[CLICK HERE] to download the L.A. County Office of Education’s Fiscal Review of the Acton-Agua Dulce Unified School District

Los Angeles County Office of Education officials have released a report detailing financial concerns with the Acton Agua-Dulce Unified School District.

A LACOE report from the county’s Fiscal Crisis and Management Assistance Team notes the district is in financial distress due to declining enrollments and a loss of students, which AADUSD officials have known for years.

“Even with the new Local Control Funding Formula (LCFF), the district is unable to sustain fiscal solvency without increasing revenues or making additional budget adjustments,” county officials wrote. “In an attempt to increase revenues, the district has approved several charter schools from which it collects oversight fees and which it charges for extra services, including in some cases special education services provided to the charter school as a ‘school of the district.’”

The county is threatening to put the operations of the district into receivership if the financial picture doesn’t improve, but Superintendent Brent Woodard said due to a number of factors, he feels the county’s estimation is off base, and their concerns unfounded.

The county’s report is a complete misunderstanding of AADUSD’s model, according to Woodard, who acknowledged the county experts financial acumen, but claimed they were “laymen, at best” when it came to charter school operations.

FCMAT is an independent agency with the authority to audit government agencies for managerial practices, finances and other processes.

“By no means is FCMAT a group of charter experts,” Woodard said, “and by no means am I going to say I agree with them — we respectfully disagree. I think we have a model that’s going to be a success.”

The biggest challenge facing the school district is the fact the district has lost about 35 percent of its enrollment in the last 10 years, according to the report.

In the 2003-04 school year, the district had approximately 1,994 students, and in 2013-14, it had 1,301, officials reported.

In an effort to address these shortcomings, Woodard was brought in as superintendent, and he set out to build a professional learning community reliant upon charter school success, he said.

The idea was to create more options for students, which is sustainable if the schools grow and are successful, Woodard said.

The district has seen early results with its new system, he said, although county officials clearly questioned the sustainability of the district’s results, and whether the oversight fees schools were being charged are sustainable.

County officials mandated the correction of these behaviors under the threat of putting the district into state receivership.

“The district’s fund balance is negative in all three years of the projection, and the district cannot maintain its required reserve levels,” according to the FCMAT report. “The district is projecting revenues totaling $1,287,112 in the 2014-15 fiscal year based on ADA estimates and contracts with the charter schools for oversight fees, which include fiscal and special education oversight. … Because the district lacks supporting documentation for specific fees for identified services, FCMAT reduced local revenues by $723,063 to $564,049 to adjust for limits on oversight fees in accordance with Education Code.”

However, the county’s financial estimates were months out of date, according to Woodard, and didn’t reflect the whole picture.

He acknowledged the district’s plan relies upon the continued growth of charter schools, even as the county estimates a declining enrollment for the district over the next few years.

The school district has reluctantly made some tough cuts, Woodard said, including cutting their last school year short five days, in a furlough-day negotiation with the union.

The district also closed a school down and allowed Einstein Academy to take over one of their locations.

Woodard pointed to cuts last year, such as 15 full-time teacher layoffs, an instructor for English language-learners, the furlough days and several part-time positions as proof district officials are doing what they can to address a gloomy fiscal forecast.

As far as the county’s FCMAT report, the board likely will be discussing the county’s findings at their next board meeting, said board member Larry Layton, who said he was still going through the report and wanted to reserve comment until the board discussed it.

Woodard’s trust in the charter school model — what he calls an unprecedented, albeit misunderstood, professional learning community the district is trying to build — is something he wouldn’t expect fiscal experts at the county’s education office to understand, he said.

By the nature of their job, the county’s finance experts must remain conservative in their practices, Woodard said, and there’s no sustained model for what AADUSD is trying to do.

While the county’s financial experts deems significant changes necessary for the district to maintain fiscal solvency, Woodard pointed to the district’s brief track record with Assurance and Einstein Academy charter schools as part of why he’s confident on his charter schools plan.

A FCMAT report has been ordered by LACOE, looking into Albert Einstein Academy’s operations, according to county officials. That report is in progress.

“They’re skeptical at best, and because of the nature of the organization, they would be,” he said of FCMAT.

If the approved charter schools fail to live up to the district’s rigorous standards, then the district is no worse off, he added.

“I’m confident we have a model of success and these charter schools will fall into that model,” Woodard said. “And if not, we’ll revoke their charter or we won’t renew it.”