2016 Winter UPDATE - Accounting

ACCOUNTING / WINTER 2016

INDISPENSABLE TOOL for SCHOOL BUSINESS MANAGEMENT

The Power of Perspective Telling the Story Behind Your Numbers

24

Cover Story

SEVEN SOURCES OF SPED FUNDING | 14

DISTRICT WAREHOUSING | 38

INTERNAL CONTROLS WITH INTEGRITY | 20

FUNDRAISING CONTROLS | 40

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IATION OC of SS

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Illinois ASBO's

QUINTESSENTIAL LEADERSHIP EXPERIENCE TWO PROVEN FEEDBACK INSTRUMENTS. How do your behaviors reflect your leadership style? How do others perceive your leadership? The Leadership Institute answers these questions through an immersive process over the course of a year utilizing Life Orientations (LIFO®) and the Leadership Practices Inventory (LPI®).

TWO ACADEMIES. TWO FISCAL YEARS. The Leadership Institute takes place over two distinct fiscal years, allowing you to earn two years worth of academy credit! You can also choose to divide up the cost over the two years.

Apply now to start your experience this spring:

www.iasbo.tools/leadershipinstitute

INSIDE

Illinois Association of School Business Officials UPDATE Magazine / Winter 2016 / v.24 / i.02

ACCOUNTING ISSUE

RISK MANAGEMENT / SPRING2014 2017 OPERATIONS ISSUE / SUMMER

INDISPENSABLE TOOL for SCHOOL BUSINESS MANAGEMENT

STAYING VIGILANT

TO KEEP YOUR DISTRICT SAFE

THE NEXT ISSUE: RISK MANAGEMENT Staying vigilant to keep your district safe.

The Power of Perspective: Telling the Story Behind Your Numbers By itself, a number is just a figure. When provided with some context, it means much more. As a school business official, it is crucial to use numbers to tell a story about your school district: its successes, State Excess State Excess CostCost State Excess Cost Federal needs and desires for the future.

Federal Federal

Cover Story by Sean P. Carney Block Grant

State

State Excess Cost

Excess Cost

Federal

Federal

Medicaid State

Medicaid Medicaid MOE Excess Cost

Block Grant Block Grant

MOE MOE Transition Federal

State

Transition Transition

24 Excess Cost

LOOKING FOR PAST ISSUES? Visit ISSUU.com and search for Illinois ASBO.

Federal

Block Grant

sources of SPED Funding & What to Expect in FY17 Get insights on the variety of funding sources for students with special needs in the state of Illinois — including local, state and federal Block Grant Medicaid Block Grant Grant fundingBlock sources.

By Julie A. Jilek and Maggie A. Lesniak Medicaid

MOE

Transition

14 MOE

Transition

www.iasbo.org

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PERSPECTIVE

FROM-THE-PODIUM Beyond Bean Counting: Managing the Details. 07

FROM-THE-OFFICE SBOs: Much More than Accountants. 09

Internal controls promote efficiency, reduce risk of asset loss, assist with good management decisions and help ensure the reliability of financial statements and compliance with laws and regulations.

By Sherry Koerner and Andrew Mace

20

FROM-THE-FIELD Cost Savings Through Behavioral Change. 11

SCHOOL BUSINESS 101 Tracking Capital Assets: Categories, Analysis and Evaluation. 19

Your Five Year Plan:

An Analytical Approach to Staffing Taking an analytical perspective with your planning and accounting for the people involved in your organization will have a direct impact on opportunities and growth for your students and community.

By Michael English

30

Zen and the Art of Supplemental Audits Proper planning and preparation can facilitate a smooth audit process that satisfies auditors and wraps up on a timely basis, with minimal disruption.

By Sean P. Carney, Matthew Geerdes, CPA, and Christine Torres, CPA 4 |

UPDATE Magazine / Winter 2016

34

Four Key Benefits of

a District

Warehouse A well thought out warehouse and inventory system allows the business manager to enjoy economies of scale, increase efficiency and accurately report for inventory on hand.

RESOURCES

By Patrick S. Browne, Jr., CPMM

38 Keep A Watchful Eye: How to Implement Fundraising Controls School districts need to have solid fiscal controls in place that protect both the school district and the various organizations that they work with.

By Mary Kalou

ON MY LIST Learning from International Success.

43

40

The Final Word Stacey L. Mallek

Asst. Supt./Business, CSBO Arlington Heights SD 25 Stacey believes her role as a business official is to manage and safeguard district assets.

To do this, she must provide the necessary physical, financial and human resources to support teaching and learning in the classroom while maintaining the financial stability of the district.

