The California Department of Education requires all school districts and county offices of education to prepare and submit two interim reports each school year representing the first four months by Dec. 15, and the second four months by April 16. While districts and county boards of education have separate roles related to interim reports, the purpose of these two reports is to display the fiscal solvency of the agency. The reports are designed to explicitly display the revenue and expenditure actuals to-date. They also provide a snapshot of the projected revenue and expenditures for the current year and two subsequent years. To ensure the continued fiscal health of their districts, board members should become knowledgeable and proficient in reading these reports.

The first page of an interim report is a certification of the agency’s fiscal condition as Positive, Qualified or Negative, and is designated by placing an X in front of the appropriate certification.

A Positive certification suggests that the agency will have sufficient funds to cover planned expenditures for the three-year cycle. A Qualified certification is cause for concern as it projects that the agency may not meet its financial obligations in the current year or two subsequent years. A Negative certification means that the agency is unable to meet its financial obligations for the remainder of the current or subsequent years. Receiving this certification should be a great cause for concern as it suggests the need for significant cuts in expenditures. A variety of reasons can contribute to this certification, but immediate actions are necessary to avoid relinquishing financial leadership to the county superintendent or state superintendent of public instruction.

Both Qualified and Negative certifications trigger interventions designed to correct the fiscal trajectory, ranging from external reviews to replacing school board authority with an outside advisor.

The next several pages of an interim report include a summary of the multiple criteria and standards that marks areas as Met or Not Met. Board members should pay particular attention to the Not Met standards. The explanation of any standard Not Met can be found in the last 26 pages of a report.

The budget pages thereafter display the current year budget actuals and projections for all fund types, displaying changes in fund balances, cashflow worksheets and multiyear projections.

Boards may want to explore the following questions as they review their reports:

• What budget areas meet or do not meet fiscal standards and criteria? What is the explanation?
• Are your projected total expenditures exceeding your board-approved operating budget?
• Is the agency deficit spending and is that a problem?
• Are your general fund total available reserves growing or shrinking in the multiyear projections?