Final Reflections on Lessons Learned in School Finance

By far, this was the most challenging course to date in the superintendent certification sequence.  This was also the course I was most excited to take because it is the area where I know I need to grow most, especially in the subsections of Competency 8 dealing with working with the board of trustees to establish a district budget and using forecasting to project budgetary and personnel needs effectively.  I have not been disappointed by the course.  I know that I have much more to learn about school finance, but I believe this course has provided me a strong foundation from which to begin.

I have recently moved into central administration from campus administration and have promoted quickly to an executive director position.  While I am so grateful for and excited about this opportunity, I am definitely the new kid on the block, working alongside assistant and deputy superintendents who have been in their roles for 15+ years.  It is imperative that I understand school finance and how it impacts my department.  The concept of differentiated staffing that was introduced in the lectures has been one that has really stuck with me and one that I keep coming back to.  I think it has some possible benefits for my district, and I want to learn more about it to see how it could be applied to increase efficiency in my district.

The assignments that have helped me the most in this course are those which dealt with the funding formulas and the annual audit. I had the opportunity to attend the public hearing for my district’s FIRST report at the same time we were studying it in class so that was incredibly insightful.  Collaborating with my peers through the wiki and blog discussions has also provided me with additional learning opportunities.  I often felt like I had a new perspective or better understanding after reading their posts.  Since many of them work in smaller districts than I do, it has also been interesting to see how those districts confront funding issues differently than we do.

Week 4, Part 5

For this assignment, I interviewed my district’s Executive Director of Business Services and Director of Financial Services. Texas Education Code, as well as district policy, requires that an audit of the district’s financial statements be completed by independent certified public accountants each year.  My district selects the external auditor through the Request for Proposal process.  The awarded contract is for one year and is renewable for four additional years.  My district has used the same auditor for many years; however, a new audit team is requested every several years in order to get a different perspective.  According to the Executive Director of Business Services, it takes the audit team about two years to gain a thorough understanding of the district’s financial processes.  The cost of the annual audit is approximately $65,000. The external auditor conducts the audit in two stages.  First, the audit team does some interim work in the district for about 1 week, reviewing various files.  Then, the team returns to the district and spends about 2 weeks onsite reviewing financial statements prepared by the district.  The external auditors spend most of their time focusing on payroll, debt expenditures, capital projects and tax collection statements and files.  During their time in the district, the auditors spend a small amount of time on campuses reviewing campus activity funds. The external auditors’ main function is to verify that information in the Comprehensive Annual Financial Report (CAFR) is presented fairly and accurately by the district and in accordance with accepted government accounting standards.  The auditors issue an opinion letter that reports their findings to the Board of Trustees. The auditors’ findings are reported to the Board of Trustees for their approval during the November Board of Trustees meeting.   All information reported out in Board meetings is posted on the district Web site for public review. Data from the audit is reported to TEA through the TEASE (TEA Secure Environment) system in November and is also submitted to PEIMS in January.

School Finance, Week 4 Part 4

For the 2011-2012 school year, 87.75% of my district's budget is allocated to personnel costs.  In a time when unprecedented funding cuts to public education in Texas appear to be inevitable for the next couple of years, there is little way around the fact that teaching positions will have to be eliminated in order to absorb these cuts in funding.  Even if it were possible to cut all of the items funded by the remaining 12% of the budget (which, of course, is not practical), my district would not be able to absorb all of the reduction in funding we were assessed.