46

THE POWER OF PERSPECTIVE: Resources to Help Tell Your Story.

44 www.iasbo.org

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THE

MAGA ZINE Illinois Association of School Business Officials

CALENDAR OF

Northern Illinois University, IA-103 108 Carroll Avenue DeKalb, IL 60115-2829 P: (815) 753-1276 / F: (815) 516-0184 / www.iasbo.org

EVENTS

UPDATE Editorial Advisory Board

Check out www.iasbo.org or the latest Calendar of Events included in the UPDATE mailing for full seminar listings including location and PDC sponsorship and register for professional development today.

December June 2014 2016

S 28 4 11 18 25 1

M 29 5 12 19 26 2

T 30 6 13 20 27 3

W T F S 31 1 2 3 7 8 9 10 14 15 16 17 21 22 23 24 28 29 30 31 4 5 6 7

January 2017

February 2017

S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 1 2 3 4 5 6 7 8 9 10 11

S 29 5 12 19 26 5

M 30 6 13 20 27 6

T W T F 31 1 2 3 7 8 9 10 14 15 16 17 21 22 23 24 28 1 2 3 7 8 9 10

March 2017

S 4 11 18 25 4 11

Event

S 26 5 12 19 26 2

M 27 6 13 20 27 3

T W T F S 28 1 2 3 4 7 8 9 10 11 14 15 16 17 18 21 22 23 24 25 28 29 30 31 1 4 5 6 7 8

Date

Time

12/2/16

7:30am

SupportCon

Naperville

Location

12/7/16

8:00am

Facilities Operations Program: Essentials of Maintenance Operations

Naperville

12/23/16 1/2/17

8:00am

Illinois ASBO Office Closed

1/27/17

8:30am

Leadership Day / PDC Networking Meeting

2/16/17

8:00am

ASBO Executive Leadership Forum

2/21-22/16

8:00am

Alliance Leadership Summit

2/23/17

9:00am

Illinois ASBO Board of Directors' Meeting

3/10/17

8:00am

BOARD & EXTERNAL RELATIONS MEMBERS Jennifer J. Hermes, SFO President Stephen Chassee SAAC Chair AT-LARGE MEMBERS Theresa Gegen Illinois Association of School Boards

TBD

STAFF MEMBERS Michael Jacoby Executive Director / CEO (815) 753-9366, mjacoby@iasbo.org Susan P. Bertrand Deputy Executive Director / COO (815) 753-9368, sbertrand@iasbo.org Rebekah L. Weidner Senior Copywriter (815) 753-9270, rweidner@iasbo.org Tammy Curry Senior Graphic Designer (815) 753-9393, tcurry@iasbo.org John Curry Graphic Designer (815) 753-7654, jcurry@iasbo.org Zack Hildebrand Membership & Marketing Coordinator (815) 753-9371, zhildebrand@iasbo.org

19th Annual Risk Management Seminar - AAC #1283

Naperville

Illinois ASBO Board of Directors

Naperville

DeKalb Itasca Miami, Florida Springfield

3/15/17

8:00am

Facilities Professionals Conference

3/22/17

5:00pm

Leadership Institute Cohort 2017

4/5/17

9:00am

Delegate Advisory Assembly Meeting

Naperville

4/5/17

8:00am

Facilities Operations Program: Essentials of Custodial Operations

Glen Ellyn

4/5/17

1:00pm

Illinois ASBO Service Associate Advisory Committee Meeting

Naperville

4/6/17

9:00am

Illinois ASBO Board of Directors' Meeting

TBD

4/26-28/17

8:00am

2017 Annual Conference

TBD

Peoria

4/28/17

10:30am Illinois ASBO Board of Directors' Meeting

6/6/17

1:00pm

Illinois ASBO Service Associate Advisory Committee Meeting

TBD

6/7/17

5:00pm

Illinois ASBO Board of Directors' Retreat

TBD

9/19/17

8:00am

SupportCon South

TBD

9/22/17

8:00am

ASBO International Annual Meeting & Expo

TBD

10/13/17

7:30am

TechCon

TBD

11/17/17

8:00am

IASB/IASA/Illinois ASBO 85th Joint Annual Conference

6 |

PDC MEMBERS Patrick S. Browne Sustainability Catherine H. Chang Food Service Seth Chapman Budgeting & Financial Planning Yasmine Dada Principles of School Finance Kevin L. Dale Technology Eric DePorter Human Resource Management Jeff E. Feyerer Leadership Development Kenneth M. Florey Purchasing John A. Gibson Technology Anton Inglese Technology Ron Johnson Purchasing Eric M. Miller Budgeting & Financial Planning Kristopher P. Monn Legal Issues Mary Werling Purchasing

