July 22, 2014
Final Reports
San Mateo Courts - Civil Grand Jury 1999 Final Report: Fiscal Oversight of School Districts by County Superintendent of Schools
Background | Findings | Recommendations
Background:

The San Mateo County 1999 Grand Jury reviewed the responsibilities of the County Superintendent of Schools and the County Office of Education to oversee the County school districts’ fiscal and operational procedures. The Grand Jury focused on the school districts’ individual internal audits required by California Education Code.

The County Office of Education does not conduct audits. Each school district must retain an independent CPA firm to conduct an annual audit. The audit report is a public record which is maintained at the County Office of Education.

According to the San Mateo County Office of Education personnel, their office’s responsibility is fiscal oversight of individual school districts within the county. Their office must approve every school district’s annual budget which must meet the minimum State’s list of criteria. If a district fails to meet the criteria, an expanded review is carried out. If the County Office of Education fails to approve the budget, the district may appeal to the State.

According to the San Mateo County Office of Education, the main focus of their fiscal oversight is to assess the solvency of each district through the review of its budget and annual internal audit. If the County determines that one of the school districts is heading into financial trouble, the district is first permitted to seek its own solution. Financially troubled districts provide a plan to the County for approval. If the district’s plan is deemed inadequate, the County Superintendent may appoint an administrator to run the district, overriding the powers of the elected school board.

The San Mateo County Office of Education has emphasized that its fiscal oversight is mainly to ensure that school districts remain solvent and does not include reviewing the adequacy of operational controls.

The 1999 Grand Jury reviewed the audit reports for all 24 school districts within the County for fiscal years 1996, 1997 and 1998.

Findings:

The review of the internal audits noted the following deficiencies common to several school districts:

  • a lack of equipment inventory and fixed assets accounting.
  • inadequate accounting in the cafeteria and food service areas.
  • inadequate cash disbursement controls.
  • inadequate control of revolving cash funds.
  • inaccurate attendance records.
  • inaccurate accounting for teachers’ absences.
  • inadequate cash clearing procedures.

The State Education Code §41020(j) charges the county superintendents of schools with the following:

Upon submission of the final audit report to the governing board of each school district and subsequent receipt of the audit by the county superintendent of schools having jurisdiction over the school district, the county office of education shall do all of the following:

 

(1) Review audit exceptions related to attendance, inventory of equipment, internal control, and other miscellaneous exceptions. Attendance exceptions or issues shall include, but not be limited to, those related to revenue limits, adult education, and independent studies.

(2) If a description of the correction or plan of correction has not been provided as part of the audit required by this section, then the county superintendent shall notify the school district and request the governing board of the school district to provide to the county superintendent of schools a description of the corrections or plan of correction by March 15.

(3) Review the description of correction or plan of correction and determine its adequacy. If the description of the correction or plan of correction is not adequate, the county superintendent of schools shall require the school district to resubmit that portion of its response that is inadequate.

Subdivision (k) of that section further provides that by May 15 the county superintendent shall certify to the California Superintendent of Public Instruction that county superintendent or his staff have reviewed all audits, all exceptions were reviewed, and that all exceptions, unless otherwise noted, have been corrected or an acceptable plan of correction has been submitted to the County Superintendent of Schools.

Further citations from the State Education Code, conforming and detailing the County Superintendent of Schools’ responsibilities are:

  • CA Ed Code § 41020 Requirement for Annual Audit which describes the procedures to be followed by both the individual school districts and the county superintendents to meet the state requirement for annual audits.
  • CA Ed Code § 41020.2 Delayed Filing which requires county superintendents to investigate the cause of a school district’s failure to meet the required dates for completing its annual audit and either grant an appropriate extension of time to complete the audit or contract with another auditor to complete the audit.
  • CA Ed Code § 41020.3 Review of Annual Audit which requires the school district’s governing board and the county board of education to review the annual audit at public meetings.

The 1999 Grand Jury surveyed four County Offices of Education (Santa Clara, Santa Cruz, Marin and Alameda) by telephone to determine their fiscal oversight practices. The four County Offices of Education responded that they aggressively follow up with their school districts to ensure that audit report deficiencies are corrected.

Santa Cruz County’s procedure is to review the audit exceptions. Each school district must then develop a plan for the correction of the exceptions. The District reviews the plan of corrections for adequacy, and the County follows up to ensure the exceptions noted by the auditors are corrected.

Marin County’s procedure is to review both the audit and the school district’s responses to the audit. The County either accepts or rejects the school district’s plan for correcting the exceptions. In some cases the County asks for more information. The County follows through by checking that the exceptions noted in the audit are corrected. The County works with the school districts to develop systems and procedures to aid in the management of the district. Last summer, the State Controller inspection team evaluated Marin County’s oversight performance and complimented them.

Santa Clara County’s first priority is to use their regular staff to review each school district’s audit, and the staff ensures that a plan of action to correct the exceptions cited in the audit is developed. Periodically, the County follows up on the plan to be sure the exceptions are corrected.

Alameda County’s procedure is to review the annual audit reports upon receipt. The County follows up to ensure that each school district corrects the deficiencies or has a plan to correct these exceptions. Later, the County determines if each school district has complied with the correction plan. According to the Alameda representative, the State Controller will follow up to make sure there is compliance.

The 1999 Grand Jury found that the San Mateo County Office of Education’s failure to focus on the evaluation of district operational procedures does not allow for timely intervention. Early intervention could prevent school districts from getting into financial difficulties which might require an appointment of an administrator.

Recommendations:

Recommendation 28

The San Mateo County 1999 Grand Jury recommends that the San Mateo County Superintendent of Schools intervenes when an audit of a school district finds there are inadequate fiscal and/or operational procedures, compelling the school district to establish a plan of adequate controls before insolvency.


Recommendation 29

The San Mateo County 1999 Grand Jury recommends that the San Mateo County Superintendent of Schools requires the County Office of Education fiscal staff establish procedures that conform to the requirementsof Education Code §41020.


Recommendation 30

The San Mateo County 1999 Grand Jury recommends that the San Mateo County Superintendent of Schools take an active role in reviewing the County’s school districts annual audits for adequate financial and operational procedures, requiring that deficiencies noted by the auditors are corrected within the fiscal year.


Recommendation 31

The San Mateo County 1999 Grand Jury recommends that the San Mateo County Superintendent of Schools make available a team of experts to work with the school districts to develop better business and fiscal operations.


Recommendation 32

The San Mateo County 1999 Grand Jury recommends that the San Mateo County 2000 Grand Jury monitors the above recommendations to ensure implementation.

 

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