Ross Valley School District Report

Ross Valley School District Business Office Review June 1, 2011 Joel D. Montero Chief Executive Officer Fiscal crisis & ManageMent assistance teaM June 1, 2011 Eileen Rohan, Superintendent Ross Valley School District 110 Shaw Drive San Anselmo, California 94960 Dear Superintendent Rohan: In November 2010, the Ross Valley School District and the Fiscal Crisis and Management Assistance Team (FCMAT) entered into an agreement for a business office review. Specifically, the agreement stated that FCMAT would perform the following: 1. Conduct an organization and staffing review of the business office to determine work flow, duties assigned to each desk, and make recommendations to maximize efficiency. 2. Review budget development and monitoring practices and make recommendations for improvement. 3. Review communication practices between the business department and other departments and administrative staff and make recommendations for improvement. This final report contains the study team’s findings and recommendations in the above areas of review. We appreciate the opportunity to serve the Ross Valley School District, and extend our thanks to all the staff for their assistance during fieldwork. Sincerely, Joel D. Montero Chief Executive Officer FCMAT Joel D. Montero, Chief Executive Officer . . 1300 17th Street - CITY CENTRE, Bakersfield, CA 93 . 301-4533 Telephone 661-6 . 36-4611 Fax 661-63 . 6-4647 422 Petaluma Blvd North, Suite. C, Petaluma, CA 94952 Telephone: 707-775-2850 Fax: 707-775-2854 www.fcmat.org Administrative Agent: Christine L. Frazier - Office of Kern County Superintendent of Schools i Table of conT enT s Table of contents About FCMAT .........................................................................................iii Introduction ............................................................................................1 Background ......................................................................................................1 Study Team.......................................................................................................1 Study Guidelines ............................................................................................1 Executive Summary ........................................................................3 Findings and Recommendations .....................................................5 Organization and Staffing ...........................................................................5 Budget Development and Monitoring .................................................15 Communications ..........................................................................................25 Appendices ............................................................................................27 ross Valley school District ii Table of conT enT s Fiscal crisis & ManageMent assistance teaM iii abouT fcM aT About FCMAT FCMAT’s primary mission is to assist California’s local K-14 educational agencies to identify, prevent, and resolve financial and data management challenges. FCMAT provides fiscal and data management assistance, professional development training, product development and other related school business and data services. FCMAT’s fiscal and management assistance services are used not just to help avert fiscal crisis, but to promote sound financial practices and efficient operations. FCMAT’s data management services are used to help local educational agencies (LEAs) meet state reporting responsibilities, improve data quality, and share information. FCMAT may be requested to provide fiscal crisis or management assistance by a school district, charter school, community college, county office of education, the state Superintendent of Public Instruction, or the Legislature. When a request or assignment is received, FCMAT assembles a study team that works closely with the local education agency to define the scope of work, conduct on-site fieldwork and provide a written report with findings and recommendations to help resolve issues, overcome challenges and plan for the future. Study Agreements by Fiscal Year 90 80 70 60 50 40 30 20 10 0 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 Projected FCMAT also develops and provides numerous publications, software tools, workshops and professional development opportunities to help local educational agencies operate more effec- tively and fulfill their fiscal oversight and data management responsibilities. The California School Information Services (CSIS) arm of FCMAT assists the California Department of Education with the implementation of the California Longitudinal Pupil Achievement Data System (CALPADS) and also maintains DataGate, the FCMAT/CSIS software LEAs use for CSIS services. FCMAT was created by Assembly Bill 1200 in 1992 to assist LEAs to meet and sustain their financial obligations. Assembly Bill 107 in 1997 charged FCMAT with responsi- bility for CSIS and its statewide data management work. Assembly Bill 1115 in 1999 codified CSIS’ mission. AB 1200 is also a statewide plan for county office of education and school districts to work together locally to improve fiscal procedures and accountability standards. Assembly Bill 2756 ross Valley school District seidutS fo rebmuN iv abouT fcM aT (2004) provides specific responsibilities to FCMAT with regard to districts that have received emergency state loans. In January 2006, SB 430 (charter schools) and AB 1366 (community colleges) became law and expanded FCMAT’s services to those types of LEAs. Since 1992, FCMAT has been engaged to perform nearly 850 reviews for LEAs, including school districts, county offices of education, charter schools and community colleges. The Kern County Superintendent of Schools is the administrative agent for FCMAT. The team is led by Joel D. Montero, Chief Executive Officer, with funding derived through appropriations in the state budget and a modest fee schedule for charges to requesting agencies. Fiscal crisis & ManageMent assistance teaM 1 inTroduc Tion Introduction Background The Ross Valley School District serves the central Marin communities of San Anselmo, Fairfax, and Sleepy Hollow. The district includes three schools that serve grades K-5: Brookside Elementary School, Manor Elementary School and Wade Thomas Elementary School. White Hill Middle School serves grades 6-8. District enrollment was 1,973 for the 2009-10 school year, marking the fourth consecutive year of enrollment growth. In October 2010 the district requested FCMAT to review business office staffing levels, budget development and monitoring practices and communications. The study agreement specifies that FCMAT will perform the following: 1. Conduct an organization and staffing review of the business office to deter- mine workflow and duties assigned to each desk, and make recommendations to maximize efficiency. 2. Review budget development and monitoring practices and make recommen- dations for improvement. 3. Review communication practices between the business department and other departments and administrative staff and make recommendations for improvement. Study Team The study team was composed of the following members: Jim Cerreta Terry Bradley FCMAT Consultant FCMAT Consultant Sacramento, California Clovis, California Laura Haywood FCMAT Public Information Specialist Bakersfield, California Study Guidelines A FCMAT study team visited the district on December 6 and 7, 2010 to conduct interviews, collect data, and review documents. This report is a result of those activities and is divided into the following sections: • Executive Summary • Organization and Staffing • Budget Development and Monitoring • Communications ross Valley school District 2 Fiscal crisis & ManageMent assistance teaM 3 execuTive suMMary Executive Summary Like many California public agencies, Ross Valley School District finds itself operating with ever-decreasing financial resources from the federal and state government. A slow-recovering state and national economy, coupled with expiring federal stimulus entitlements, leaves the district in a precarious fiscal condition that includes a large structural budget deficit. This difficult financial situation has occurred even though the district has made millions of dollars in budget reductions over the last several years. The district has experienced continuous turnover in various administrative positions during this time, which has added to the challenge of developing and implementing effective fiscal solutions. In particular, the district superintendent position has changed hands multiple times in the last five years, leaving the district without consistent direction and leadership. The current superintendent, district administration and the governing board are working diligently to resolve the district’s structural deficit through development of a new fiscal recovery plan. Community involvement has been sought, and district staff members are working hard to develop a process to identify core versus supplemental program priorities. If successful, the plan