LACOE's response to districts second interim report. This was not released by the district untill the 5-13-04 Board meeting [Notes are in green]
Los Angeles County Office of Education
Leading Educators ∎ Supporting Students ∎ Serving Communities
April 12, 2004
Mr. Steve Harbeson, Board President Acton-Agua Dulce Unified School District 32248 N. Crown Valley Road Acton, CA 93510
Dear Mr. Harbeson:
In accordance with the provisions of Education Code (EC) Section 42131, a review of the Acton-Agua Dulce Unified School District's (District) Second Interim Report for fiscal year 2003-04 has been completed by the Los Angeles County Superintendent of Schools (County Superintendent). Based on the multiyear projections and assumptions provided by the District, with data current as of January 31, 2004, it appears that the District should be able to meet its financial obligations for the current and two subsequent fiscal years. We therefore concur with the District's positive certification.
Based on our review of this report, we wish to acknowledge the progress that the District has made to date in making budget reductions. In view of the current State budget crisis and the related uncertainties that still surround education funding, the District is urged to continue to exercise caution in implementing its spending priorities. The various comments resulting from our review are reflected in the following sections.
DISTRICT'S ACTIONS IN RESPONSE TO FIRST INTERIM REPORT REVIEW LETTER
In our First Interim Report review letter dated January 15, 2004, we requested that the District provide the following:
• A Board-adopted fiscal stabilization plan which includes updated enrollment and attendance projections by grade level with corresponding revenue limit calculations for multiyear projections. The plan was to incorporate any budget reductions necessary to offset potential reductions in ADA and allow the District to maintain a positive General Fund balance and the required reserves in all three years.
• A deficit reduction plan, addressing the District's ongoing pattern of deficit spending.
• Adjustments to the budget and multiyear projections to compensate for the change in the District's expected lottery revenues.
• Budget revision summary for the County School Facilities Fund to reflect the specified audit adjustment.
• Revisions to the Capital Facilities Fund 2003-04 beginning fund balance.
Our review of the Second Interim Report indicates that the District has resolved the three items related to: adjustments to the budget and multiyear projections, the budget revision for the County School Facilities Fund, and the revisions to the Capital Facilities Fund.
In addition, the District has taken significant steps in addressing the deficit spending trends by enacting a Board-adopted fiscal stabilization plan, which includes the closure of one school and certificated and classified personnel reductions for 2004-05, resulting in projected budget reductions of approximately $394,717 in 2004-05 and 2005-06. As a result of these actions, the District's Second Interim reflects reserve levels of 4.82 percent, 3.19 percent and 4.51 percent in 2003-04, 2004-05, and 2005-06, respectively. [Note LACOE only requires 3%. The added 1.82% is about 180,000 that was taken by eliminating CSR in 3rd and kindergarten and is proposed to be sent on the failed Red Rover site] We request that the District provide the County Office with updated information on the fiscal impact of these structural changes to the District's budget and program operations with the 2004-05 adopted budget, due to this office on or before July 1, 2004.
DEFICIT SPENDING
We have noted that the District is projecting an operating deficit of ($151,345), representing 1.19 percent of the District's projected expenditures and other outgo for fiscal year 2003-04. According to our review of the District's Second Interim data and assumptions, and as confirmed by the District, this projected deficit is primarily due to State budget reductions and the expenditure of restricted fund balance carried forward from the prior year. Based on the District's assumptions and narrative, the District's Board of Education appears to be planning to take the actions necessary to maintain the District's fiscal solvency in the two subsequent fiscal years.
CASH FLOW PROJECTIONS
Senate Bill Xl 18 (Chapter 4/Statutes 2003) deferred the P-2 Apportionment from June to July on an ongoing basis (see Informational Bulletin No. 373, dated March 26, 2003). We have noted that the District's cash flow projection does not reflect a deferral of the June apportionment into July. Our analysis indicates that the projected 2003-04 P-2 Apportionment for your district is approximately $416,031. When we factor the deferral into the District's projections, the District's ending cash balance becomes $366,325.
Although the District's ending June cash balance remains positive after adjusting the P-2 Apportionment from June to July, we recommend that the District reevaluate its projections to ensure that positive cash flow is maintained through the end of 2003-04.
BUDGETING FOR REVENUE LMIT DEFICIT REDUCTION FUNDING
Recent state level discussions regarding the 2004-05 budget and the funding for K-12 education indicate that proposed funding for revenue limit deficit reduction may be in jeopardy. May Revise revenue may be lower than' projected by the Department of Finance for the Governor's Proposed Budget. If that is the case, education would still be cut by $2 billion, but proposed revenue augmentations (e.g., deficit reduction funding) may he reduced or eliminated.
Based on district data as of March 15, revenue limit deficit reduction funding for the District is projected at approximately $96,825 in 2004-05. Based on this current information and until more is known at May Revise, all districts should be cautious about including this revenue in 2004-05 budgets.
CONCLUSION
Thank you for providing documentation that supports the District's positive certification. The multiyear projections, with accompanying narrative and assumptions, were extremely helpful in our analysis of the 2003-04 Second Interim Report and in verifying the District's fiscal condition.
We are aware that the information provided reflects the District's financial position and assumptions as of January 31, 2004, and that further adjustments will be made during the year as additional data becomes available. We hope that these comments will be helpful to the District administration and board as you plan for the remainder of 2003-04 and begin building your 2004-05 budget. We wish to express our appreciation to the District staff for their cooperation during the review of the 2003-04 Second Interim Report. If our office can be of further assistance, please call me at (562) 922-6135.
Sincerely, Teri S. Stockman Business Services Consultant
Acton Agua Dulce School District Data
Acton Agua Dulce School District
Vanguard News Home page