Fiduciary Duty

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BUDGET AND FINANCE: WHAT EVERY NEW SCHOOL BOARD MEMBER NEEDS TO KNOW LEIGH BURDEN, ASSISTANT SUPERINTENDENT BUSINESS & FINANCE 1

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Budget and Finance: What Every NEW School Board Member Needs to Know Leigh Burden, Assistant Superintendent Business & Finance. Fiduciary Duty. Legal authority Malfeasance. Who is minding the store?. Fiduciary Duty. Legal authority Malfeasance. VA Code: 22.1-89 Management of funds - PowerPoint PPT Presentation

Transcript of Fiduciary Duty

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BUDGET AND FINANCE: WHAT EVERY NEW SCHOOL BOARD MEMBER NEEDS TO

KNOW

LEIGH BURDEN, ASSISTANT SUPERINTENDENT BUSINESS & FINANCE

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Fiduciary Duty

Legal authority Malfeasance

Who is minding the store?

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Fiduciary Duty

Legal authority Malfeasance

What this means…

The School Board determines how the funds are to be spent. The local governing body determines appropriation levels.

VA Code: 22.1-89 Management of funds

“Each School Board shall manage and control the funds made available to the School Boards for public schools and may incur costs and expenses.”

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Fiduciary Duty

Legal Authority Malfeasance

VA Code: 22.1-91 Limitation on expenditures

“No school board shall expend or contract to expend, in any fiscal year, any sum of money in excess of the funds available for school purposes for that fiscal year . . . .”What this means…

The School Board can not exceed the appropriation levels determined by the local governing body.

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So, who IS minding the store?

Superintendent CFO/Director of Finance/Assistant Superintendent School Board

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BUDGET

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Budget

Superintendent’s role School Board role Local governing body role

Who does what…when?

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ORIGIN OF WORD “Budget”

VIDEO about word “budget” from Hotforwords.com

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The origin of our word budget is the Latin bulga, a little pouch or knapsack.

The word turned up in English in the fifteenth century, having travelled via the French as “leather bag” where housewives kept their money.

Video source: Hotforwords.com

ORIGIN OF WORD “Budget”

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Superintendent’s Role

Development of needs-based budget Compensation decisions Date requirements

What LCPS does….

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School Board Role

Sometimes direction to Superintendent on priorities Public hearings (formally advertised) Public input (community info) Submission to local governing body

What LCPS does….

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Local Governing Body Role

Fiscal guidance? Appropriation – lump sum or state category? It’s all about relationships….

What LCPS does….

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Budget Development: Key Players

Board of Supervisors School Board Superintendent Senior Staff Department of Business and Financial

Services School Administrators Parents and School Community Education Association

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Standard Budget Reports

Budget reportsTrend dataComparisons with previous yearExplanations of changes – cost of

salariesEnrollment projections Peer comparisons

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FINANCE

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Finance

School activity funds Finance committee School operating fund

Where the money goesHow to monitor? Financial reporting

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School Activity Funds

Basic principlesFunds used for purpose collectedProjects shall contribute to educational experienceFunds derived by student body used for student bodyStudents encouraged to participate in management Funds managed with sound business practices

Note no oversight responsibility of PTAs/PTOs/Boosters

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Finance Committee

Contracts/ProcurementVirginia Public Procurement Act (VPPA)Sanctions significantSchool Board policyCompetition thresholds

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Standard Finance Reports

Monthly financial reportsReporting by state category

Quarterly financial reportsExpenditure and revenue summaryExpenditure detail (by Dept, by

Program, by Subobject)

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LCPS Monthly Report- State Category ex.

State Category Original Budget Revised Budget Actual Balance ExpendedOperating Fund

Instruction $540,362,397 $560,301,189 $443,090,286 $117,210,903 79.08%

Admin, Attend & Health $34,590,145 $38,420,337 $34,496,855 $3,923,482 89.79%

Facilities $2,308,489 $4,224,570 $3,059,755 $1,164,815 72.43%

Operation & Maintenance $65,840,169 $64,436,188 $55,227,551 $9,208,636 85.71%

Pupil Transportation $52,466,940 $53,052,165 $39,733,172 $13,318,993 74.89%

Technology $25,277,522 $30,838,772 $22,709,099 $8,129,674 73.64%

Debt Service & Fund Transfers $0 $7,434,609 $7,434,609 $0 100.00%

Fund Subtotal $720,845,662 $758,707,831 $605,751,327 $152,956,504 79.84%

Food Service Fund

Food Services $24,034,272 $24,034,272 $18,318,973 $5,715,299 76.22%

TOTAL $744,879,934 $782,742,103 $624,070,300 $158,671,803 79.73%

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LCPS Quarterly Report – Summary ex.

