El Rancho Unified audit: unmodified opinion but district missed state's 55% certificated-salary threshold

External auditors presented the Rancho Unified School District's 2023–24 annual financial audit at the Jan. 21 board meeting and issued unmodified opinions on the district's financial statements, federal awards and state compliance tests.

Monique Manzo of the audit firm summarized the audit scope (internal controls, purchasing, payroll, attendance and federal awards). She reported an unmodified (clean) opinion on the financial statements and no material weaknesses identified in the audit testing. However, auditors reported a compliance finding under the state classroom-salary threshold: the district spent 51.08% of its expenditures on classroom teacher salaries in fiscal year 2023–24, below the state benchmark of 55%.

The auditor estimated the effect of the calculation at roughly $4,900,000 and said the shortfall is commonly seen in districts that carried one-time COVID-era funds into operating balances. District staff said they are preparing a waiver/exemption package to submit to the county office of education and will present the waiver to the board before submission.

Trustees asked whether corrective actions or penalties would follow; auditing staff said they typically see waivers approved and that the district is preparing documentation and labor reporting to support exemptions for one-time funds that are not certificated salary expenses.

The board accepted the audit report by vote at the meeting.

What's next: District staff will finalize and present the waiver request to the board and county. Trustees asked for monitoring reports to track the salary percentage as one-time federal funds wind down.