005.28.20 Ark. Code R. § 023 Dese Rules Governing the Arkansas Fiscal Assessment and Accountability Program

• Library: Arkansas Administrative Code
• Edition: 2023
• Currency: Current through Register Vol. 48, No. 12, December, 2023
• Year: 2023
• Citation: 005.28.20 Ark. Code R. § 023

ARKANSAS DIVISION OF ELEMENTARY AND SECONDARY EDUCATION RULES GOVERNING THE ARKANSAS FISCAL ASSESSMENT AND ACCOUNTABILITY PROGRAM

Effective October 19, 2020

1.00 AUTHORITY

1.01 The Arkansas State Board of Education enacted these rules pursuant to Ark. Code Ann. § 6-11-105, Ark. Code Ann § 6-20-1901 et seq., Ark. Code Ann. § 25-15-201 et seq. and Act 929 of 2019.

1.02 These rules shall be known as the Arkansas Division of Elementary and Secondary Education ("Division") Rules Governing the Arkansas Fiscal Assessment and Accountability Program. ,

2.00 PURPOSE

2.01 The purpose of these rules is to establish how the Division will review the financial management practices of public school districts, including identifying best financial management practices, and evaluate, assess, identify, classify and address school districts in any phase of fiscal distress, including identification of early indicators of fiscal distress and early intervention in public school districts that experience early indicators of fiscal distress, and provide fiscal support to public school districts.

3.00 DEFINITIONS

3.01 "Annexation" means the joining of an affected school district or part of an affected school district with a receiving district pursuant to Ark. Code Ann. § 6-13-1401 et seq.

3.02 "Capital Outlay Expenditures" means land, land improvements, buildings, infrastructure and equipment having a unit value of $1,000 or more and a life expectancy of more than one year.

3.03 "Consolidation" means the joining of two (2) or more school districts or parts of the districts to create a new single school district pursuant to Ark. Code Ann. § 6-13-1401 et seq.

3.04 "Current Year Expenditures" means the total expenditures accruing to the combined teacher salary, operating, and debt service funds, excluding restricted funds.

3.05 "Current Year Revenues" means the total revenues accruing to the combined teacher salary, operating and debt service funds, excluding restricted funds.

3.06 Day means a calendar day, unless otherwise specified in these rules, regardless of whether it is a day the Division or a public school district conducts official business.

3.07 "Debt" means a legal liability encumbrance or contract, including employment contracts, to be paid out of future revenues or current reserves of the district.

3.08 "Declining Balance" means balance resulting when current year expenditures exceed current year revenues.

3.09 "Fiscal Distress Financial Improvement Plan (Plan)" means the written plan submitted by a district classified in fiscal distress and approved by the Division to be implemented by the district addressing each indicator of fiscal distress identified by the Division and the State Board with a specific corrective action plan and timeline.

3.10 "Fiscal Distress Status" means the status of a public school district identified by the Division and classified by the State Board as being placed in fiscal distress status pursuant to Ark. Code Ann. § 6-20-1901 et seq. and these rules. , '

3.11 "Fiscal Integrity" means to comply with financial management, accounting auditing, and reporting procedures and facilities management procedures as required by state and federal laws and regulations in a forthright and timely manner. /

3.12 "General Business Manager" means a chief financial officer or business manager however the position is titled, who: 3.12.1 Is responsible for the fiscal operations of a public school district; 3.12.2 Performs duties under the direction of a superintendent, or equivalent, of a public school district; and 3.12.3 Is not the superintendent or equivalent of the public school district.

3.13 "Jeopardize" means to expose to loss, -injury, or peril.

3.14 "Material Failure, Violation, Default, or Discrepancies" means an act, omission, event, circumstances, or combination thereof, that directly jeopardizes the fiscal integrity of a school district.

3.15 "Non-Material Failure, Violation, Default, or Discrepancies" means an act, omission, event, circumstance, or combination thereof, that does not directly jeopardize the fiscal integrity of a school district, but without intervention could place the school district in fiscal distress.

