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Fiduciary Duty  Legal authority  Malfeasance 2 Who is minding the store?

Fiduciary Duty  Legal authority  Malfeasance 3 What this means… The School Board determines how the funds are to be spent. The local governing body determines appropriation levels. VA Code: Management of funds “Each School Board shall manage and control the funds made available to the School Boards for public schools and may incur costs and expenses.”

Fiduciary Duty  Legal Authority  Malfeasance 4 VA Code: Limitation on expenditures “No school board shall expend or contract to expend, in any fiscal year, any sum of money in excess of the funds available for school purposes for that fiscal year....” What this means… The School Board can not exceed the appropriation levels determined by the local governing body.

So, who IS minding the store ?  Superintendent  CFO/Director of Finance/Assistant Superintendent  School Board 5

6 BUDGET

Budget  Superintendent’s role  School Board role  Local governing body role 7 Who does what…when?

8 ORIGIN OF WORD “Budget” Used VIDEO on Budget from HOTFORWORDS.com

The origin of our word budget is the Latin bulga, a little pouch or knapsack. The word turned up in English in the fifteenth century, having travelled via the French as “leather bag” where housewives kept their money. ORIGIN OF WORD “Budget”

Superintendent’s Role 10  Development of needs-based budget  Compensation decisions  Date requirements What LCPS does….

School Board Role  Sometimes direction to Superintendent on priorities  Public hearings (formally advertised)  Public input (community info)  Submission to local governing body 11 What LCPS does….

Local Governing Body Role  Fiscal guidance?  Appropriation – lump sum or state category?  It’s all about relationships…. 12 What LCPS does….

13 Budget Development: Key Players  Board of Supervisors  School Board  Superintendent  Senior Staff  Department of Business and Financial Services  School Administrators  Parents and School Community  Education Association

Standard Budget Reports  Budget reports Trend data Comparisons with previous year Explanations of changes – cost of salaries Enrollment projections Peer comparisons 14

FINANCE

Finance  School activity funds  Finance committee  School operating fund Where the money goes How to monitor? Financial reporting 16

School Activity Funds  Basic principles Funds used for purpose collected Projects shall contribute to educational experience Funds derived by student body used for student body Students encouraged to participate in management Funds managed with sound business practices Note no oversight responsibility of PTAs/PTOs/Boosters 17

Finance Committee  Contracts/Procurement Virginia Public Procurement Act (VPPA) Sanctions significant School Board policy Competition thresholds 18

Standard Finance Reports  Monthly financial reports Reporting by state category  Quarterly financial reports Expenditure and revenue summary Expenditure detail (by Dept, by Sub object) 19

LCPS Monthly Report- State Category ex. 20 State CategoryOriginal BudgetRevised BudgetActualBalanceExpended Operating Fund Instruction$540,362,397$560,301,189$443,090,286$117,210, % Admin, Attend & Health$34,590,145$38,420,337$34,496,855$3,923, % Facilities$2,308,489$4,224,570$3,059,755$1,164, % Operation & Maintenance$65,840,169$64,436,188$55,227,551$9,208, % Pupil Transportation$52,466,940$53,052,165$39,733,172$13,318, % Technology$25,277,522$30,838,772$22,709,099$8,129, % Debt Service & Fund Transfers$0$7,434,609$7,434,609$ % Fund Subtotal$720,845,662$758,707,831$605,751,327$152,956, % Food Service Fund Food Services$24,034,272$24,034,272$18,318,973$5,715, % TOTAL $744,879,934$782,742,103$624,070,300$158,671, %

