Reflections of EDLD 5342 School Finance

Overall, I’m so surprised at the amount of information I’ve learned in this 5-week course. I am happy with the content and the assignments. They were all relevant and useful. The reflection pieces have caused me to pause and consider each assignment and just how much I gained from each one. They caused me to consider each activity and how each one related to my own district, my own roles and responsibilities, and the current status and future possibilities of my district. The reflections help keep me in a state of constant evaluation (self and decision-making evaluations) where I look to improve myself each day. If I can find something good from some decision I’ve made that may have been a poor decision, then I can still leave school feeling pretty good about myself. By reflecting on each day’s decisions and experiences, I can say that I learned something about myself and know what I need to do to improve. 

Competency 8 Self-assessments

• The self-assessments have been good for me to measure the growth that I feel I’ve made through certain courses.  The pre-assessment helped me to know what I would be focusing on throughout the course and made me stop and reflect on my own experiences with regard to each item on the self-assessment tool.  Then, taking the self-assessment again is another opportunity to reflect on what I’ve learned during the course and how it applied to me and my own experiences.

Lectures, interviews and readings, and resources

·         The lectures gave me very useful information and helped direct me through each week’s assignments.  It’s nice to hear information from the experts in their field, especially for a topic like school finance.  If I didn’t get needed information through the interviews in this course, I could many times go to the lecture notes and find answers. 

The interviews were the most helpful to me.  In the past when I’ve gone to our CFO to get explanations in areas I didn’t know much about, I didn’t even know enough to ask appropriate questions.  The assignments focused on specific questions, and that was a big help.  Having the CFO explain and show me examples of a variety of finance activities, procedures, and rules was a tremendous help.  I know I’m a visual and auditory learner, so this had an impact on my learning about finance.  The greatest amount of new knowledge for me was regarding district revenues.  I had always been afraid of that topic because I thought it was a giant monster that I would never be able to conquer.  Once our CFO talked with me and explained things, I had a strong understanding of how the system works.  I was amazed how quickly I picked it up. In reflection, I know that I went into the course a little scared of the topic, but am leaving the course with a great deal of confidence.

Weekly assignments and activities, including information and insights from interviews

·         The weekly assignments and activities were very useful and relevant to what we needed to learn during this 5 week course.  Although they were intimidating to me the first time I would look at an assignment, once I began and started talking to the CFO or other cohort members, my confidence became stronger.  Then, I’d complete an assignment and feel very confident in myself.  I found very quickly that I knew more about finances than I’d realized – my experiences to this point as an administrator have given me more knowledge than I knew. 

The assignments that included comparing district was most helpful.  It was a great way to teach the concept of “Robin Hood.”  I took a finance class in my masters program from one ot the original authors of Robin Hood, and I never did really grasp  the concept like I did with these simple activities and the lecture.  However, I didn’t have as much administrative experience then as I do now, so my experiences could play a big role in my understanding of it now, as well.  I probably learned the most from those comparison assignments and from the interviews with the CFO.

Any other highlights from the course – this may include wiki group experiences, blog comments and reflections, Web Conferences or other school finance insights or experiences during the course.

It was tough trying to get all of my assignments taken care of early in the week for my wiki group, but I managed.  I think the best part of the group experience and blog comments is that it gives us insight into what other districts are doing, what other students are thinking, and what they are experts at or need help with.  Even though we didn’t meet face to face for the course, I feel a connection with my wiki group and that it’s the beginning of a “networking” stage; I will continue communicating with them via emails.  We’ve already shared problems with each other outside of school finance through email, so it’s been a good thing. 

Interviewing my CFO was a good experience and I think it helped build a stronger relationship between us.  It’s not that we had a poor relationship before, it’s just that we didn’t really have a relationship of any kind.  I got to see a different side of him and gained insight into what his job entails.  I know it’s a job I would never want!

