Appendix

Scope and Methodology

The Joint Legislative Audit Committee (Audit Committee) directed the California State Auditor to conduct an audit of Sacramento Unified. Specifically, it directed us to review Sacramento Unified’s fiscal health and budgeting practices. The table below lists the objectives that the Audit Committee approved and the methods we used to address those objectives.

Audit Objectives and the Methods Used to Address Them
AUDIT OBJECTIVE		METHOD
1	Review and evaluate the laws, rules, and regulations significant to the audit objectives.	Reviewed relevant laws, rules, regulations, guidelines, and policies related to the financial and operational administration of school districts. Interviewed key staff at Sacramento Unified who oversee the administration of the district, including staff in the finance, human resources, and special education departments.
2	Determine the scope of Sacramento Unified’s short‑term and long‑term financial problems.	Reviewed and analyzed Sacramento Unified’s financial information including budgets, interim financial reports, and audited financial statements. Interviewed key staff at Sacramento Unified in the finance department.
3	Review Sacramento Unified’s revenues, expenditures, and budget projections for the last five years to determine the following: a. Which actions that Sacramento Unified took or failed to take that were the primary causes of its current financial crisis. b. Which of Sacramento Unified’s key decisions caused the financial crisis, who made those key decisions, and why those decisions were made. c. Whether Sacramento Unified took reasonable actions to reduce its budget shortfalls. d. What Sacramento Unified needs to do to resolve both the immediate financial crisis and the root causes of the crisis.	Reviewed documentation and interviewed key staff to identify primary causes and key decisions relating to areas of concern, including labor agreements, employee benefit costs, special education, and executive turnover. Reviewed the actions the district has taken to address its budget shortfalls. Reviewed documentation and interviewed key staff and leadership to identify the root causes of the financial crisis and identify methods to resolve those causes. Reviewed documentation from nearby comparable districts regarding finances, labor agreements, salaries, and benefits, and we compared Sacramento Unified’s actions in these areas with those of the selected districts. Evaluated proposals from Sacramento Unified and its teachers union regarding the district’s budget. To identify options Sacramento Unified could take to help resolve its immediate financial crisis, we made projections of the savings that the district could expect if it implemented certain spending changes.
4	Determine what financial or budgeting practices Sacramento Unified needs to improve to avoid this situation in the future.	Reviewed Sacramento Unified budgeting practices. Reviewed best practices to identify areas where Sacramento Unified should improve its budgeting practices.
5	Evaluate the recommendations made by the county office superintendent and Sacramento Unified’s response to those recommendations.	Although the county office superintendent did not make formal recommendations to Sacramento Unified about how to resolve its financial problems, we reviewed the guidance it provided to the district and whether and how the district implemented that guidance. Reviewed guidance provided to Sacramento Unified by other third‑party organizations, including FCMAT, and determined how the district applied that guidance.
6	Determine what Sacramento Unified is doing in the short term to minimize the budget reductions impact on its students.	Reviewed actions taken by Sacramento Unified to address its fiscal condition, including layoffs of staff.
7	Review and assess any other issues that are significant to the audit.	Because of the importance of its multiyear projections in guiding Sacramento Unified’s decision making, we reviewed its use and preparation of these projections. Reviewed the impact accepting a loan from the State would have on students.

Sources: Analysis of the Audit Committee’s audit request number 2019‑108, and information and documentation identified in the table column titled Method.

Assessment of Data Reliability

In performing this audit, we relied on electronic data files that the California Department of Education makes publicly available. These electronic data files relate to school district salaries and benefits for certificated staff. The U.S. Government Accountability Office, whose standards we are statutorily obligated to follow, requires us to assess the sufficiency and appropriateness of computer‑processed information we use to support our findings, conclusions, or recommendations. To perform this assessment, we relied on accuracy and completeness testing that the California Department of Education has completed. In addition, we conducted logic testing to ensure that the data in the electronic data files were appropriate and consistent with information that Sacramento Unified published in its budget and audited financial documents. Based on that assessment, we considered the information sufficiently reliable for our purposes.

We also relied on information from Sacramento Unified’s accounting system. To assess the sufficiency and appropriateness of this information, we compared the information to the district’s audited financial statements. Based on that assessment, we considered the information sufficiently reliable for our purposes.