UPDATE Magazine / Winter 2016

Peoria

Chicago

Jennifer J. Hermes, SFO President David H. Hill President-Elect Cathy L. Johnson Treasurer Susan L. Harkin Immediate Past President 2014–17 Board of Directors Barry Bolek, Dean T. Romano, Paul Starck-King 2015–18 Board of Directors Mark W. Altmayer, Julie-Ann C. Fuchs, Eric M. Miller 2016–19 Board of Directors Jan J. Bush, Julie A. Jilek, Bradley L. Shortridge

Illinois ASBO Board Liaisons

Stephen Chassee Service Associate Advisory Committee Chair Anne E. Noble Service Associate Advisory Committee Vice Chair Terrie S. Simmons ASBO International Liaison Deborah I. Vespa ISBE Board Liaison Perry Hill IASB Board Liaison Paul McMahon Regional Superintendent Liaison Calvin C. Jackson Legislative Liaison

Privacy Policy

All materials contained within this publication are protected by United States copyright law and may not be reproduced, distributed, displayed or published without the prior written permission of the Illinois Association of School Business Officials.

You may not alter or remove any trademark, copyright or other notice from copies of the content.

References, authorship or information provided by parties other than that which is owned by the Illinois Association of School Business Officials are offered as a service to readers. The editorial staff of the Illinois Association of School Business Officials was not involved in their production and is not responsible for their content.

PERSPECTIVE / Board President

FROM–THE–PODIUM Beyond Bean Counting: Managing the Details Bean counting — isn’t that where this all started? Perhaps in the early, early days of school business management, it might have simply been about keeping track of the money: taking care of a couple of bills, paying a few teachers and communicating to others where things stood.

Those same responsibilities still exist, only now the job is much more complex. This UPDATE issue demonstrates just how complicated managing the details has become. The depth of knowledge a school business official needs is ever changing and increasing. The details need to be accounted for, proper internal controls maintained and new concepts (such as crowdfunding) vetted. Additionally, in setting up accounting systems, we need to anticipate how we might need to later access, summarize and present these details in a meaningful manner.

Jennifer J. Hermes, SFO ASST. SUPT./BUSINESS SERVICES, CSBO LAKE FOREST SD 67

SIMPLY SAYING

We need to be able to communicate the details in a manner that helps our organization continually move forward.

It is also possible to overcomplicate accounting — leading to inefficiency. Once upon a time I was working for a large school district that was experiencing difficulty completing timely accounts payable batches. Upon review, it was quickly determined that we were overcomplicating our invoice coding. For example, the monthly milk invoice listed the charge for white, chocolate and strawberry milk for each of the 21 schools with a different account code. Sixty-three account numbers were entered to pay one invoice. Never having been asked for that level of detail, we stopped overcomplicating the process and began entering one account for the milk payment.

Communicating the Details It is critically important that we anticipate informational needs as we develop and fine-tune our systems. At the end of the process, we need to be able to communicate details in a manner that helps our organization continually move forward.

As experts in our field, this is where we need to become teachers. We need to be able to assess where our students are, the information they need and how we can help them with understanding and mastery. Our students could be a board of education, community member, fellow administrator, union representative or group of parents. We need to be cognizant that similar to the students in our schools, our “students” also require differentiation. Communication should be tailored to the needs of each student.

The demands on a school business official are many and sometimes the breadth of our responsibilities can be overwhelming. Take solace that despite all the craziness that might swirl around us in our daily jobs, in the end the beans still need to be counted.

www.iasbo.org

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ASSEMBLE YOUR DISTRICT LEADERSHIP TEAM

AND MARK YOUR CALENDARS! JOIN US IN SPRINGFIELD FEBRUARY 21-22, FOR THE ALLIANCE LEADERSHIP SUMMIT A jointly sponsored event designed for district leadership teams: the superintendent, school board members, business officials, and building principals.

F E B R U A R Y 2 1 - 2 , 2 0 17

Hear from educational experts and political analysts Discuss educational leadership issues Engage in the legislative process

Ideally, district representatives would include the superintendent, one board member, one principal and one business official but any combination is welcome. District superintendents will be responsible for registering the team.

MORE INFORMATION AND REGISTRATION AT WWW.IASAEDU.ORG.

