Week 4 Part 5 Interview with Business Manager

Our external auditor has been serving our district for over 15 years.  There is no one in our office that was around when they were selected, and since they have done such a spectacular job over the last 15 years the district has had no reason to pursue a change. Also a change would require a search and possibly be a costly event for the district.  In bigger school districts, they perform a RFP search annually to find an external auditor, this is cost effective for them, buy not for small districts.  Our auditors follow the GAAS standards, Generally Accepted Accounting Standards. Our business manager did not elaborate on this, but from what I understand this is very normal. When I asked about the audit findings, our BM replied with, “A bunch of stuff.”  I glanced at our audit report for the past year and discovered a bunch of numbers that did not make real clear sense for me.  I did however have a conversation with our BM about the two major reports.  She explained that one of those reports looks at the district as if we were a corporation, and that is not very useful for us.  It includes things like depreciation and we do not benefit from that as a school district. This report is only included because of those GAAS standards.  The other major report is very useful due to the big picture nature of the information, the bottom line expenditures and fund balance numbers.  Our audit report is publically presented at a school board meeting in the fall annually.

Week 4 Part 4

I took advantage of our Business Manager’s time with this part.  When I asked her about our district's total personnel salaries as a percentage of the total district budget, she responded with some percentages lower than some other districts in our group. Our personnel salaries totals 75% of our Operating and 72% of all funds.  When I asked her about the impact of a 5% salary increase for all personnel, her response was rather predictable. A 5% increase on all salaries would not break our district and would in fact be a huge morale boost.  The huge question would be where do we cut in order to make this happen.  Our district will receive about a half a million dollars less in revenue from the state in 11-12, and has cut budgets tremendously to minimize the impact of that loss in revenue.  So to implement a 5% raise would have to eliminate expenditures somewhere else.  So although possible it would cause some other program to suffer.

Week 3 Part 4 - Reviewing and analyzing your district’s Maintenance & Operations Fund

My district is a rural property poor school district with funds coming in from many sources. We receive funding from State mainly through the Foundation school program. SFSF and ARRA moneys were helpful to supplement the FSP but with the rules tied to the money it was difficult to manage appropriate spending and impact the local budget at the same time. Our WADA for 11-12 is at $5032.56 and WADA @compressed rate is at $5056.90. Compared to the 10-11 school year this represents a reduction in funding close to $500,000 or 5% of our total revenue. The numbers based on Target Revenue are not any better. Therefore, our district made many hard decisions and reduced expenditures through not filling many positions lost due to retirement and leaving the district, conservative spending, using grant funds whenever possible, and economic use of utilities. Thus far we have been successful in avoiding a reduction in force or mass removal of positions. Although some administrative positions have been removed from campuses, a majority of our school district's personnel have remained employed.
Allocation of funds is done well in our district. With so little everyone must be aware of spending funds, where they come from, and the rules in proper expenditure of those funds. One example of a significant problem faced in our district is the 55% rule for spending Vocational State funded money. According to the guidelines set by TEA for these funds our district must spend a min of 55% of that fund on direct expenditures to the program. With a small student body, and very specific rules tied to this money, spending it has proved to be an issue that requires creativity and collaboration. It is State money like this that rural districts, I think, would love to have more flexibility in spending and possibly the ability to roll it forward for a bigger project. My questions is, "Why can't school districts be trusted to spend money in the very best interest of the students they serve?" I guess it is because someone in the past has spent money inappropriately, and we all must suffer for that misguided act.

Week 2 School Finance - Additional Stakeholder Input

For this assignment I met with the district Business Manager (BM). Although this time of year is extremely busy, we found time to address the assignment in its entirety, but briefly.
Types of input from:

• CO Admin and Staff - payroll figures, overtime use, lunch prices, meal revenue, CO travel, supply needs, maintenance and transportation needs
  
• Principals - Campus supply needs, software and hardware needs, personnel changes for coding, structural needs
• SBDM Committee - big picture items, like goals, vision, curriculum, assessment, and culture
• District Improvement - we do this in the SBDM Committee
• Teacher Organizations - these are represented but not locally organized to contribute to budget planning.
• Stakeholders - we consider tax rate, city projects due to the sharing of facilities, and service organizations. All of these organizations informally have input on school spending.
• Board - review current budget monthly, provide input monthly during planning process and this year drove the expenditures of the district down by several hundred thousand dollars. They are a key part of the budget annually.