School Finance Week 3, Part 4

My district is a property-rich district as defined by Chapter 41 with a value per student of $483,276 (2009-2010 AEIS).  In 2010-2011, the district’s budget totaled $336,086,122.  Looking at the 2010-2011 district budget, 62.78% of the revenues came from local property taxes.  Large corporations like Dell, Samsung and Applied Materials are located within district boundaries.  In addition, the district is a fast-growing district, averaging about 1,200 students per year in growth.  While the housing market has declined sharply in other parts of the state and country, it has remained relatively strong in central Texas.  State revenues made up 36.95% of my district’s revenues in 2010-2011. In 2010-2011, the district averaged approximately 44,600 students, with 31.4% defined as at risk, 28.7% defined as economically disadvantaged, and 8.3% defined as LEP learners.  Federal revenues comprised only .27% of the district’s revenues in 2010-2011. Like most districts, my district allocated the largest amount of funding, 59.87% in 2010-2011, to instruction costs, which includes expenditures for payroll.  The district had 49 schools in 2010-2011 plus additional district facilities, and thus, facilities maintenance and operation consumed 11.65% of the annual budget.  Almost 6% of the budget was spent on school leadership costs, with guidance, counseling and evaluation garnering 3.6% of the budget.  Student transportation costs consumed 3.54% of the 2010-2011 budget, while curriculum and staff development costs totaled 2.94% of the budget.  Approximately 2% of the district budget was spent on general administration and co/extra-curricular activities, respectively.  Instructional resources and media, data processing, instructional leadership, and security each were allocated approximately 1.5% of the total budget.  Each of the following categories used less than 1% of the 2010-2011 budget:  health services, community service, other governmental charges, social work, debt service, JJAEP, and facilities acquisition. Overall, the amount of monies allocated to each area seems to be reasonable.

Stakeholder Input Critical to Budget Development Process

To have a district budget that truly reflects the priorities of the district’s stakeholders, it is critical to have input from as many stakeholder groups as possible.  My superintendent is masterful at this, and he modeled this last spring through an incredibly difficult budgeting process because of the state’s projected budget deficit and resulting cut to school funding.

Central office administrators: The superintendent meets weekly with his executive team to gather their input.  All “big” ideas are run through this group, and the group is made up of his leadership team (assistant superintendents, executive directors, and representative principals  from each level.)  This group was the first to suggest possible cuts for last year’s budget.  We were also the group who began the process of prioritizing the cuts and determining the order they would be added back in if the loss of funding was not as large as expected.

Principals: Principals provided feedback based on their school assignment (i.e., elementary, middle or high school.)  They were charged with reaching consensus among their groups before advancing suggestions to the superintendent for review.  They were also responsible for disseminating key budgeting decisions to their staffs and SBACs.

Site Base Advisory Committees:  Each campus SBAC met with the principal to provide input from their perspective to the principal.  The principal was then responsible for using that input in his/her discussions with the principal groups.

District Improvement Committee: The DAC is comprised of at least one staff member from each campus. The superintendent met with the DAC several times throughout the budgeting process last spring.  Like the executive team, he had the DAC suggest possible cuts for last year’s budget and prioritize the cuts that were suggested.

Teacher Organizations:  We have one teacher organization that is unique to our district.  The president of that group meets with the superintendent and others on different occasions throughout the school year to discuss concerns/issues related to teachers.  In addition, he often speaks at board meetings.

Key Stakeholders:  The superintendent held two community forums regarding budget issues that were well attended by community members.  Data was presented at these meetings, state budget information was explained, and questions were answered.  Community members were invited to prioritize proposed cuts and were also asked to complete a budget survey. All budget information was posted on the district’s Web site, and all stakeholders were invited to submit budget questions to the Web site, which were then answered and posted on the Web site.

Board of Trustees:  The Board of Trustees is responsible for approving a final budget so it is imperative they understand the process and the recommendations being made.  The superintendent had different key personnel research answers to the board’s questions and report back. In addition, 4 board workshops were held so that board members could review budget information before approving the budget.

As has been mentioned many times in these courses, the school district, its students and its resources do not belong to the superintendent.  They are only entrusted to the superintendent to manage to the best of his/her ability.  In fact, the district, its students and resources belong to the community, its parents and taxpayers.  Therefore, if the superintendent and the Board of Trustees truly want to develop a goal-driven budget, they will gather as much input as is possible from all of the stakeholder groups listed above before making final decisions on the budget.