PERSPECTIVE / Executive Director

FROM–THE–OFFICE SBOs: Much More than Accountants Business officials have long been known as “accountants.” But long gone is the image of the green shaded, pencil pushing, ledger-focused bureaucrat. Today accounting is a necessary technical function for sure, but not the primary role of the education CFO. It is a check and balance activity and no one should diminish its importance, but if all we do is balance the books, then our value as leaders is extremely limited and we miss opportunities to use our expertise to give direction and focus to the future of the district.

Michael A. Jacoby, Ed.D, CAE, SFO EXECUTIVE DIRECTOR/CEO ILLINOIS ASBO

SIMPLY SAYING

Accounting is a necessary technical function... but if all we do is balance the books, then our value as leaders is extremely limited and we miss opportunities to use our expertise to give direction and focus to the future of the district.

The lead article in this issue of UPDATE attempts to show that behind those balance sheets and ledgers is a story.

The numbers tell us about a district, its priorities, its stability and even its effectiveness. When we teach the accounting function in our School Business Management Master’s degree program at Northern Iillinois University, we stress this. I often give students an assignment that brings the district’s numbers onto the page, but then ask them to discuss the story the numbers are telling.

I trust that is happening at every local district as well. But what can we use to help tell that story? Our partnership with Forecast5 is a primary example of an attempt to take the numbers to the public in visual ways that can have meaning and to turn simple numbers into projections and options for boards to consider. The use of analytics to lead

a district and community to better decision-making is at the heart of this partnership. More and more districts are finding it necessary to have a platform such as this in order to plan and articulate where they are headed and how they are doing that in the context of their region and alongside specific comparable districts.

If you have not taken the time to check out your options available in the Forecast5 platform, do it today. In no time, you will be able to tell an amazing story about your district and find yourself leading it into the next generation of students more effectively. If your superintendent or board sees you as just the “accountant,” you can change that image overnight.

www.iasbo.org

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MAKE AN

IMPACT

IN PEORIA

FOUNDATION LEGACY PROJECT Tuesday, April 25, 2017

Come a day early to the 2017 Annual Conference to make a lasting IMPACT on the Peoria community!

The Foundation Legacy Project will benefit EP!C, an organization that serves adults with intellectual and developmental disabilities. Plan now to spend the day getting to know your peers while serving this great cause!

Find out more about this Community Impact event at: www.iasbo.tools/ACprecon

PERSPECTIVE / SAAC Chair

FROM–THE–FIELD Cost Savings Through Behavioral Change When people hear about energy savings, they typically think about solar panels, wind turbines, LED lighting and retrofitting their existing facility with more efficient equipment. While those are all good things and would all help reduce your energy consumption, and subsequent energy bill, those items can also come at a substantial cost.

I want to remind districts that there are other options. Cost savings through behavioral change is all about low cost, straightforward improvements a district can make to their facilities to reduce their energy consumption as well as their monthly bill.

Stephen Chassee ASSOCIATE PRINCIPAL​ GREENASSOCIATES, INC.

SIMPLY SAYING

Behavioral changes can all be done by in-house personnel without substantial financial investment from the district.

Start by simply changing staff expectations and helping them understand what you are trying to accomplish. Engage building staff in the process; you never know where the next great idea may come from. Work on a program that will be supported by your board of education, the administration and can be disseminated to all of the staff in the building. Use previous years’ utility bills for baseline information and track the improvements and savings.

Lights Out Focus on turning off everything in the building when not in use, managing the devices or equipment that are plugged in throughout the building during nighttime hours (especially the pesky classroom refrigerators and microwaves) and eliminating unauthorized equipment that is also using power.

Use the “Dark Skies” method by turning off all lights after midnight. This can provide large savings to the district, assuming this is discussed with your local police and fire departments for security purposes. Shutting off exhaust fans for ten hours a day during non-working hours can save over $5,000 per year for every 20 horsepower motor in the building. Communication with building occupants is key. If a space is too hot/cold, have them report to facility staff. A change in temperature settings can help avoid a situation where a window or door is unnecessarily propped open.

Fill in the Gaps Air infiltration is another large issue for districts. It can cause inefficiencies for heating and cooling equipment year round: • Check with your architects and engineers to ensure that your equipment is running properly to specification and code. An excess of fresh air can cause equipment to work harder or longer than it needs to, using more energy and costing the district money.

• Installing variable speed drives on your fans and occupancy sensors can also improve efficiency for your mechanical equipment, but there are other simple repairs your staff can make to improve building efficiency and reduce the workload for your mechanical equipment.

