2020 P-2 8.16% $4,706,703 8/24/2020 Revised P-2 0.95% $547,799 9/28/2020 Revised P-2 0.95% $547,799 3/4/2021 R-1 0.42% $244,618 6/28/2021 Revised R-1 0.43% $245,691 Fiscal Crisis and Management Assistance Team Yuba Community College District 21 tnuomA Additional Findings and Recommendations Budget Development Source: Adapted from Yuba CCD Apportionment Reports – California Community Colleges Chancellor’s Office. (https://www.cccco.edu/About-Us/ Chancellors-Office/Divisions/College-Finance-and-Facilities-Planning/Apportionment-Reports) 2019-20 Apportionment Revenue Deficits $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 3.69% $2,000,000 $2,128,923 $1,500,000 $1,000,000 0.95% $547,799 0.42% 0.43% $500,000 $244,618 $245,691 $0 ADV: 7/29/19 P-1: 2/24/20 P-2: 6/26/20 P-2: 8/24/20 P-2: 9/28/20 R-1: 3/4/21 R-1: 6/28/21 Reporting Period Figure 2. Graph showing 2019-20 apportionment revenue deficits. Source: Adapted from Yuba CCD Apportionment Reports – California Community Colleges Chancellor’s Office. (https://www.cccco.edu/ About-Us/Chancellors-Office/Divisions/College-Finance-and-Facilities-Planning/Apportionment-Reports) Table 3: Fiscal Year 2020-21 Apportionment Revenue Deficits Date Reporting Period Deficit Factor % Revenue Reduction 7/29/2020 ADV 0.35% $204,718 8/27/2020 Revised ADV 0.85% $493,328 9/28/2020 Revised ADV 0.85% $493,328 2/25/2021 P-1 2.38% $1,373,672 6/28/2021 P-2 0.76% $440,548 7/28/2021 Revised P-2 0.61% $349,845 2/24/2022 R-1 0.00% $0 3/18/2022 Revised R-1 0.00% $0 6/28/2022 Revised R-1 0.00% $0 Source: Adapted from Yuba CCD Apportionment Reports – California Community Colleges Chancellor’s Office. (https://www.cccco.edu/About-Us/ Chancellors-Office/Divisions/College-Finance-and-Facilities-Planning/Apportionment-Reports) Fiscal Crisis and Management Assistance Team Yuba Community College District 22 tnuomA 8.16% $4,706,703 0.95% $547,799 0% $0 Additional Findings and Recommendations Budget Development 2020-21 Apportionment Revenue Deficits $1,600,000 2.38% $1,373,672 $1,400,000 $1,200,000 $1,000,000 $800,000 0.85% $600,000 $493,328 0.61% $400,000 $349,845 $200,000 0.00% $0 $0 ADV: ADV: ADV: P-1: P-2: P-2: R-1: R-1: R-1: 7/29/19 8/27/20 9/28/20 2/25/21 6/28/21 7/28/21 2/24/22 3/18/22 6/28/22 Reporting Period Figure 3. Graph showing 2020-21 apportionment revenue deficits. Source: Adapted from Yuba CCD Apportionment Reports – California Community Colleges Chancellor’s Office. (https://www.cccco.edu/ About-Us/Chancellors-Office/Divisions/College-Finance-and-Facilities-Planning/Apportionment-Reports) Table 4: Fiscal Year 2021-22 Apportionment Revenue Deficits Date Reporting Period Deficit Factor % Revenue Reduction 7/28/2021 ADV 1.03% $631,213 2/24/2022 P-1 3.35% $2,028,953 3/18/2022 Revised P-1 3.35% $2,028,953 6/20/2022 P-2 0.00% $0 2/21/2023 R-1 0.00% $0 6/21/2023 Revised R-1 0.00% $0 Source: Adapted from Yuba CCD Apportionment Reports – California Community Colleges Chancellor’s Office. (https://www.cccco.edu/About-Us/ Chancellors-Office/Divisions/College-Finance-and-Facilities-Planning/Apportionment-Reports) Fiscal Crisis and Management Assistance Team Yuba Community College District 23 tnuomA 0.85% $493,328 0.76% $440,548 0.35% $204,718 0.00% 0.00% $0 $0 Additional Findings and Recommendations Budget Development 2021-22 Apportionment Revenue Deficits $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 0.00% $0 $0 ADV: 7/28/21 P-1:2/24/22 P-1: 3/18/22 P-2: 6/20/22 R-1: 2/21/23 R-1: 6/21/23 Reporting Period Figure 4. Graph showing 2021-22 apportionment revenue deficits. Source: Adapted from Yuba CCD Apportionment Reports – California Community Colleges Chancellor’s Office. (https://www.cccco.edu/ About-Us/Chancellors-Office/Divisions/College-Finance-and-Facilities-Planning/Apportionment-Reports) Table 5: Fiscal Year 2022-23 Apportionment Revenue Deficits Date Reporting Period Deficit Factor % Revenue Reduction 7/27/2022 ADV 0.07% $46,523 2/13/2023 P-1 0.00% $0 6/26/2023 P-2 10.83% $7,485,421 9/15/2023 R-1 0.96% $663,167 2/20/2024 Revised R-1 0.00% $0 3/21/2024 Revised R-1 0.00% $0 Source: Adapted from Yuba CCD Apportionment Reports – California Community Colleges Chancellor’s Office. (https://www.cccco.edu/ About-Us/Chancellors-Office/Divisions/College-Finance-and-Facilities-Planning/Apportionment-Reports) Fiscal Crisis and Management Assistance Team Yuba Community College District 24 tnuomA 3.35% 3.35% $2,028,953 $2,028,953 1.03% $631,213 0.00% 0.00% $0 $0 Additional Findings and Recommendations Budget Development 2022-23 Apportionment Revenue Deficit $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Reporting Period Figure 5. Graph showing 2022-23 apportionment revenue deficits. Source: Adapted from Yuba CCD Apportionment Reports – California Community Colleges Chancellor’s Office. (https://www.cccco.edu/ About-Us/Chancellors-Office/Divisions/College-Finance-and-Facilities-Planning/Apportionment-Reports) Table 6. Fiscal Year 2023-24 Apportionment Revenue Deficit (Year to Date) Date Reporting Period Deficit Factor % Revenue Reduction 7/21/2023 ADV 2.29% $1,715,309 2/21/2024 P-1 3.55% $2,656,976 Source: Adapted from Yuba CCD Apportionment Reports – California Community Colleges Chancellor’s Office. (https://www.cccco.edu/About-Us/ Chancellors-Office/Divisions/College-Finance-and-Facilities-Planning/Apportionment-Reports) Fiscal Crisis and Management Assistance Team Yuba Community College District 25 tnuomA 10.83% $7,485,421 0.96% 0.07% 