I would like to publicly thank our BM for her time answering this question during a very high stress time of the fiscal year. In reaction to the answers from our BM, I am not surprised by any of them. I have worked in the same office with her for months and have seen this process unfold this school year. I believe, as stated in previous reflections, that for me in the role of superintendent, I will have a hands on approach to budgeting. I am not sure if it because of a thirst to understand the process and a desire to involve as many stakeholders as possible or if I just think it is the right thing to do. Either way, for me, the budget and superintendent go hand in hand. Locally, the major players in the budget are the board and principals, I would like to offer the opportunity for expanded input based on goals, vision, and needs. I would like to develop spending models for maintaining our technology, transportation fleet, and buildings. I am not saying my district does it wrong, we absolutely are doing something correct with a positive fund balance, but I am saying in regards to input, I believe there is another level.

Week 2 School Finance - Superintendent Interview

Interview with Superintendent Summary:

We started out with a discussion on how budgeting in our district is handled on a yearly basis. We talked about local control of funds, where we receive funds and how they are tracked throughout the year. Specifically in regards to budget preparation, we talked about the spring and summer. Typically, this is the time of year the process takes place. In our district, a majority of the nuts and bolts of budgeting falls directly on our business manager (BM). We talked about how in board meetings questions concerning budget, expenditures and revenue are directed to the BM, and the superintendent mainly delivers the figures from various reports. It is basically a team effort with a majority of the team being the BM.

In regards to the planning process, we talked about how we are constantly looking back to see how this year compares to last years budgets in regards to expenditures, revenues and total budget. The superintendent’s role in the process is to oversee, ask questions and decide on critical changes to the budget during the planning process.

I asked about the sample calendar in our FASRAG resource from class. We talked about the components and how we follow all the required aspects of the calendar. Our BM adheres to a basic calendar of events that, for the most part, does not fluctuate. Although in this legislative session the timeline to budget approval was stressed with the finance rules being clarified so late in the summer.

I asked him about grant funding and how much of a challenge it was to budget and account for grant expenditures in multiple years due to their overlap. He explained that this all falls on our BM to track properly. Grant expenditures are programmatically planned for with an application. The key is to tie all expenditures to the application and account for them in the correct year.

The final portion of our conversation on the budgeting process was reflective. I asked him, “If you were to start over, what would you change about this process.” He answered with a resounding, “Nothing.” He complemented our BM and how he never has to worry about the funds of the school district be handle inappropriately. He then reinforced a philosophy of his that was a part of an interview we had in the beginning of this program, “Be sure to hire the right people because if you have the right person in a job, it will run smoothly and you can comfortably lay your head down at night.”

Reflection:

Since the beginning of this program, I have been excited to learn about school finance. Now, I am completely aware of the complexity of the process and humbled by the effort needed to complete a budget annually. I have been privileged to work closely with two different superintendents in my administrative career. Each superintendent had an opposite approach to annual budgets. One was a key part of the creation, evaluation, and completion of the district budget, and the other was closer to hands off as the BM budgeted for the district. I can see benefits and drawbacks to each view, but after my interview with my current superintendent and reflecting back on a previous more involved superintendent, I think I would want to be as involved as possible. My current superintended has stated in a previous interview, that, “a superintendent cannot do the whole job well, your must be willing to delegate.” I believe that, but this is not one of the things I want delegated away from my participation as superintendent. I think that is more clear now.