• Repairing the air-gaps around your vestibule doors can make a drastic improvement. To put things in perspective, a ¼" gap around your doors is the equivalent of having a 20" hole in your wall. No district would leave a 20" hole in their school’s wall, but many districts leave air gaps around their vestibule doors. A reduction of one degree on your boilers could save the district 1% of their energy costs.

These behavioral changes all add up to large savings for the district. They can all be done by in-house personnel without a substantial financial investment from the district. www.iasbo.org

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CONTRIBUTORS

Patrick Browne, CPMM

Sean Carney

Michael English

Dir./Facility Operations Yorkville CUSD 115

Asst. Sup./ Business Adlai E. Stevenson HSD 125

President/CEO Forecast5 Analytics, Inc.

Has 15 years experience constructing and maintaining facilities, with the last eight years as a B&G Director. Pat is a member of the Sustainability PDC and serves on the UPDATE Editorial Advisory Board.

In 2013, he was certified as a Plant Maintenance Manager. pbrowne@y115.org

Has been an Illinois ASBO member since 2008 and has contributed to the Association through participation in the Delegate Advisory Assembly (DAA) and the Accounting, Auditing & Financial Reporting PDC.

Has been a member of Illinois ASBO for more than 25 years.

As a founder of Forecast5 Analytics, Mike is now concentrating on the development and growth of analytic tools to support the operational and strategic needs of school administrators. menglish@forecast5analytics.com

scarney@125.org

Matt Geerdes

Julie Jilek

Mary Kalou

Senior Manager Crowe Horwath LLP

Assistant Superintendent, CSBO Northwest Suburban Spec. Ed. Org.

Assistant Superintendent Maine Twp. HSD 207

Has more than 15 years of experience providing auditing and consulting services to governmental and not-forprofit organizations. Matt focuses on municipalities, community colleges, school districts, state agencies and state universities.

Has worked in the field of education for over 30 years, with her entire career focusing on the education of students with special needs. Julie completed the CSBO program at Northern Illinois University in 2001. Since then, she has worked as a CSBO for Special Education Cooperatives. jjillek@NSSEO.org

An Illinois ASBO member for over 20 years, Mary participates in the Delegate Advisory Assembly (DAA) and the Accounting, Auditing & Financial Reporting PDC. Mary has been a speaker at many professional development events, including the Illinois ASBO Annual Conference. mkalou@maine207.org

matt.geerdes@crowehorwath.com

Sherry Koerner

Maggie Lesniak

Andrew Mace

Dir./Business Services Twp. High Sch. Dist. 214

Chief School Business Official AERO Special Ed. Co-Op

Dir./School District Services Sikich, LLP

In addition to her role at Township High School District 214, Sherry also serves as Assistant Treasurer of the Wheeling Township Schools Intergovernmental Agreement. This is Sherry’s 12th year at District 214.

After spending more than ten years in corporate and public accounting, Maggie joined the field of education.

She earned her MBA from Saint Xavier university and has been the CSBO at A.E.R.O. Special Education Cooperative for more than six years. mlesniak@aerosped.org

Has spent his entire professional career performing audits of local governments, particularly school districts. Andrew has assisted school districts in enhancing their internal controls and has presented numerous seminars on this topic over the course of his career. amace@sikich.com

sherry.koerner@d214.org

Would you like to be an UPDATE Contributor?

Christine Torres Partner Crowe Horwath LLP

Christine has more than 17 years of experience providing accounting, auditing and consulting services to government and not-for-profit clients. Her client experience includes state agencies, institutions of higher education, school districts, not-forprofits and municipalities. christine.torres@crowehorwath.com

If you have an issue you feel needs to be brought to the forefront, present your ideas to Rebekah Weidner at rweidner@iasbo.org.

The issue themes that we will be soliciting articles for next year include:

• Cash Management • Human Resources • Operations (Ancillary) • Legal Issues We look forward to seeing new faces on this page as we continue to make the UPDATE an indispensable resource for school business management.

www.iasbo.org

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State

cess Cost

Excess Cost

Federal State

Excess Cost

State

Federal Block Grant

Federal

Excess Cost

Federal

Block Grant

Medicaid

MOE

Transition

Block Grant

Medicaid Block Grant

ock Grant

State

Excess Cost

MOE

Federal

Medicaid

MOE

Medicaid

Transition

MOE State

Excess Cost

Transition Federal

Block Grant

MOE

Transition

7 Medicaid

Block Grant

MOE

Transition

sources of SPED Funding & What to Expect in FY17 Medicaid

MOE

Transition

By Julie A. Jilek

ARTICLE

ASSISTANT SUPERINTENDENT, CSBO NORTHWEST SUBURBAN SPEC. ED. ORG.

