Yesterday, as part of our #OUSDBudget series, we provided some background on the Fiscal Crisis and Management Assistance Team’s Fiscal Health Risk Analysis of OUSD, issued in August. Today, we delve into the seven of twenty areas where FCMAT said OUSD was not doing too bad.
According to FCMAT, OUSD earned a positive rating in three of twenty areas, based on “yes” answers to all the questions in each topic area:
- Debt: Surprisingly, OUSD scores well on this, despite still owing the state $40 million from the last time the district was bailed out. FCMAT’s rating is based on OUSD not having lots of non-voter-approved debt, having sources of funds identified to pay off the debt it does have, and accounting for pension liabilities correctly.
- Multiyear Projections: OUSD received a favorable response on all five questions in this category, which are focused on the process for creating multi-year projections. Unfortunately, FCMAT didn’t ask about the historical variances between OUSD’s projections and their actual expenditures.
- Charter Schools: FCMAT reports that OUSD’s Charter Schools Office is doing its job well, monitoring the financial condition of each charter school authorized by OUSD. (In Oakland, all the charters – and their budgets – are under the oversight of OUSD but independently managed by not-for-profit 501c3 governing boards, which is why charter budgets are not affected by OUSD’s cuts.)
In four areas, OUSD passed overall even though it failed on some specific questions in that category and some of FCMAT’s answers left us scratching our heads.
- Management Information Systems: Overall, the District passed this category based on “Yes” answers to four of seven questions – although we disagree with the “Yes” answers to the questions “Are the district’s financial data accurate and timely?” and “Are key fiscal reports accessible, timely, and understandable?” If these were actually true, we shouldn’t be in the situation we’re in.
- Budget Development & Adoption: Similarly, OUSD scored an overall positive in this category based on “Yes” answers to 8 of 10 questions – but some of those answers were contradicted in another part of the report. For example, FCMAT notes that the biggest dollar problem in the 16-17 budget was “the result of over-projecting ADA“ but then answers “Yes” to the question “Are projections for ADA, enrollment, revenue, and unduplicated pupil count accurate and reasonable?” Similarly, the report it points out that the District does not have a functional position control system for hiring, even while answering “Yes” to the question “Does the district use position control data for budget development?”
- Internal Controls & Annual Independent Audit Report: FCMAT gives OUSD an overall Yes on this section despite concluding that the district does not implement appropriate measures to discourage and detect fraud, has not received an audit without a material finding, and “many employees report a lack of consistency and continuity with district policy and procedures,” such as “spending beyond site/department budgets.”
- Facilities: Overall FCMAT rates the district positively on this topic, based on 8 of 10 “Yes” answers, despite noting they weren’t provided with the legally required audits of the bond measures and that the district “may be out of compliance in this area.”
So, that’s the “good” news – the seven areas in which FCMAT gave OUSD’s fiscal health a passing grade. Yet even in these areas, however, there is clearly a lot of work still to be done. We’ll be looking for the proposed Action Plan to include strengthening financial information systems and reporting, increasing accuracy in budget development and ensuring employees stick to established policies and procedures. Tomorrow, we will review the eight sections that raised concern.