0.00% $663,167 0.00% 0.00% $46,523 $0 $0 $0 ADV: 7/27/22 P-1:2/13/23 P-2: 6/26/23 R-1: 9/15/23 R-1: 2/20/24 R-1: 3/21/24 Additional Findings and Recommendations Budget Development 2023-24 Apportionment Revenue Deficit (Year to Date) $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 ADV: 7/21/23 P-1: 2/21/24 Reporting Period Figure 6. Graph showing 2023-24 apportionment revenue deficits. Source: Adapted from Yuba CCD Apportionment Reports – California Community Colleges Chancellor’s Office. (https://www.cccco.edu/ About-Us/Chancellors-Office/Divisions/College-Finance-and-Facilities-Planning/Apportionment-Reports) Additional reports for 2023-24 have not yet been released. The preceding tables and charts detail the challenges the district faces when budgeting for revenue amounts that closely match the actual amounts received. Multiyear financial projections become essential to managing significant revenue changes and adjusting estimates accordingly. Revenue fluctuations have a major effect on the ending fund balance, moving in correlation with each revision and affecting available reserves. Budget Assumptions The best practice is for a district to impose stringent restrictions to help ensure that recurring revenues match recurring expenditures and that one-time revenues are used to fund only nonrecurring or temporary expenditures. In addition, districts must prepare clear budget presentations that show the governing board and other interested parties how revenues and expenses align, along with budget projections for the next three to five years. The tables below show budget assumptions for the unrestricted general fund compared to the actual reve- nues and expenditures from 2019-20 through 2022-23. Fiscal Year 2019-20 In 2019-20, the total amount the district received from state and local sources exceeded the amount of revenue it budgeted for by more than $3 million, or 5.57%. This included state general apportionment funds, EPA proceeds, other state revenues, and property tax receipts. Expenditures for employee salaries and benefits were overbudgeted by more than $1.9 million. Conversely, other outgo was underbudgeted by more than $3 million. Overall, expenditures were underbudgeted by more than $1.6 million, or 2.67% of total budgeted expenditures. Fiscal Crisis and Management Assistance Team Yuba Community College District 26 tnuomA 3.55% $2,656,976 2.29% $1,715,309 Additional Findings and Recommendations Budget Development Table 7: 2019-20 Budgeted and Actual Revenue Account 2019-20 2019-20 Actuals to Budget Code Account Description Budget Actual Difference 8100 Federal Revenues $5,900 $11,341 $5,441 8600 State Revenues $28,784,517 $31,483,870 $2,699,353 8800 Local Revenues $31,489,629 $32,143,871 $654,242 8900 Other Financing Sources - - - 801 Total Revenues $60,280,046 $63,639,082 $3,359,036 1000 Academic Salaries $23,015,610 $22,734,638 −$280,972 2000 Classified Salaries $9,757,684 $9,399,723 −$357,961 3000 Employee Benefits $15,413,691 $14,141,467 −$1,272,224 4000 Supplies and Materials $454,048 $496,778 $42,730 Other Services and Operating 5000 Expenses $6,343,760 $6,443,325 $99,565 6000 Capital Outlay $277,458 $565,321 $287,863 7000 Other Outgo $4,881,358 $7,970,312 $3,088,954 501 Total Expenditures $60,143,609 $61,751,564 $1,607,955 Source: California Community Colleges Chancellor’s Office CCFS-311 Annual Report. Fiscal Year 2020-21 In 2020-21, the total amount the district actually received from federal, state and local sources exceeded the amount it budgeted for by more than $2.2 million, or 3.7%. These funds included state general appor- tionments, EPA proceeds, other state revenues, and property tax receipts. Expenditures for employee sala- ries and benefits were overbudgeted by more than $1.9 million, and other operating expenses were over- budgeted by more than $1.4 million. Overall, expenditures were overbudgeted by more than $3.9 million, or 6.5% of total budgeted expenditures. Table 8: 2020-21 Budgeted and Actual Revenue Actuals Account 2020-21 2020-21 to Budget Code Account Description Budget Actual Difference 8100 Federal Revenues $5,900 $7,718 $1,818 8600 State Revenues $32,098,067 $30,628,776 −$1,469,291 8800 Local Revenues $29,534,925 $33,283,053 $3,748,128 8900 Other Financing Sources - $1,346 $1,346 801 Total Revenues $61,638,892 $63,920,893 $2,282,001 1000 Academic Salaries $22,531,943 $22,444,415 −$87,528 2000 Classified Salaries $10,261,955 $9,344,182 −$917,773 3000 Employee Benefits $15,462,436 $14,530,240 −$932,196 4000 Supplies and Materials $661,231 $374,973 −$286,258 5000 Other Services & Operating Expenses $6,855,327 $5,424,148 −$1,431,179 6000 Capital Outlay $559,745 $573,791 $14,046 7000 Other Outgo $4,989,400 $4,663,686 −$325,714 501 Total Expenditures $61,322,037 $57,355,435 −$3,966,602 Source: California Community Colleges Chancellor’s Office CCFS-311 Annual Report. Fiscal Crisis and Management Assistance Team Yuba Community College District 27 Additional Findings and Recommendations Budget Development Fiscal Year 2021-22 In 2021-22, the total amount the district received from federal, state and local sources exceeded the amount it budgeted for by more than $2.2 million, or 3.4%. This included state general apportionments, EPA proceeds, other state revenues, and property tax receipts. Expenditures for employee salaries and benefits were overbudgeted by more than $7 million, and other operating expenses were overbudgeted