(a) Beginning with the fiscal year ending June 30, 1997, all public school districts, including vocational-technical school districts, both sometimes referred to herein as “district,” are required to submit to the Secretary of Education, 3 financial position reports, 1 on or before February 1, 1 on or before May 1 and 1 on or before August 31 of each year. The format of the reports shall be as prescribed by the Secretary consistent with the provisions of this section, and also shall establish that the school district has sufficient year-end carryover balances, including any nonstate funded share, to fund at least 1 month of local payroll for the next ensuing fiscal year.
The financial position report due by February 1 shall project a school district's current fiscal year ending balance in its local current expense revenue accounts after taking into consideration all remaining local operating obligations that can be reasonably estimated. To the extent that a district has General Fund balances in their Division III Equalization Accounts, Division II—All Other Costs and Energy Accounts, or in an approved cash option account, such balances may be identified as offsets to any local obligation. If the financial position report shows a deficit occurring prior to the close of the current fiscal year, the district shall indicate what steps it will take to assure that its obligations are satisfied in the current fiscal year. If the financial position report shows a current expense deficit for the current fiscal year, or a surplus that is less than the amount required to satisfy 1 month's full local payroll and other operating obligations for the ensuing fiscal year, the district shall also indicate what steps it plans to take in the ensuing fiscal year to assure that its future year-end balance will be sufficient to cover at least this amount.
The financial position report due by May 1 shall project a school district's current fiscal year ending balance in its local current expense revenue accounts after taking into consideration all remaining local operating obligations that can be reasonably estimated. To the extent that a district has General Fund balances in their Division III Equalization Accounts, Division II—All Other Costs and Energy Accounts, or in an approved cash option account, such balances may be identified as offsets to any local obligation. If the financial position report shows a deficit occurring prior to the close of the current fiscal year, the district shall indicate what steps it will take to assure that its obligations are satisfied in the current fiscal year. If the financial position report shows a current expense deficit for the current fiscal year, or a surplus that is less than the amount required to satisfy 1 month's full local payroll and other operating obligations for the ensuing fiscal year, the district shall also indicate what steps it plans to take in the ensuing fiscal year to assure that its future year-end balance will be sufficient to cover at least this amount.
The financial position report due on or before August 31 of the ensuing fiscal year shall be focused exclusively on local district payroll obligations through and including the October 15 payroll cycle. This report shall compare the district's year-end current expense balances from the previous fiscal year, and its preliminary Division III Equalization appropriation for the current year (which amount shall be based on 75% of the Division III amount earned in the previous fiscal year), with the district's projected local salary obligations through October 15. To the extent that this report shows a deficit, the district shall report what steps it will take to meet its payroll obligations through October 15. If the August 31 report projects an October 15 surplus that is less than the amount required to cover 1 month's full local payroll cycle, the district shall also indicate what steps it plans to take to attempt to assure that such a minimum balance will be in place in the subsequent fiscal year.
Whenever the August 31 report shows that a district will be unable to meet all or some of its payroll obligations through October 15, the district may meet those obligations by requesting from the Secretary of Education with the approval of the Secretary of Finance and the Director of the Office of Management and Budget an advance of state funds in an amount sufficient to cover the district's payroll obligations through October 15. Upon such request and approval, the Secretary of Finance shall cause to have the requested funds advanced to the district, and the district shall reimburse the State for those funds no later than November 15 of the same year. In addition, the district shall pay an amount to the State for interest defined as the average rate of return on state investments during the period of the loan.
The financial position report shall have been reviewed and approved by the school board of each reorganized school district and be made a part of the public record of that school district. An electronic copy of each report shall be submitted to the Department of Education by the dates specified above. The Department of Education shall provide copies of the submitted reports to the Director of the Office of Management and Budget and the Controller General within 5 working days of all submissions.
(b) Notwithstanding any provision in this Code to the contrary, a minimum of 25% of all projected state funding to any school district, including a vocational-technical school district shall be withheld until the submission of the financial position report required to be filed on or before August 31 pursuant to the provisions of subsection (a) of this section, and the acceptance thereof as satisfactory in the sole discretion of the Secretary of Education, and the certification of the school district's unit count in accordance with this Code and any rule or regulation promulgated in accordance therewith.
(c) If a school district materially alters its financial position after providing any report required by this section, the school district shall provide financial impact statements to the Department of Education, the Office of Management and Budget and the Office of the Controller General, specifying the nature of such change and its impact upon its previously filed financial position report.
(d) Any school district that fails to comply with this section or any provision herein shall be subject to review, including all of its books and financial records, by the Department of Education, the Office of Management and Budget and the Office of the Controller General in order to determine whether the school district is financially stable.