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Monterey County Office of Education

Leadership, Support and Service to Prepare All Students for Success

Dr. Deneen Guss, County Superintendent of Schools

January Update from Monterey County Board of Education on Millennium Charter High School

January Update from Monterey County Board of Education on Millennium Charter High School

Tuesday, Jan 15, 2019

Contact: Jessica Hull / Communications and Public Relations Officer  831.784.4245 (o), 209.679.4858 (c)

 

Salinas, CA – The Monterey County Board of Education (MCBOE) and Monterey County Office of Education (MCOE) will be providing monthly updates on Millennium Charter High School (MCHS) to the public during Board of Education Meetings and with press releases.

This release serves as a summative history of the concerns and issues facing MCHS and an update of their current financial status. 

History of Financial Issues

MCHS was notified by MCBOE and MCOE in writing regarding fiscal concerns on June 11, 2018, October 15, 2018, October 24, 2018, October 29, 2018, November 2, 2018, November 12, 2018, and December 7, 2018. These notifications happened after many conversations regarding the reduction in ADA, which would lead to a reduction in revenue.

MCHS Board should have notified their staff, students, and community of these financial concerns beginning in June, 2018. The MCBOE and MCOE staff gave the school numerous suggestions for how to increase enrollment and decrease budget beginning in June, 2018, when the reduction in ADA became apparent. 

Budgets are based upon assumptions of revenue and expenditures. These assumptions  are adjusted during each budget year due a variety of changing circumstances. This is why it is extremely important for a school to have a reserve. The Memorandum of Understanding between the County Board of Education and MCHS states that the school would maintain a reserve in conformity with Title 5 California Code of Regulations 15443, Education Code Section 33128 and the criteria and standards adopted by the California State Board of Education (in MCHS case, five percent or $50,000 whichever is higher) for financial uncertainties. MCHS has not maintained such a reserve. 

Financial Transaction Timing

When providing business services to MCHS, MCBOE and MCOE have been forthright and transparent about the timing and remedy of four financial transactions:

  1. A Health & Welfare liability in the amount of $48,011 from 2016 was not moved from a liability to an expense until the 2017-2018 Fiscal year. This problem was based on an under-collection of the liability for medical benefits set up by MCHS.
  2. There was a duplicate posting of an accounts receivable during the 2017-18 financial records closing in June 2018 for the school’s State Facilities Grant in the amount of $117,328. This was caught by MCOE and reversed by the fall of 2018.
  3. The first year’s apportionment ($120,994) of a four year Career Technical Education Grant in the amount of $512,080 from the California Department of Education (CDE) was intended to serve MCHS students and MCOE Alternative Education students. The apportionment was sent to MCHS by the CDE because the grant application listed the school’s CDS code in error. The grant application clearly shows who the intended funds were to go to and what services were to be provided with the funds. Further, this is documented in a signed and fully executed MOU. There are multiple email communications from the school’s principal to the CDE stating why the funds were sent the school in error. The CDE corrected the CDS code error by the second year of the grant.
  4. Invoicing of MCOE fees that should have been quarterly were done annually as part of the closing of the financial records.

The timing of these financial transactions made it appear that the school had a positive cash balance. However, once these transactions were caught by MCOE, and rectified, it was clear that the school had no cash. MCHS board members were immediately notified once MCOE had finished reviewing the MCHS financials in October 2018. The heart of the financial insolvency stems from a drop in ADA in the 2017-2018 school year, when the school had a massive turnover in employees including teachers and administration. The reduction in enrollment resulted in a reduction in ADA, which in turn, resulted in lower revenue without a similar decrease in expenditures.

Current Financial Status

MCHS has had full access to and has been provided ongoing training on how to use the countywide financial systems. It is ultimately the school’s responsibility to monitor their revenues and expenditures, and ensure the school does not spend more than it takes in. An outside auditor’s report confirms the ratio between expenses and ADA were not in line.

During the MCBOE meeting on December 19, 2018, the MCBOE approved amending the Charter School Memorandum of Understanding between the MCBOE and MCHS to transfer Business Services from MCOE to MCHS as of February 1, 2019. The MCHS Board voted to take back their Business Services during their January 9, 2019 board meeting. The terms of this agreement have not been finalized, however it is the expectation of the MCOE and the County Board of Education that MCHS will control its own Business Services beginning February 1st.

The County Treasury shows, as of January 10, 2019, MCHS has a negative cash balance of <$197,375.75.> MCHS’ cash flow forecast is that the school will continue to have a negative cash flow every month of this fiscal year, ending on June 30, 2019.

The school has been conducting fundraising efforts and is seeking out financial assistance in order to address the operational deficits. 

Requested Information

Several parents have contacted MCOE for assistance with disenrolling their student(s) from MCHS and have requested a list of options for their student(s). 

Options include:

  • Students can enroll in their home high school, based upon residency.
  • Students can enroll in alternative programs provided by their district of residency. Contact district of residency for more information.
  • Students can enroll in MCOE alternative programs. Contact the MCOE Alternative Education Department at 831-784-4224 for more information. 

All of the district contact information can be found on the MCOE District Links page

Compliance Issues

During the December 19, 2018, MCBOE meeting, the MCBOE directed MCOE staff to complete a thorough review of the Charter and MOU and determine where the school is in compliance and where it is out of compliance.

Staff will provide a monthly compliance review update to MCBOE, beginning on January 16, 2019.

Next Steps

MCHS took over their Human Resources Services on August 15, 2018. As of February 1, 2019, MCHS is expected to control its own Business Services. These changes to the MOU will be memorialized once the MOU language is signed by both entities.

Starting in February of 2019, the MCHS will be required to report their financial condition, including enrollment, ADA, beginning balance, projected ending balance, current month projected revenues, expenses, and cash balances at each MCBOE meeting.

 

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