by nearly $1 million. Overall, expenditures were overbudgeted by more than $7.8 million, or 10.7% of the total bud- geted expenditures. Table 9: 2021-22 Budgeted and Actual Revenue Actuals Account 2021-22 2021-22 to Budget Code Account Description Budget Actual Difference 8100 Federal Revenues $6,600 $7,629 $1,029 8600 State Revenues $30,648,224 $32,929,140 $2,280,916 8800 Local Revenues $34,199,510 $34,124,829 −$74,681 8900 Other Financing Sources - - - 801 Total Revenues $64,854,334 $67,061,598 $2,207,264 1000 Academic Salaries $23,225,812 $22,186,185 −$1,039,627 2000 Classified Salaries $10,754,451 $7,499,325 −$3,255,126 3000 Employee Benefits $16,445,612 $13,690,782 −$2,754,830 4000 Supplies and Materials $501,600 $297,079 −$204,521 5000 Other Services & Operating Expenses $6,962,741 $5,977,917 −$984,824 6000 Capital Outlay $226,223 $323,284 $97,061 7000 Other Outgo $14,729,729 $15,047,366 $317,637 501 Total Expenditures $72,846,168 $65,021,938 −$7,824,230 Source: California Community Colleges Chancellor’s Office CCFS-311 Annual Report. Fiscal Year 2022-23 In 2022-23, actual revenue was very close to the budgeted amount. Expenditures for employee salaries and benefits were overbudgeted by more than $11.9 million; other operating expenses were overbudgeted by $332,792; and other outgo was underbudgeted almost $6 million. Overall, expenditures were overbud- geted by more than $6.3 million, or 8.7% of the total budgeted expenditures. Table 10: 2022-23 Budgeted and Actual Revenue Actuals Account 2022-23 2022-23 to Budget Code Account Description Budget Actual Difference 8100 Federal Revenues $6,600 $12,625 $6,025 8600 State Revenues $36,191,150 $33,859,373 −$2,331,777 8800 Local Revenues $37,076,256 $39,641,687 $2,565,431 8900 Other Financing Sources - $2,520 $2,520 801 Total Revenues $73,274,006 $73,516,205 $242,199 1000 Academic Salaries $24,221,433 $20,616,627 −$3,604,806 2000 Classified Salaries $11,377,545 $7,566,057 −$3,811,488 3000 Employee Benefits $17,166,074 $12,612,036 −$4,554,038 Fiscal Crisis and Management Assistance Team Yuba Community College District 28 Additional Findings and Recommendations Multiyear Budget Projections 4000 Supplies and Materials $591,158 $418,892 −$172,266 5000 Other Services & Operating Expenses $7,423,823 $7,142,138 −$281,685 6000 Capital Outlay $272,961 $394,120 $121,159 7000 Other Outgo $12,173,531 $18,103,248 $5,929,717 501 Total Expenditures $73,226,525 $66,853,118 −$6,373,407 Source: California Community Colleges Chancellor’s Office CCFS-311 Annual Report. Before fiscal year 2022-23, the district had a large variance each year between state budgeted revenue and actual receipts, ranging from 3.5% to 5.5%. The district’s assumptions used to prepare the budget for state apportionment revenue were consistent with the information received from the CCCCO at the time. Variances represent the apportionment revenue with a deficit factor estimated by the CCCCO during P-1 and P-2 of each fiscal year. These estimates are referenced earlier under the “Revenue” section of this report. Since 2020-21, expenditures have been consistently overbudgeted by 6.5% to 10.7% of total budgeted expenditures. Most of these variances were in employee salaries and benefits and in other operating expenditures. According to staff interviews, the variances were caused primarily by position vacancies and transfers related to the Higher Education Emergency Relief Fund (HEERF). In addition, other outgo was underbudgeted by $3.1 million in 2019-20 and by $5.9 million in 2022-23. FCMAT noted that the district’s governing board does approve budget adjustments to other outgo throughout the year to more closely align anticipated expenditures with the budget. Multiyear Budget Projections Financially sound community college districts set priorities for spending and resource allocation, monitor performance regularly, define objectives and identify shortcomings, create plans to eliminate any shortcom- ings, and improve budgeting procedures as part of their planning and budget process. A community college's budget projections are essential for planning, forecasting, resource allocation, and upholding accountability. With the help of reliable projections, community colleges can better align their budgets with their mission, strategic plan, and priority goals while also improving student outcomes. Accurately forecasting spending plans also allows community colleges to adjust to changing economic circumstances. Below is the district’s multiyear planning scenario that it used to forecast its budget through 2027-28. Fiscal Crisis and Management Assistance Team Yuba Community College District 29 Additional Findings and Recommendations Multiyear Budget Projections Table 11: District Summary Revenues, Expenditures and Fund Balance, 2022-23 Through 2027-28 GENERAL FUND – UNRESTRICTED FUND 11 Summary Revenues, Expenditures and Fund Balance MULTI-YEAR PLANNING SCENARIOS Ongoing Budget COLA to Salary Schedules at 2.50% 2 3 4 5 6 7 8 Unaudited Tentative Adopted Projected *Projected *Projected *Projected Actuals Budget Budget Budget Budget Budget Budget 2022-23 2023-24 2023-24 2024-25 2025-26 2026-27 2027-28 3-Year Average 7017.04 6596.53 6596.53 6223.57 6031.56 7065.33 7012.00 Funded FTES 7626 7096.01 7096.01 622.57 6031.56 7065.33 7012.00 Actual FTES Projected 6121 6300 6300 6255 6410 6570 7000 Base Allocation Assumptions FTES 70% 70% 70% 70% 70% 70% 70% Supplemental 20% 20% 