will return the district to fiscal solvency over time. To succeed, the district must have an effective communication system in place to provide for sharing of reliable fiscal information. Such a system is comprised of many components, from the formal lines of communication inside and outside the organization to the somewhat informal internal communications among staff. The district has strived to engage its community in discussions about the fiscal crisis through the use of surveys and advisory committees. Yet internal communication is lacking both in terms of staff involvement and confidence. With significant turnover in the superintendent position during the past five years, the chief business official managed the budget development process largely on her own and without sufficient guidance. The district budget has been developed without input from school and department budget managers and has created frustration on the part of those administrators. As a result, management level staff has little understanding of their budgets. They do not feel involved regarding allocations or augmentations, and question the reliability of fiscal information provided by the chief business official. This is a very unhealthy situation for any organization, but particularly when the fiscal solvency of the agency is in ques- tion and thus should be rectified as soon as possible. The district’s budget development and monitoring systems are functioning at a fairly low level. Industry-standard tools such as a budget development calendar and routine budget reports are not utilized. The QSS financial management system does not appear to be utilized as effectively as it could be, with some believing it is not reliable in certain aspects. An upgraded system, known as QCC, is just months away from implementation. The district should make every effort to ensure the capabilities of the new system are utilized to the district’s maximum benefit. FCMAT also reviewed business office position functions and staffing levels. Interviews and documentation indicate the business office has experienced constant change over the last several years including the juggling of duties and assignments, some of which occurred as the result of the elimination of the accountant position. This occurred at a time of increasing complexity of school district finances and growing compliance requirements. This made it more challenging for the chief business official to provide timely and accurate fiscal support to the entire organization. The district should consider restoring this position. ross Valley school District 4 execuTive suMMary Staffing levels of the district business office were compared to allocations of six like-sized elemen- tary school districts throughout California. The survey revealed the Ross Valley School District staffing is consistent with the comparison districts. Nevertheless, it may be necessary to restore the accountant position even if doing so means further restructuring of the business office to ensure the proper mix of technical skills and experience are available to manage the district’s fiscal challenges. Fiscal crisis & ManageMent assistance teaM 5 orGaniZaTion and s TaffinG Organization and Staffing Principles of Organizational Structure A school district’s organizational structure should establish the framework for leadership and for delegating duties and responsibilities. The organizational structure should adapt as the district’s enrollment increases or declines. A district should be staffed according to generally accepted theories of organizational structure and standards used in other school agencies of like size and type. The most common of theories of organizational structure are span of control, chain of command, and line and staff authority. Span of Control Span of control refers to the number of subordinates reporting directly to a supervisor. Although there is no agreed upon ideal number of subordinates for span of control, it is generally agreed that the span can be larger at lower levels of an organization than at higher levels, because subordinates at lower levels typically perform more routine duties and can therefore be supervised more easily.1 Chain of Command Chain of command refers to the flow of authority within an organization and is characterized by two significant principles: unity of command, where a subordinate is only accountable to one supervisor; and the scalar principle, which suggests that authority and responsibility should flow in a direct vertical line from top management to the lowest level. The result is a hierarchical divi- sion of labor.2 Line and Staff Authority Line authority is the relationship between supervisors and subordinates. It refers to the direct line in the chain of command. For example, the assistant superintendent of business services has direct line authority over the director of fiscal services, and the director of fiscal services has direct line authority over the fiscal services department staff. Conversely, staff authority is advisory in nature. Staff personnel do not have the authority to make and implement decisions; rather they act in support roles to line personnel.3 The organizational structure of local educational agencies contains both line and staff authority. The purpose of the organizational structure is to help district management make decisions to fa- cilitate student learning while balancing its financial resources. The organizational design should outline the management process and its links to the system of communication, authority and responsibility necessary to achieve the district’s goals and objectives. 1 Principles of School Business Management, Association of School Business Officials, Incorpo- rated, Wood, R.Craig, Thompson, David C., Picus, Lawrence, O., Tharpe, Don I., 2nd Edition (1995) 2 Ibid 3 Ibid ross Valley school District 6 orGaniZaTion and s TaffinG Business and Financial Services Structure and Staffing In reviewing various documents provided by the district and reviewing information on the district’s web page, the position title for the leader of the business department is inconsistent. Some documents identify the title as chief business official while other documents identify the title of the position as business manager and/or chief business manager. For the purposes of this section of this study, the title of chief business official will be used because it has become the industry standard for California school districts. The Business and Financial Services Department is overseen by the chief business official (CBO), who has served in this position since 2006. Prior to assuming the CBO position in the Ross Valley District, the CBO served in a neighboring district for five years with responsibilities related solely to payroll and accounting functions. This is the first management position in a school district for the CBO. Except for the limited experience gained as an employee in payroll and accounting in a neighboring district, the CBO took this position with no formal professional development or training in the role and function of a CBO. Since taking the CBO position, the individual has completed the CBO leadership program operated by the Association of California School Administrators (ACSA). The organizational chart for the department indicates that the following positions report directly to the CBO: payroll coordinator, accounting assistant, staff assistant, print shop specialist and food service coordinator. Functions typically assigned to the CBO position, including informa- tional technology, facilities, maintenance and operations, collective bargaining and risk manage- ment, are assigned to either the superintendent or assistant superintendent because the current CBO has little or no experience in these important areas. The assignment of these functions to other members of the administrative team has resulted in the affected administrators having to concentrate on functions outside their normal areas of responsibility. Interviews with staff members within and outside the business department indicated that the department no longer provides reliable, accurate and timely information to the governing board, school sites and district-level departments. One of the reasons for this decrease in service is the elimination of the accountant position in July 2009; however, based on information provided by several individuals interviewed, another reason for the perceived lack of reliability and reduction in services is the limited teamwork of business department staff coupled with lack of experience and limited direction coming from the CBO. In addition, many business department employees are relatively new to their current positions, which has resulted in a reallocation of duties and uncertainty among the employees remaining in the department. To obtain a clearer understanding of the amount of time required for the tasks assigned to each position and to determine the impact of the elimination of the accountant position, the district should consider assigning each business office staff member to complete