The Financial Oversight Committee has reviewed the five conditions required under the Board's Phased Operating Framework (Policy 200.3G5) for the district to step down from Phase 1 (Recovery) to Phase 2 (Stabilization). The Committee finds that each condition has been satisfied and certifies the change to the Board for approval in open session at the regular meeting of March 23, 2027.

Conditions and current state

1. Interfund Health Insurance Fund loan repaid in full with interest. Met. Repayment of $10,612,500 (principal $10,000,000 plus accrued interest $612,500) completed November 15, 2026. Independent confirmation against Health Insurance Internal Service Fund bank statement reconciled by the Committee on November 22, 2026.
2. Three consecutive on-time monthly closes. Met. The December 2026, January 2027, and February 2027 closes were completed within the published target window of 15 business days after period end, confirmed by the Controller and verified against the close calendar.
3. FY24 audit accepted by the Board with a corrective action plan adopted. Met. Audit accepted July 22, 2026 (Board minutes, agenda item L.07). Corrective action plan adopted August 11, 2026 (agenda item I.04) covering all findings. Implementation tracked monthly through the Committee's corrective-action tracker.
4. All operating metrics out of the red zone for two consecutive quarters. Met. Q3 FY27 and Q4 FY27 quarterly scorecards (attached) show no red-zone breach on the six operating metrics defined under Policy 200.3G5 §3. The two audit-cycle metrics — months to audit acceptance and continuing disclosure on-time rate — remain in red as of this certification date and are excluded from this condition per Policy 200.3G5 §3.b.iii, which separates audit-cycle catch-up timing from steady-state operating health.
5. Continuing disclosure annual filing for FY24 submitted on time. Met. Filing submitted to the Electronic Municipal Market Access (EMMA) system March 31, 2027 (filing reference EM-2027-ICCSD-AN-FY24), inclusive of the audited FY24 financial statements, the Required Supplementary Information, and the Material Events Notice covering the FY24 SAVE Fund deficit and related fund-classification restatement.

What changes at the phase transition

Per Policy 200.3G5 §4, the Committee's operating cadence steps down at the Phase 2 transition. The Committee will meet every other month rather than monthly. The 13-week rolling cash forecast moves from weekly to bi-weekly. The exception thresholds for the bi-weekly claims review widen modestly under Schedule B of the policy. The dashboard reverts to the standing monthly cadence with the operating-zone presentation as in Phase 1. The corrective-action tracker continues without modification.

Recommendation

The Committee recommends the Board approve the phase change at the regular meeting of March 23, 2027 in open session. Consistent with the Board's prior practice on independently certified milestones, the Committee further recommends that the Board issue a brief public statement noting that this transition is an independently certified milestone in the district's financial recovery and that the underlying conditions are verifiable in the attached documents.