Pursuant to Education Code Section 41344.1(d), a local educational agency (LEA) may request a summary review of audit exceptions on the grounds of substantial compliance. Substantial compliance means nearly complete satisfaction of all material requirements of a funding program that provides an educational benefit consistent with the program’s purpose. A minor or inadvertent noncompliance may be grounds for a finding of substantial compliance provided that the LEA can demonstrate it acted in good faith to comply with the law and/or regulation necessary for apportionment of funding.

The summary review process is voluntary and informal, does not involve a hearing, and is not subject to the provisions of the Administrative Procedure Act. For exceptions involving amounts that meet or exceed 150 units of average daily attendance, or the equivalent value of 150 units of average daily attendance multiplied by the statewide average local control funding formula rate for the corresponding audit year (posted on the California Department of Education’s webpage,) waiving or reducing the reimbursement or penalty also requires written approval of the Department of Finance and the Superintendent of Public Instruction.

If the conditions for finding substantial compliance are not clearly met or involve substantial questions of fact, and the Executive Officer denies the request, the LEA will then have 30 days to initiate the formal appeal process.