Week 5- School Finance

Week 5

Part 1

Dr. Artebury stated in his week 5 lecture that, “It is almost impossible for anyone to illegally take money or resources from a school district without ultimately being caught. The checks and balances of the system are virtually foolproof. Invariably someone knows what a violator is doing. We all know that doing the right thing is the right thing to do.” School finance has long been a contentious topic in Texas schools.  The source of funding has been shrinking every year due to economic conditions along with more and more unfunded mandates from the state and federal governments. With the spotlight on finance, more and more school districts are scrutinizing their fiscal policies, as well as the current use of the funds in their districts.

Recently, allegations were made against a superintendent in a North Texas school district that she had misappropriated school funds to purchase furnishings for her home. This violated Texas Ethics Standard 1.3. The educator shall not submit fraudulent requests for reimbursement, expenses, or pay. The allegation was that the furnishings were being purchased to replace current furniture in the district. The short term effect this could have is the superintendent was put on administrative leave while the allegations were being investigated. This in turn could increase the stress at the central office of the employees who have to conduct the investigation. As part of the investigation, the process of how items are purchased and how the alleged actions could occur in the first place would need to be scrutinized and changes would need to be made as necessary.

When talking with my site supervisor over the past five weeks, the recurring theme has been transparency in everything that is done in a school district.  When misuses of school district funds are alleged, this can have a negative long term effect on the perception and reputation of a district’s administration. If the stakeholders have the perception that a district’s administration is not fiscally responsible, it can be hard for the district to raise funds to expand and repair facilities and campuses.

Ethical behavior is imperative in a school superintendent. Any time a superintendent believes that the policies and rules in place set forth by the state, federal, and local governments do not apply to him, it can have a negative effect on district morale and reputation. An example of this is a superintendent in a Dallas area district who accepted honoraria and travel expenses from two companies with whom the district did business. The district had done business with these companies prior to the superintendent coming on board; however, not to the extent that they did once the new superintendent increased the contract sizes currently in place. In a six month period, the superintendent went to nine out of state conferences and collected over $14,000 dollars in fees from the companies. He did all this even after he was told by the district’s attorney that this would be against local policy along with a legal representative of TASB giving the same opinion. Currently, the district is trying to get reimbursement of $240,000 from one of the companies for inappropriate use of district funds. The superintendent resigned prior to the board’s vote for removal. The superintendent’s actions violated Texas Ethical Standard 1.4. The educator shall not use institutional or professional privileges for personal or partisan advantage. It also violated Texas Ethical Standard 1.7. The educator shall comply with state regulations, written local school board policies, and other state and federal laws.

Short term effect, is again, the time and effort it costs to conduct an investigation of this nature and the stress it adds to the district employees during said investigation. Long term, it could affect the hiring practices put in place to hire future superintendents and restrictions that could be put in place to protect from this occurring in the future.

Ethical allegations can also be brought up when dealing with contracts for vendors who supply services and products to the district. Currently an issue, more prevalently found in the charter school system, is the awarding of contracts for consulting and other services awarded to family members of board members and superintendents acting as CEOs and campus administrators. Charter schools currently are not held to the same standards as public school districts in the state. When severe issues arise with misappropriation of funds occur in a charter school, it can result in the revocation of the school’s operating charter. This conduct can also be seen as a violation of Texas Ethical Standard 1.4.

