1. Transportation Refunds and Inventory Shortages NC DPI – Transportation Services Derek Graham Steve Beachum Kevin Harrison

2. Why Refund to PRC 056? State Board of Education Allotment Policy Manual

3. Purpose of PRC 056 Provides funding for all transportation related expenses for "yellow bus" use for eligible school age (K-12) students for travel to and from school and between schools. § 115C-242. Qualifies this further to state that the transportation be limited to “the regularly organized school day” with exclusions for instructional purposes

4. Special Provision 2 These funds may not supplant other state, federal and local programs use of the "yellow bus" that serve the instructional purpose of the school, such as Pre-K, Smart Start, Head Start, Remediation Programs, Summer School, NC State Fair, Special Olympics, NC Symphony and other instructional field trips. When allotted state transportation funds are used to provide transportation services for these programs, the responsible program must reimburse this fund.

5. Special Provision 3 Allotted funds cannot be used for the maintenance of local vehicles and machinery such as - activity buses, staff vehicles, school maintenance trucks and vehicles, etc. When state funds are used to pay for this kind of activity, those state funds must be reimbursed from local (or other non-state) sources

6. Why Refund? PRC 056 is only for transportation of K-12 students to/from/between schools and support of vehicles performing those functions LEAs often use staff and materials on hand for OTHER purposes for both convenience and efficiency To use PRC 056 funds in that way would be illegal and so the funds must be returned to PRC 056

7. Knowing how much to refund to where TD-19 Monthly Refund Report

8. Two Categories of Refunds Extra Yellow Bus Use – Per mile and per student refund rates provided each year based on prior year data – LEA gathers data on ‘extra use’ manually and calculates the refund due Operation and Maintenance of Local Vehicles – Costs maintained in the Business Systems Information Portal (BSIP) via LEA data entry of costs to maintain, repair, and operate vehicles. – Data on expenditures to local vehicles is available in a report called MCIS

9. TD 19 REV. 11/98UNIT NO. NORTH CAROLINA PUBLIC SCHOOLS MONTHLY REPORT OF DIRECTOR OF TRANSPORTATION AMOUNT TO BE REFUNDED TO STATE PUBLIC SCHOOLS FUND FROM LOCAL FUNDS UNIT NAME OBJECT CODE DESCRIPTIONOBJECT CODEAMOUNT MONTH OF YR. YR. TRANSPORTATION SALARIES6550-56-175 DATE PREP YR. DRIVERS SALARIES6550-56-171 CONTRACTED REPAIR/MAINT- EQUIPMENT6550-56-326 SUPPLIES AND MATERIALS6550-56-411 OIL6550-56-424 TIRES AND TUBES6550-56-425 The TD-19 should be completed and submitted to the REPAIR PARTS6550-56-422 finance officer for processing through the BUD system GASOLINE AND DIESEL FUEL6550-56-423 and transmitted to DPI. EMPLOYEE'S SOCIAL SECURITY6550-56-211 EMPLOYEE'S RETIREMENT6550-56-221 EMPLOYEE'S INSURANCE6550-56-231 TOTAL - STATE PUBLIC SCHOOL FUND.......................................................……………………………………………………… MAJOR REPLACEMENTS - OTHER USE OF BUSES.......................................……………………………………………… TORT INSURANCE COST............................................................................……………………………………………………………….. TOTAL AMOUNT OF REFUND.............................................................……………………………………………………………………. DATEDIRECTOR OF TRANSPORTATION DATEFINANCE OFFICER OR DESIGNEE TD -19 REFUND REPORT NOTE 29.29 140.10 1,500.00.62 3.65 5.69 34.11 21.30 14.90 6.38 $1,756.04 1,036.01 3.00 $2,795.05 Post ins. check Post ins. Check if fixed @ garage Prorate among codes Include ins. Check for total loss vehicle YOUR COUNTY 010

10. Refunding by Object Code Labor, Parts, Fuel, Tires, Social Security, Retirement, etc. Many aspects of the LEA are represented by dollar figures in particular categories. Accuracy yields understanding where money is spent and where improvement is needed. If you refund everything to 423 - Fuel, then the LEA will appear to have spent too little per mile on Fuel and too much on other things.