Week 2 School Finance - TEA Budgeting Guidlines

Before starting this assignment I have been exposed to the FASRAG several times in my current job related work. As I reviewed the FASRAG for this class, I discovered that I had never gone deep enough into the FASRAG to see the exhibits at the end of the document, nor had I reviewed any materials outside of the purchasing module.
My first take away from Module 2 of the FASRAG was the exhibits. I must say each of these examples and guides are extremely helpful. Most especially the exhibits on estimating expenditures. Not only do these provide what questions to ask concerning the future budget, but also provide a complete picture of the reflective aspect of budgeting to ensure that as the new budget is prepared historical spending is analyzed rather than carried forward blindly.
My second take away was also noted by another cohort member in the methods of budgeting, line item, performance, program and planning, zero balance, and site based. I hear our school board talking about a commitment to a balanced budget and after reading the descriptions of these approaches, it seems a zero balanced budgetary approach might be truly helpful to an incoming superintendent. This approach built on the concept of eliminating outdated efforts is crucial in reducing cost and effectively balancing a budget. I see opposition to this all the time in district staff wanting to keep a program because we have always done it that way! Or we have always used this item! All they are really saying is, "Don't move my cheese." They are also saying, "I don't want to know if there is something better to use." I think this budgetary approach, although time consuming, may be good for a first year of a superintendency. For me, evaluation and change is good, if the change is initiated for the purpose of achieving a common district goal, and not just for changes sake.
Lastly, I found the budget calendar very helpful, not only for a piece of this assignment, but also in my future career. I feel very comfortable that most districts meet all state guidelines set in the FASRAG budget calendar, but again I believe this is done mostly in isolation. I may be over stepping my bounds here, but it seems with the state legislative schedule, budget crisis happening everywhere, and time lines being so short, collaboration and public hearings have become increasingly difficult. I think as a publicly funded organization we need to overcome these challenges and include the local communities that fund schools in the conversation about how we spend those tax dollars.

Week 2 School Finance - Goal Driven Budgeting

Goal driven budgeting is the use of data, input from stakeholders, and identified needs to drive budgetary decisions through a collaborative process where the end result is a shared identified vision for the budget year. Goal driven budgeting is prudent in education and seen often in the Comprehensive Needs Assessment (CNA) Cycle used during the process of writing the District and Campus Improvement Plans (DIP/CIP). The cycle, required by NCLB and referenced in TEC 11.252, is a step-by-step process where districts are intentionally looking at data sets to analyze needs and strengths within the organization. The investigation is not limited to student assessment alone, but extends into demographics, culture and climate, staff, curriculum, family and community involvement, and technology. This process is the first step in goal driven budgeting. Without the establishment of needs over wants, future budgetary decisions are misguided and often misspent. Another key aspect of the CNA is the input from various groups both inside and outside of the district. Community members, parents, teachers, businesspersons, and sometimes secondary students should be a part of this developed vision and the identification of district needs. Therefore, it is important to note that once the needs are identified and the shared vision is established (step 2), the next key is to develop the plan to implement this vision in the schools. After the needs are identified and a vision for the future is agreed upon, the next step (3) is to develop the goals and strategies the district and campuses will implement to attain the vision set by the CNA process. This implementation will involve a clear plan, DIP/CIP, and commitment to that plan at every level. I believe this is where the some disconnect begins, at least for us locally. The plan might be developed and developed well, but without checkpoints for sincere reflection of adherence with the district goals, the plan is just a piece of paper or a pdf file on a website.

A local control that some districts has moved to, especially those that have been audited by TEA and/or the Dep. Of ED., a pre-requisition step prior to expenditure in any federal fund code. This ensures that funds are clearly identified as meeting a district or campus “goal” and “strategy for implementation of that goal” prior to purchase approval. I know that in my own school district the conversation has begun for all expenditures to possibly follow this pre-requisition method, ensuring all expenditures correlate with district and campus goals. Currently, and I believe commonly, this process is happening in districts, but verbally. Unfortunately, the world of accountability that we live in has people checking on the spending of public funds. Therefore, I find it to be a serious point of emphasis as a new superintendent to initiate a review of the budgeting process. As Dr. Arterbury states in the lecture, the connection of goals between the district, campus and board of trustees is vital in the budgeting process for a school district. So as a new superintendent, I believe connecting the goals of these district entities is vital to financial success. A clear process where needs are identified, goals and strategies are connected to the identified needs, and expenses are made to accomplish the goals and strategies will lead to good financial outcomes. In my interview with our district Business Manager, she believes the same steps are vital to good fiscal responsibility in our district. Last year, because of NCLB guidelines and recent audits in Texas, our district went to a pre-requisition for all supply and material expenditures out of federal funds. Once the pre-requisition is submitted to our District Support Center, our Federal Programs Director must sign off that the expenditure meets a district or campus identified need. Then, once approved, the Business Manager is the final sign off, and a purchase order can be generated. Although this is a time consuming process, the end result is clear. All federal expenditures will be tied to DIP/CIP needs. Locally, when we consider this for all purchases regardless of fund code, the time to accomplish the process is far too great to justify the result. Therefore, we have started a conversation with campus and district administration to authorize purchase orders that can only be tied to DIP/CIP goals. This informal process should increase the direction of expenditures and narrow the focus of general spending.