1. Building and Sustaining the Business Manager’s Relationship with Board Members Luann Mathis, Business Manager, Prospect Heights ESD 23 Lauri Calabrese, Asst. Superintendent of Finance, LaGrange ESD 102 Ann Williams, Director of Business & Ops, Bradley-Bourbonnais HSD 307

2. Agenda School Board Roles and Responsibilities Building & Sustaining Relationship Board Members Should Have a Basic Understanding of Business Office Functions: – School Finance – Business Operations Question and Answer Session with Real Life Board Members!

3. Origins and Basic Function of School Boards  Grew out of town meetings dating back to the original Thirteen Colonies.  Basic Function of the School Board remains the same: represent all constituents within their district providing local control over education.  ALL CONSTITUENTS: Administrators, teachers, support staff, students, parents, non-parent tax payers, local businesses, special interest groups etc. etc.

4. IASB Mission Statement “The mission of the Illinois Association of School Boards is Excellence in local school governance and support of public education”

5. Foundational Principles of Effective Governance  The School Board is considered a corporate entity required by law to govern the school district according to State Statute.  The School Board represents all their constituents within their school district boundaries.

6. School Board Duties & Responsibilities  IASB Defined Duties:  Employs a Superintendent  Clarifies the District Purpose  Connects with the Community  Delegates Authority  Monitors Performance  Takes Responsibility for Itself

7. Employs Superintendent  Single most important job of the School Board.  Only individual School Board actually employs and evaluates.  Directs and holds Superintendent accountable for implementation of School Board Policy and overall School District performance.  School Board is legally required to approve all employment contracts, however,  School Board delegates authority to Superintendent to select, employ and evaluate all other employees within the standards established by School Board policy.

8. Clarifies the District Purpose  Per IASB, “as its primary task, the School Board continually defines, re-defines and articulates district ends to answer the recurring question – who gets what benefits for how much?”  As Steven Covey states: “Begin with the End in Mind”. Knowing where you want to be as a School District will help you to establish your mission, values and goals providing clear direction to all involved.  Clearly established goals allows the School Board to easily monitor the District performance holding the organization accountable.

9. Board Connects with the Community  Per IASB “the purpose of the conversation is to enable the Board to hear and understand the community’s educational aspirations and desires, to serve effectively as an advocate for district improvement and to inform the community of the district’s performance”.  How does your Board communicate?  Comment time at meetings, web site, email, twitter, face book, day/evening coffees, staff coffees, newsletters = transparency, transparency

10. Board Delegates Authority  Difficult for some Board Members!  Board is ultimately responsible for everything, however the Board delegates authority to the Superintendent who delegates to many individuals within the District including the Business Manager.  Successful Boards are able to delegate and empower their Superintendent and staff.

11. Board Monitors Performance  Per IASB “A School Board that pursues its ends through the delegation of authority has a moral obligation to itself and the community to determine whether that authority is being used as intended”.  Board needs to have a basic understanding of data used within District, both student and financial based data.

12. Board Takes Responsibility for Itself The role the School Board fulfills as trustee for their constituents cannot be filled by any other person or group – the Board is ultimately responsible for the operations, success and compliance with State Laws.

13. Mandatory Board Training  Open Meeting Act – Effective 1/1/2012  Board Members elected post 6/13/2011:  Minimum 4 hours of professional development inclusive of: education and labor law, financial oversight and accountability and fiduciary responsibilities.  PERA – Effective 6/13/2011

14. That’s All Great, But Where Does the Business Manager Fit in? – How do I Build and Sustain My Relationship with My Board Members??

15. District’s Are Different!  The First Step is to understand how your District operates in terms of:  Board Structure  Communication with Board  Board Policy Development  Trust Between Board & Administrators  Documents for the Board  Board Involvement in Training & IASB

16. Don’t Forget  CARDINAL RULE: UNDERSTAND clearly your superintendent’s expectations of your relationship with Board Members!!  History of Relationship between Business Manager and Board Members  New to the District - talk to your predecessor about their relationship with Board. Take all discussions with a grain of salt – what worked for them, might not be your style – what can be changed, what needs to remain the same!  Have a basic understanding of your Board Members professional and personal backgrounds. Hot Buttons? Platforms? Agendas?

17. Board Structure  This is not a cookie cutter approach! All Boards are unique with their own personality!  How Does your Board Operate:  Committee of the Whole?  Board Committees with only Board members  Board Committees plus community members  Board Committees plus other administrators  Board Committees plus community members & other administrators,  Etc., Etc., Etc.,!!!!!!  Don’t forget – What authority do these committees have?