a one-month time analysis. This process will also allow the district to determine if proper internal controls are being adhered to in the business office. The district utilizes QSS, the Marin County Office of Education financial software system. Based on interviews with members of the Business Department, QSS is lacking in several aspects of a state-of-the-art integrated financial software system including an effective position control system, online purchase requisitioning and ordering and a human resources system that is inte- Fiscal crisis & ManageMent assistance teaM 7 orGaniZaTion and s TaffinG grated with the budget, accounting and payroll system. Although QSS has limited capabilities, it also appears that the system is underutilized by the business office. Marin County is in the process of converting to QCC, a system that should provide the district with the tools to better manage and improve the effectiveness and efficiency of the business department and provide staff members outside the department with greater capability to manage and control their respective budgets. However, the necessary training during the testing of this system should be made available to members of the business department and, once implemented, to members of other district-level departments and affected school site staff members. Internal Controls Internal controls are the foundation of sound financial management and allow districts to fulfill their educational mission while helping ensure efficient operations, reliable financial information and legal compliance. Internal controls also help protect the district from material weaknesses, serious errors and fraud. All educational agencies should establish internal control procedures to perform the following: • Prevent internal controls from being overridden by management • Ensure ongoing state and federal compliance • Provide assurance to management that the internal control system is sound • Help identify and correct inefficient processes • Ensure that employees are aware of the proper internal control expectations Districts should apply the following basic concepts and procedures to their transactions and reporting processes to build a solid internal control structure: • System of checks and balances • Segregation of duties • Staff cross-training • Use of prenumbered documents • Asset security • Timely reconciliations • Comprehensive annual budget • Inventory controls A desk audit of each position in the business office was not part of this assignment. However, interviews with all members of the business office staff and a review of job descriptions appear to reveal deficiencies related to internal control procedures. Job descriptions and actual assignments of the CBO, accounting assistant and staff assistant should be reviewed to ensure proper separa- tion of duties and the necessary checks and balances to protect district assets. ross Valley school District 8 orGaniZaTion and s TaffinG Employees indicated that little or no cross-training occurs for some of the department’s key func- tions, including tasks in purchasing, accounts payable and payroll. These tasks are essential to the district’s operations, and the lack of cross-training could place the district at risk of serious errors. Employees in the district office and at school sites reported that the budget information provided by the business office is inconsistent and not provided in a timely manner. As a result, school site staff maintain their own manual budget administration system to keep an updated and accurate record of their general fund budget for supplies, materials and equipment. This dual budget monitoring and administration leads to inconsistencies and misunderstanding between the busi- ness office and school sites and departments regarding the status of their respective budgets. Effective position control is an essential component of an effective financial software system and should be available for use in the operation of the business and human resources offices. The existing position control system that is part of the QSS financial system has been implemented effectively by the CBO; however, it is not currently in use and accessible to the human resources department. Desk manuals are essential to the smooth business office operations, especially in a district that experiences high turnover of staff. Other than a very thorough desk manual for the staff assistant position, there do not appear to be any desk manuals available for new or substitute employees in the business office. Recommendations The district should: 1. Authorize Business Department staff members to attend training sessions provided by the Marin County Department of Education as the QCC finan- cial system is being tested and implemented. Establish a schedule for training district and school site staff on the QCC system once implemented. 2. Consider having each business office staff member complete a one-month time analysis. 3. Consider a follow-up review of the specific duties of each member of the busi- ness department to ensure that proper internal control systems are in place. 4. Direct all members of the business department staff to develop a desk manual that identifies position duties, including procedures to follow for each duty. 5. During the development of the 2011-12 general fund budget, consider re-establishing the accountant position and apportion the funds necessary for the district to recruit and maintain an experienced individual for this neces- sary position. 6. Develop a timely and accurate budget administration system that can be used by departments and school sites in monitoring and administering their respective budgets. 7. Work with the human resources department so that both the business and human resources departments can use the QSS position control system. Fiscal crisis & ManageMent assistance teaM 9 orGaniZaTion and s TaffinG 8. Complete a thorough evaluation of the CBO that includes not only the tech- nical performance of the individual but the ability of the individual to provide the leadership required of the CBO position and to develop an effective busi- ness office team. The evaluation should include interviews with employees in the Business Department, in other departments and at school sites. 9. Establish a consistent title for the leader of the business office and modify all district documents to reflect the correct title of the position. Accounting Assistant The district has one accounting assistant position. Because of a lack of department staff, this employee performs duties related to accounts payable, accounts receivable, deposits cash, makes budget transfers, balances cash with the Marin County Treasurer, balances clearing accounts and student body funds, and performs other department duties. The accounting assistant position reports directly to the CBO. This employee has worked for the district for approximately 10 years and has served in this posi- tion for approximately four years. Prior to this assignment, the employee performed payroll and human resources functions. Interviews with the accounting assistant and other employees in the district office reported that the accounting assistant is overwhelmed and has done an excellent job under very difficult conditions. A review of the job description for the accounting assistant position and interviews with depart- ment staff shows that some of the duties assigned to the accounting assistant are inconsistent with sound internal control practices. For example, a single employee should not prepare invoices for payment, make journal entries and balance cash with the county treasurer. The accounting assistant is also responsible for depositing cash. To separate duties and provide better internal controls, the district should consider reassigning some of these to other members of the business department. Recommendations The district should: 1. Complete a one-month time analysis of the work performed by the accounting assistant. 2. Conduct a study of specific responsibilities of each staff member in the busi- ness office to ensure that proper internal controls practices are in place. 