20% 20% 20% 20% 20% Student Success 10% 10% 10% 10% 10% 10% 10% Beginning Fund Balance $ 19,893,362 $ 19,893,363 $ 26,001,501 $ 20,284,128 $ 20,611,464 $ 20,929,529 $ 21,161,317 Revenues Federal $ 12,625 $ 9,100 $ 3,808 $ 9,100 $ 9,100 $ 9,100 $ 9,100 State 30,683,222 39,776,985 36,808,376 39,121,645 38,154,519 38,155,278 38,127,441 State – STRS On Behalf 2,622,230 2,701,687 2,701,687 2,728,704 2,755,991 2,783,551 2,811,386 State – PERS On Behalf 553,921 570,705 - - - - - Local 39,684,208 36,928,756 39,858,505 36,888,690 36,864,588 36,864,589 36,864,590 Total Revenue $ 73,556,206 $ 79,987,233 $ 79,372,376 $ 77,748,139 $ 77,784,197 $ 77,812,517 $ 77,812,517 Expenditures Academic Salaries $ 21,229,773 $ 25,210,707 $ 26,186,886 $ 26,698,755 $ 27,215,742 $ 27,487,900 $ 28,312,779 Classified Salaries 7,600,560 13,102,318 13,191,811 13,323,729 13,456,966 13,591,536 13,727,451 Benefits 9,476,990 17,732,142 $17,988,458 18,410,000 18,783,014 19,099,122 19,623,295 Benefits – STRS On Behalf 2,622,230 2,701,687 2,701,687 2,728,704 2,755,991 2,783,551 2,811,386 Benefits – PERS On Behalf 553,921 570,705 - - - - - Supplies and Materials 418,892 749,628 717,507 767,507 817,507 817,507 817,507 Other Operating Expenses & Services 7,048,802 6,899,782 7,283,659 7,405,671 7,528,902 7,653,366 7,779,075 Capital Outlay 394,119 305,734 260,734 260,734 263,341 265,975 268,635 Other Outgo 18,102,779 5,658,491 $5,706,804 5,763,872 5,821,511 5,879,726 5,938,523 Revise Budget (HEERF Indirect, UI, Travel) - - - - - - Total Expenditures $ 67,448,067 $ 72,931,194 $ 74,037,546 $ 75,358,972 $ 76,642,976 $ 77,578,683 $ 79,278,651 Net Increase (Decrease) in Fund Balance 6,108,139 7,056,039 5,334,830 2,389,167 1,141,122 233,835 (1,466,133) Net Ending Fund Balance $ 26,001,501 $ 26,949,402 $ 31,336,331 $ 22,673,295 $ 21,752,685 $ 21,163,364 $ 19,695,184 One-Time Budget Less Designated Fund Balance Minimum Reserve Balance (two months of unrestricted and restricted GF Expenditures) $ 21,182,920 $ 18,340,128 $ 18,667,464 $ 18,985,529 $ 19,217,317 $ 19,638,422 Fiscal Crisis and Management Assistance Team Yuba Community College District 30 Additional Findings and Recommendations Multiyear Budget Projections Contingency for Revenue Shortfall $1,440,389 $1,944,000 $1,944,000 $1,944,000 $1,944,000 $56,761 Anticipated Fund Balance $ 22,623,309 $ 20,284,128 $ 20,611,464 $ 20,929,529 $ 21,161,317 $ 19,695,183 OPEB Trust 1,756,749 3,394,252 500,000 123,156 STRS/PERS Trust 550,000 1,550,000 361,831 Innovation Funds 200,000 200,000 200,000 200,000 2,047 Enrollment Efficiencies 500,000 500,000 General Fund & Carryovers 1,040,937 FCMAT Related Items IT 380,000 500,000 500,000 500,000 Ongoing Increase Requests to One-Time 569,926 - One-Time (Capital Outlay Fund) 437,839 3,867,014 500,000 Undesignated Fund Balance $ (68,421) $ - $ 0 $ 0 $ (0) $ 0 Source: Yuba CCD Multiyear Planning Scenarios. Below is a Student Centered Funding Formula (SCFF) calculation, prepared by FCMAT, based on the assumption that FTES will remain mostly stable through 2028-29. Table 12: District SCFF Summary Description 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 Estimated State Cola 6.56% 8.22% 0.76% 2.73% 3.11% 3.17% 0.00% I. Base Allocation $52,429,133 $55,599,623 $53,633,647 $52,644,094 $54,281,344 $56,002,037 $56,002,037 II. Supplemental Allocation $9,185,757 $10,277,737 $10,355,821 $10,638,534 $10,969,375 $11,317,144 $11,317,144 III. Student Success Allocation $7,516,389 $8,518,488 $9,043,805 $9,522,285 $9,818,427 $10,129,672 $10,129,672 Subtotal $69,131,279 $74,395,847 $73,033,273 $72,804,913 $75,069,146 $77,448,853 $77,448,853 Hold Harmless - $418,023 $1,927,982 $2,222,169 - - - TCR $69,131,279 $74,813,870 $74,961,256 $75,027,082 $75,069,146 $77,448,853 $77,448,853 Revenue Deficit - - - - - - - Available Revenue $69,131,279 $74,813,870 $74,961,256 $75,027,082 $75,069,146 $77,448,853 $77,448,853 % Change from Prior Year Available Revenue 14.32% 8.22% 0.20% 0.09% 0.06% 3.17% 0.00% Source: Adapted from Yuba CCD Assumptions based on 2023-24 First Principal, Exhibit C. Below is a chart showing total actual unrestricted general fund expenditures for the prior four years and projected expenditures for the current year and subsequent four years. Fiscal Crisis and Management Assistance Team Yuba Community College District 31 Additional Findings and Recommendations Salaries and Benefits Total District Expenditures $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 Actual Actual Actual Actual Budget Projected Projected Projected Projected Fiscal Year Figure 7. Graph showing total district expenditures actual and projected from 2019-20 through 2027-28. Source: Adapted from 2019-20 through 2022-23 Actual – CCFS-311 Annual Report; 2023-24 through 2027-28 Budgeted and Projected Expenditures – Yuba CCD Multiyear Planning Scenarios. The revenue projections in the district’s multiyear planning scenario are mostly consistent with SCFF- calculated assumptions for the district for 2024-25 through 2026-27. The district will need to review pro- jections for the 2027-28 TCR, which includes funding allocations for general state revenue, EPA, and local revenue sources, to ensure the assumptions are consistent with prior year projections and the implementa- tion of the new funding floor. For total expenditures, the district’s projections include a planned increase of 10.7% from 2022-23 to 2023- 24. As noted in the “Budget Assumptions” section of this