LYNWOOD — Effective Monday, Eric Hall, a fiscal agent for the Los Angeles County Office of Education, will have an office at the Lynwood Unified School District headquarters.
At a special school board meeting Tuesday night, Hall and Ken Shelton, assistant superintendent of Business Services for the county, presented to the board and the community the structure and options required by state law for the district to continue its path toward fiscal recovery. Hall will report exclusively to Shelton.
To better understand the fiscal implications of the district’s mounting challenges, the school board last year requested the services of the state’s Fiscal Crisis and Management Team, which together with the School Services of California and the county Office of Education have worked with the district to help clarify district finances and develop recommendations for a fiscal recovery plan.
The assignment of the fiscal agent became effective immediately, according to the district’s interim Superintendent Patrick Leier, who clarified that the fiscal agent’s presence in the district resulted from the financial review of the district, and is separate from the county’s District Assistant and Intervention Team’s report.
That report was assigned to the district based on its program improvement status. The Fiscal Crisis and Management Team’s work, on the other hand, is related to the district’s financial position.
According to Shelton, Hall will assist the district with the development of budget revisions, facilitate the development of future budgets and will help create a financial plan for the district. As the district’s fiscal advisor, Hall will also have the ability to rescind proposed expenditures approved by the school board.
In December, the district “made a self-declaration of its 2009-10 budget as negative,” Leier said in a released statement on Wednesday. “A negative certification indicates that without corrective action, [the district will have] an inability to meet financial obligations in the current or two succeeding academic years.”
The district has, over the past four years, experienced declining enrollment while maintaining numerous academic programs, the continuous hiring of teachers and opening of four new schools. To meet the challenges of increasing accountability for student performance under the No Child Left Behind Act, reduced state funding and existing contractual obligations, the district experienced deficit spending, negatively impacting its reserves and future operations, Leier said in the statement.
In an interview late Wednesday, Shelton said the district was to be commended for taking action to self-certify a negative budget at this time, as this is a necessary and critical step on the road to recovery.
“They self-certified as negative,” said Shelton. “So that means they are taking a realistic view of their financial position. In other words, they didn’t submit numbers and see it rosier than the numbers were. … They were realistic about the numbers, and they should be commended for that.”
Self-certifying also means that the district is being more transparent in saying that it will not be able to meet its financial obligations in the current year, and in the following two years.
In his report to the board Tuesday, Shelton said that last year, three other school districts in the county declared negative budget certifications, and now all three have moved to solvency and a positive budget status.
Shelton said Hall will work with district staff as well as the District Assistant and Intervention Team, but reminded the board that the fiscal advisor may supersede any decisions they may approve if he deems necessary.
Leier said in a brief interview Wednesday, the fiscal agent’s presence in the district is a positive one.
“Him being here gives [the district] another outside expert a chance to review the district’s financial status,” he said. “And it sends a clear message, as I interpret it, as we interface with all of our stakeholders on the validity and depth of the problem we’re having … it’s a position we really need … to send the message that the district isn’t hiding any money.”
Being an outside expert, the fiscal agent will be able to clarify the exact position of the district’s financial status. It’s like putting all of the cards on the table, Leier added.
Shelton said he was uncertain if this is the first time the district has declared a negative certification. He said that the district may have had similar challenges 10 to 15 years ago, but he would have to double check.
“But in recent times, this is the first time,” he said. “The district could have had similar issues before in recent years, but not to this severity.”
Leier said the district will receive further direction in a formal response from the county office to the first interim report sometime in the next week.
Asked if the county’s findings and their assignment of a fiscal agent to the district opens the door wider for state takeover, Leier said no.
“It’s actually a step in the right direction,” he said. “It’s helps us take corrective action early in turning this massive airliner around,” he said.
Shelton said the county’s focus was not on how the district got to this place in time, but rather the focus was put on “right now.”
The district apparently built a recovery plan last year, so there were some fiscal difficulties identified last year, but actions were not implemented fully, Shelton said.
Shelton also said the district’s financial position is being complicated by the state. The county is aware of that as well.
“As opposed to having a stable revenue source, they have a declining revenue source, cash deferrals, budget cuts, all of that exacerbates the impact on the district in this point in time.”
The district has had fiscal issues, but they’ve been compounded with the state’s fiscal difficulties.
Shelton said there is no time frame for a state takeover. The district would have to be in a condition that required a state loan.
“That happens when the district truly runs out of cash, and it can’t make payroll and make other payments,” he said. “But the district isn’t there yet.”
The financial agent was a step in making sure the district doesn’t get to that level, he added.
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