3. Consider funding and filling the accountant position or, alternatively, approve and fund a second accounting assistant position in the business department. ross Valley school District 10 orGaniZaTion and s TaffinG Staff Assistant The staff assistant reports directly to the CBO. Because the business department has limited staffing, the staff assistant position includes many functions typically performed by employees requiring more technical experience than required in the job description for this position. For example, this position is responsible for monitoring and preparing parcel tax exemptions and appeals, maintains the phone system in the district office, provides backup to the food services coordinator and backs up the computer system. However, the staff assistant does not maintain the daily schedule or monitor phone calls for the CBO. Staff reported that it is very difficult to ascertain the CBO’s schedule, which makes it difficult for employees from other departments to get the opportunity to discuss issues with the CBO. The employee serving in this position has been an employee in the district for approximately one year, and it is the employee’s first experience with a school district. However, the employee has extensive experience in private sector positions with supervisory and leadership responsibilities. During the interview with the staff assistant, the employee presented a desk manual for this position. The manual summarizes major responsibilities for each month of the fiscal year, July through June. Although the manual provides an excellent summary of the major responsibilities for the position, it does not include the steps necessary to complete the tasks. Recommendations The district should: 1. Consider conducting a reclassification study of this position to determine if the title and placement on the salary schedule is consistent with the responsi- bilities and duties assigned. 2. Conduct a one-month time analysis of the work performed by the staff assistant. 3. Utilizing the document prepared by the staff assistant, expand it to include steps necessary to complete the tasks identified in the existing report. 4. Require the CBO to either allow the staff assistant to maintain the daily calendar for the CBO or, alternatively, require the CBO to provide the staff assistant with a copy of the daily calendar. Payroll Coordinator The payroll coordinator has been a district employee since 2000 but has only been in this posi- tion since August 2009. Previously, the payroll coordinator served as the district’s accountant. This employee applied for and was appointed to the payroll coordinator position when the accountant position was eliminated in 2009. During FCMAT’s interview, the payroll technician presented a brief, two-page summary of the steps for preparing district payrolls. This document cannot be considered a complete desk manual but would be useful in preparing such a manual. This is especially important as the Fiscal crisis & ManageMent assistance teaM 11 orGaniZaTion and s TaffinG Marin County Office of Education transitions from a payroll system that is part of the QSS financial system to the QCC system that is being implemented for school districts throughout the county. Another reason for the importance of this manual is that during the interview with the payroll coordinator, it was reported that the employee might be leaving the district within the next couple of months because of “burnout” as a result of the elimination of the accountant position and the business office being understaffed. Recommendations The district should: 1. Conduct a one-month time analysis of the payroll coordinator’s daily respon- sibilities and duties. 2. Utilizing the document provided by the payroll coordinator, develop a complete desk manual for the position, taking into consideration the conver- sion to the QCC payroll system. 3. With the impending departure from the District of the Payroll Coordinator, start the process of replacing this position as soon as possible. This is espe- cially critical because of the conversion to the QCC payroll system by the Marin County Office of Education. 4. Consider the temporary appointment of an experienced consultant familiar with the QCC payroll system to help with its implementation until the district can recruit and train an employee in all aspects of its development and maintenance. Print Shop Specialist The print shop specialist has been employed by the district for approximately four years. In addition to being responsible for virtually all district printing and written communication with the community, this position also maintains the district website and redesigns most district-wide forms used by departments and school sites. Further, the print shop specialist has been assigned to assist the district staff with district-wide surveys, which at times can be very time-consuming. Although additional responsibilities appear to have been assigned to this position because of the employee’s abilities, the position has been reduced to .6 of a full-time position because of budget constraints. This reduction in time has significantly affected the ability of the district to provide up-to-date written communication with school sites, parents and community members.During the FCMAT interview, the print shop specialist stated that even though the district acquired a new printer that is used for most booklets, an older printer also needs to be replaced if the district wants to maintain the quantity and quality of print shop service that school sites and district departments have come to expect. ross Valley school District 12 orGaniZaTion and s TaffinG The print shop specialist also reported during this interview that he is well informed of districtwide issues because of monthly meetings held for all district office employees. However, he is not as aware of issues in the business office because of the infrequency of meetings. Numerous other district office personnel pointed out during interviews that the print shop specialist devotes many more hours to the position than the 24 hours per week assignment. This issue must be addressed by the district before it becomes a violation of both federal and state employment laws and regulations. Recommendations The district should: 1. Conduct a reclassification of the print shop specialist position to determine if the responsibilities and duties assigned warrant a change in the job descrip- tion and placement on the salary schedule. 2. Conduct a one-month time analysis of the print shop specialist position to determine if the duties assigned over and above those identified in the job description can reasonably be completed within the hours assigned to the position. 3. Complete a thorough review of the equipment being used by the print shop and as funds become available, replace outdated equipment to improve the efficiency and effectiveness of this operation. 4. Contract with an outside third party to analyze the operation and cost of the print shop along with the cost of printing/copying done at school sites to determine if the continued operation of the current system is cost effec- tive and can provide timely communication to school sites, parents and the community, as opposed to contracting for said services. Food Services Coordinator The food services coordinator supervises the child nutrition department, which is responsible for providing meals to the district’s students, including those eligible for free and reduced price meals. As is the case with most district departments, there is very little backup for this position, and that is provided by the staff assistant. Because of time constraints, it was not possible to interview the employee who holds this posi- tion. However, a copy of the position handbook was made available to the study team. In review- ing this document, it was found to be thorough and provided the detailed steps necessary for a substitute to temporarily maintain departmental operations. The document outlines daily, weekly and monthly activities, as well as the processes necessary to complete the activities. Fiscal crisis & ManageMent assistance teaM 13 orGaniZaTion and s TaffinG Recommendations The district should: 1. Use the desk manual developed by the food services coordinator as a template to develop desk manuals for other business department positions. Staffing Comparisons To develop a comparison of business department staffing, FCMAT obtained data from six California elementary school districts with enrollment similar to that of Ross Valley School District. In choosing the comparison districts, FCMAT included two elementary school districts located in Marin County that had enrollments somewhat similar to that of Ross Valley. The other four elementary school districts are located throughout the state in four different counties. The comparison districts surveyed included Central Union, Chowchilla, Corning Union, Robla, Dixie and Larkspur elementary school districts. Although comparative information is useful, it should not be considered the only measure of appropriate staffing levels. School districts in California are complex organizations and vary widely in demographics and resources. As a result, careful evaluation is necessary in reviewing the results of the comparisons. Generalizations can be misleading if significant circumstances related to each district are not taken into account. The following factors were considered when selecting the comparative districts: • Grade level configuration of the district (elementary) • District size • Revenue limit districts (rather than basic aid) • Percentage of students eligible for free and reduced price meals The following table lists the student enrollment and business department staffing levels of the comparison districts as reflected on the Ed-Data website for 2008-09 and from data obtained from the comparison districts. ross Valley school District 14 orGaniZaTion and s TaffinG Item Ross Robla Larkspur Central Union Corning Dixie SD Chowchilla ESD Valley