FCMAT has compiled lists of indicators of risk or potential insolvency for TK-12 local educational agencies (LEAs), charter schools and community colleges. These lists are based on FCMAT's more than 30 years of experience with LEAs since the inception of Assembly Bill (AB) 1200 in 1991. They will continue to be revised to ensure they remain relevant and helpful.
Each indicator signifies a lack of function, commitment or attention to one or more critical elements of an LEA's operations. The existence of any one of these indicators increases the risk of insolvency and the need for assistance from outside agencies. An LEA’s failure to manage these critical areas will eventually lead to fiscal insolvency and its discontinuation.
Identifying issues early is the key to maintaining fiscal health. Diligent multiyear planning, proactive risk assessment and accurate cash flow projections enable LEAs to better understand their financial objectives and to develop strategies to sustain a high level of fiscal effectiveness and overall solvency. LEAs should discuss these indicators regularly and complete a Fiscal Health Risk Analysis (FHRA) periodically, if not annually, to assess their fiscal health risk and progress. The FHRA is available at: www.fcmat.org/fiscal-health.