Record Number of School Districts in Financial Jeopardy

State Schools Chief Tom Torlakson Reports Record
Number of School Districts in Financial Jeopardy

State Superintendent of Public Instruction Tom Torlakson warned today that 2.6 million California children now attend schools in districts that are in financial jeopardy—the highest number of financially troubled districts in state history.
“This is the kind of record no one wants to set. Across California, parents, teachers, and administrators are increasingly wondering how to keep their schools’ lights on, their bills paid, and their doors open,” Torlakson said. “The deep cuts this budget crisis has forced—and the uncertainties about what lies ahead—are taking an unprecedented and unacceptable toll on our schools.”
The state’s Second Interim Status Report for 2011-12 also shows a record-high 188 local educational agencies (LEAs) are either in negative or qualified financial status. That’s up 61 LEAs from the First Interim Status Report for 2011-12 issued in February, and up 45 from the Second Interim Report for 2010-11 issued a year ago.
The new report shows 12 LEAs received negative certifications and 176 received qualified certifications. Students in these 188 LEAs represent more than 2.6 million of California’s 6.2 million students attending schools in districts with serious financial challenges, up from nearly two million students in February.
Twice a year, the California Department of Education receives Notice of Interim Certifications on the financial status of the state’s 1,037 LEAs, comprised of school districts, county offices of education, and joint powers agencies. The certifications are classified as positive, qualified, or negative.
A positive certification is assigned when an LEA will meet its financial obligations for the current and two subsequent fiscal years.
A qualified certification is assigned when an LEA may not meet its financial obligations for the current or two subsequent fiscal years. This certification allows the LEA’s county office of education to provide assistance to the district.
A negative certification—the most serious of the classifications—is assigned when an LEA will be unable to meet its financial obligations for the remainder of the current year or for the subsequent fiscal year. This certification means the LEA’s county office of education may intervene in the district’s finances.
The assistance or intervention by the county office may include assigning external consultants, requiring a district fiscal recovery plan, or even disallowing certain district expenditures.
This new list is a compilation of the certifications by LEAs that were due April 16, 2012, and cover the financial and budgetary status of the districts for the period ending January 31, 2012. The certifications reflect whether the LEAs are able to meet their financial obligations for the remainder of the current fiscal year and subsequent two fiscal years, based on projections at that point in time.
These certifications predate the Governor’s May Revision to the proposed 2012-13 state budget. Because these Interim Status Reports are snapshots in time, the LEAs’ financial status may have changed since these certifications were collected.

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