SD** SD SD Union SD SD Enrollment* 1,940 1,950 1,330 1,866 1,947 1,796 1,928 CBO position Yes Yes Yes Yes Yes Yes Yes Business Payroll Fiscal Serv Admin. Asst Acct Supv.; Acct Acct Tech; Admin Asst. to CBO; Acct Asst.; Payroll/ Office Coord.; Mgr.; Admin Payroll/Benefits Coord.; Bus. Sect.; Asst; Payroll Tech Acct/Payroll; Acct Specialist; Acct Support Staff Acct Serv. Coord. (.75); HR Asst. Dist. Clrk Bus. Tech; Clerk Asst.; (.75) Accountant Staff Asst. Total Bus. 3.0 2.0 2.5 4.0 3.0 4.0 3.0 Office Support Staff District Business; Business; Business; Food Business; Food Business; Food Business; Business; Classified Depts. Food Food Serv; Serv; Classified Serv; Maint/Ops/ Serv; Maint/Ops/ Food Serv. Personnel; Food Serv; Reporting to Serv; Print Technology Personnel Grnds; Facilities; Grnds; Facilities; Maint/ Ops/Grnds; CBO Shop Warehouse Transportation Transportation; Reprographics *2008-09 enrollment per Ed-Data Web page **Payroll reports to Human Resources Based on the districts surveyed, the span of control and the number of management level staff that report directly to the CBO, the number of business office support staff in the Ross Valley School District is comparable to the districts included in the comparison study. However, many of the districts surveyed included both a payroll technician and accounting technician position in the business office in addition to clerks and assistants. The district would benefit from reinstating the accountant position and is encouraged to attempt to allocate the resources necessary to fund this position when developing the 2011-12 general fund budget. As mentioned previously in the staffing section of this study and as shown in the comparison, it is very unusual in the administrative structure of California school districts to have only two main district support departments reporting to the CBO. A highly qualified CBO should be able to assist the superintendent by having departments such as technology, facilities and mainte- nance/operations reporting directly to the CBO. Recommendations The district should: 1. As funding allows, consider filling the position of accountant in the business office. 2. Consider increasing the span of control of the CBO position to include district-level departments such as maintenance/operations/grounds/facilities and technology. Fiscal crisis & ManageMent assistance teaM 15 budGeT develoPM enT and Moni TorinG Budget Development and Monitoring General Budget Management Fiscal accountability and budget oversight of California school districts is required by various Education Code sections. The enacted statutes comprise the core of measures that were imple- mented in response to multiple school district financial failures during the last two decades. The county office of education is responsible for conducting this oversight. Periodic reviews are required with each state-required budget report, at adoption and with each interim report. The external oversight provided by the Marin County Office of Education has been extended to include the assignment of a fiscal expert. The assignment of this additional oversight was agreed to mutually by the district and the county office of education in an effort to provide support as the district began the identification and implementation of budget reductions pursuant to a fiscal recovery plan. The district school board has been developing a plan and calendared action to implement same at their February 2011 meeting. Policies and regulations of the school board should be adopted that provide clear guidance to the community, district administration and other stakeholders regarding management of the district budget. Guidance to staff regarding expectations for the budget, including goals and objectives for student achievement, should be identified. Processes by which budgets are aligned with the goals and objectives, along with standardized budget assumptions and the budget development and monitoring processes, should be included. The school board’s current policies and proce- dures provide for some but not all of these recommendations. Federal and state government agencies require a single plan for student achievement that docu- ments the coordination of categorically funded programs. The plans demonstrate how the school plans to use such funds to improve student achievement and comply with other restrictions surrounding these resources. School site councils, consisting of parents and staff, are required to develop the plan including budgetary line-item detail. Interviews with school site staff indicated that funds are sometimes allocated by the district office before the plans are developed by the school site council. This practice is inconsistent with the purpose and function of a school site council and should be reviewed by district administration. Multiyear financial projections are required by AB 1200 and AB 2756 and are a part of the adoption budget and interim reporting process. In June 2004, AB 2756 (Daucher) was passed and signed into law on an urgency basis. This legislation made substantive changes to the financial accountability and oversight used to monitor the fiscal position of school districts and county offices. Among other things, AB 2756 strengthened the roles of the superintendent of public instruction (SPI) and county offices of education and their ability to intervene during fiscal crises, including requesting assistance from FCMAT. Financial planning is crucial for every school district, regardless of its size or structure. Long-term financial planning helps a district strategically align its budget with its instructional goals and programs, and should be a part of annual budget development. Multiyear financial projections (MYFPs) help districts make more informed decisions and provide the ability to forecast the effect of current decisions, and should be evaluated and updated at least during each interim financial reporting period and in preparation for negotiations. Documentation provided to FCMAT indicates the district is diligent in its multiyear financial projection development and management. ross Valley school District 16 budGeT develoPM enT and Moni TorinG Many staff development opportunities are available to district business office staff that provide critical technical information and development of leadership capacity relative to the performance of their duties. As fiscal conditions continue to deteriorate, it has become more difficult to fund these activities, let alone justify the time spent away from the office. FCMAT encourages the district to make a priority of staff development activities for the business office to ensure they have the knowledge and skills necessary to perform their duties at the highest level. California school districts have worked with a number of industry-standard budget development and monitoring tools for many years. Some of these tools provide enrollment and staffing projec- tion analysis, others offer revenue and expenditure multiyear financial projections, and still others assist with cash flow management. District staff has recently utilized the free online tool Budget Explorer as developed by FCMAT. This program contains all of the above-noted analysis tools, helping to improve staff efficiency and productivity. Staff should continue to use this tool to analyze and monitor district budgets and multiyear financial projections. Recommendations The district should: 1. Develop board policy and administrative regulations that provide guidance to staff regarding processes by which budgets are aligned with the goals and objectives, standardized budget assumptions and the budget development and monitoring processes. 2. Review the practice of designating restricted categorical funds before school site councils have the opportunity to develop the single plan for student achievement. 3. Make a priority of staff development activities for the business office to ensure they have the knowledge and skills necessary to perform their duties at the highest level. 