Report 2019-108 Recommendation 7 Responses
Report 2019-108: Sacramento City Unified School District: Because It Has Failed to Proactively Address Its Financial Challenges, It May Soon Face Insolvency (Release Date: December 2019)
Recommendation #7 To: Sacramento City Unified School District
To address its current financial problems, Sacramento Unified should do the following:
Revise its multiyear projections and update them at least quarterly until it has taken action that would cause it to no longer project insolvency. It should disclose these projections to the board.
6-Month Agency Response
The District has prepared revised multi-year projections and presented them to the Board at the following meetings: 2/6/20, 4/2/20, 5/7/20 and 5/21/20. These multi-year projections reflected the impact of developing State Budget information. The District is also preparing the 2020-21 budget which will include revised multi-year projections and will be presented at the 6/18/20 Board Meeting. The 2019-2020 budget information, including interim reports are found at: https://www.scusd.edu/2019-2020-fiscal-year
- Estimated Completion Date: July 2020
- Response Date: June 2020
California State Auditor's Assessment of 6-Month Status: Pending
Although the district has regularly prepared multi-year projections in its most recent interim financial reports and budget documents, it needs to address our related recommendation (recommendation #8) regarding developing and publishing a methodology for these projections, including disclosing its assumptions and rationale used to estimate changes in its revenue and expenses. A clear and thorough methodology for these projections is critical to the district's financial planning. Further, the district must disclose this methodology and regularly update its projections to provide better information to the public about its financial condition, particularly while the district projects insolvency.
60-Day Agency Response
With the Education Code requirements that correspond with a Disapproved budget and Negative budget certification, the District must provide three interim budget reports in December, March, and May, as well as its adopted budget in June. In addition, due to SCOE disapproving the District's budget because of its structural deficit and projected future negative balance, the District was required to additionally submit and present a Revised adopted Budget at the board meeting on October 3, 2019. (Board item 9.1 https://www.scusd.edu/board-meetings; SCOE letter 10/10/19). As long as the District's budget results in disapproved and negative status, it will continue to be required to submit the frequent budget updates and reports.
- Completion Date: October 2019
- Response Date: February 2020
California State Auditor's Assessment of 60-Day Status: Pending
Going forward, we expect to see evidence from the Sacramento City Unified School District that it is regularly updating its multiyear projections to provide timely information to its stakeholders.
Agency responses received are posted verbatim.