18. How Do You Communicate?  Here is where having a clear understanding of your superintendent’s expectations will come in handy!  Again, possibilities are endless:  Individual Board member can email you questions:  You respond only to that Board member,  You forward question and your response to superintendent who will respond to Board member(s),  You respond only to that Board member and superintendent,  You respond to entire Board and superintendent.  If not already established, early in your tenure, talk with your superintendent and possibly entire Board on their preferences for communication.

19. A Few Last Words on Communication Methods  Please Note in Ink!!!  Established methods are subject to change!!!  New Superintendent – new methods  New Board President – potential new methods.  And your mantra:  Transparency, Transparency, Transparency!!

20. School Board Policy Development  Well developed School Board Policy has been found to make your life easier in some respects…..  Does your Board just implement/approve policy pushed out by IASB?  Does your Board and superintendent allow you to further develop policies unique to your district that are associated with finance and operations of the District?

21. What Exactly Do You Do All Day? Or, Why Does Our District Need You? In meeting with new Board Members it is critical that they have a basic understanding of your role and responsibilities in the District!

22. Top Ten Business Manager Responsibilities Tax Levy Annual Budget Audit/Legally Required Claims (GSA, Grants, NSLP, Etc.) Payroll & Accounts Payable Buildings & Grounds/Construction Risk Management Transportation Food Service Enrollment Projections/Staffing Contract Negotiations

23. Board Members Should Have  Essentials of Illinois School Finance by Jim Fritts  Annual Budget Book: - ISBE Generated Budget & Budget Certifications - District Financial System Generated Budget - Budget Presentation/Talking Points - Long Range Planning Overview – How did we arrive at this budget - Fund Summary – One Sheet Broken Down by Fund - Tax Levy - GSA Entitlement

24. Board Members Should Have  Audit & AFR  Current Five Year Financial Projections  Most Recent Life Safety Report  Copy of all Collective Bargaining Agreements  In addition – review the Business Office sections of your school district website.

25. Finance Toolbox

26. Tools for the Business Manager to use with School Board Members in Understanding School Finance

27. Simplify the High Level Concepts Budget Tax Levy Investing Borrowing

28. FUND ACCOUNTING  10 - Education  20 - Operations & Maintenance  40 - Transportation  50 - IMRF/Social Security  70 - Working Cash OPERATING FUNDSOTHER FUNDS  30 - Debt Service  60 - Capital Projects  80 - Tort Immunity  90 - Health/Life Safety

29. A Good Resource

30. How is school income determined? Property Values Tax Rates State Appropriations & Federal Aid Pupil Enrollment

31. Revenue (Federal) Block Grants - usually based on student population and need. Focus resources on handicapped children, economically disadvantaged students and other targeted special purposes. National School Lunch Program

32. Revenue (State) General State Aid - Unrestricted. The greater the property value results in less General State Aid to the district per student. Based on average daily attendance. Categorical Aid - Restricted. Underwrites state required programs such as lunch program, transportation and special education. Grants - Restricted. Block and Matching

33. GSA & the Foundation Level (State) The State Legislature increases General State Aid (GSA) each year by increasing the foundation level. $6,119 in FY13 - $5,631? General assembly boasts that each school district will receive $X more per student GSA formula reduces foundation level by local “wealth”. Divide it!

34. Property Values Determines how much revenue the district is capable of raising from property taxes. Property value is set by the marketplace, the ability to access it is affected by the tax cap. Tax Rate Maximum tax rates are established by the State of Illinois Can be raised above the maximum only with approval of voters. Tax cap keeps the tax rate lower than the approved level. Revenue (Local)

35. Revenue (Local - Other) School Fees Lunch Fees Rental Income

36. Who decides how the district spends the money? 1.Determined by Board of Education based on recommendations from administrators through program decisions and negotiated contracts. 2.More and more budget decisions however are forced on boards by mandates beyond the board’s control (federal and state).

37. LaGrange School District 102 BUDGET PRESENTATION FISCAL YEAR 2012

38. All Funds Summary CHANGES FROM TENTATIVE TO FINAL BUDGET Final Stimulus Payment Received $187,945 Added Retirement Penalty Budget $142,000 Salary & Benefits Increase $178,611 Reduced Supply Budget $20,000 Construction Loan $2,000,000 Net Effect: $1,887,334

39. Operating Funds Summary PRELIMINARY RESULTS FOR FY11: Operating Fund Balance $1.5m Favorable Variance Deliberate Cost Savings Measures Conservative Estimates Teacher Contribution $660,000 over next two years State of Illinois Owed $1.1 Million from FY11 Promised by December Will Receive Four Payments in FY12 10/4/2015

