Report 2017-104 Recommendation 5 Responses

Report 2017-104: Montebello Unified School District: County Superintendent Intervention Is Necessary to Address Its Weak Financial Management and Governance (Release Date: November 2017)

Recommendation #5 To: Montebello Unified School District

To improve its current financial condition and ensure future viability, Montebello should, within 60 days, revise its fiscal stabilization plan and make the necessary cuts to fund its ongoing commitments.

Annual Follow-Up Agency Response From October 2021

MUSD reviews both its student enrollment and staffing based on program and student needs. The multi-year projections will continue to demonstrate a positive certification and position control continues to be closely monitored.

The District is working with the newly appointed Interim Superintendent in finalizing the fiscal stabilization plan. However, the District had received a significant amount of COVID-19 stimulus funds. As part of the requirements of the use of funds, no significant cuts to an existing workforce was permitted. We anticipate through attrition and a possible early retirement incentive to reduce a significant number of personnel.

Completion Date: July 2021

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Montebello did not provide documentation to support that it fully implemented this recommendation. Further, in its response to Recommendation #1, the Los Angeles County Office of Education indicated that there continue to be concerns over Montebello's ability to meet its financial obligations. It also stated that Montebello is reluctant to curtail spending to compensate for declining enrollment.

Auditee did not substantiate its claim of full implementation
Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From October 2020

Completion Date: July 2020

California State Auditor's Assessment of Annual Follow-Up Status: Pending

According to the Los Angeles County Office of Education, Montebello is reluctant to curtail spending to compensate for declining enrollment. In addition, Montebello's multi-year projections from its 2020-21 budget shows its general fund expenditures are expected to exceed its revenue from 2020-21 through 2022-23.

Annual Follow-Up Agency Response From October 2019

MUSD continues to review both its student enrollment and staffing based on program and student needs. There has been a reduction based on the staffing standard. The multi-year projections will continue to demonstrate a positive certification and position control will be closely monitored.

Completion Date: September 2019

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Montebello has not demonstrated that it has made necessary cuts to fund its ongoing commitments. Montebello's documentation shows that it has a deficiency of revenues over expenditures in its multi-year projections.

Auditee did not address all aspects of the recommendation

1-Year Agency Response

MUSD continues reviewing its student enrollment and monitoring staffing based on program and student needs. The multi-year projections will continue to demonstrate a positive certification and position control will be closely monitored as well as ensuring that supplemental and concentration monies are utilized to enhance programs and the delivery of services to our students.

Completion Date: November 2018
Response Date: November 2018

California State Auditor's Assessment of 1-Year Status: Pending

Montebello has not demonstrated that it has made necessary cuts to fund its ongoing commitments. Montebello's Budget Adoption Narrative and Fiscal Stabilization Plan dated June 27, 2018 shows that it has a deficiency of revenues over expenditures in its multi-year projections. This trend may not be sustainable.

Auditee did not address all aspects of the recommendation

6-Month Agency Response

In the current year, MUSD has reviewed its staffing and will be submitting a Resolution for layoff of three classified management, supervisory, and confidential positions. In addition, through attrition, vacant positions were filled by internal transfers. During year two and year three of the multi-year projections, MUSD will exercise reductions in force, on an as needed basis, to address declining student enrollment.

Completion Date: May 2018
Response Date: May 2018

California State Auditor's Assessment of 6-Month Status: Pending

Montebello has not provided us with a revised fiscal stabilization plan. In its November 8, 2017, letter to Montebello, LACOE stated that Montebello's fiscal stabilization plan does not address staffing concerns and does not address staffing issues related to declining enrollment. Further, in its April 2018 response to Montebello's 2017-18 Second Interim Report, LACOE stated that Montebello must assess and adjust its staffing needs for the upcoming years based on the projected rate of decline in enrollment. LACOE further noted that Montebello is projecting an operating deficit of $22.4 million for fiscal year 2019-20. To ensure future viability, Montebello should revise its fiscal stabilization plan and make the necessary cuts to fund its ongoing commitments.

Auditee did not address all aspects of the recommendation

60-Day Agency Response

MUSD continues addressing its ongoing commitments and ability to meet its priorities, including maintaining the legally required level of reserves. Effective November 8, 2017, MUSD was assigned a Los Angeles County Office of Education (LACOE) Fiscal Adviser, Mr. Mark Skvarna, who on an on-going manner is assisting with all fiscal matters. Furthermore, on December 21, 2017, the Board of Education approved the First Interim Budget with a "Positive" certification. A budget monitoring process is also evident via the Revenue and Expense Committee whereby representatives from the District Office, Classified School Employees Association (CSEA), Montebello Teacher Association (MTA), and Association of Montebello School Administrators (AMSA) meet to review the annual allocated budget and expenditures on a monthly basis.

Completion Date: December 2017
Response Date: December 2017

California State Auditor's Assessment of 60-Day Status: Pending

In a November 8, 2017 letter to Montebello, LACOE stated that Montebello's fiscal stabilization plan does not address staffing concerns and does not address staffing issues related to declining enrollment.

Auditee did not address all aspects of the recommendation

All Recommendations in 2017-104

Agency responses received are posted verbatim.