4. Continue to use Budget Explorer to analyze and monitor its budgets and multiyear financial projections. Budget Development Development of the district budget is a critical component of sound fiscal management in public schools. Effective communication of the district’s priorities, challenges and opportunities to all interested parties is necessary to achieve the district’s goals and objectives, which include providing quality educational programs and improving student performance. The budget is the means by which this communication occurs. The district adopts its annual budget within the statutory time lines established by California Education Code Section 42127, which requires that on or before July 1, the governing board shall hold a public hearing on the budget to be adopted for the subsequent fiscal year. No later than five days after that adoption, or by July 1, whichever occurs first, the governing board shall file that budget with the county superintendent of schools. The budget should reflect the Fiscal crisis & ManageMent assistance teaM 17 budGeT develoPM enT and Moni TorinG district’s goals and objectives, which should be developed annually and approved by the board. School district budgets are not static; the revenues, expenses and estimated ending balance of each fund can change because of items such as the state-adopted budget, changes in personnel, and negotiated settlements of employee bargaining agreements. Budget development is a detailed process that begins as early as November or December of the prior year in most school districts. Effective budget development includes utilization of a budget calendar so that each staff member is aware of deadlines for which they are responsible, and all interested parties are informed of the process. FCMAT’s interviews revealed that a budget development calendar was utilized last for the 2008-09 fiscal year. The district should review its budget development tasks and time lines and construct a district-specific annual budget develop- ment calendar each year to ensure the process is managed appropriately. Effective communication of district budget priorities and challenges can greatly enhance the ability to achieve its financial and educational goals. As noted, a budget development calendar is an effective tool for communicating the district budget process to interested parties. Another tool utilized by most school districts is a budget advisory committee (BAC). Other communication tools include community surveys, newsletters, postings on the district website, and press releases. BACs are typically comprised of members of the community, district administration, site and department staff, parent and community groups and collective bargaining unit representatives. They collectively provide feedback to district administration, and then to the school board, regarding budget priorities. They should not have specific authority over any aspect of the budget or the development process, as that should be reserved for the school board. The district has utilized an advisory committee in the past, with significant involvement by the school board at the committee level. School board involvement can be problematic, in that some committee members may not feel as free to participate or share their thoughts. FCMAT recom- mends discontinuing this practice. The district has also conducted community surveys to seek input regarding budget priorities. One such process is under development as of the writing of this report. The budget development process conducted during the 2008-09 year included a survey wherein community members were asked to identify and rank budget priorities. The results of this survey were received as ineffective by some school board members because it was perceived that survey respondents were not neces- sarily informed, and thus the quality of their feedback may be suspect. Other board members felt the survey produced reliable information. The school board is approaching the current survey with the goal of producing feedback that is considered reliable by all district decision makers. During the 2008-09 fiscal year the district developed a core and supplemental program analysis to guide their survey efforts. Staff assigned each program a status as being either necessary to the core instructional program as determined by the school board, or supplemental to that core. Programs or portions thereof identified as supplemental were the subject of budget reductions that year, while core items were preserved. The list was resurrected for the current year fiscal recovery plan budget reduction process. The list was updated to identify current cost estimates and allocations, and a timeline developed to implement the district’s recovery plan. Board actions regarding staff layoffs and other actions have been identified on the calendar. Supplemental items have been identified and their costs calculated, along with a target budget reduction amount for the 2011-12, 2012-13 and 2013-14 fiscal years. A community survey is under development to seek feedback regarding prioritization of the reductions. ross Valley school District 18 budGeT develoPM enT and Moni TorinG Any budget development process should be presented in a format that provides decision makers with a framework from which they can take appropriate action. All too often, board members in public education express frustration that the complexities of California school finance make it difficult to identify information that will assist them in their decision making. The Standardized Account Code Structure (SACS) financial report is often considered too detailed and complex, lacking information for the purposes of key decision makers. Chief business officials often report frustration when identifying the information that will allow decision makers the ability to carry out their responsibilities, and what formats best achieve that task. The Ross Valley School District is no different and has suffered from the challenges noted above. To address this, the district should consider the following report format as a framework to assist in the budget development and monitoring decision-making process. • A summary of the district multiyear financial projection, as approved by the school board: • Unrestricted resources only • Restricted resources only • Combined resources • A summary of the district cash flow projection for the entire multiyear financial projection period • Details of reserves and designations of the ending fund balance, by year, for the general fund • List of key budget development assumptions, to include: • Enrollment projections • Federal, state and local revenue changes (material items only) and their allocation • Staffing allocations • School and department allocations • Fixed cost allocations (step and column costs, statutory and contracted benefits, utilities, etc.) • Contributions to restricted programs • Budget reductions, allocations and/or reallocations • Program restoration, modification and expansion priorities • Analysis mapping budget allocations or reductions to board goals and objectives These documents can be supplemented by additional information that the district deems helpful to the decision-making process. The district’s CBO alone has been primarily responsible for budget development, including developing site and department budgets, during fiscal years where there have not been significant funding reductions proposed by the state. In years where such reductions have been proposed, as noted earlier, a variety of community-based processes have been utilized to seek input regarding budget priorities. Fiscal crisis & ManageMent assistance teaM 19 budGeT develoPM enT and Moni TorinG The CBO reports that in previous years consistent direction regarding the district budget has not been provided by the district superintendent, leaving her to develop the budget without guid- ance. Any community-based process was managed by school board members; direction regarding technical aspects of revenue and expenditure assumptions was provided by school board members as well. Internal processes involving site and department budget managers were virtually non- existent. Many of these managers reported to the FCMAT team their frustration regarding this format. Little or no input was sought for their priorities or needs. Proposed budget amounts appeared to be rollovers of prior year budgets. No opportunity to request enhancements or reallocations was provided. In essence the proposed budget was what it was, and site and department managers were left to communicate their needs after budget adoption by the school board. Although having a single staff member create the budget may expedite budget development, site managers have expressed a desire to have input into the process. This would help create a sense of shared ownership and responsibility, a deeper understanding of budgetary issues, and possibly fewer budget transfers during the year. Implementing such a process will require a significant effort at the beginning of budget develop- ment. The business department would need to prepare budget development materials, provide a budget workshop and be more available to provide assistance and answer questions as work progresses. However, the result would be a greater sense of ownership on the part of those responsible for managing site and department budgets. To this end, the district school board needs to develop a realistic and manageable expectation of the productivity of the CBO and business office staff given existing staffing levels. The CBO is responsible to meet external mandated compliance requirements of federal, state, county and local regulatory agencies, as well as generate reliable management information for effective deci- sion making by the superintendent and the board. These tasks take time, skill, education, experi- ence and energy, particularly when funding issues develop. A balance needs to be struck between time allocated to meet external compliance demands and internal management information needs. If no balance is achieved, both will suffer and few needs will be met, placing the district at even