42. Purchased Services DESCRIPTIONBUDGET S/E Tuition to LEA's$650,000 S/E Transportation$517,011 Regular Transportation$341,662 Cleaning Service$279,046 Professional Development$189,501 Food Service$170,512 TRS Penalty/Bonus$142,000 Worker's Comp$132,749 Telephone$130,900 Property/Liability Ins.$110,536 Legal$110,000 Treasurer's Office Fee$107,000

43. DESCRIPTIONBUDGET Heating/Cooling$100,000 Grounds$72,000 Equipment Service$65,800 Copiers$62,649 Trash$61,500 Auditing$55,000 Technology Repairs$47,340 Substitute Custodians$44,472 Unemployment$43,360 Custodial Equipment$37,500 Water$28,250 Professional Services$24,726 Purchased Services

44. DESCRIPTIONBUDGET Travel$22,500 Plumbing$21,000 Postage$18,000 Discretionary$17,200 Software$17,115 Testing Services$17,000 S/E Diagnostics$15,000 Building Structure$13,000 Electrical$12,000 Printing$12,000 Miscellaneous (ED)$11,114 Miscellaneous (O&M)$10,300 Purchased Services

45. DESCRIPTIONBUDGET Homebound$10,000 PMA$10,000 BASE$8,790 Field Trips$8,500 OPEB-GASB 45 Valuation$7,000 Officials$6,500 Security$6,000 Vehicle Expense$4,000 Criminal Background$3,500 Appraisal$3,000 Debt Recovery$2,500 Staff Recognition$2,500 Purchased Services

46. DESCRIPTIONBUDGET Storage$2,000 Graduation$1,500 Travel (O&M)$1,500 Exterminator$1,200 Total$3,788,233 Purchased Services

47. NON OPERATING FUNDS Debt Service Fund: TentativeFinalPreliminary FY 2011 Beginning Fund Balance $1,455,351 $1,556,281 Revenues $2,577,668 $2,399,889 Expenditures $2,452,667 $2,500,819 Ending Fund Balance $1,580,352 $1,455,351 Capital Projects Fund Beginning Fund Balance$60,513 $1,463,446 Revenues/Loan Proceeds $10,000 $2,010,000$10,618 Expenditures $1,520,000 $1,534,217 Ending Fund Balance $1,570,153 $429,487 $60,513

48. 2011 Property Tax Levy Presented By: Lauri Calabrese

49. 2011 Tax Levy Timeline & Truth in Taxation Act Tax levy must be estimated twenty days prior to the adoption If the proposed levy increase is more than 105% – Public notice must be given via local media – Public hearing must be held Tax Levy filed with Cook County by the last Tuesday in December

50. 2011 Tax Levy Equalized Assessed Valuation (EAV) should be approximately 1/3 of a parcels Fair Market Value Equalized Assessed Valuation (EAV) should be approximately 1/3 of a parcels Fair Market Value Property tax burden is shifting from commercial/industrial to residential property values in recent years Property tax burden is shifting from commercial/industrial to residential property values in recent years

51. 2011 Tax Levy LEVY YEARCPICOLLECTED: 2010 Levy2.7%Spring 2011FY11 2010 Levy2.7%Fall 2011FY12 2011 Levy1.5%Spring 2012FY12 2011 Levy1.5%Fall 2012FY13 Cook County collects and distributes property taxes as follows: 55% of prior year in the spring and the remainder in the fall TAX COLLECTION CYCLE

52. 2011 Tax Levy

53. TOTAL LEVY $25,130,881 1.8% 2010 EXTENSION

54. 2011Tax Levy Limiting tax rate: – The calculated total allowable tax rate for all operating funds. Bond and interest rate: – The rate for bond and interest payments is in addition to the limiting rate, and OUTSIDE of the tax cap.

55. 2011 Tax Levy Step 1 Compute the limiting rate Numerator: Multiply the previous years extension by the CPI $24,680,171 * 101.5% = $25,050,374 Denominator: Subtract the new construction from current year EAV $931,924,834 - $3,000,000 = $928,924,834 Divide: $25,050,374 / $928,924,834 = 2.6967%

56. 2011 Tax Levy – Step 2: Multiply the limiting rate by the EAV for the current year 2.6967% * $931,924,834 = $25,130,881 – Step 3: Distribute the total extension to the operating funds

57. 2011 Tax Levy Limiting Rate 2.6967% Bond & Interest.2748% Total Estimated Tax Rate 2.9715%

58. 2011 Tax Levy

59. Seeking approval of the final resolutions at the December 8,2011 Board Meeting. Thank You 2011 Tax Levy

60. NEW PROPERTY & TIFS When tax increment financing districts expire they are returned to the tax rolls as new property These tax dollars were already being collected, they were just redirected to the municipality for redevelopment projects This increase in EAV will not impact individual taxpayers Individual resident taxes will adjust based on the new EAV of their individual property and the Consumer Price Index (2.7%)

61. 2011Tax Levy How TIFs Work

62. A Tax Bill

63. State of School Funding from State of Illinois Current Hot Topics: Pension Reform General State Aid Funding Transportation Funding

64. Financial Forecasting Importance of a three to five year projection Standard format Revisit no more than 3 times per year Reaffirm the Philosophy Maintain Programs & Deficit Spend? Achieve a Balanced Operating Budget?