Another area that ethical conflicts can arise in is the hiring, evaluation, and dismissal of personnel. A superintendent was hired by a new district. In the new district, a high school principal and head football coach were also needed. He had the principal and her spouse from his previous district apply and interview for the jobs. In the principal interviews, he had his applicant interviewed in the morning. At lunch time, he called the committee and had them choose his applicant. In the afternoon session, he had his applicant assist in the hiring process of an assistant principal and the new football coach. The new coach hired was the new principal’s husband. The football coach had lost his certification from a previous state and had not gotten a certificate to teach in the state he currently resided. In addition to this, the new superintendent had resigned from his previous district for misappropriating gas from the school district’s gas pumps at their transportation depot. He had told the new district he had retired from the previous one. He lied on his application, which is a violation of ethics. In this situation there were several standards violated. The first one violated was Texas Ethical Standard 1.11.The educator shall not intentionally or knowingly misrepresent his or her employment history, criminal history, and/or disciplinary record when applying for subsequent employment. In the hiring of the new principal and head coach, the superintendent violated Texas Ethical Standards 2.3 and 2.5. Ethical Standard 2.3 states, the educator shall adhere to written local school board policies and state and federal laws regarding the hiring, evaluation, and dismissal of personnel.  Ethical Standard 2.5 states, the educator shall not discriminate against or coerce a colleague on the basis of race, color, religion, national origin, age, gender, disability, family status, or sexual orientation.

Short term effects will be the cost of investigation, along with having to start the process of hiring a new superintendent along with a high school principal and head football coach, all very pivotal positions in a school district. In addition, by hiring someone so seemingly lacking in ethics and morals, the perception of the leaders of the district by the community could be irreparably damaged by the entire incident, making it hard for the district to move forward in a positive manner without any long-lasting negative effects.

As a superintendent, it is important to have faith in the people with whom you work. A good educational leader allows those under him to have the authority to lead and take risks. Any time you throw in the human factor in an equation, there is the possibility for mistakes. Hopefully, mistakes will be small and can be used as positive learning experiences from which both you and the employee can grow and learn from. It is important, that as a superintendent, if you face a more serious situation, you approach it with as much transparency in the process to assure the stakeholders of the district that no one is held to any less of an ethical standard on your watch.

Part 2/3- Self-evaluation

Week 1	Competency	Week 5
C	apply procedures for effective budget planning and management	C
I	work collaboratively with board of trustees and appropriate personnel to develop district budgets.	C
I	facilitate and evaluate effective account auditing and monitoring that complies with legal requirements and local district policy.	I
I	establish district procedures for accurate, effective, ethical purchasing and financial record keeping and reporting.	I
I	acquire, allocate, and manage resources according to district vision and priorities, including obtaining and using funding from various sources.	C
C	use district and staff evaluation data for personnel policy development and decision making.	C
C	apply knowledge associated with personnel management, including requirements related to certifying, recruiting, screening, selecting, evaluating, disciplining, reassigning, and dismissing personnel.	C
C	manage one's own time and the time of others to enhance district operations.	C
C	develop and implement plans for using technology and information systems to enhance efficiency and effectiveness of school district operations.	C
C	apply legal concepts, regulations, and codes as required.	C
I	use revenue forecasting and enrollment forecasting to address personnel and budgetary needs accurately.	I

Although I feel a little more knowledgeable about school finances after the past five weeks working with the course material, I realize that I could spend five years working on school finance and not really consider it a strength. I know that finances and accounting practices are not necessarily my forte and when stepping into the position of superintendent, it will be important to make sure that there are extremely competent individuals in the financial department of the district. After week three of this course, I learned that having a strong network support system is imperative to being successful in some endeavors. Banding together with my wiki group to tackle week 3’s assignment was transforming. I think it was a strong example of what the future should look like for myself as a central office administrator.

Week 4

Part 4-

In looking at the budget for Lockhart ISD 2010-2011school year, the majority of its funds are earmarked for salaries and benefits. The total amount set aside is $28,737,258, which is 64.8% of the total budget. Currently the district employs 611 full and part-time staff. 366 of the staff are teachers, librarians, and counselors.

Prior to this course, I had no real idea how much of a school’s budget went to personnel and salaries. In studying the budgets, it was heartening to see that the majority of all districts’ budgets are set-aside for personnel. A concern with the large proportion of a district’s budget being set-aside for personnel is that in tough economic times, when cutbacks need to be made, there isn’t many areas to make cuts unless you look directly at personnel. In addition, when cutting personnel becomes necessary, it affects the morale of the entire district along with having a negative effect on the learning process in the classrooms (through increased class size, fewer courses selections offered, etc.).