Superintendent's Role in the Budgeting Process

As we learned in a previous course, the superintendent is the CEO of the school district. In this role, it is ultimately his/her responsibility to ensure the district functions smoothly, and it cannot do this without an optimal district budget. Additionally, the superintendent is the primary instructional leader of the district and its biggest public relations officer, too.  Therefore, the superintendent is called upon to serve many roles in the budget development process.  My interview with the superintendent and observations of him throughout this process last spring confirmed the important and varied role he plays in the budget development process. As the primary instructional leader, the superintendent is responsible for setting a direction for the district.  My superintendent does this by gathering input from as many stakeholders as possible.  He attends community events, district advisory committee meetings, and principal meetings; visits campuses; communicates regularly with board members; meets with the executive leadership team; collaborates with other superintendents; works with school attorneys; and serves on legislative committees in order to make the best decisions he possibly can. Ultimately, he uses the information he gathers to work with the Board of Trustees to establish the district goals for the upcoming school year.  Achieving these goals will drive how district monies are spent. As the CEO, it is his responsibility to ensure that all of the necessary budget preparation tasks are taking place in a timely manner.  He works with the Deputy Superintendent for Business Administration to establish the budget calendar.  He also checks with key personnel to oversee that revenue projections are being made, that staffing guidelines are in place, that student projections for the upcoming school year are accurate, and that budget workshops are scheduled. As the district’s primary public relations officer, he takes steps to ensure the budget development process is as transparent as possible for all stakeholders.  My superintendent does this by sending employees emails updating them on the process, posting all steps of the process on the district’s Web site, holding community forums to address the budget process, publishing a column in the local newspaper, attending school and community events to explain the process, and ensuring that several budget workshops are planned for the board.  He is also constantly touching base with all board members to keep them posted throughout the process and answer any questions they may have.  The superintendent’s final task in the process is to bring a quality budget to the Board of Trustees for their approval and to set the tax rate. Nothing about the interview really surprised me as I worked closely with the superintendent last spring to establish a district budget for the 2011-2012 school year.  It seemed there were meetings to attend on a daily basis, with many of them scheduled at various locations in the evenings.  I guess the two things I didn’t realize before moving into my current role were how much the superintendent communicates with board members throughout the week, answering their questions and explaining things to them.  In addition, I didn’t realize that the budgeting process is really an on-going process with very little down time in between cycles.  Although this school year has barely gotten underway, we are already starting to talk about beginning the budget process for 2012-2013!

Review of TEA Budgeting Guidelines

Moving from teacher to assistant principal to principal, one learns many new things and has a broader perspective of the district and how it functions with each move. However, the one area I felt least experienced with even through each of these moves was preparation of the campus budget and understanding the district budget.  In talking with my colleagues, they reported having the same experience.  Therefore, the first thing I discovered while reviewing the TEA Budgeting Guidelines was simply that they exist.  I think a course like School Finance should be required as part of the Principal Certification course work as I know principals would feel much more confident beginning in their roles with this information. Currently, my district uses a fiscal year that ends on June 31st.  However, this has made it difficult to project the costs for personnel for the upcoming school year because in HRS we are still placing surplus teachers throughout June.  When the Deputy Superintendent for Business does the budget rollover in preparation for the next school year, these surplus teachers are counted twice and personnel costs are inflated.  Therefore, he is urging the district to move to a fiscal year that ends August 31st.  Reviewing section 2.10.2 Change in Fiscal Year has given me more information on how the process to change fiscal years would need to take place and is definitely something I can see myself using within the year. Another area of the TEA Budgeting Guidelines that I plan to review thoroughly is section 2.12 Budgeting for Grant Programs.  I do not understand grant programs as well as I would like to and accounting for personnel that are paid for through grants is something I work with regularly in HRS. This is another area that could help me in my role immediately.