Expenditures FY Budget Expenditures Encumbrances Current Balance % Spent Projection BalanceSalaries $443,907,086 $283,244,196 $0 $160,662,890 64% $149,830,464 $10,832,426Employee Benefits $173,175,217 $122,025,112 $0 $51,150,105 70% $47,980,520 $3,169,585Contractual Services $20,616,004 $13,282,156 $3,440,205 $3,893,643 81% $3,493,643 $400,000Internal Services $11,873,258 $7,269,088 $0 $4,604,170 61% $4,604,170 $0Utilities $16,236,799 $8,340,677 $14,400 $7,881,722 51% $5,261,722 $2,620,000Communication $3,145,404 $1,932,485 $5,476 $1,207,443 62% $1,147,443 $60,000Insurance $1,460,919 $1,230,325 $0 $230,594 84% $230,594 $0Materials, Supplies $26,103,487 $15,871,987 $1,654,404 $8,577,095 67% $8,577,095 $0Training and Mileage $1,820,412 $1,016,703 $30,253 $773,456 58% $583,456 $190,000Continuing Education $548,042 $350,468 $1,385 $196,189 64% $196,189 $0Leases & Rentals $536,484 $371,729 $34,946 $129,809 76% $129,809 $0Ops & Maintenance $8,500 -$24,748 $0 $33,248 -291% $33,248 $0Capital Outlay $1,843,271 $342,180 $69,984 $1,431,107 22% $1,431,107 $0Transfer Out $5,168,683 $5,168,683 $0 $0 N/A $0 $0Total Expenditures $706,443,566 $460,421,041 $5,251,053 $240,771,471 66% $223,499,460 $17,272,011

Revenue FY Budget Revenue Received Current Balance % Rec. Projection BalanceCounty $470,818,084 $470,818,084 $0 100% $0 $0State $196,451,138 $140,960,915 $55,490,223 72% $62,490,223 $2,953,903Federal $120,000 $171,602 -$51,602 143% -$51,602 $0Other $5,654,344 $4,607,493 $1,046,851 81% $1,046,851 $0Appropriated Fund Bal. $33,400,000 $33,400,000 $0 100% $0 $0Total Revenue $706,443,566 $649,958,094 $56,485,472 92% $63,485,472 $2,953,903

Projected Change to Fund Balance @ June 30 $20,225,915

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VSBA Quarterly Report – Detail ex.Column A

Org. Approved

Budget 07-08

Column B Budget Adjust 07-08

Column C Revised Budget 07-08

Column D Expend.

Year-to-Date 07-08

Column E Add. Est.

Expenses to End of Year

Column F Est. Expend.

Based on Date of Report

Column G Difference Orig. Budget and Est.

Exp.

Column H % Diff

Orig. Budget New Est.

Column I Dollar Diff Rev. Budet and New Est.

Expenditure Lines ______________ ___________ ______________ __________ _____________ ___________ ____________ ____________ _________ ___________Instruction

Teacher Salaries $266,303,358 $6,875,890 $273,179,248 $80,812,228 $188,948,433 $269,760,661 $3,457,303 101.30% ($3,418,587)Librarian Salaries $6,971,110 $42,265 $7,013,375 $2,371,251 $4,554,358 $6,925,609 ($45,501) 99.35% ($87,766)Guidance Salaries $10,627,977 $19,863 $10,647,840 $3,441,603 $7,072,989 $10,514,592 ($113,385) 98.93% ($133,248)Psychologists $5,569,744 $79,277 $5,649,021 $1,904,813 $3,673,516 $5,578,329 $8,585 100.15% ($70,692)Asst. Superintendent $289,988 $0 $289,988 $120,828 $169,160 $289,988 $0 100.00% $0Directors $1,012,977 $0 $1,012,977 $422,071 $590,906 $1,012,977 $0 100.00% $0Principal Salaries $8,793,449 $47,745 $8,841,194 $3,621,924 $5,108,631 $8,730,555 ($62,894) 99.28% ($110,639)Asst. Prin. Salaries $11,865,702 $18,717 $11,884,419 $4,615,903 $7,116,165 $11,732,068 ($133,634) 98.87% ($152,351)Coord. Salaries $6,827,001 $68,340 $6,895,341 $2,873,355 $3,935,697 $6,809,052 ($17,949) 99.74% ($86,289)Ins. Asst. Salaries $24,447,863 $229,670 $24,677,533 $5,942,650 $18,413,391 $24,356,041 ($91,822) 99.62% ($321,492)Secretary Salaries $14,564,177 $26,170 $14,590,347 $5,339,507 $9,068,255 $14,407,762 ($156,415) 98.93% ($182,585)Substitute Salaries $13,009,486 ($2,031,927) $10,977,559 $2,740,885 $8,099,300 $10,840,185 ($2,169,301) 83.33% ($137,374)Supplemental Pay $4,430,768 $140,029 $4,570,797 $1,502,291 $3,011,307 $4,513,598 $82,830 101.87% ($57,199)FICA $28,533,667 ($40,562) $28,493,105 $8,451,041 $20,042,064 $28,493,105 ($40,562) 99.86% $0VRS $53,086,372 $64,690 $53,151,062 $17,725,014 $36,588,361 $54,313,375 $1,227,003 102.31% $1,162,313Legal Services $207,064 $0 $207,064 $44,611 $162,453 $207,064 $0 100.00% $0Medical Premiums $48,245,662 $87,664 $48,333,326 $17,718,419 $30,614,907 $48,333,326 $87,664 100.18% $0Life Insurance $3,985,553 $27,677 $4,013,230 $1,077,355 $2,935,875 $4,013,230 $27,677 100.69% $0Other Insurances $1,182,167 $3,786 $1,185,953 $1,144,706 $41,247 $1,185,953 $3,786 100.32% $0Purchased Services $6,002,860 $2,979,239 $8,982,099 $4,711,323 $4,083,308 $8,794,631 $2,791,771 146.51% ($187,468)Tuition $3,006,096 ($52,000) $2,954,096 $1,573,849 $1,318,591 $2,892,440 ($113,656) 96.22% ($61,656)Printing $57,847 $62,904 $120,751 $62,577 $55,654 $118,231 $60,384 204.39% ($2,520)Office Supplies $186,504 $98,244 $284,748 $142,360 $136,622 $278,982 $92,478 149.58% ($5,766)Educational Supplies $26,094,153 $3,208,038 $29,302,191 $16,949,076 $11,759,737 $28,708,813 $2,614,660 110.02% ($593,378)Media Supplies $636,534 $127,784 $764,318 $526,820 $222,020 $748,840 $112,306 117.64% ($15,478)Textbooks $4,945,916 $499,645 $5,445,561 $3,682,417 $1,652,870 $5,335,287 $389,371 107.87% ($110,274)Equipment $2,284,935 ($374,898) $1,910,037 $1,590,858 $256,380 $1,847,238 ($437,697) 80.84% ($62,799)