Reflection: Code of Ethics for School Leaders

I can vividly recall how I felt with each incident that I wrote about.  I felt that we had staff members cheating the system and our students out of money in all funding examples.  I also felt our students and the integrity of our system were being cheated with regards to all examples given.  I felt let down that in some cases the upper admin (supt) didn’t turn to the authorities or TEA in some cases.  Looking at it now, I guess as an upper administrator, you have to consider what that type of publicity and action can cost your district in terms of money and trust from the public.  I guess you have to weigh all sides when considering to file charges or not in certain situations; it may be cheaper to just fire them and allow them to move on, except of course for incidents/activities in which we are legally required to notify TEA and/or authorities.  All incidents were several years ago in another district.  Some of those incidents created a terrible dissention throughout the district. I’m glad to say that I'm in a district now in which our Board and administrators have much more integrity and they model this integrity and their expectations to all of us when they get the chance.  It’s quite obvious every day that our district staff and our Board members are truly here to make decisions about what’s best for students in this district, not what’s best for themselves, their own children or children of their friends, and/or their own pocketbooks.  This exercise reminded me of how much of an impact unethical behavior can have on a school district and how important it is to communicate upfront the behavior expectations and to review the code of ethics on a regular basis (beginning of each year) with staff.  It sends a message that you believe strongly in the ethics and plan to uphold them.

Financial Audits: Interview with a CFO

According to TES, each year, charter schools, education service centers, and school districts must have their annual financial and compliance report audited by an independent auditor. The resulting annual financial and compliance report must then be submitted to TEA for review.  And, under the American Recovery and Reinvestment Act (ARRA), most Texas local education agencies (LEAs) are allocated supplemental federal funds. The TEA is required to perform compliance audits of these stimulus funds to ascertain compliance with federal laws, rules and other grant requirements.  This makes it particularly critical that superintendents understand all aspects of school finance and the audit process.

In interviewing our CFO regarding annual audits, I learned so much about the process that I was not aware of before.  The audit process is critical to keeping all business personnel/administrators and business practices honest and accountable for the district and campus finances.  If strong processes are in place, it will prevent misappropriations of funds and will safeguard the monies.  Audits and processes can also protect school personnel if anyone is ever accused of mismanaging or misspending district funds.   

My interview results include the following:

How is the external auditor selected?
We interview applicants through a “request for qualifications” process; the superintendent and the CFO select the auditing firm based on the interview and qualifications regarding district needs.  The Board does have to approve the recommendation.  We like to stick with the same auditor once we find a firm that we have confidence in and who has proven themselves to be the best for our district.  Many districts change firms every 3 – 5 years.  We are more comfortable know the auditors know and understand our processes, needs, and goals.

How does the auditor conduct the audit?
We send certain information to the firm ahead of time (our general ledger and financial records) for them to review and load into their software programs for initial analysis.  Then they conduct an onsite visit for about a week to review records – they pull random files for review.  The take this information back to their offices and review and develop a final report (this report has to comply with state regulations) to be presented to our Board of Trustees.  Once presented, the Board approves (accepts) the audit report, and the audit report is then due to TEA 120 days after the end of the district’s fiscal year.

What does the audit conclude about the district financial procedures and actions?

A statement is issued regarding the integrity of the district’s finances – whether or not we financially sound.  All areas of the school district’s financial procedures and activities are addressed in the report.  We want an “unqualified opinion,” meaning no weaknesses were found in the practices.  A letter is prepared by the auditor that identifies any major discrepancies  (weaknesses) in our procedures.

How are the results communicated?

The auditors meet with the Audit Committee, which is made up of 3 Board members and the superintendent.  The CFO is not on this committee so that the auditors may speak candidly and discuss sensitive information regarding their findings.  The audit team presents a final report of the Annual External Audit to the Board of Trustees at a regularly scheduled meeting in November or December.  The results of the audit are also reported to the media and a report is also submitted to TEA.

Understanding Professional Salaries in District Budgets

Huffman ISD’s total personnel salaries make up about 67% of our total revenue and about  83% of our total operating expenditures.  Over the past 7 years, our Board has made it a priority to bring our teacher salaries into a range competitive with districts in our surrounding area.  We are the only 3A district in Harris County – this means we have to compete with the salaries of 4A and 5A districts that have much higher property value and business/industry support than Huffman.  In planning for the salary increases, we knew that Huffman had a strong projected enrollment growth.  Principals worked hard to make sure our ADA increased each year.  Our property values were also on the rise.  All combined, our Board was confident in implementing salary increases for all staff in our district.  The increases eventually put us in a competitive range with the surrounding districts.  The raises were possible because we knew our revenue would be increasing each year and would provide enough to cover these expenditures. 

