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Board withholds 3% of state aid for districts found noncompliant with USFR; members urge more rural support
Summary
After Auditor General reviews, the board voted to withhold 3% of state aid from districts found noncompliant with the Uniform System of Financial Records (USFR). Board members and public commenters emphasized the burden on small, rural districts and called for preventive training and support rather than punitive measures.
The State Board voted to withhold 3% of state aid for districts identified as noncompliant with the Uniform System of Financial Records (USFR), following presentations from the Auditor General and public comment from rural-district officials.
During discussion, Dr. Clay and other board members emphasized that the deficiencies cited were procedural and not findings of fraud or misappropriation; several speakers from small districts (including Globe Unified) said audits reflected one-time or human errors and pleaded for technical assistance rather than withheld funding that would immediately affect students. Auditor General manager Chris Vrebeck explained the corrective timeline: after an audited finding, the office issues a 90-day letter and works with districts on a corrective action plan; if a status review shows deficiencies remain, the Auditor General notifies the board, which may withhold funds. Executive Director Ross said the board—9s long-standing practice is a 3% initial withholding (statute allows up to 10%) and that withheld funds are returned after the Auditor General and the board determine the district is back in compliance and the Department of Education processes the payment.
Board action and voting details: The motion to withhold 3% (item 3H) was moved and seconded and passed on voice vote with no recorded opposing votes. The board also clarified that withheld funds are typically returned by the Department of Education after the board votes to restore funds when compliance is verified; the timeline for the DE—9s payment-processing was described as "immediate notification" but the exact timing was not specified by staff.
Why it matters: Rural districts and small schools said withholding even a modest percentage of state aid can halt services (specialized staffing, tutoring, therapy) because many lack alternative revenue sources. Board members requested consideration of a rubric to vary withholds based on context, corrective progress and the nature of the deficiencies.
Next steps: The board staff committed to ongoing outreach and training for districts and to continue coordinating with the Auditor General—9s office; the hearing record includes a status review path for districts to follow to secure return of funds.
