August 29, 2017
The Honorable Al Muratsuchi
Chair, Joint Legislative Audit Committee
The State Capitol, Room 2179
Sacramento, CA 95814
Dear Assembly Member Muratsuchi:
The Joint Legislative Audit Committee serves an important role to improve government performance in part
through its work to identify key audit requests that best use the limited resources of the California State
Auditor’s Office. It is crucial that audits requested not duplicate existing oversight efforts and that inquiries
be targeted and aligned to current law. Unfortunately, the audit described in Audit Request 2017-123 misses
the mark and would be an ineffective use of the Bureau of State Audit’s limited dollars.
The proposed audit of how Local Control Funding Formula (LCFF) funds are spent at the local level is
unnecessary, unwarranted and duplicative of existing efforts. Expenditure of LCFF funds is already subject
to rigorous oversight at the local and state level. Local budgets are adopted by local school boards at a
public hearing, and are reviewed and approved by county offices of education. School district spending is
subject to annual external audits, with oversight by the State Controller’s Office, the Superintendent of
Public Instruction and Financial Crisis and Management Assistance Teams (FCMAT) including through the
state Education Audit Appeals Panel (EAAP). Audits are done pursuant to state standards adopted by the
EAAP through a full regulatory process, including review by the Office of Administrative Law.
The scope of the proposed audit is inconsistent with the statute and regulations governing the use of Local
Control Funding Formula (LCFF) funds. LCFF funds are spent as set forth in the Local Control and
Accountability Plan (LCAP), which requires spending to support the 8 state priorities based on local
decisions informed by parents, students, educators and the community. LCFF supplemental and
concentration funds are provided to improve or increase services for a targeted student population. The LCFF
aligns budgeting and programmatic decisions within the LCAP process. The LCAP template used by school
districts was adopted pursuant to state law and regulations adopted by the State Board of Education after
many months of full public hearings and input from stakeholders, parents, civil rights groups and others.
School district LCAPs are adopted by local school boards at a public hearing, and are reviewed and approved
by county offices of education. The Legislature has created many of these accountability measures so it is
inconceivable why an audit should be done in a manner that is inconsistent with the LCFF and LCAP
structure set forth in statute or regulation.
Parents, community and legislators have many ways to hold school districts accountable for LCFF funds and
the 8 state priorities. Anyone who wants to question whether the LCFF and LCAP has been lawfully
implemented by a district can file a complaint with the Superintendent of Public Instruction (SPI). The SPI
can and has become involved to ensure funds are spent consistently with LCFF and LCAP requirements.
This process already has successfully resolved major disputes at LAUSD, West Contra Costa and Long
Beach. Moreover, the California Collaborative for Educational Excellence (CCEE), created by statute and to
whom the Legislature has made appointments, is specifically charged with providing assistance to districts
with all LCFF and LCAP requirements.
Audit 2017-123 requires school level data that districts are not required to collect or maintain, either by
statute or regulations. Budgets are done at the school district level – not at the school site level. The proposed

 audit would require districts to create an entirely new budgeting and expenditure tracking system just to
comply with this request. School level budgeting was considered and rejected by the Legislature and the
State Board as part of deliberations on the LCFF authorizing statute, implementing regulations and on the
LCAP template and instructions. The BSA Audit as proposed would require review of up to tens of billions
in local spending across at least 5 fiscal years – three districts, over a thousand school sites and hundreds of
charter schools. LAUSD alone has over 900 schools and over 180 public charter schools. Schools should be
spending those scare resources on students and programs and not on creating data to respond to an
unnecessary audit.
LCFF is both a new funding and a new accountability system. The funds are subventions – these are
explicitly not categorical funds or grants. The funds represent the state’s core support to school districts to
ensure access to free public education in California. They are not optional grant funds. The LCFF funding
and the LCAP requirements focus on state priorities and on programs and services. The requirements
relating to the use of concentration and supplemental funds are not a strict spending test. They are anchored
on local reflection and local efforts to continuously improve outcomes in specified state priority areas. The
test is one of proportionality -- it is a level of effort and programmatic test. This means that the spending
must support the program. The proportionality test is a relative test and not the type of spending test implied
in the proposed audit. Further, there already is significant oversight built into the LCAP review process.
Among other things, county offices of education must specifically test whether the districts have computed
their proportionality test – i.e., have they accurately calculated the proportional increase or improvement in
services that must be provided to the targeted student population. They also review whether the LCAP
demonstrates how the district will accomplish that proportional increase or improvement in services. The
EAAP guidelines require district auditors to test whether the district has in fact spent funds as it said it would
in the LCAP.
Finally, the rules regarding the LCAP and spending of LCFF dollars have changed over time and have been
strengthened. Under this proposed audit, the BSA would be measuring efforts across fiscal years when the
rules have not been exactly the same in all years. This would at best make the audit very complicated to
complete.
For these reasons, please do not pursue Audit 2017-123. It is wasteful, unnecessary and duplicative.
Sincerely,

Lori Easterling, Legislative Relations Manager, CTA

Sara Bachez, Assistant Executive Director
Governmental Relations, CASBO

Edgar Zazueta, Senior Director
Policy & Governmental Relations, ACSA

Teri Burns, Legislative Advocate, CSBA

Sandra S. Morales, Assistant Executive Director
CCSESA

Jeff Frost, Legislative Advocate, CALSSD

Barrett Snider, Advocate, SSDA

Ron Rapp, Legislative Director, CFT

Cc: Joint Legislative Audit Committee Members