Without the revenue increases, as was the case this year, the raises would not have been possible.  In a district like Huffman, every penny matters.  If we don’t have extra pennies, we can’t spend extra money.  A 5% salary increase will have a major impact on our budget if we do not see at least a 5% revenue increase along with it.  If revenue stays the same, a 5% salary increase would take our salaries from 83% of our operating budget to about 87% of our operating budget, and we’d have to decide where the budget cuts would come from in order to cover the salary increase….very likely from a reduction in force.  Currently, we are still a bit below the state average in professional salaries by about $2,000.  When we worked on the budget and staffing positions for the 2009-2010 and 2010-2011 school years, we had lengthy discussions about paying stipends to math and science teachers to keep us competitive with neighboring districts.  It was decided that we really couldn’t afford to do so.  It turned out to be okay; we were still able to attract and retain excellent math and science teachers.  We recognize that the attributes of working in a small school district can offset the fact that we might not pay as much as our neighbors.

Positives of a 5% raise:  This is a given:  boost in morale; increase in teacher retention; ability to attract and retain the best teachers in the area; a boost in teacher morale results in a boost in student morale.

Negatives of a 5% raise:  can deter a goal driven budget; may require taking money from fund balance; may require a tax increase; might result in personnel salaries  exceeding 80% of M & O budgets; established educational programs would likely be altered or cut completely; goals of the district would be impacted negatively.

Reviewing and Analyzing Huffman ISD's M&O Fund

 Reviewing and Analyzing District Maintenance & Operations Fund

Total revenues:                                $21,336,637  (12,603,473 state; 8,563,164 local; 170,000 federal)

Some of the expenditures include:

11 (Instruction)                             $11,715,012            54%

12 (Instruction resources)                 313,638             02%
13 (Curr and Staff Devel)                   398,175             02%
23 (School Leadership)                    1,166,831            06%
36 (Extra/Co Curricular)                      607,672            03%
34 (Transportation)                              982,703           05%
41 (Central Admin)                               978,201           05%
51 (Plant M & O)                                2,492,911           12%
93 (elect co-op)                                  1,030,000           05%

Fund Balance:   $6,737,146

WADA                                   3,856  (unweighted ADA 3005.00)

Rev per WADA                  $5,298.146

Rev @ Comp Rate            $20,432,047
Found School Grant        $  1,015,855

(Note:   w/o weighted ADA:       $15,920,928)

Huffman ISD is a 3A school with approximately 3,100 students.  We are unincorporated and have little business support as a source of revenue.  Most local revenue is derived from homeowners.  We have one Title 1 campus.  Our total revenue for 2010-2011 was $21,336,637 and is comprised of: 

  $8,563,164        local

                        $12,336,637        state
                             $170,000        federal

As is the case with all school districts, the majority of our revenue is expended in function 11, Instruction (54% to be exact), and includes most of the district teacher positions.  The next major expenditure is function 51, Plant Maintenance and Operations (17%).  I don’t think we are much different than most other districts with this breakdown.   Transportation comprises about 5%.  Functions 41 (Central Administration) and 23 (School Leadership) comprise 11%, which accounts for campus and central office administrator salaries as well as office staff payroll.  Clearly, district personnel expenses comprise the majority of the budget.

I’m interested in the remaining funds and how they are expended.  These funds reflect a budget that clearly supports our district goals.  We place a strong emphasis on continuing professional development and on providing our teachers and students with the materials needed to support our new curriculum programs.  Adequate funding is allocated to do so, 4% to be exact.  Our goals also strongly emphasize student involvement –our budget supports extra/co-curricular programs by allocating 3% of the revenue for this (this includes the athletic budget as well).

Having been involved in the budget planning for the past 8 years, I have experienced a process that works to create a budget that supports the goals and instructional needs of the district.  We have open communication and involve many stakeholders as we hammer a budget out.  Our Board insists on a balanced budget, and they expect the budget to reflect the goals and the needs – and each year the budget is developed to do just that.

It’s interesting to note what the difference in our revenue would be without WADA; the weighted ADA gives us an additional 850 students!  If we didn’t have weighted ADA and were allocated the same per student revenue, we would receive $5,415,709 less than when the ADA is weighted.  To a district our size, this is a significant amount – a 25% difference!  This shows how critical it is for districts to ensure correct PEIMS reporting.  It also tells me how critical it is for our district to keep/increase our attendance numbers and to make sure our PEIMS data reflects our district and high school programs (CTE).