1. Joel Montero Fiscal Crisis and Management Assistance Team California Teachers Association Presidents Meeting San Bernardino February 26, 2008

2. Talking Points What is the Fiscal Crisis and Management Assistance Team (FCMAT)? What Does FCMAT Do? How Does FCMAT Respond to District and Other Requests? What Sort of Data Analysis Does FCMAT Untilize? How are Multi-Year Projections Created and Used? What are the Basics of AB 1200 Oversight? How Do Districts Typically Get Into Financial Trouble? How Do Districts Assess What They Can Afford in the Collective Bargaining Process? What is the Latest with respect to the State’s Budget?

3. What is FCMAT? An Independent/External Public Agency of the State designed to Support Districts and COEs in areas that are related to: School Finance Human Resources Data Management

4. What is FCMAT? A Small Core Staff composed of former School District and COE People (certificated and classified) FCMAT support is generally requested by School Districts FCMAT can be assigned by the COE, Superintendent of Public Instruction, or the Legislature

5. What Does FCMAT Do? Solvency: The ability of a public agency to meet their financial obligations over time Avoid Emergency Loans: Cash Insolvency

6. What Does FCMAT Do? Management Assistance by invitation Technical Assistance-Help Desk and Remote Professional/Product Development California Schools Information Services (CSIS) Fiscal Crisis Intervention

7. How Does FCMAT Respond to Requests? Online Job Management System (JMS) www.fcmat.org Study Agreement Field Work Report—Findings and Recommendations Ongoing support and follow up Job Data over time Requests per Year (handout) Total Number and Type(handout)

8. What Sort of Data Analysis does FCMAT Utilize? Fiscal Health Risk Analysis Tool Contains both fiscal (number) and organizational impacts Attempts to Identify the Potential Risk of Insolvency to the district A Tool Among Other Tools and Indicators

9. How Are Multi-Year Projections Created and Used? FCMAT Budget Explorer ™ External/Independent MYP Tool Web Based Software Available to All Uses Initial Assumptions from the SSC Dartboard Direct Upload from the District’s Official Financial Information submitted to the CDE Attempts to predict relative solvency over multiple years (1 to 5)

10. How Are Multi-Year Projections Abused? Garbage In, Garbage Out Not Keeping the Assumptions Up To Date Including Unrealistic Assumptions Manipulation of the Numbers to Impact the Fiscal Bottom Line MYPs Require Constant Review and Analysis in order to Maintain their Viability as a Usable Tool

11. The Basics of AB 1200/2756 County Office Review at a Minimum of Three Specific Data Collection Points Budget Approval First and Second Interim Reporting Positive, Qualified and Negative Certifications COE Must Assess Solvency for the Current Plus One or Two Years Disclosures

12. The Basics of AB 1200/2756 Possible Actions Under a Qualified Certification Fiscal Expert Assignment Budget Analysis and New Financial Projections Approval of New Debt Issuance Longer Period of Review for Collective Bargaining Agreements Encumber all Contracts and Other Obligations Withhold Compensation from Superintendent and Governing Board

13. The Basics of AB 1200/2756 Possible Actions Under a Negative Certification All Actions Under a Qualified plus: Develop and Impose a Budget in Consultation Stay or Rescind Any Action of the Board that is Inconsistent with Fiscal Recovery In Consultation with the District Develop a Fiscal Recovery Plan Assign a Fiscal Advisor May Not Abrogate any Provisions of the Collective Bargaining Agreement

14. The Basics of AB 1200/2756 In the Event of Insolvency (Emergency Loan) Authority Transfer to the California Department of Education Assignment of a State Administrator Governing Board becomes Advisory Only Recovery and the Assignment of a State Trustee

15. How Do Districts Typically Get Into Financial Trouble? Overly Optimistic Estimates of the State’s Economy Overly Aggressive estimates of Enrollment, Attendance, ADA Failing to React Early Enough to Declining Enrollment Failure to Update Budget Assumptions Lack of Monitoring of Staffing Levels Underestimating Automatic Cost Growth Use of One-Time Money for Ongoing Expenses Adversarial Collective Bargaining Process Inadequate or Inaccurate Multi-year Projections Failure to Follow Through on Budget Decisions Poor Budget Monitoring Chronic, multi-year Deficit Spending Inadequate Reserves

16. How Do Districts Assess What They Can Afford in the Collective Bargaining Process? Big Picture Estimate Next Year’s Income Enrollment (ADA) Revenue Limit Lottery Special Purpose Funds Local Income Special Education Plan Next Year’s Expense Actual Salary of Each Employee Actual Benefit Cost of Each Employee New Programs Assumptions re: utilities, insurance, capital and equipment, etc. Legal Costs What’s is the Balance?

17. How Do Districts Assess What They Can Afford in the Collective Bargaining Process? The More Granular View COLA5.00%?? Deficit Factor(0%?) Total Net Impact5.00% Step and Column(~1.5%) Health and Welfare(1.5%??) Enrollment Adjustment(0%) Other Fiscal Impacts(0%) Total Available (absent change) 2%

18. How Do Districts Assess What They Can Afford in the Collective Bargaining Process? The More Granular View—2008-09 COLA4.94% Deficit Factor(6.99%) Total Net Impact(2.4%) Step and Column(~1.5%) Health and Welfare(1.5%??) Enrollment Adjustment(0%) Other Fiscal Impacts(0%) Total Available (absent change) (5.4%)

19. The Latest on the State’s Budget? The Economy in General Fiscal Year 2007-08 State of Fiscal Emergency Mid-Year Cuts? Fiscal Year 2008-09 $16 billion projected state deficit Possible Suspension of Proposition 98 ~$4 billion hit to Education Fiscal Year 2009-10

20. Questions