greater fiscal jeopardy. FCMAT recommends consideration of existing workloads whenever additional tasks are assigned to the business office to allow for quality external and internal busi- ness and financial management services from the business office. Position costs comprise most of the district’s expenditure base. The district utilizes the position control system in the QSS human resources module. During budget development, position control is revised and updated; certificated staffing allocations are driven by enrollment projec- tions and calculated based on formulas. Final staffing allocations are approved and vacancies filled. A reliable position control system establishes positions by site or department and helps prevent over- or under-budgeting by including all district-approved positions. In addition, a reliable posi- tion control system prevents a district from omitting routine annual expenses from the budget, such as substitutes, extra duty pay, stipends, vacation payouts and estimated column changes. To be effective, a single position control system needs to be used and integrated with other finan- cial modules such as budget and payroll. In addition, position control functions need to be sepa- rated to ensure proper internal controls. The controls should ensure that only board-authorized positions are entered into the system, that human resources hires only employees for authorized positions, and that the payroll department pays only employees hired for authorized positions. ross Valley school District 20 budGeT develoPM enT and Moni TorinG The proper separation of duties is a key factor in creating strong internal controls and a reliable position control system. Rolling over position control data from the current fiscal year to the budget year provides a starting point for developing the district’s budget and should be completed early in the budget development process. Position control files for the budget year should then be updated to elimi- nate positions, add new approved positions, make changes in statutory and health and welfare benefit rates, and make any other adjustments that will affect salaries and benefits for the budget year. A fully functioning position control system helps districts maintain accurate budget projec- tions, employee demographic data and salary and benefit information. The system should be used to update the budget at each reporting period. The human resources department should play a key role in the management of position control. They, much like the school and department budget managers, must have an opportunity for input into staffing allocations because they are responsible for meeting the staffing needs of the district. To accomplish this, they must also be acutely aware of the current status of all authorized positions and vacancies. Communication of budgeted position data is essential to the manage- ment of position costs. Certificated positions are staffed in accordance with the district’s certificated staff collective bargaining agreement. Classified support and administrative positions are staffed per agreements reached between district and site or department managers. Human resources department staff reported that position decisions are not always communicated effectively and sometimes change without explanation. The CBO should provide clear and concise information regarding position authorizations. The common vehicle for this is a position control form that is used to articulate position and personnel changes alike, affording both departments the opportunity to inform each other of any changes. District staff reported that the form is not consistently utilized; FCMAT recommends the form be used whenever changes are implemented to the following: • Opening, adjusting and/or closing positions • Filling or vacating existing positions • Position funding • Personnel compensation • Work calendar Sound internal controls should be in place for any position control system. The following table provides a suggested distribution of labor between the business and personnel departments to help provide the necessary internal control structure for position control. Tasks are listed in order of execution. Fiscal crisis & ManageMent assistance teaM 21 budGeT develoPM enT and Moni TorinG Governing board Approve or authorize position Business department Input approved position into position control, with estimated salary/budget Assign position a unique number Personnel department Enter demographic data into the main demographic screen, including: • Employee name • Employee address • Social Security number • Credential • Classification • Salary schedule placement • Annual review of employee assignments • Update employee benefits • Review and update employee work calendars Business or personnel department Annually review and update salary schedules Business department Update account codes Budget development Budget projections Multiyear projections Salary projections Recommendations The district should: 1. Review budget development tasks and timelines and implement a district- specific budget development calendar each year. 2. Avoid direct board member involvement in the operation of budget advisory committees. 3. Adopt a budget report format that assists key decision makers at the district and governing board level in carrying out their responsibilities. 4. Assign sites and departments the task of creating their budgets. Ensure that the business department develops and designs budget materials and support to provide sites with the tools and knowledge needed to complete this task. 5. Separate position control duties between the human resources and business services departments to provide for proper internal controls. 6. Integrate the position control, payroll and budgeting systems on QSS to ensure maximum efficiency and accuracy in position management. 7. Keep the position control system current at all times, utilize the position control form to communicate all position changes, and use the position ross Valley school District 22 budGeT develoPM enT and Moni TorinG control system to upload salary and benefit information for each reporting period. 8. Consider staffing levels and the mandated workload of all business office staff when directing same regarding additional tasks and responsibilities. Budget Monitoring Once the district budget is adopted, the monitoring process begins to ensure that budgeted resources are received as projected and authorized expenditures are not exceeded. This moni- toring is necessary to ensure the district’s fiscal viability. A failure to provide such oversight is an invitation for fiscal disaster, and figures prominently into the characteristics of districts that experience fiscal insolvency. External monitoring and oversight of the district budget is provided by the Marin County Office of Education as required by the Education Code. A formal review process is required of the adopted budget, as well as periodic interim budget reports. Other external oversight activities include audits conducted by the district’s independent external financial auditors, as well as compliance and financial audits conducted by federal and state agencies, as required by law and regulation. Internal monitoring and oversight of the district budget is the responsibility of district manage- ment, and is a component of a sound system of internal control. The budget monitoring process originates with the business office providing access to reliable fiscal information to site and department budget managers. The district utilizes the QSS financial management system as provided by the Marin County Office of Education. The program is being modified to provide a more user-friendly environ- ment, including easier menu navigation. However, until these enhancements are implemented, the system is considered by many in the district to be antiquated in terms of user interface. Staff at the site and department level report frustration utilizing QSS. The system does not provide reports or screens that they can easily interpret. Others report the performance of the system is inconsistent. A few staff members reported to the FCMAT team that they manually track their transactions and then reconcile their balances to program reports as they cannot effectively utilize the QSS program to perform research or generate reports. Others reported they ignore QSS altogether and simply call the business office to identify their available budget balances. The business office should work closely with site and department staff to identify the basis for these deficiencies and support their ability to utilize the program successfully. They should also report such issues to the Marin COE and work to implement effective solutions to problems or performance issues that all districts in the county are experiencing. Sites have online access to the QSS financial system and can review line-item detail budgets. If a budget transfer is needed, site and department personnel manually prepare a budget transfer form and submit to the CBO requesting that a transfer be completed. If