66. Analyze Revenues & Expenses How are we doing? Quarterly Benchmarking Monthly Cost Center Reporting Dashboards Monthly Board Run

67. Financial Profile Score

68. Investment Policy Policy 4:30 in accordance with 30 ILCS 225

69. Borrowing General limit: – Separate Elementary & H.S. Districts 6.9% EAV – Unit Districts 13.8% EAV Rating Agencies – Long Term Borrowing for Operations EAV Changes – & Bond Levy – Be Aware…

70. Collective bargaining agreements Review current environment – How many years is the current agreement? – Is there language that we need to focus on modifying or removing? – During negotiations what will be our focus? Salary schedule Benefit plan Language changes – What is the current relationship with the union?

71. Operations

72. Purchasing – Purchasing Official – Purchase Orders – Request for Proposals – Bidding Expenses over $25k must be bid ($50k relating to Operations & Maintenance) Bids should be awarded to the lowest responsible bidder who conforms in all material aspects to the requirements and criteria set for in the invitation to bid – In house services – Contracted services – Vendor relations Gift ban act

73. Purchasing-Bidding Specifications Vendor selection Bid opening Public notice 10 days before All bids must be sealed All bids must be opened during a public bid opening where the contents are announced Bid analysis Low, responsive, responsible Bids should be awarded to the lowest responsible bidder who conforms in all material aspects to the requirements and criteria set for in the invitation to bid Board approval

74. Facilities Describe current environment – Custodial and Maintenance Cleaning schedule Summer/spring/holiday break schedules – Intergovernmental agreements An agreement between two or more government to cooperate in some specific way – Facility planning Facility committee Long range facility plan Facility inspection schedule – Life safety Life safety fund 10 year life safety survey

75. Food Service Describe current environment – In house or contracted out – Services provided Lunch – Free/Reduced participation – National School Lunch Program Breakfast Snack – Before and after school programs Milk – Preschool and kindergarten programs – Nutritional requirements for grant funded programs

76. Transportation Describe current environment – In house Own or leased bus fleet – outsourced – Special ed transportation Parent concerns often come from this service-be knowledgeable! Service must be provided for students living 1.5+ miles from the school Distances under 1.5 miles may be approved as “serious safety hazards” Business Manager or Transportation Director files an annual claim for reimbursement

77. Technology Current environment – Hardware – Software – Replacement schedule – Telephone system – Copier/printer management – Security E-rate program

78. Risk Management Lines of Insurance – Property – General liability – Board legal liability – Student accident insurance – Workers’ compensation Insurance Cooperatives – Medical/Dental – Workers’ Compensation – Risk Management Unemployment Compensation

79. School Board Member calendar When to do what you do July 1 st – First day of fiscal year July/August – Prepare Tentative Budget OR Hold Public Hearing on the Final Budget (105 ILCS 5/17-1) September 30 –last day to adopt the annual budget (105 ILCS 5/17-1). October 15 – Annual Financial Report (ISBE 50- 35) due November IASB, IASA, & IASBO Joint Annual Conference in Chicago November 30 – Annual Statement of Affairs due Last Tuesday in December (December 27) – Certificate of Tax Levy (ISBE 50-02) due December 30 – Last day for the school board to adopt a resolutions putting policy questions on the ballot at the March 20, 2012 General Primary Election. (10 ILCS5/28-2). March – Approve Staffing Plan for next fiscal year and release certified staff (if needed) at the March Board Meeting. April 1 – School Board must give written notice and reason of intent not to renew Superintendent’s expiring contract (105 ILCS 5/10-21.4) May 1 – Statement of Economic Interests: Completed form filed with county clerk (5 ILCS 420/4A-105) June 30 – Last day of the fiscal year for most Illinois school districts.

80. In summary… As the Business Official you need to: – Understand the Board Member’s Role – Communicate and work with your Board Members to help them understand your role as the Business Official. – Last Piece of Advice – Remember!! Superintendent is the Orchestra Leader! Follow their lead in developing your relationship with your Board of Education.