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FINANCIAL AUDIT FINDINGS & OVERVIEW
Board Workshop October 10, 2017
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INTRODUCTION GENERAL FINDINGS 2
An audit of the budget was conducted for the purpose of determining the cause of the shortfall and to provide recommendations for future budgeting practices. There were no missing or misappropriated funds Of the 23 items examined that constituted the identified expenditures, all of the funds were accounted for and properly expended. All expenditures benefitted students All of the underfunded or unfunded items were expended for the benefit of students.
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REVIEW PROCESS Review Past Practice 3 Recommendations
The Review Process was based on the following: A thorough review of the 23 identified items, along with their funding source(s) A review of the district’s Proposed Financial Plan for Addressing Budgetary Practices & Processes Experience based on past budget practices of the district for the previous nine (9) years
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DEFINITIONS 4 Maintenance of Effort Budget Amendments
Commonly Used Terms Maintenance of Effort Federal requirement that the level of state and local expenditures remain constant from year to year. Budget Amendments Required by State Board of Education Rule 6A and Board Policy 7.12 in order to change the original budget. Presented for monthly School Board approval. Payroll Suspense Accounts Amounts accumulate in these accounts when salaries and benefits are paid without sufficient budget. Comparability Federal requirement that state and local resources in Title I schools are comparable to that provided to non-Title I schools. Unrestricted Fund Balance This amount represents the amounts available for use in operations and are not restricted for a particular purpose. Supplanting This occurs when Federal funds are not supplemental and take the place of state and local funds in schools. Roll Forward This amount represents the portion of unrestricted fund balance above the minimum amount defined in Section , Florida Statutes (3%). However, the Duval County School Board has required a minimum amount of 5%. Sweeping Accounts This refers to the practice of determining excess funds budgeted in various accounts and transferring the excess funds into a budget holding account. Salary vs. Non-Salary In the District’s system, salary and benefit expenditures may be paid without sufficient budget. Non-salary purchase orders and expenditures require sufficient budget in order for the transaction to occur.
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5 OVERVIEW OF FINDINGS Findings by Category
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Executive Summary: CATEGORY: Personnel Description Funding Request
6 CATEGORY: Personnel Description Funding Request Retiree Incentive $ 241,983 Elementary Paraprofessionals 1,513,700 Content Specialists 5,000,000 Comparability Positions 788,000 Additional Tutoring 561,000 CTE Bonuses 19,000 Principal and AP Bonuses 689,000 Executive Summary: Unbudgeted and underfunded personnel expenses included additional support for elementary schools, content specialists to assist in schools, comparability positions, tutoring supports, and bonuses.
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CATEGORY: Contracted Services
7 CATEGORY: Contracted Services Description Funding Request Orton Gillingham PD Contract $ 18,055 Professional Development Contracts 150,000 Speech Contractors 1,200,000 SLP and Printing Contracts 1,449,000 Transportation Contracts 4,800,875 Curriculum Audit 480,000 Executive Summary: Funding was allocated to professional development, exceptional education services, printing, curriculum services, and transportation of students.
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CATEGORY: Equipment & Supplies
8 CATEGORY: Equipment & Supplies Description Funding Request Jackson Sports Medicine Equipment $ 38,439 Visual & Performing Arts 930,000 Band Uniforms 22,000 AEDs for Elementary 127,181 Advanced Placement Trust Check 314,286 Executive Summary: Funding was allocated to support the various enrichment activities at schools, as well as AEDs for elementary schools and AP bonuses for teachers.
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CATEGORY: Additional Elements
9 CATEGORY: Additional Elements Description Funding Request Software: i-READY Software Licenses $ 1,600,000 Transfer to C&I: Includes personnel, contracted services, and fees 236,000 Revenue Decrease: 4th Calculation Adjustment 1,391,545 Executive Summary: Expenditures included software licenses, funding to Curriculum and Instruction, and an adjustment in the revenue received from the state in the 4th calculation.
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1 2 3 4 RECOMMENDATIONS 10 SINGLE ENTRY KNOWN CONDITIONS
Next Steps Eliminate the use of spreadsheets to create budgets prior to entering the information into the BudPrep System. 1 SINGLE ENTRY District staff responsible for creating department budgets should review several years of expenditures to determine that all necessary expenditures are budgeted for next year. Simply updating spreadsheet or BudPrep amounts does not guarantee completeness of next year’s budgets. HISTORICAL DATA 2 Departments should not under-budget individual line items in order to balance the budget, especially if the line items are recurring costs. ADEQUATE FUNDING 3 4 KNOWN CONDITIONS The budget for next year should be based on known conditions at the time of budget development, not based on speculation regarding what may happen financially.
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5 6 7 8 RECOMMENDATIONS 11 ROLL FORWARD GRANT BUDGETS
Next Steps The projected roll-forward of fund balance over the 5% Board-required amount should not be considered in developing the next year budget. The true roll-forward is not known until year-end close-out is completed and accruals are recorded. 5 ROLL FORWARD Average salaries and the benefit rate should be adjusted as necessary when preparing the Staff Allocation Plan for the proposed budget. SALARY ADJUSTMENTS 6 The Staff Allocation Plan should consider Cabinet Add-On Positions and Comparability Positions. These positions should be included in the proposed budget presented to the Board during budget workshops. ADD-ONS & COMPARABILITY 7 8 GRANT BUDGETS When budgets are developed for Federal grants, District staff should ensure that specific items that are moved to or from General Fund do not create a supplanting situation. District staff should also determine that the Maintenance of Effort requirement for Federal grants is met in developing the General Fund Budget.
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BUDGET MAINTENANCE & REVIEW
12 BUDGET MAINTENANCE & REVIEW Payroll suspense Payroll suspense amounts should be reconciled and adjusted after each payroll so that the Budget Department can better monitor the District’s financial position. HOLDING FUND Amounts held in and transferred into/out of budget holding accounts should be monitored by designated District staff. Salary & Budget Transfers Departments should monitor salary and benefit budget lines in order to determine if budget transfers are required to cover any payroll suspense amounts. BUDGET LIAISON Each Department should have an employee who is responsible for monitoring the Department budget and expenditures. This employee should receive professional development concerning budget practices from both external and internal sources. SUMMARY The recommendations are in alignment with those previously identified by district leadership.
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