Abstract
Purpose. The purpose of this study was to determine if a predictive relationship exists between the FCMAT 15 common conditions of fiscal distress and California school districts that filed a negative interim budget and districts that filed a positive interim budget as perceived by county office of education CBOs. Specifically, this study surveyed county CBOs' perceptions of the degree of presence of the FCMAT 15 common conditions of fiscal distress in the areas of governance, deficit spending, budget development, budget monitoring, collective bargaining, and cash flow. Methodology. This quantitative correlational study measured the presence of the FCMAT 15 common conditions of fiscal distress in selected California school districts to determine if these conditions are predictive of fiscal distress. County CBOs were surveyed to assess their perception of the degree of presence of the conditions in 90 California school districts. Findings. Data indicated that (a) all 15 common conditions of fiscal distress are present in districts that certified a negative interim report; (b) there were statistically significant differences in the degree of presence of the conditions in districts that certified a positive report compared to districts that certified a negative report; (c) four independent variables "failure to maintain reserves," "lack of monitoring categorical programs," "lack of integration of position control," and "poor cash flow analysis" account for 70% of the variance and are significant predictors of the dependent variable, "interim budget status"; (d) "failure to maintain reserves" is the single greatest predictor (54%) of an interim budget report status. Conclusions. Policymakers, county offices and school districts should monitor the factors that were found to be most predictive of fiscal insolvency. California policymakers, county offices, and districts should consider increasing the minimum reserve level maintained for economic uncertainty. School districts should hire competent staff and provide training in subject areas that are predictive of fiscal distress. Recommendations. The study should be replicated and the population expanded to include districts with a qualified budget to test for incremental distress in the predictive factors. Further research would also determine the reliability of the instrument and identify the threshold where contributions to categorical programs become an indicator of fiscal distress.