Maggie A. Lesniak

CHIEF SCHOOL BUSINESS OFFICIAL AERO SPECIAL ED. CO-OP

School District & Cooperative Funding Funding for students with special needs in the state of Illinois is provided to districts and special education cooperatives from a plethora of local, state and federal funding sources. The operations of the business office at a cooperative is much like that of a school district in that they both manage budgets with expenditures and revenues from multiple funding sources.

However, one of the biggest differences between special education funding in a school district and a cooperative is the actual sources of funding. In a cooperative, most of the revenue (depending on the financial structure of the cooperative) comes from tuition from member districts. Often times, the costs of the administration and/or programs are offset with revenue from state and federal funding sources.

Whether you are a school business official in a school district or a cooperative, we are all responsible for the management of state and federal dollars received to serve students with diverse abilities.

State Funding

State

The State of Illinois provides four state categorical pupil reimbursement fund sources for districts serving students with disabilities who require special education and related services.

Excess Cost students Federal Such may be eligible under:

• Private Tuition 105 ILCS 5/14-7.02 (Fund code B) This program reimburses districts’ tuition costs that exceeds two times the district per capita tuition charges for costs paid Block to an approved Private Facility. (Estimated Grant FY17 Proration: 91.2%).

• Orphanage 105 ILCS 5/14-7.03 (Fund codes E & F) This program reimburses 100% of the tuition costs (both regular for eligible students with Medicaidand summer MOE terms)Transition disabilities who are under the guardianship of a public agency or reside in state residential facilities. (Estimated FY17 Reimbursement: 100%.)

• Summer School 105 ILCS 5/18-4.3 (Extended School Year) This program reimburses school districts a portion of the educational costs for eligible students with special needs that attend summer programs. (Estimated FY17 Proration: 80.1%.)

• Funding for Children Requiring Special Education Services 105 ILCS 5/14-7.02b Funding is provided to districts in the form of a block grant. (Estimated FY17 Proration: 99.6%.)

Additionally, Section 14-7.02b of the School Code requires that Excess Cost reimbursement for students “whose

program costs exceed four times the district’s per capita tuition rate” be distributed from unused federal IDEA room and board funds. If excess cost claims exceed the unused amount, the reimbursement will be prorated.

Excess Cost Reimbursement (Fund codes X & J) In recent years, many districts have not submitted pupil reimbursement claims for their students that are coded Fund X due to a lack of funds. Districts should be sure to file their claims for Fund X in FY17 because it is estimated that there will be $5-$10 million available after discretionary funds are spent on room and board.

Other state funding sources for special education programs and services include: • Special Education Personnel Reimbursement This program reimburses districts and cooperatives a portion of the costs for instructional and related services staff serving students with disabilities, ages 3-21 years old. (Estimated FY17 Proration: 99.8%.)

• Special Education Transportation This program reimburses districts and cooperatives a maximum of 80% of the costs incurred to transport students with disabilities who have special transportation needs. (Estimated FY17 Proration: 93.8%.)

Local Education Agencies (LEAs) must transmit claims to the state for pupil, personnel or transportation reimbursement. Deadlines and directions for submitting claims can be found on the Illinois State Board of Education’s website.

www.iasbo.org

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The Impact of ESSA Reauthorization In December of 2015, President Obama signed The Every Student Succeeds Act (ESSA), which reauthorized the Elementary and Secondary Education Act that was originally passed at part of Lyndon B. Johnson’s “War on Poverty.” The goal of ESSA is to fully prepare all students to be successful in higher education and their chosen careers. There are “Stakeholder Engagement Meetings” taking place statewide that will help districts transition to and implement ESSA. Many of these requirements will take effect at the beginning of the 2017-2018 school year.

Federal Funding The Individuals with Disabilities Education Act Flow Through Grant provides supplemental funds to districts so that all eligible children ages three through twenty-one receive a free, Excess Cost Federal appropriate public education in the least restrictive environment. The state of Illinois’ FY17 IDEA grant allocation is approximately $516.5 million. This is a 3% increase ($16,250,261) over FY16’s grant. School districts (LEAs) will receive 88% Block Grant ($455.7 million) of that overall allocation. The rest of the federal dollars fund ISBE administration, room and board expenditures and other statewide initiatives, including but not limited to Due Process, Assessment Development, Harrisburg Project and Surrogate Parent Costs.

