Presentation on theme: "Effective Fiscal Governance for Student Achievement Ken Roberts, CPA Alabama Association of School Boards."— Presentation transcript:
Effective Fiscal Governance for Student Achievement Ken Roberts, CPA Alabama Association of School Boards
Discussion Framework Board’s Role in School Finance Global Concepts-”What to Know” Specific Responsibilities-”What to Do”
Board’s Role in School Finance Legal References: A (1-13)-Specific Requirements (1-282)-Global Concepts 16-8 (1-43) and 16-11(Cities)- (1901 language-updated/repealed…)
What is your Role? Yes: “Supervise”, “Consult”, “Adopt Policy”, “Ensure”, “Lead”, “Advise”, “Oversee”, etc. No: “Manage”, “Administer”, etc.
What is Your Role? Establish Fiscal Policy Align Resources Monitor Financial Progress Evaluate/Approve Financial Results Establish Financial Goals and Objectives Ensure Fiscal Transparency
Global Concepts-Legal Responsibility Key Points in History: Minimum Program (1927/1935) Foundation Program (1995) Fiscal Accountability Act (2006) 2009 Legislative Session SB 165/SB426…
Global Concepts-Legal Responsibility Specific Policy Requirements Bank Reconciliations Fixed Asset Inventory Deposit of Funds Monthly Review of F/S
Global Concepts-Legal Global Concepts-Legal Responsibility Specific Procedural Requirements ( ) Foundation Program Participation Requirements: Specific Financial Reports Local Match Public Input Requirements Allocation of Funds
Global Concepts-Legal Responsibility CSFO-qualifications, duties Reporting (Monthly, Annual) Plan for minimum reserve (Exceptions: Proration/Decline in State funds) Audit Requirement Expenditure Authority (Approval Policy) Penalties Indemnification Language
Global Concepts-Legal Responsibility Again: Board Member: Set Policy, Oversee, Ensure Superintendent: Manage, Implement, Administer
The Economy is So Bad That: I got a pre-declined credit card in the mail. The Mafia is laying off judges. McDonalds is selling the ¼ ouncer. Parents in Beverly Hills fired their nannies and learned their children’s names. Motel Six WON’T leave the light on anymore.
Global Concepts…”What to Know”… Focus: Big Picture, Not Details … Does budget support goals? How are we performing? What is our unique revenue composition? What do our expenses say about us? Are we fiscally accountable? Where is our flexibility financially?
Global Concepts Simply, where does our money come from?
Funding Sources: What do they pay for? State funds the following, generally… Instructional Program Student Transportation Federal funds the following, generally… Supplemental Instruction School Lunchrooms
Funding Sources: What do they pay for? Local revenue funds whatever the state does not…! May include OCE, locally funded teachers, capital needs, and will include local match just to participate in Foundation Program
State Funding Foundation Program Transportation Capital Other –At Risk –Nurses Program –Pre-School –Children’s First –ARI
What is the Foundation Program ? The Foundation Program is the state funding mechanism for K-12 school districts in Alabama. The program provides a funding formula for the allocation of funds for— Teacher Units Instructional Support Units (principals, assistant principals, counselors, librarians) Support Personnel (aides, custodians, etc.) CIS Funds-Textbooks, instructional supplies, professional development All school districts are required to contribute local effort equivalent to the value of 10 mills of local district property tax for its share of the cost of the Foundation Program.
Foundation Program Key concept: “Earned Instructional Unit” Teachers: Earned Instructional Unit: Based upon divisors: Grades K-3: 13.8 ( FY) Grades 4-6: 21.4 ( FY) Grades 7-8: 20 ( FY) Grades 9-12: 18 ( FY) AND….
Foundation Program …attendance….specifically… 20 Day ADM: Average Daily Membership (Enrollment for 20 school days starting with the first day after Labor Day) For Each Grade Span: 20 Day ADM/Funding Divisor
Foundation Program Earned Instructional Units: Teachers… Earned units by school are REQUIRED to be placed at that school.
