Question: The District declared a negative second interim report in FY 00-01 and a negative first interim report in FY 01-02, mostly due to uncertainty in the second multi year. Fiscal controls were put into place and the District has declared positive interim reports since. When would the AB 1200 oversight generated by the negative interim reports end? My review of the education code and FCMAT literature would indicate that AB 1200 oversight would be in place for the fiscal year and next succeeding fiscal year, and given the dates presented our AB 1200 oversight would end at the end of the FY 02-03 year. Is this correct? Would the same time parameters be in place if the District was to issue a COPS?

Response: California Education Code, Article 3, Financial Reports and Certifications, Sections 42130-42134, outline the various aspects associated with positive, qualified and negative certifications. As you know, a negative certification shall be assigned to any school district that, based upon current projections, will be unable to meet its financial obligations for the remainder of the fiscal year or the subsequent fiscal year. This appears to have occurred in your district in fiscal years 2000-2001 and 2001-2002. There are various rules/authority that a county superintendent of schools can exercise to any school district having a negative or qualified certification, pursuant to Section 42127.6. These include:

**The Controller's office may conduct an audit or review of the fiscal condition of any district having a negative or qualified certification.

**The governing board of each school district filing a qualified or negative certification for the second report required under Section 42130, or classified as qualified or negative by the county superintendent of schools, shall provide to the county superintendent of schools, the Controller, and the Superintendent of Public Instruction no later than June 1, financial statement projections of the district's fund and cash balances through June 30 for the period ending April 30. The governing boards of all other school districts are encouraged to develop a similar financial statement for use in developing the beginning fund balances of the district for the ensuing fiscal year.

In addition, section 42133 outlines additional requirements for school districts that have a qualified or negative certification in any fiscal year. They may not issue, in that fiscal year or in the next succeeding fiscal year, certificates of participation, tax anticipation notes, revenue bonds, or any other debt instruments that do not require the approval of the voters of the district, nor may the district cause an information report regarding the debt instrument to be submitted pursuant to subdivision (e) of Section 149 of Title 26 of the United States Code, unless the county superintendent of schools determines, pursuant to criteria established by the Superintendent of Public Instruction, that the district's repayment of that indebtedness is probable.

AB 1200 oversight is always in place and is a critical role of county offices over school districts. AB 1200 includes budget adoption, budget review committees, lack of going concern, interim reports, public disclosure responsibilities and various other fiscal matters. As far as debt, districts cannot enter into non-voter approved debt, such as COPs, in the current or next succeeding year after being certified qualified or negative unless the county superintendent of schools is able to determine that the district's repayment of that indebtedness is probable.

12/08/03