MOE

Transition

State Excess Cost Federal The IDEA Preschool Grant provides supplemental funds for a comprehensive special education program for children ages three through five with disabilities. The Preschool Grant for FY17 increased 4% ($630,144) over FY16’s grant.

Medicaid fee for service Block Grant

Medicaid

Medicaid was created on July 30, 1965 (Title XIX of the Social Security Act).

It provides health coverage or nursing home coverage to certain categories of income individuals, including: MOE

There are two Medicaid programs that districts can participate in to get reimbursed for Medicaid services: Medicaid Administrative Claiming (MAC) and Fee for Service (FFS).

Medicaid Administrative Claiming (MAC) provides reimbursement to districts and cooperatives for indirect services such as: • Coordination of medical and mental health related services covered by Medicaid • Linking students to Medicaid services • Monitoring the delivery of medical and mental health services performed in the LEA/Joint Agreement Fee for Service (FFS) provides reimbursement to districts and cooperatives for direct medical services such as: • Speech Therapy • Physical Therapy • Occupational Therapy The Illinois Department of Human Resources has contracted with Fairbanks LLC to provide statewide MAC services and ongoing auditing of all phases of the program.

Districts and cooperatives may choose a vendor of their choice for Medicaid FFS program reimbursement.

Reimbursement is based on the direct services provided to Medicaid eligible students.

Transition

Excess Cost

• Children • Pregnant women • Parents of eligible children • People with disabilities • The elderly School personnel may be involved in identifying, coordinating, delivering and monitoring students’ needs for health and related services. Many of these activities are covered by Medicaid and are reimbursable through the school-based Medicaid programs.

State

IDEA funds are meant to supplement, not supplant, the costs in excess of a LEA’s local dollars for students with disabilities. Each district is now required to collect district expenditure and student population Excess Cost Federal data, which is used to calculate an Annual Per Pupil Expenditure and its IDEA excess cost threshold annually.

Block Grant

16 |

UPDATE Magazine / Winter 2016

tate

dicaid

ARTICLE / SPED Funding

State

Excess Cost

Federal

Maintenance of Effort

State

Block Grant

Medicaid

All districts are required to verify MOE Eligibility annually before they expend IDEA dollars. This process is to ensure that each LEA and/or Joint Agreement spends the same per capita MOE Transition amount on the education of students with disabilities as it does on those students who are in general education year after year.

There are provisions in IDEA that allow for an exception in an LEA’s MOE from one fiscal year to the next. The IDEA Flow Through Grant application cannot be approved until Medicaid the MOE Eligibility page is completed.

With the upcoming reauthorization of IDEA and the current fiscal crisis facing Illinois schools, we are hopeful that the following exceptions will be added to the current provisions:

• Decreased benefit costs for employees (districts are renegotiating insurance costs, for example).

• Decreased transportation costs (districts are renegotiating transportation contracts and managing more efficiently).

Excess Cost transportation Federal • Decreased salaries or reduction of benefits as part of a collective bargaining agreement.

Transition funding

Block Grant

MOE

Funding is available for transition age students (post high school, up to age 22) through the Department of Rehabilitative Services, the Secondary Transitional Education Transition Program and the Workforce Innovation and Opportunity Act grant funded by the Department of Labor. These grant dollars help offset program costs and more importantly, provide students with disabilities access to education, training and employment opportunities. It is the goal of the transition program to prepare the students to be competitively employed by the time they reach the age of 22.

CHICAGO'S BLOCK GRANT Excess Cost

Federal

Chicago District 299 receives all of their state special education funds via the Educational Services Block Grant.

Since the creation of the General Education and Educational Services Block Grant Block Grant, Chicago Public School (CPS) District 299 has been entitled to the same percentage of the current year fiscal appropriation as the percentage of the appropriation that was established in 1995. Therefore, the funding for CPS is not based on the formulas used toTransition determine funding for other school MOE districts in the state of Illinois. Additionally, prior to August 2, 2011, CPS was not required to submit expenditures by programs, population and service levels in the same manner as all other districts in the state.

Striking a balance The relationship between the school business official, executive director of a cooperative and its member districts centers on a balance of strong communication, collaboration, trust and mutual respect. It is imperative that school districts and special education cooperatives work together to provide progressive and visionary leadership in the field of education through advocacy in funding reform at the local, state and federal levels in order to ensure adequate funding for all students including students with special needs.

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A New Advocacy Vision

for Your Association

The Illinois Association of School Business Officials is devoted to the school business management profession. Our mission is to provide our members and stakeholders with a comprehensive range of professional development activities, services and advocacy through networking and participation.