report, the district has a history of large variances between budget and actuals, ranging from 2.6% to 10.7%. Because the multiyear projections for 2024-25 through 2027-28 are based on the 2023-24 budget, the district needs to review and update these amounts each year based on prior year actual expenditures to create a reliable basis for future assumptions. Salaries and Benefits The district does not encumber salaries and benefits in its financial system because its HR and financial systems are not integrated. Funds allocated for employee salaries and benefits during a fiscal year need to be encumbered in the district's financial system, because this helps ensure that the funds are designated exclusively for this purpose and will not be spent on other budget items. Encumbrances are also import- ant for managing cash flow and projecting future financial needs. Encumbrances are critical to managing expenses, including grants and grant funding, throughout the fiscal year. Collective Bargaining The district’s latest collective bargaining agreement with its full-time and part-time faculty expired on June 30, 2022, and no successor agreement is in place. Negotiations were ongoing at the time of FCMAT's fieldwork. Fiscal Crisis and Management Assistance Team Yuba Community College District 32 tnuomA $74,037,546$75,358,972$76,642,976$77,578,683$79,278,651 $66,853,118 $65,021,938 $61,751,564 $57,355,435 Additional Findings and Recommendations Faculty Release and Reassigned Time Employee salaries and benefits significantly affect the financial resources of a college district because they typically are its largest combined expenditure item. College districts are required to negotiate in good faith with their collective bargaining units and be aware of how an agreement will affect present and future spending. When an agreement is not in place, the future effect of salaries and benefits on a district’s fiscal outlook is unknown. This makes it difficult to develop a reliable estimate for current and future budget projections. Faculty Release and Reassigned Time The district could not provide an analysis of the fiscal impact of its release and reassigned time for faculty. Faculty release and reassigned time is part of a faculty member’s assigned duties other than teaching. Examples include but are not limited to chair and administrative duties, curriculum processes, and spe- cial projects. Because these duties are in addition to a regular teaching assignment, the amount of funds allocated for these activities must be estimated and monitored. Some of these duties may be described in the agreement; however, without a limit to these types of functions, they must be monitored and analyzed continually to ensure the extra time authorized does not exceed budgeted amounts. The governing board needs to approve all faculty release and reassigned time before an assignment is given to an employee. This is important to ensure all additional time is approved and sufficient funds are available. Enrollment Student Centered Funding Formula The SCFF, written into California state law on June 27, 2018, significantly changed the way California com- munity college districts are funded. The SCFF focuses on improving access and achievement for disad- vantaged students and improving community college student outcomes as outlined in the state’s “Vision 2030”, the California Community Colleges Chancellor's Office guide to reforms that would make higher education more accessible and equitable for Californians. The SCFF divides the state’s community college budget into three allocations: 1. The base allocation, which is focused on access. It is distributed based on full-time equivalent student enrollments (FTES) plus a basic allocation for college size and college centers. 2. The supplemental allocation, which targets equity and is distributed based on a count of Pell Grant recipients, California College Promise Grant recipients, and students to whom Assembly Bill 540 applies, which exempts certain nonresident students from paying nonresident supplemental tuition. 3. The student success allocation, which targets successful outcomes and is distributed based on weighted measures of various types of student success. Before the SCFF, funding for the state’s community college system was based entirely on FTES in each district, plus a basic allocation based on the number of colleges and educational centers in a district. The state’s 2022 Budget Act extended a modified hold harmless provision that protected college revenues from declining significantly as a result of the COVID-19 pandemic. Effective in 2025-26, if a district has not recov- ered to its prepandemic revenue levels and remains in hold harmless status, the new funding minimum will be the district’s 2024-25 maximum TCR. This minimum is the level below which funding cannot drop. Fiscal Crisis and Management Assistance Team Yuba Community College District 33 Additional Findings and Recommendations Integrated Systems Although a district is still held harmless, its TCR will not increase until its earned SCFF revenue is greater than its funding minimum. This can result in multiple years without an increase in SCFF funding. FCMAT found no evidence that the district is adjusting its staffing levels consistently as enrollment changes. A district needs to analyze staffing trends, identify necessary adjustments, and implement them, especially if its cost-of-living