Amend the bill, as and if amended, Section 59-20-90(C), as contained in SECTION 1, by deleting the subsection in its entirety and inserting:
/ (C) 'Fiscal watch' is the first level and lowest level of concern.
(1)(a) The State Superintendent of Education shall declare fiscal watch if:
(ai) he determines, within his discretion, that a district declared to be in fiscal watch has not acted reasonably to eliminate or correct practices or conditions that prompted the declaration and has determined that a state of fiscal watch is necessary to prevent further decline; and upon review of the district's annual audit, the department determines financial practices occurring outside of acceptable accounting standards exist;
(ii) the district submits an annual audit more than sixty days after the December first deadline provided in Section 59-17-100;
(biii) there is any type of ongoing, related investigation by any state or federal law enforcement agency or any other investigatory agency of the State;
(iv) an outside, independent auditing firm declares that a school district's financial records are unauditable; or
(v) the department identifies significant deficiencies, material weaknesses, direct and material legal noncompliance, or management letter comments which, in the opinion of the department, the aggregate effect of the reported issues has, or could have, a significant effect on the financial condition of the district.
(b) If a district meets the criteria in (A), the State Superintendent shall declare a fiscal watch only after prior notification with the district board chairman and district superintendent, who must begin immediate consultation with the chief financial officer of the district. The watch notification must include steps the district may take to avoid the declaration.
(2) After prior written notification with the district board chairman and superintendent, the State Superintendent of Education may declare fiscal watch if:
(a) an independent, outside auditing firm notifies the department that the district is not operating under generally accepted accounting principles; or
(b) the district does not maintain a general reserve fund of at least one month of general fund operating expenditures of the previous two completed fiscal years, or has not made progress in increasing the general reserve fund balance in accordance with department guidelines to meet at least one month of general fund operating expenditures within the previous two completed fiscal years.
(3)(a) Within sixty days after the State Superintendent of Education declares a fiscal watch for a district, the district board shall submit a financial recovery plan to the department.
(b) The State Superintendent shall evaluate and accept or reject the plan within thirty days after receipt of the financial recovery plan. If he disapproves the plan, he shall recommend modifications that would make the plan acceptable.
(c) A district shall not implement a recovery plan unless approved by the State Superintendent.
(d) The department shall provide technical assistance.
(e) The district board may amend the plan at any time with the State Superintendent's approval.
(f) The district board shall submit an updated recovery plan annually until the district is released from the fiscal watch.
(g) The State Superintendent shall accept or reject an updated plan no later than the anniversary of the date on which the first plan was approved.
(4) A district under a declaration of fiscal watch must not be released from fiscal watch in the same fiscal year in which the declaration was made, but may be released the following fiscal year if the department determines that the corrective actions have been or are being successfully implemented. The State Superintendent shall notify the local board chairman, district superintendent, and chief financial officer of the release of the district from fiscal watch.
(5) The district board of trustees may appeal a declaration of a fiscal watch to the State Board of Education within ten days of after the declaration and the state board must hold a hearing on the appeal within thirty days after the filing of the appeal or at the next regularly scheduled State Board of Education meeting, whichever is later. However, the district shall continue to work with the department in the manner provided by this subsection when a fiscal watch is declared pending determination of the appeal. /
Renumber sections to conform.
Amend title to conform.