School solvency threats now at a minimum

School solvency threats now at a minimum

(Calif.) The number of California school districts reporting budget problems has dropped to the lowest overall level in a decade, based on a biannual, mandated survey of financial data collected by the state.

Just 20 school districts – the fewest since the onset of the great recession – received either a negative or qualified certification in the first reporting period for 2015-16, according to figures released by the California Department of Education earlier this month.

During the height of the economic crisis for schools in 2012, the number of districts unable or in danger of being unable to meet current or up-coming fiscal obligations rose to an all-time high of 188.

By law, each of the state’s roughly 1,000 school districts and county offices of education must submit two “interim” financial reports every year verifying whether or not they can pay their debts for the current and two subsequent budget years. The county superintendent’s office reviews the information and certifies the local educational agency’s budget as positive, qualified or negative.

A positive certification is assigned when the LEA will meet its financial obligations for the current and two subsequent fiscal years. A qualified certification means the agency may not meet its financial obligations for the current or two subsequent fiscal years.

Districts receiving a negative certification – the most dire of the classifications – will likely be unable to meet their financial obligations for the remainder of the current year or the next two. This certification also means the district's county office of education may intervene in its finances and possibly take over administration duties.

The number of negative and qualified certifications decreased in the 2015-16 first interim reporting period to 20 LEAs – down from 43 a year ago. Four LEAs are certified as negative, down from five last year while 16 LEAs received qualified certifications, down from 38 in 2014-15.

Two of the four districts on the negative certification list are Castaic Union Elementary School District and Inglewood Unified, both in Los Angeles County. The others are Julian Union High School District in San Diego County and Shandon Join Unified School District in San Luis Obispo.

Some of the state’s largest districts are on the qualified certification list this year, including Oakland Unified, San Diego Unified and Los Angeles Unified.

The current list, however, stands in stark contrast to 2011-12 when a record number 188 LEAs were either in negative or qualified financial status. At that time, the state was digging itself out of a budgetary hole brought on by a severe economic recession that had forced drastic cuts, including to education.

The number of LEAs in negative or qualified status began declining the following year after the passage in November 2012 of Proposition 30, a $6 billion-a-year tax measure aimed at shoring up both the state’s and schools’ depleted budgets.

The first interim report is based on budget data submitted in December 2015 that covers the period ending Oct. 31.

Certifications for the second interim report were due March 17 for the period ending January 31. The results of that reporting period will likely be released in May.

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