adjustment (COLA) does not increase its TCR and its staffing costs need to be reduced. District leadership needs to work collaboratively to understand these trends and determine how they may affect the district’s financial projections. Based on enrollment trends, the district’s multiyear projection of the SCFF shows that it will receive a small portion of the COLA in 2025-26 and 2026-27, with full restoration of the COLA assumed to occur in 2028- 29. This data indicates a need for research and fiscal staff to work together to understand how enrollment projections will affect expenditures. Integrated Systems The district lacks software and processes that integrate its class schedule with budget development. Using data to guide decision-making is essential to strategic enrollment planning. Including education partners, allowing access to internal and external data, encouraging collaboration within the district, embracing openness, and developing a schedule of classes are all essential to a district's success and to ensuring transparency. The leadership team needs to include specialists from enrollment, academic affairs and finance in this planning. Integrating class scheduling software with budget development can streamline operations, reduce space and resource conflicts, and aid in decision-making when developing class sched- ules. The district has developed annual planning guidelines that help with trend analysis and allow the cost of its schedule to be considered during budget development. Facilities Use of Space California community colleges have use and space standards to help plan the construction of facilities. These standards are tools for budget planning that can be used to determine the amount of academic space (e.g., classrooms, labs, library and technology space, faculty offices) required currently and in the future. Various guidelines dictate the allocation of space for administrative and instructional activities. For exam- ple, the use standards for laboratory space are lower than those for classrooms. Per California Code of Regulations Title 5 standards, laboratory room use shall not be less than 27.5 hours per 70-hour week. The district’s use of laboratory space is less than this standard; it has 54% more lab space than is needed for the applicable FTES it is serving. Americans with Disabilities Act The Americans with Disabilities Act (ADA) of 1990 offers extensive civil rights protections in employment, public accommodations, state and local government services, and telecommunications. Ensuring that all eligible Americans with disabilities have equal access to public spaces is one of the ADA's main objectives. Fiscal Crisis and Management Assistance Team Yuba Community College District 34 Additional Findings and Recommendations Position Control Programs, services and activities offered by public entities such as community colleges are covered by Title II of the Act. As mandated by the Code of Federal Regulations, Title 28, Section 35.105 (28 CFR 35.105), an agency must conduct a comprehensive assessment of all its programs, services and activities to ensure that, collectively, they are readily accessible to eligible individuals with disabilities. The goal of such an assessment is to identify areas that need changes to guarantee that individuals with disabilities have access. Public agen- cies are permitted to transition to full compliance using an ADA transition plan. This gives a public agency enough time to develop a thorough plan that can be implemented over time. The district does not have a current ADA transition plan; its last plan was developed in 2008. Failure to develop a current transition plan and implement it could create legal liability. Position Control The district lacks an integrated position control system that links all positions with their associated cost information from payroll, human resources, and budgeting. Position control helps manage and track staffing positions. The focus of a position control system is on keeping track of each position, including its function, requirements, and associated budget account. A posi- tion control system gives every position in an organization a unique identity, which enables careful manage- ment of staffing needs and financial impact. A position indicator includes details about the position, such as its role in the organization, the department to which it is assigned, the funds allocated to the position, the requirements for applicants, and whether the position is full-time or part-time. By using position control, organizations can better understand the composition of their workforce and make more informed long-term plans. This is important for maintaining a clear picture of how human resources are being allocated, as well as ensuring related costs are accurately reflected in the budget, including allowances for vacancies. The ability to tie budgets to positions rather than to individuals allows for more accurate forecasting of personnel costs and improves budgeting accuracy. Streamlined hiring procedures result from a position control system’s ability to simplify recruitment by outlining the requirements and parameters for each open position. Position control also helps improve compliance by ensuring that staffing levels meet grant funding or regulatory requirements, because each position has a clearly defined set of guidelines. Position control requires a robust human resources information