Report 2019-108 Recommendation 8 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 #8 To: Sacramento City Unified School District
To address its current financial problems, Sacramento Unified should do the following:
The district should adopt and disclose publicly a multiyear projection methodology. This methodology should disclose the assumptions and rationale used to estimate changes in salaries, benefits, contributions, and LCFF revenue—including changes in enrollment and the source and reliability of the data used to make these projections.
6-Month Agency Response
The MYP Budget Assumptions can be found in the District's fiscal interim reports. The District is developing a methodology for the assumptions and plans to have a draft completed by September 2020. https://www.scusd.edu/2019-2020-fiscal-year
- Estimated Completion Date: September 2020
- Response Date: June 2020
California State Auditor's Assessment of 6-Month Status: Pending
We are troubled that the district plans to take nine months to develop a draft methodology while still projecting insolvency. According to its proposed fiscal year 2020-21 budget, it currently projects to face significant cash challenges as soon as February 2021. Because the pending insolvency has such a large potential impact on the district, we believe that it is imperative that the district develop and publish a methodology sooner to improve its financial planning and help its community and stakeholders better understand the problems facing the district and the need for swift action.
60-Day Agency Response
The District agrees with the recommended budget development improvements and with the recent hiring of a Budget Director, the District will work on a plan to implement for the upcoming 2020-21 budget development cycle.
The District is improving the disclosure of assumptions used for the multi-year projection to be included in the Second Interim Budget report to the Board in March 2020. The District MYP uses the assumptions provided by School Services of California as well as information from Federal, State and local agencies. Additionally, the table of assumptions may include other items that are specific to the District and that may have a significant impact on the budget and multi-year projections. A few examples of District specific assumptions may include major changes to: vendor rates, compensation changes other than step and column, one-time funds and expenditures and long term commitments. MYP Budget Assumptions Document to follow.
- Estimated Completion Date: March 2020
- Response Date: February 2020
California State Auditor's Assessment of 60-Day Status: Pending
The district provided a draft of an updated multiyear projection assumption disclosure. In developing its multiyear projection methodology and disclosure, it will be important for the district to explain clearly why it is making certain assumptions to increase transparency and trust in its projections.
Agency responses received are posted verbatim.