Before enacting a salary increase for personnel, a superintendent needs to consider whether or not a salary increase will:

 promote or deter a goal driven budget that addresses Board of Education, District

Improvement Committee and Campus Improvement Committees goals and

priorities.

 require an ad valorem/property tax increase.

 place salaries at level comparable to area/regional districts.

 retain the best teachers in the district.

 reduce the fund balance to an unacceptable level.

 cause personnel salaries to exceed 80% of the Maintenance and Operations

budget.

 reduce the ability of the district to maintain established educational programs

 be received positively by the teachers and staff.

 be received positively by parents, key stakeholders and the general public.

 create an undesirable impact on any district function or activity. (Week 4 Lecture, question 4, paragraph 2)

If the district was to grant a 5% increase in salary for all personnel, it would mean an additional $1,436,863, would be allocated. In the current economic times, any positive impact the increase would have would be overshadowed by the negative impact it would have on the district’s financial health as a whole. To meet the upcoming school year’s budgetary needs, Lockhart ISD is going to have to take money from its fund balance to make sure the budget is balanced. Any increase would be adversely reflected in the district’s financial rating.

Week 4

Part 5-

I met with my site supervisor to discuss more of the financial processes of our district, as well as the financial processes put in place by the state to make sure districts are being fiscally responsible. In this meeting we discussed in detail the FIRST system along with the financial audit process that the district completes every year. The topic of transparency in activities was again prominent in our interview. Mrs. Wright has stressed in every one of our meetings that transparency in your actions should be the prominent factor in every action a superintendent takes.

In terms of the district’s audit process, it is very straight forward and follows the same direction every year. The external auditor is selected by the district RFQ - Request for Qualifications. (Bids) The LISD Board of Trustees reviews the RFQ and votes on which auditor will be approved. The audit is conducted at LISD Central Office. It is a desk top audit. The auditors ask questions regarding the special programs such as Special Ed and Title I programs. The audit concludes whether or not the district is in compliance with general accounting procedures as well as with GAO Government Accounting Office standards. The results are communicated as follows:
               1.The company determines if the district is in compliance and does put this detailed report in writing. 

               2. This booklet/report is then reviewed in an open School Board Meeting AND a PUBLIC Meeting. The PUBLIC Meeting is held first and then the Board Meeting generally follows.  

Week 3 Assignment

I think we can all agree that this week has truly been an experience to learn and grow from. I have also discovered that "it takes a village" to attempt a school finance assignment. Thanks for all of the posts and information added to help us tackle this monster!

Part 4- Week 3 Lockhart ISD

Lockhart ISD is a rural school district serving 4,612 students. It is the largest employer in Lockhart. There are a total of 366 teachers, librarians, and counselors on staff. The district’s demographics break down as follows:
            African American         6.5%
            Hispanic                      61.5%
            White                          31.2%
            Native American           0.4%
            Asian/PI                        0.5%
            Econ. Dis.                   65.7%

Lockhart ISD’s M&O tax rate is $1.04 with a collection of $8,702,467. The DPV for the district is $867,477,724. The Target Revenue for the district is $29,991,825.765. The majority of the M&O budget is from target revenue. The I&S collections are $1,536,869. The state compensatory allocation for the district is $3,328,269 due to the fact that 65.7% of the student population is categorized as economically disadvantaged.
In the past 10 years, Lockhart has built a few new buildings- a junior high and an elementary school. The current high school’s main buildings were built back in 1964. There have been a few additions made over the years, but it is definitely time to start looking at plans for a new high school. With the current Ch. 46 allocations in the budget at $1,004,368, combined with the uncertain economic times, the district is currently looking at the options to try and remodel and repair existing facilities. Currently, the district is not taking advantage of the “golden penny” source with their M&O set at 1.04.
Lockhart ISD is in sound financial position at this time. They practice the “balanced budget” accounting when planning for the school year expenditures. They have more than enough money in their account to cover operating expenses for up to 6 months, well over state requirements. In addition, there are no staff cuts being considered currently.