system and the capacity to manage a potentially complicated variety of positions, both of which the district currently lacks. Having such a system is essential to maintaining organizational structure and efficiency. Collaboration of Fiscal and Human Resources Functions Collaboration is lacking between the district’s Human Resources (HR) and Finance departments. There is no evidence of regularly scheduled joint meetings of these departments to collaborate and discuss how to improve processes. Although finance and HR are two different departments with different functions in most organizations, their duties and responsibilities overlap and intersect significantly, particularly in position control functions. Consequently, HR and finance need to work collaboratively to fully support the organization's objectives, maintain optimal productivity, and allow a district’s leaders to carry out strategic plans. Fiscal Crisis and Management Assistance Team Yuba Community College District 35 Additional Findings and Recommendations Internal Controls Internal Controls Access and Authorization Internal controls help protect a district from fraud, misuse, or misappropriation of funds by defining how an organization's assets and resources are allocated, tracked, and evaluated. Reliable financial reporting, effective operations, and legal compliance are all components of strong internal controls. Authorization and security access controls for technology are additional internal control functions. The district lacks a process for monitoring financial system access and functions when employment actions such as resignations, terminations, promotions or demotions require a change in authorizations and access. Any organization needs to conduct a periodic review of authorizations and access to its data and financial systems. This helps ensure that all current users are authorized and that any employment actions result in appropriate and timely changes to system access. Failure to monitor access and authorization controls can put a district’s finances, data, operations and technology systems at risk because of unauthorized access. Fiscally Accountable or Fiscally Independent Status A fiscally accountable or independent status allows a community college district to process payroll and/or vendor warrants without approval from the county superintendent of schools. A district with this status is also required to designate a district auditor or disbursement officer to oversee this process. In interviews, staff indicated that the district is either a fiscally accountable or fiscally independent district. A district typically obtains this status when approved by the local county superintendent of schools, in accordance with Education Code 85266 (fiscal accountability). It can also be obtained when approved by the Board of Governors of the California Community Colleges, in accordance with Education Code 85266.5 (fiscal independence). This status is common for community colleges, and in many cases, such a status may have been obtained many years ago. Because of this, documents related to achieving the status are often unavailable. This is true in the district’s case: FCMAT was not provided with documents indicating whether or not the district’s status is fiscally accountable or independent. The district also could not provide evidence that it has a des- ignated district auditor or disbursement officer assigned as required by the Education Code sections cited. Although common, this status places an increased burden on small community college districts, because they need to have additional staff to meet internal control requirements. A district auditor or disbursement officer position is required by law if a district is fiscally accountable or fiscally independent. Preparing and approving all vendor and payroll warrants without oversight from the county superintendent of schools can speed processing and increase efficiencies; however, lower staffing levels at smaller districts may not allow for adequate internal controls, which require additional staff with specific skills and training. District leaders and the governing board must be aware of the requirements and additional responsibilities for maintaining this status. Fraud Prevention Internal controls act as checks and balances, shielding an institution from internal threats and lowering the likelihood that fraud will occur. In addition to acting as the first line of defense, fraud prevention controls can help identify fraud quickly, which in turn can reduce potential losses. Fraud hotlines are one example of a fraud prevention tool that offers confidential reporting so that staff, students, and community members can securely report any suspected fraudulent activity. The district has a fraud prevention hotline; however, Fiscal Crisis and Management Assistance Team Yuba Community College District 36 Additional Findings and Recommendations FCMAT found no evidence of a documented process for collecting and investigating reports of possible fraud. To effectively manage a robust fraud prevention system, tips regarding potentially fraudulent activity must be reviewed and investigated promptly. This can significantly reduce an institution’s potential loss and help maintain confidence with all education partners because it signals an organization's commitment to ethical behavior and indicates a culture of identifying fraud, waste and abuse. Recommendations The district should: 1. Update its budget development policy to include the adoption of a comprehensive budget development calendar that includes statutory and closing dates for processes that affect budget development, as well as the individuals or departments responsible for each item. 2. Review historical expenditure data and include the most current and relevant information in its budgeting process to ensure more accurate financial projections. 