______________ ___________ ______________ __________ _____________ ___________ ____________ ____________ Sub-Total $553,168,930 $12,208,250 $565,377,180 $191,109,735 $369,632,197 $560,741,932 $7,573,002 101.37% ($4,635,248)

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EXPENDITURES

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LCPS School Operating Fund Where the money goes

All other costs 12%

Salaries & benefits 88%

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Fund Balance/Surplus/Savings

Coming soon to a Local Governing Body meeting Important issue facing School Boards across the

Commonwealth Why it happens and why it matters

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Why it happens and why it matters

What is lapse and turnover? Fluctuations of budget to actual Position lapse and turnover CAUTION, CAUTION Only flexibility the division has…

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How To Address It

Budget a large negative number Make assumptions for vacant / new positions Other variables Predicting human behavior

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Surpluses Come From Savings

Surpluses are not a surprise All school division’s budgets should have unspent

funds School divisions cannot exceed their

appropriations

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REVENUE

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LCPS - Where the money comes fromFY 2013 Amount ($ in millions) Carryover $10.0 Local/County Funding $528.0 State Revenue $250.1 Federal Funds $14.1 Other Funds $6.9Total $809.1

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Local/County 65.3%

State 30.9%

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Local/County Funding

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Alexandria City

Arlington County

Fairfax County

Falls Church City

Loudoun County

Manassas City

Manassas Park City

Prince William County

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

30.8%

34.6%

47.7%

42.2%

47.2%43.7%

30.9%

39.7%

Source: FY 2012 WABE Guide

Tax Rate

$1.235 per $100 of assessed valueValue of 1¢

$8.0 million

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State Funding & the Local Composite Index

Source: DOE website

Components• True Value of Property• Adjusted Gross Income• Taxable Retail Sales

LCPS LCI - .5666

According to the LCI, locally we should be able to pay for about 57 percent of the costs of education and the Commonwealth should pick up 43 percent.

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Adjusted ADM (K-12) 66,814State per pupil amount

$5,594Total $373.8 million

Less sales tax ($59.3 million)

Total Basic Aid $314.5 million

State share .4334

State funding$136.3 million

Basic Aid Calculation

Weldon Cooper July 2010 1,569,153Weldon Cooper LCPS 77,491LCPS Percentage 4.938%

Sales tax statewide $106.9 billion

Education share 1.125% $1.2 billion

LCPS percentage 4.938%

Sales tax funding $59.3 million

Sales Tax Calculation

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OTHER STUFF

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Other Stuff You Should Know

Misinformation Simplify, simplify, simplify Strategies to cut spending

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Misinformation

VIDEO from Saturday Night Live Gilda Radner and Chevy Chase “Violins on Television”

Can be found at Hulu.com

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The Things I’ve Learned….

The media sometimes gets it wrong If your version isn’t out there, it doesn’t exist. Tell the story better Everyone has to help

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Simplify, Simplify, Simplify

What kind of information do employees need? What can be easily understood? The right data will tell your story. Peer comparisons Pupil/teacher ratios Cost per pupil Compensation packages School-based and non-school based positions

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Strategies to Cut Spending

Last in first out Reduce staffing greater

than SOQ Review current vacancies Reduce extended

contracts Increase class size Healthcare co-pays and

deductibles

Reduce employer share of healthcare

Defer equipment replacement plans

Mid-year salary enhancements

Increase fees Selective elimination of

programs