News

News

VC Office of Education tells Ojai Unified: 'The District may not meet its financial obligations for the current and two subsequent fiscal years'

5 13 22 VCOEletter

Photo of first page of three-page letter to Ojai Unified School District trustees, copied in its entirety below, with the school board members' addresses whited out.

 

When Ojai Unified School District Board of Trustees meets Wednesday, May 11, it will discuss an April 21 letter from the Ventura County Office of Education, explaining that its analysis of the school district's second interim report, "indicates the District may not meet its financial obligations for the current and two subsequent fiscal years."

As a result, it issued a "qualified certification."

California School Board Association’s website describes what that means on page 6 of this explanation page: https://bit.ly/39D56Qc

That is one of several items to be discussed when the Ojai Unified School District trustees meet starting at 5 p.m. The meeting will be held in the school district board room at 414 E. Ojai Ave.

The reference to the qualified certification in the OUSD agenda packet and the letter from the Ventura County Office of Education may be viewed at: https://drive.google.com/file/d/1Q7Q7pDqY8boV-wwyYDlE_OGePKnRix1-/view

The school board agenda can be viewed online at: https://core-docs.s3.amazonaws.com/documents/asset/uploaded_file/763/Ojai_Unified_School_District/2068915/Wednesday__May_11__2022_Board_Meeting_Agenda_.pdf

The board will open its meeting in public session at 5 p.m. before adjourning to closed session to discuss student discipline. It is scheduled to reopen in public session at 5:30 p.m.

The meeting will be livestreamed on Youtube at: https://www.youtube.com/user/adminojaiusdorg  and on

Facebook at: https://www.facebook.com/ojaiusd.org

The public may make public comments in several different ways:

— They may write them on the school district’s online form at: https://bit.ly/3wjiUqI

Those written comments should be made prior to 4 p.m. on the day of the meeting.

The school board does not read the written comments aloud and has a word limit.

The Ojai Valley News welcomes the public to also submit their comments of any length to the Ojai Valley News for possible posting on the OVN website.

— The public may also make their comments in person at the school district boardroom at 414 E. Ojai Ave. 

The Ventura County Office of Education letter describing the issues is copied below:

 

April 21, 2022

Dear Governing Board Trustees and District Superintendent:

The Ventura County Office of Education has reviewed the second interim report of the Ojai Unified School District (District) for the period ending January 31, 2022 in accordance with Education Code Section 42131. Our analysis of the second interim report indicates the District may not meet its financial obligations for the current and two subsequent fiscal years. Therefore, in accordance with Education Code Section 42131, we are changing the second interim report from a positive to a qualified certification.

The County Superintendent’s review process included examining the interim report to determine whether it complies with the standards and criteria established by the State Board ofEducation pursuant to Education Code Section 33127, and to identify any technical correction needed to bring the report into compliance. In addition, the review determined whether the budget projections presented on the interim report would allow the District to meet its financial obligations for the remainder of the current fiscal year and would enable the District to satisfy its multi-year financial commitments.

The District submitted a second interim report that indicated a positive certification, reflecting that the District would meet its financial obligations for the current and two subsequent fiscal years. However, based upon our analysis and subsequent information discovered, including a multitude of technical errors, we believe the District may not meet its obligations for one or both subsequent fiscal years.

The basis of our determination is as follows:

1. Reserve for Economic Uncertainty: The multi-year projection reflects the District does not meet the required minimum reserve for economic uncertainties for the current and two subsequent years. The District’s multiyear projection lists the “3% Economic Uncertainty” for 2021-2022 as $783,920, for 2022-2023 as $696,436, and for 2023-2024 as $727,968. The District’s multiyear projection total expenditures for 2021-2022 are $31,549,388, for 2022-2023 are $32,059,458, and for 2023-2024 are $32,889,624. The calculation of the required “3% Economic Uncertainty” is based on total expenditures and other financing uses; therefore, for 2021-2022 is $946,482, for 2022-2023 is $961,784, and for 2023-2024 is $986,689. The District’s ability to maintain the reserve for economic uncertainty is one of the key qualifiers for a positive certification. The District does not meet the minimum requirement for the current and two subsequent years.

2. Lack of Position Control: The position control system does not include health and welfare costs for approximately 40 employees. Therefore, the budgeted health and welfare expenditures are materially understated in the current year and two subsequent years. There are a number of position control related costs that appear to be understated. It is recommended that a reconciliation be performed for all employees compared to actual expenditures, benefit statements, and collective bargaining agreements.

3. Unreliable Budget Development: Local Control Funding Formula (LCFF) projected revenues are overstated each subsequent year by at least $1 million or more due to:

      a. The District’s Average Daily Attendance (ADA) exceeded enrollment in the LCFF Calculator creating an attendance ratio of 100.74%. Historically, the District has experienced an attendance ratio of approximately 95% for the past ten years. With the COVID pandemic, the current year attendance ratio has been much lower than the historical trend.

      

      b. The District used enrollment projections within the LCFF Calculator assuming there would not be a decline in enrollment. Absent any firm data supporting the leveling of student enrollment, the District should follow the historical trend of decline.

4. Unplanned Contributions and Transfers: As of January 31, 2022, the Cafeteria Fund had actual revenue posted within the second interim report of $51,541 and budgeted total revenue of $900,400. A monthly reconciliation should be performed for the Cafeteria Fund to identify potential impact to the General Fund.

With the change from positive to qualified certification, the District is subject to the following criteria:

      • The District shall provide a third interim report to the Ventura County Office of Education no later than June 1, 2022, in accordance with Education Code 42131(f).

      

      • The District shall submit a proposal for addressing the fiscal conditions that resulted in the determination that the school district may not be able to meet its financial conditions, in accordance with Education Code Section 42127.6(a)(1)(E).

      • Prior to entering into any collective bargaining agreement, the District must submit the proposed agreement to the county office of education and allow 10 days for this office to review and comment, in accordance with Government Code 3540.2(a).

To further support the District, Fiscal Crisis and Management Assistance Team (FCMAT) will be contacted to perform a fiscal health risk analysis and assess the multi-year projection.

As a reminder, school district studies, reports, evaluations, or audits which indicate signs or symptoms of fiscal distress are required to be submitted as soon as they are available to the Ventura County Office of Education, School Business and Advisory Services. In addition, the District must obtain county office of education approval prior to the issuance of any nonvoter approved debt, including TRANs and Certificates of Participation (COP).

We appreciate the District’s cooperation during our review. We recognize the diligence and hard work necessary for school district business operations and we look forward to an ongoing collaborative working relationship. If our office can be of further assistance, please do not hesitate to contact Misty Key, Deputy Superintendent of Fiscal and Administrative Services at This email address is being protected from spambots. You need JavaScript enabled to view it. or (805) 383- 1905, or Danni Brook, Executive Director of School Business Advisory Services at This email address is being protected from spambots. You need JavaScript enabled to view it. or (805) 383-1981.

Sincerely,

Dr. Cesar Morales

Ventura County Superintendent of Schools

cc:      State Superintendent of Public Instruction

           State Controller

           Fiscal Crisis and Management Assistance Team Chief Executive Officer

           Eide Bailly

           District Superintendent

           District Chief Business Official

 

 

 

Not a subscriber?  choose your subscription plan.