3. Develop a process to ensure ongoing encumbrance of salaries and benefits. 4. Develop a board-approved plan to eliminate, reduce or control transfers from the unrestricted general fund to the restricted general fund. 5. Continue to negotiate all collective bargaining agreements until a settlement is reached. Negotiate and obtain board approval for any successor agreements before current agreements expire. 6. Analyze the fiscal impact of faculty release and reassigned time periodically throughout the fiscal year. Ensure that all extra assignments are approved by the governing board before an assignment is offered to an employee and that sufficient funds are available for each assignment. 7. Create reports of changes and trends in staffing levels and enrollment, and use these to help analyze and identify appropriate staffing levels based on SCFF revenue estimates. 8. Implement tools and processes that integrate the class schedule with budget development. Continue to monitor and assess annual planning guidelines and trend analysis to ensure an accurate cost of the schedule is considered during annual budget development. 9. Conduct a facilities use study to help determine how to more efficiently use both lecture and laboratory space. 10. Update its ADA transition plan to better serve individuals with disabilities and to identify and reduce potential risks to the district. 11. Establish a comprehensive position control process that is integrated with its financial reporting system, that informs budget development, and that includes coordination between fiscal and human resources staff and management. Review all vacant positions and include in the adopted budget only those that are filled or expected to be filled during the fiscal year. Fiscal Crisis and Management Assistance Team Yuba Community College District 37 Additional Findings and Recommendations 12. Establish regular joint meetings of human resources and fiscal staff and management to help the two departments work cooperatively to analyze and improve functions and processes of each that overlap and/or that are interdependent. 13. Implement an ongoing process to monitor financial system access and authorization controls when employment actions occur. 14. Conduct a comprehensive study of internal controls for all business-related functions, and comply with Education Codes 85266 and 85266.5 regarding fiscal accountability and independence. Educate district leaders and the governing board regarding the responsibilities and requirements that accompany its fiscally accountable or independent status, including the designation of a district auditor or disbursement officer. 15. Establish policies and procedures for reviewing and investigating suspected or reported incidents of fraud, abuse, or waste of district resources. Fiscal Crisis and Management Assistance Team Yuba Community College District 38 Appendices Appendices Appendix A Sample Budget Calendar Date Task Facilitator Review processes and parameters for Participatory governance committee for September through January budget development budget Board adoption of budget development December calendar Board of trustees December Resource allocation requests due Fiscal Services January Review governor’s proposed budget Deadline for purchases that exceed bid February limit and equipment & furniture requisitions Purchasing February First principal apportionment (P-1) February through March Budget development discussions Administrators March Budget study sessions Board of trustees March Deadline for tangible purchase requisitions Purchasing March Distribute budget development instructions Fiscal April Return budget worksheets Administrators Deadline for purchases on open purchase May orders Purchasing May Review governor’s May revise budget June Second principal apportionment (P-2) June Board adoption of tentative budget Board of trustees June through July Review governor’s signed budget July Beginning of new fiscal year Public hearing for board adoption of final September budget Board of trustees Source: FCMAT. Fiscal Crisis and Management Assistance Team Yuba Community College District 39 Appendices Appendix B Study Agreement Fiscal Crisis and Management Assistance Team Yuba Community College District 40 Appendices Fiscal Crisis and Management Assistance Team Yuba Community College District 41 Appendices Fiscal Crisis and Management Assistance Team Yuba Community College District 42 Appendices Fiscal Crisis and Management Assistance Team Yuba Community College District 43 Appendices Fiscal Crisis and Management Assistance Team Yuba Community College District 44 Appendices Fiscal Crisis and Management Assistance Team Yuba Community College District 45 Appendices Fiscal Crisis and Management Assistance Team Yuba Community College District 46 Appendices Fiscal Crisis and Management Assistance Team Yuba Community College District 47 Appendices Fiscal Crisis and Management Assistance Team Yuba Community College District 48