11. Inventory Shortages The Problem (… aside from that losing things is bad….)

12. Why is it a problem? PRC 056 could be used to support Local Vehicles which would be an illegal use of state funds Stock may be being actively stolen during the year Incorrect reporting alters refund rates, which must reflect the actual cost per mile or student in order to prevent illegal use of state funds Vehicles will have incorrect maintenance and cost records. DPI relies on this information to provide an accurate picture of vehicle costs to the legislature. Further, LEAs rely on this information in the event of an accident or in case of ongoing problems with a vehicle Knowingly falsifying state records is illegal

13. How Big is the Problem?  ~8-10 Counties appear to have performed no full inventory of stock on hand in 13-14 Reported Stock Losses in 2013-14 – $2,234,144 across ~11 thousand line item losses – Losses Ranged from $0 - $466k in each County – 36 Counties reported losses greater than $10,000 – 16 of those 36 reported losses greater than $30,000 – Half of those 16 reported losses greater than $100k These are things that SHOULD have been on hand and available to use, were not knowingly stolen or the result of a known data error, and yet could not be found

14. Process Overview From High Above

15. Purchase Create County PO and submit to vendor (may just be a phone call) Wait for arrival of stock and invoice Receive Parts into BSIP inventory and then place on a shelf (Stocked Parts) OR Put the part on a vehicle and charge the cost immediately to the work order in the BSIP system (Non-Stock Parts)

18. Distribute Stocked Parts As needed distribute parts to technicians to repair vehicles Create a work order and issue the part to it – At time of distribution – After the job is completed via a paper work order

20. The Devil in the Details Parts on Service Trucks and Field Repairs – No control over this environment, but you can track your losses to the person if you’re deliberate in what allows restocking Control of the Stock Room not Absolute – The more hands in the till, the easier it is to say ‘it wasn’t me, it was someone else’ – Put someone who stays at the garage in charge of distribution (the gateway) even if they’re not sitting where the parts are Lack of Importance in Paperwork – As transportation is often undervalued, so is paperwork – Raise the bar on the information collected – Let personnel see the data be used for something

21. High Level Keys to Success Personal Responsibility – However it can be instilled this is worth more than any other thing you can do Stock Room Parts Distribution Process – Ultimately it is about parts not leaving without being recorded in whatever form that takes – It could be as simple as a notepad cross-check of outgoing parts versus incoming paperwork – It could be as technological as issuing the part to the work order in BSIP before it leaves the room Cost Clerks and Supervisors careful review of work orders – If the work order doesn’t make sense it should be questioned immediately

22. Annual physical Inventory

23. Process Create Blind Count Documents Count Parts Enter Counts Review Entry for Discrepancies – Correct typos – Spend your time figuring out where the big dollars disappeared – Correct Counts, POs, Work Orders, and do recounts where needed Post Counts

24. Purpose Determine actual stock on-hand – A return to even ground for the start of the next year Analysis of the Year – Identify problem areas for instituting corrective action – Compare to previous years to determine whether you’re moving in the right direction Contain the problems to one year so you can get a good read on each year

25. Last Opportunity After the fiscal year has closed LEAs will be afforded the opportunity to point to losses which should not have been listed as losses – Stolen items (with police report) – Invoice and Work Order errors not know before the final posting of physical inventory (corrected after inventory was complete) – Failure to transfer parts between the stock room and service trucks – Incorrect inventory adjustments In all cases documentation of the error and the corrections will be required

26. Questioned Costs When items are determined to be missing for an uncertain reason the cost of those items will be reported to DPI’s School Business Section as Questioned Costs Items with bulk liquid measures will likely be given special consideration

27. Transportation Refunds and Inventory Shortages NC DPI – Transportation Services Derek Graham Steve Beachum Kevin Harrison February, 2015