approved, the accounting assistant enters the transfer into QSS; if not, the CBO contacts the school or depart- ment to discuss any issues identified. This process is time consuming and inefficient, particularly considering the capabilities of most financial management software programs. Staff at the schools and departments reported frustration with this process, including lost forms and inconsistent Fiscal crisis & ManageMent assistance teaM 23 budGeT develoPM enT and Moni TorinG guidance from the CBO regarding use of account codes and appropriate utilization of restricted resources. The financial management system is capable of providing site and department staff the ability to process their own budget transfer requests, which eliminates the need for paper processing. Such authority should be limited to those accounts for which the budget manager has responsibility. Training should be provided to site and department staff on how to utilize the system for this purpose. Budget monitoring is greatly enhanced with payroll encumbering. This process provides an encumbrance entry for payroll obligations for the balance of the fiscal year for each salary and benefit line item. Identified overages, if any, can then be corrected timely. The district does utilize payroll encumbering, although some districts have reported the QSS system is not completely reliable in this regard. The business office should work with the Marin COE to ensure payroll encumbering works effectively in the new QCC system. The unaudited year-end financial report is a key document relative to the budget monitoring process. Issued each September, the report provides details regarding the final status of previous year transactions and cash position. The district should utilize this information in the current year budget to: • Update beginning fund balance budgets to match actual amounts • Evaluate current year revenue and expenditure budget allocations relative to past actual transaction trends over a multiyear period • Update cash flow projections to reflect actual cash, accounts receivable and accounts payable accruals as of the close of the previous year The district audit report, issued in December of each year, should be used as a source document to record audit adjustments made to the district’s books by the independent external financial auditors. The district budget should also be modified to provide for any changes required by the posting of these audit adjustments. Recommendations The district should: 1. Work with the Marin County Office of Education to identify best practices regarding utilization of the new QCC financial management system and its capabilities surrounding financial research, report generation and budget transfer processing. 2. Train site and department staff to manage budget transfers for accounts under their responsibility. 3. Ensure the payroll encumbering feature of the new QCC system functions properly. ross Valley school District 24 Fiscal crisis & ManageMent assistance teaM 25 coMMunicaTions Communications Effective communication is essential to any well-functioning school district, especially in small districts like Ross Valley where the schools are typically the hub of the community. In addition to effective communication to community residents, effective, accurate and consistent communica- tion among employees in each department and between departments and school sites is necessary to maximize the effectiveness of the district’s overall operation. Because the district has experienced turnover in key administrative positions as well as with staff members in the business office, effective communication is essential when implementing new direc- tion and structural changes caused by new leadership and severe general fund budget reductions. Communication in the Business Office One of the most important areas of communication in a school district lies within the business office. Because all aspects of a school district operation are impacted by financial decisions being made at the district level, all members of the business office should understand why certain decisions are made and the impact of those decisions on their department as well as other depart- ments and school sites. The CBO has been employed in that position by the district since 2006. However, there appears to be little, if any, respect and trust developed between the CBO and staff members in the department. Staff meetings are infrequent at best, and written communication within the department is basically nonexistent. Department staff members do not have access to the CBO’s calendar, which makes it very awkward when staff from other departments question the whereabouts of the CBO. Further, staff members are not permitted to answer phone calls on behalf of the CBO which, again, creates frustration for both staff members in the business office and individuals trying to reach the CBO. This practice also reduces the effectiveness of the CBO because these types of clerical tasks should not be done regularly by a key member of the superintendent’s cabinet. Open communication within any department is enhanced when members of the department adopt an “open-door” policy. Certainly there are times when doors have to be closed because of the nature of the discussion and/or meeting; however, the current CBO’s door is closed the majority of the time the employee is in the office. This policy limits the informal discussions that are so vital in creating an atmosphere of trust and cooperation among department staff members. Recommendations The district should: 1. Strongly encourage the CBO to hold regular meetings with all business office staff members. 2. Strongly encourage the CBO to provide access to her professional calendar to staff members in the business office. 3. Direct the CBO to allow the staff members in the business office to answer the CBO’s phone when the CBO is not in the office. ross Valley school District 26 coMMunicaTions 4. Encourage all members of the business office to work together to create a positive office atmosphere of trust and cooperation. A first step would be to create an “open-door” policy. Business Office Communications with Departments, School Sites and Community Communication between the CBO and other district-level instructional and operational admin- istrators is inconsistent. Further, it appears the CBO has difficulty explaining important budget and financial data in a manner that is understandable. This lack of being clear and concise has led to long and frustrating meetings of district administrators with the CBO in an attempt to understand budget information and provide budget reports to the governing board, school sites and community in an understandable format. Budget information provided by the business office is not timely, is inconsistent and contains errors. Reports that are made to the governing board are not always the same as reports provided to district administrators and school sites. This lack of consistency has resulted in a lack of trust in budget and financial reports and has led to departments maintaining their own budget status reports. This practice has led to unnecessary duplicative work being done by district-level and school site staff members. As is the case within the business office, verbal communication between the CBO and depart- ment administrators is infrequent. Financial and budget information for state and federal programs is not consistent or accurately reported. Again, this has led to concerns on the part of district administrators regarding the expenditure of federal and state categorical funds and that the funds are fully expended within the proper time frames. Recommendations The district should: 1. Develop a user-friendly template for use by the CBO in developing and reporting state, federal and local budget information to the governing board, district-level staff, school sites and the community. 2. With the pending implementation of the QCC financial software system, provide the necessary professional development to staff members in the business office so that the system can be used to provide timely and accurate financial information to staff members responsible for maintaining and administering department and school site budgets. 3. Upon implementation of the QCC financial software system, provide profes- sional development opportunities to district and school site staff members so that the district can fully utilize the system. 4. Encourage the CBO to provide timely information related to financial and other business-related issues by establishing a regular meeting schedule with each district-level administrator and school principal. Fiscal crisis & ManageMent assistance teaM 2277 aPPenddricaefsT Appendices Appendix A Study Agreement ross Valley school District 2288 darPPaefnTdices Fiscal crisis & ManageMent assistance teaM 2299 aPPenddricaefsT ross Valley school District 3300 darPPaefnTdices Fiscal crisis & ManageMent assistance teaM 3311 aPPenddricaefsT ross Valley school District 3322 darPPaefnTdices Fiscal crisis & ManageMent assistance teaM