FCMAT has compiled the list of indicators of risk or potential insolvency based on more than 25 years of experience with local educational agencies (LEAs). Each item listed indicates a lack of function, commitment, or attention to one or more critical elements of an organization’s operations, which may eventually contribute to an LEA’s insolvency. The existence of any one of the indicators increases risk of potential insolvency and the need for assistance from outside agencies. Lack of attention to these indicators will eventually lead to financial insolvency and loss of local control. Identifying issues early is the key to maintaining fiscal health. Diligent multiyear planning will enable an LEA to better understand its financial objectives and strategies to sustain a high level of fiscal efficiency and overall solvency.
An LEA should consider discussing the indicators regularly and complete a Fiscal Health Risk Analysis (FHRA) annually to assess its own fiscal health risk and progress over time.