LCPS Quarterly Report – Summary ex. 21 ExpendituresFY11 BudgetExpenditures EncumbrancesCurrent Balance% SpentProjectionBalance Salaries$443,907,086$283,244,196$0$160,662,89064%$149,830,464$10,832,426 Employee Benefits$173,175,217$122,025,112$0$51,150,10570%$47,980,520$3,169,585 Contractual Services$20,616,004$13,282,156$3,440,205$3,893,64381%$3,493,643$400,000 Internal Services$11,873,258$7,269,088$0$4,604,17061%$4,604,170$0 Utilities$16,236,799$8,340,677$14,400$7,881,72251%$5,261,722$2,620,000 Communication$3,145,404$1,932,485$5,476$1,207,44362%$1,147,443$60,000 Insurance$1,460,919$1,230,325$0$230,59484%$230,594$0 Materials, Supplies$26,103,487$15,871,987$1,654,404$8,577,09567%$8,577,095$0 Training and Mileage$1,820,412$1,016,703$30,253$773,45658%$583,456$190,000 Continuing Education$548,042$350,468$1,385$196,18964%$196,189$0 Leases & Rentals$536,484$371,729$34,946$129,80976%$129,809$0 Ops & Maintenance$8,500-$24,748$0$33, %$33,248$0 Capital Outlay$1,843,271$342,180$69,984$1,431,10722%$1,431,107$0 Transfer Out$5,168,683 $0 N/A$0 Total Expenditures$706,443,566$460,421,041$5,251,053$240,771,47166%$223,499,460$17,272,011 RevenueFY11 BudgetRevenue Received Current Balance% Rec.ProjectionBalance County$470,818,084 $0100%$0 State$196,451,138$140,960,915 $55,490,22372%$62,490,223$2,953,903 Federal$120,000$171,602 -$51,602143%-$51,602$0 Other$5,654,344$4,607,493 $1,046,85181%$1,046,851$0 Appropriated Fund Bal.$33,400,000 $0100%$0 Total Revenue$706,443,566$649,958,094 $56,485,47292%$63,485,472$2,953,903 Projected Change to Fund June 30, 2011 $20,225,915

22 VSBA Quarterly Report – Detail ex.

23 EXPENDITURES

LCPS School Operating Fund Where the money goes 24 All other costs 12% Salaries & benefits 88%

Fund Balance/Surplus/Savings  Coming soon to a Local Governing Body meeting  Important issue facing School Boards across the Commonwealth  Why it happens and why it matters 25

Why it happens and why it matters What is lapse and turnover?  Fluctuations of budget to actual  Position lapse and turnover  CAUTION, CAUTION  Only flexibility the division has… 26

How To Address It  Budget a large negative number  Make assumptions for vacant / new positions  Other variables  Predicting human behavior 27

Surpluses Come From Savings  Surpluses are not a surprise  All school division’s budgets should have unspent funds  School divisions cannot exceed their appropriations 28

Source: FY 2010 Comprehensive Annual Financial Reports All school divisions have unspent funds at the end of the year. Division Percentage Alexandria 6.5% Arlington 6.8% Fairfax 6.5% Falls Church 6.6% Loudoun 5.7% Manassas 7.1% Prince William 6.4% Unspent Funds

30 REVENUE

LCPS - Where the money comes from FY 2012Amount ($ in millions)  Carryover $10.0  Local/County funding$494.0  State revenue$221.6  Federal funds$13.2  Other Funds$7.2 Total$ Local/County 66.2% State 29.7%

Local/County Funding 32 Source: FY 2012 WABE Guide Tax Rate$1.285 per $100 of assessed value Value of 1¢$7.5 million

State Funding & the Local Composite Index 33 Source: DOE website Components True Value of Property Adjusted Gross Income Taxable Retail Sales LCPS LCI According to the LCI, locally we should be able to pay for about 58 percent of the costs of education and the Commonwealth should pick up 42 percent.

Adjusted ADM (K-12) 61,893 State per pupil amount$5,448 Total$337.2 million Less sales tax($51 million) Total Basic Aid$286.2 million State share.4146 State funding$118.7 million Basic Aid Calculation 08 Triennial census statewide1,511, Triennial census LCPS71,489 LCPS Percentage4.7285% Sales tax statewide $95.9 billion Education share 1.125%$1.1 billion LCPS percentage4.7285% Sales tax funding$51 million Sales Tax Calculation

35 OTHER STUFF

Other Stuff You Should Know  Misinformation  Simplify, simplify, simplify  Strategies to cut spending 36

