27.1 Any education service cooperative that meets one (1) or more of the following criteria may be identified by the Department of Education as being in fiscal distress upon final approval of the State Board of Education:
27.1.1 A declining balance that jeopardizes the fiscal integrity of the education service cooperative. The Department of Education shall not use capital outlay expenditures from the education service cooperative's balance for facilities to identify the education service cooperative as being in fiscal distress;
27.1.2 A material failure to meet the education service cooperative's obligation to maintain the education service cooperative's facilities;
27.1.3 A material violation of local, state, or federal law or regulations relating to:
27.1.3.1 Fire, health, or safety codes;
27.1.3.2 Construction codes;
27.1.3.3 Audit requirements; or
27.1.3.4 Procurement, bidding, and purchasing requirements;
27.1.4 A material failure to provide timely and accurate legally required financial reports to the department, the Division of Legislative Audit, the General Assembly, or the Internal Revenue Service;
27.1.5 A material failure to maintain sufficient funds to cover payroll, salary, employment benefits, or legal tax obligations;
27.1.6 A material default on any debt obligation;
27.1.7 A material discrepancy between budgeted and actual expenditures; or
27.1.8 Any other fiscal condition of the education service cooperative that the Department of Education determines materially impacts the education service cooperative's delivery of education services.
27.2 The Department of Education may identify an education service cooperative as being in fiscal distress at any time a fiscal condition of the education service cooperative is discovered to have a detrimental negative impact on the continuation of educational services provided by the education service cooperative.
27.3 If the Department of Education identifies an education service cooperative as being in fiscal distress, the Department of Education shall notify the education service cooperative in writing of the identification of fiscal distress within ten (10) calendar days.
27.4 The Department of Education shall identify in the notice each criteria for fiscal distress on which the department based the identification of fiscal distress.
27.5 The Department of Education shall deliver the notice by certified mail, return receipt requested, and addressed to:
27.5.1 The president of the education service cooperative's board of directors; and
27.5.2 The director of the education service cooperative employed under Ark. Code Ann. § 6-13-1010 and Section 11.00 of these rules.
27.6 The identification of fiscal distress made by the Department of Education under Ark. Code Ann. § 6-13-1027 and Section 27.00 of these rules may be appealed to the State Board of Education under Ark. Code Ann. § 6-13-1031 and Section 31.00 of these rules in which case the final order entered upon appeal is the final classification of fiscal distress.
27.7 Within two (2) weeks following the date the education service cooperative receives the final classification by the State Board of Education of fiscal distress, the education service cooperative shall:
27.7.1 Notify in writing each public school district in its service area that the education service cooperative is classified as being in fiscal distress; and
27.7.2 File with the Department of Education a fiscal distress plan under Ark. Code Ann. § 6-13-1028 and Section 28.00 of these rules.
27.8 An education service cooperative that is identified as being in fiscal distress shall not incur any debt without the prior written approval of the department.
27.9 The education service cooperative shall include in the annual report to constituent school districts under Ark. Code Ann. § 6-13-1020(d) and Section 21.00 of these rules the progress the education service cooperative had made on its fiscal distress plan.
Source: Ark. Code Ann. § 6-13-1027
Credits
Adopted July 16, 2012. Amended March 28, 2016; May 19, 2018.
Current with amendments received through February 15, 2024. Some sections may be more current, see credit for details.
Ark. Admin. Code 005.01.24-27.00, AR ADC 005.01.24-27.00