3.16 "Public school" means: 3.16.1 A school operated by a public school district; or 3.16.2 An open-enrollment public charter school, as defined in Ark. Code Ann. § 6-23-103. 3.16.3 Schools or educational programs created by or receiving authority to exist pursuant to Ark. Code Ann. § 6-15-501, Ark. Code Ann. § 9-28-205, and Ark. Code Ann. § 12-29-301 et seq., are specifically excluded from this definition.

3.17 "Public school district" means: 3.17.1 A geographic area that qualifies as a taxing unit for purposes of ad valorem property taxes under Ark. Code Ann. § 26-1-101 et seq. and Arkansas Constitution, Article 14, § 3, and is either: 3.17.1.1 Governed by an elected board of directors; or 3.17.1.2 Under the administrative control of the State Board or the Commissioner of Education in place of an elected board of directors; or 3.17.2 An open-enrollment public charter school, as defined in Ark. Code Ann. § 6-23-103. 3.17.3 Schools or educational programs created by or receiving authority to exist pursuant to Ark. Code Ann. § 6-15-501, Ark. Code Ann. § 9-28-205, and Ark. Code Ann. § 12-29-301 et seq., are specifically excluded from this definition.

3.18 "Reconstitution" means the reorganization of the administrative unit or the governing school board of directors of a school district, including, but not limited to, the replacement or removal of a current superintendent or the removal or replacement of a current school board of directors or both;

3.19 "Restricted Funds" means funds accruing to the teacher salary, operating and debt service funds that can be used only for specific purposes as stated in law or in accordance with a grant award (such as ESA, ALE, ELL, Professional Development).

3.20 "School district systems" means the operations and procedures that occur within a public school district, including without limitation:3.20.1 Academics; 3.20.2 Facilities; 3.20.3 Fiscal operations; 3.20.4 Human capital management; and 3.20.5 Student support services

3.21 "School Year" means a school year beginning July 1 of one calendar year and ending June 30 of the following calendar year.

3.22 "State Board" means the Arkansas State Board of Education.

4.00 INDICATORS OF FISCAL DISTRESS

4.01 A school district meeting any of the following criteria may be identified by the Division to be a school district in fiscal distress upon final approval by the State Board 4.01.1 A declining balance determined to jeopardize the fiscal integrity of a school district. However, capital outlay expenditures for academic facilities from a school district balance shall not be used to put the school district in fiscal distress. 4.01.2 An act or violation determined to jeopardize the fiscal integrity of a school district, including without limitation:4.01.2.1 Material failure to properly maintain school facilities; 4.01.2.2 Material violation of local, state, or federal fire, health, or, safety code provisions or law; 4.01.2.3 Material violation of local, state, or federal construction code provisions or law; 4.01.2.4 Material state or federal audit exceptions or violations; 4.01.2.5 Material failure to provide timely and accurate legally required financial reports to the Division, Arkansas Legislative Audit, the General Assembly, or the Internal Revenue Service; 4.01.2.6 Insufficient funds to cover payroll, salary, employment benefits, or legal tax obligations; 4.01.2.7 Material failure to meet legally binding minimum teacher salary schedule obligations; 4.01.2.8 Material failure to comply with state law governing purchasing or bid requirements; 4.01.2.9 Material default on any school district debt obligation; 4.01.2.10 Material discrepancies between budgeted and actual school district expenditures; 4.01.2.11 Material failure to comply with audit requirements; 4.01.2.12 Material failure to comply with any provision of the Arkansas Code that specifically places a school district in fiscal distress based on noncompliance; 4.01.2.13 Material failure to comply with Ark. Code Ann. § 6-20-1913 or the Division's rules concerning the minimum qualifications for a general business manager; or 4.01.2.14 Material failure to comply with reporting, debt approval, or other requirements placed on a public school district that has been returned to local control under Ark. Code Ann. § 6-20-1912; or 4.01.3 Any other fiscal condition of a school district deemed...