Foundation Program Earned Instructional Units: Instructional Support Units Based upon SACS standards Keys: Size of School/Grade Span
Foundation Program Support Personnel: OCE OCE: Other Current Expense Amount per Earned Instructional Unit Key Difference: Funding is a dollar amount and NOT personnel units
Foundation Program Classroom Instructional Support Materials and Supplies ($525/unit in 2008 ) Professional Development($90/unit in 2008) Technology ($350/unit in 2008) Textbooks($75/adm in 2008) Library Enhancement ($200/unit in 2008) Common Purchases ($200/unit in 2008)
How The Foundation Program Works SystemHomewood CityPickens County System ADM 3,242 3,239 Teachers Certified Support Total Units
How The Foundation Program Works Foundation ProgramHomewood CityPickens County Salaries$ 8,377,379$ 8,827,561 Fringe Benefits$ 3,057,034$ 3,182,926 OCE$ 2,881,890$ 2,972,485 CIS Funds$ 447,220$ 454,173 Total Foundation$ 14,763,523$ 15,437,145 Per Pupil $4554 $4766 Local Funds- 10 Mills$ 4,419,870$ 1,203,630 Net State Funds$ 10,343,653$ 14,233,515 Per Pupil $3192 $4394
State Funding: Transportation Funds personnel and operating cost of buses Cost of buses funded under fleet renewal, a separate allocation (per bus) New allocation method: Salary matrix and earned position concept
State Funding: Capital Purchase Allocation Funds for capital projects and maintenance of facilities Allocation based upon enrollment and relative wealth of each school system CAN carry forward to subsequent FY Major resource for “Flexibility”…
Other Allocations-School Nurse New law: One Nurse per School minimum Can use LPN’s (with 5:1 cap) Goal: One state-funded nurse per 500 students state-wide and one in each school Pay per salary schedule Current Funding: One nurse per system with remainder allocated based upon enrollment
Federal Revenue Sources Federal dollars are restricted in use –Used to supplement not supplant Major Programs –Title I –IDEA B- Special Ed –National Lunch Program
Local Revenue Sources Local revenue is used to supplement the Foundation Program funding –Additional teaching units –Enhance curriculum programs –Capital improvements –Fills “gap” between state OCE funding and actual cost of operations
Local Revenue Keys: Amount (discretionary considerations) i.e...How much flexibility do we have? Composition (property tax vs sales tax) i.e…How volatile is that flexibility?
Global Concepts Where can we spend our money?
Global Concepts Alabama is an “earmarking” state… Earmarked for: Specific Purposes (Ex-Foundation Program- Instructional Program) Specific Student Populations (ELL, At-Risk..)
Where do we spend our money? Classroom: 61.8% Administrative Services: 3.2% Operations and Maintenance: 7.7% Debt: 6.2% Auxiliary Services: 10.4% Capital Outlay: 8.3% Other: 2.4%
Where do we spend our money?
Global Concepts-Summary Role of Board Revenue Sources-Flexibility Expenditure Distribution-Reflects board focus or needs Key: Local teacher units
Specific Responsibilities “What numbers are critical?”
Specific Responsibilities-”What to Do” Budget Financial Statements-Annual Financial Statements-”During the Year…”
Budget Surplus or Deficit? Projected Ending Fund Balance? Funds: General/Capital Project Key Assumptions… Pay Raise Capital Plan Debt Load Local Teaching Units Reflect board focus/intent?
Financial Statements-Annual Performance against budget Overall Financial health Understand “Fund Types” Compliance Support board goals/objectives Ex-“Cost Center” Financial for abc school support AYP initiative?
Financial Statements-”During the Year…” Operations Report-YTD Analysis Understand big picture and trends that affect goals/decision-making while avoiding minute details of F/S
“During the Year…” Monthly Reporting and Analysis Key: YTD “% analysis” Understand key trends…. Cash Flow Analysis Local Revenue Impact Expenditure Patterns Attendance (ADM)
During the Year…Cash Flow Trends-Long Term Trends-Current Year Local Revenue picture intertwined with Cash Flow Analysis
During the Year…Expenditures Follow a “pattern” Should be uniform-Seek explanation if not the case
During the Year…Attendance Understand trends by school-may require planning due to local teaching unit increase/decrease and impact on discretionary local funds Recommendation: Local Units by school compared to previous year in budget information
What can you do…?..SUMMARY UNDERSTAND budget and what it reflects for…goals…legal compliance…PR… MONITOR performance against budget during the year EVALUATE financial performance at end of the year for impact on…system goals…legal compliance… REALIGN resources to link with system goals
Hot Topics Status of Education Trust Fund Fund Balance through September 30, 2011 Fund Balance through September 30, 2012 Funding “cliff” for FY 2012 Evaluated new technologies? (Investment Pools, Purchasing Cards, Reverse Auctions, Life- Cycle Costing…)
“Buzz” Words OCE: Other Current Expense ADM: Average Daily Membership ETF: Education Trust Fund RDF: Rainy Day Fund PPA: Proration Prevention Account HELP: Help!!!!!!!!
Any Questions? Thanks! Ken Roberts, CPA, MBA Chief Operating Officer Alabama Association of School Boards