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The timing of this study has implications for interpreting its findings. During the period for which state and local fiscal data were collected—2002–03 to 2004–05—California’s financial situation was particularly volatile. In 2005–06, the year the survey was administered, the state implemented new regulations related to fiscal oversight. In addition, the year marked a turning point in a two decade increase in student enrollment, a matter of import for the affected districts because the amount of revenue provided in California is closely tied to the number of students a district serves.

Based on the measure created for this study, slightly more than half of California school districts are fiscally healthy

California’s fiscal accountability system considers a district’s short-run financial condition to determine whether the district is able to meet its obligations (positive certification), may not be able to meet such obligations (qualified certification), or will not meet its obligations (negative certification). Based on this measure, from 2002–03 to 2004–05, 88% of districts received a positive certification, 7% were qualified, and 5% were given a negative certification.