Report 2017-104 Recommendation 7 Responses

Report 2017-104: Montebello Unified School District: County Superintendent Intervention Is Necessary to Address Its Weak Financial Management and Governance (Release Date: November 2017)

Recommendation #7 To: Montebello Unified School District

To improve its current financial condition and ensure future viability, Montebello should, within 90 days, implement an effective budget monitoring process with regular budget-to-actual comparisons. This process should include safeguards against spending in excess of budgeted expenditures and require advance board approval of such spending before it occurs. For example, Montebello should require that the budget manager perform monthly reviews of budget-to-actual figures and provide detailed explanations to the board for any variances.

1-Year Agency Response

MUSD continues to refine its processes to ensure that spending does not exceed budgeted expenditures. The Director of Fiscal Services monitors and works with staff to ensure monthly reviews continue to occur.

  • Completion Date: October 2018
  • Response Date: November 2018

California State Auditor's Assessment of 1-Year Status: Pending

Montebello had not demonstrated that it has fully implemented our recommendation. It used one-time transfers to meet certain obligations, but its approved budget projects deficit spending in the two subsequent years.

  • Auditee did not address all aspects of the recommendation

6-Month Agency Response

The LACOE has informed MUSD that any unfunded expenditures exceeding $25,000 could not be approved by the Board without LACOE's approval (Nov. 28, 2017. The Director of Fiscal Services is working with staff to make sure monthly reviews of budget-to-actual figures becomes the norm.

  • Completion Date: May 2018
  • Response Date: May 2018

California State Auditor's Assessment of 6-Month Status: Pending

This is a temporary measure while the LACOE Fiscal Advisor is assigned to Montebello and not part of the budget monitoring process. Montebello has not demonstrated that it has implemented safeguards against spending in excess of budgeted expenditures.

  • Auditee did not address all aspects of the recommendation

60-Day Agency Response

MUSD continues addressing its ongoing commitments and ability to meet its priorities, including maintaining the legally required level of reserves. Effective November 8, 2017, MUSD was assigned a Los Angeles County Office of Education (LACOE) Fiscal Adviser, Mr. Mark Skvarna, who on an on-going manner is assisting with all fiscal matters. Furthermore, on December 21, 2017, the Board of Education approved the First Interim Budget with a "Positive" certification. A budget monitoring process is also evident via the Revenue and Expense Committee whereby representatives from the District Office, Classified School Employees Association (CSEA), Montebello Teacher Association (MTA), and Association of Montebello School Administrators (AMSA) meet to review the annual allocated budget and expenditures on a monthly basis.

  • Completion Date: December 2017
  • Response Date: December 2017

California State Auditor's Assessment of 60-Day Status: Pending

Montebello has not demonstrated that it has implemented safeguards against spending in excess of budgeted expenditures or that it requires advance board approval of such spending before it occurs.

  • Auditee did not address all aspects of the recommendation

All Recommendations in 2017-104

Agency responses received are posted verbatim.