Misinformation Used VIDEO from SNL “Violins on Television” from HULU.com

Misinformation  The media sometimes gets it wrong  If your version isn’t out there, it doesn’t exist.  Tell the story better  Everyone has to help 38

Simplify, Simplify, Simplify 39  What kind of information do employees need?  What can be easily understood?  The right data will tell your story.  Peer comparisons  Pupil/teacher ratios  Cost per pupil  Compensation packages  School-based and non-school based positions

Strategies to Cut Spending  Last in first out  Reduce staffing greater than SOQ  Review current vacancies  Reduce extended contracts  Increase class size  Healthcare co-pays and deductibles 40  Reduce employer share of healthcare  Defer equipment replacement plans  Mid-year salary enhancements  Increase fees  Selective elimination of programs

Random thoughts about work…

….and life in general

The nice thing about teamwork is you always have others on your side. Margaret Carty American Author

I can’t remember the last time I wasn’t at least kind of tired. Author Unknown

Can we all just agree to ignore whatever comes after Blue Ray? I don't want to have to restart my collection...again. Author Unknown

Snowflakes are one of nature’s most fragile things, but just look what they can do when they stick together. Author Unknown

I disagree with Kay Jewelers. I bet on any given Friday or Saturday night more kisses begin with Miller Lite than Kay’s. Author Unknown

A positive attitude may not solve every problem, but it makes solving any problem a more pleasant experience. Grant Fairley Motivational Speaker

Obituaries would be a lot more interesting if they told you how the person died. Author Unknown

Delegating work works, provided the one delegating works too. Robert Half Founder of Staffing Firm

The trouble with doing nothing is you never know when you’re done. Author Unknown

It is amazing how much you can accomplish when it doesn't matter who gets the credit. Harry S. Truman 33 rd President, United States

I hate it when I just miss a call (Hello? Darn it!), but when I immediately call back, it rings nine times and goes to voic . What'd you do after I didn't answer? Throw the phone and run away? Author Unknown

It is hard to lead a cavalry charge if you think you look funny on a horse. Adlai Stevenson Former Vice President & Congressman

No one can whistle a symphony, it takes a whole orchestra to play it. Halford E. Luccock American Methodist Minister

I totally take back all those times I didn't want to nap when I was younger. Author Unknown

Men have never been individually self-sufficient. Reinhold Niebuhr American Theologian

I think part of a best friend's job should be to immediately clear your computer history if you die. Author Unknown

I keep some people’s phone numbers in my phone just so I know not to answer when they call. Author Unknown

Nothing sucks more than that moment during an argument when you realize you're wrong. Author Unknown

Map Quest really needs to start their directions on #5. I'm pretty sure I know how to get out of my neighborhood. Author Unknown

What separates those who achieve from those who do not is in direct proportion to one’s ability to ask for help. Donald Keough Former Coca Cola President

You moon the wrong person at an office party, and suddenly you aren’t “professional” anymore. Author Unknown

Teamwork is the fuel that allows common people to attain uncommon results. Andrew Carnegie Entrepreneur & Philanthropist

I'm always slightly terrified when I exit out of Word and it asks me if I want to save any changes to my ten-page document that I swear I did not make any changes to… Author Unknown

The best way to appreciate your job is to imagine yourself without one. Oscar Wilde Irish Writer/Poet

You never know when it will strike, but sometimes there comes a moment at work when you just know that you aren't going to get anything productive done for the rest of the day. Author Unknown

A pat on the back is only a few vertebrae removed from a kick in the pants, but is miles ahead in results. Ella Wilcox American Author/Poet

I hate leaving my house confident and looking good and then not seeing anyone of importance the entire day. What a waste. Author Unknown

The only place where success comes before work is in the dictionary. Donald M. Kendall Former CEO Pepsico

There is a great need for a sarcasm font. Author Unknown

Working together works. Author Unknown

Bad decisions make good stories. Author Unknown

Simply stated, it is less me and more we. Author Unknown

I think the freezer deserves a light as well. Author Unknown

None of us is as smart as all of us. Ken Blanchard American Author & Management Expert

We are all in this together….

78 QUESTIONS?