Illinois ASBO has always been advocating for its members — this past year the Board made it official! Advocacy is now included in the mission of Illinois ASBO and the Board has developed a vision for how Illinois ASBO will carry out this mission…

Illinois ASBO’s Vision for Advocacy

Illinois ASBO will be the foremost knowledge base and voice for promoting sound school business practices to the Illinois Legislature, ISBE and other state policymakers.

• Our presence will be driven by the Illinois ASBO Board of Directors and executed by the Executive Director and supported by the Delegate Advisory Assembly, lobbyists and governmental specialists who work collaboratively with the Illinois Statewide School Management Alliance (Illinois ASBO, IPA, IASA and IASB) on a day-to-day basis to improve outcome for students.

• Advocacy will be achieved through proactive engagement with the Alliance, Vision 20/20 and other stakeholder groups.

How Illinois ASBO Implements this Vision Here are just a few of the ways Illinois ASBO is already carrying out our vision for advocacy:

• Participating in Governor Rauner’s School Funding Commission, along with many other task forces and collaborative efforts that influence school legislation.

• Playing a key role in the development and ongoing work of Illinois Vision 20/20.

• Promoting the value of the profession to legislators and other stakeholders.

• Partnering with other Alliance organizations in advocacy and communications.

• Illinois ASBO members will receive Advocacy Alert communications and updates.

Watch for communications with this look and feel — These Advocacy Alert

emails, highlights within the Insider e-newsletter and other publications will keep you connected to all the ways Illinois ASBO is advocating for you in Springfield and beyond.

PERSPECTIVE / On the Profession

SCHOOL BUSINESS 101 How are you tracking your capital assets?

assets are tracked historically in Excel and prior to the start of our annual audit we “ Our submit the changes to our appraisal firm. For consistency, our internal tracking mirrors the way our firm codes the assets. We find that an on-site valuation is beneficial every five to seven years but that cycle depends on the size of your district and the rate of asset acquisition or removal. Our firm also tracks depreciation by class for easy reference of all asset groups in the district.”

KENNETH KORBEL Business Manager, CSBO, Bloom Twp. HSD 206

use a vendor to help us complete the re-inventory process annually. They help us “ We organize all the critical control assets and aid us in preparing the final counts. We are the 7th largest school district in the state of Illinois with twenty-two buildings to maintain.

Normally, I will personally set up and organize the count. We keep track of everything that’s in each building, including technology. The vendor is responsible for accounting which helps the district meet state audit requirements, annual tracking of assets and insurance reporting to assure that buildings and contents are being adequately insured.

We have a process that we complete annually to account for capital items. We start organizing the process in May, then we have the final reports ready in August for the auditors.”

SHERRY L. REYNOLDS-WHITAKER, Ed.D. Asst. Dir./Finance, Comm. Unit Sch. Dist. 308

use a vendor to track all of our capital assets. As a small district, we all wear many “ We hats and our time and resources are limited. Using a vendor really helps us to account for our capital assets. Our vendor updates our property inventory and accounting cost record as well as updates the insurable values. We monitor additions and deletions throughout the year to get a final complete report. It works really well for us.”

TIM J. MAHAFFY, Ed.D. Superintendent/Business Manager, Fox River Grove CSD 3

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Internal controls, policies and procedures are put in place by a school district to ensure the integrity of financial and accounting information. Internal controls promote efficiency, reduce risk of asset loss, assist with good management decisions and help ensure the reliability of financial statements and compliance with laws and regulations.

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By Sherry Koerner

ARTICLE

DIR./BUSINESS SERVICES TWP. HIGH SCH. DIST. 214

Andrew Mace

DIR./SCHOOL DISTRICT SERVICES SIKICH, LLP

School District Transactions and Key Controls There are several types of transactions that a district makes during a given school year. It is important to have controls in place to ensure your district maintains its integrity. Below are some typical school district transaction classes and their related key controls.

Cash and Investments Wire transfers should be properly authorized and executed by someone with no record keeping (general ledger) duties. Bank reconciliations should be performed monthly by someone with no other record keeping duties. Any difference between cash and the general ledger must be detailed.

Revenue/Receipts Schools have three main sources of revenues: 1. State and federal.

2. Property and replacement taxes.

3. Locally received deposits for services that students pay directly.

The risk of safeguarding the cash received for category one and two is low because this revenue is wired directly into school bank accounts. The key controls that should be in place for this type of revenue are reconciliation and monitoring to ensure all revenue the district is entitled to has been received and has been recorded in the general ledger properly. Direct deposits from funding sources should be compared to expectations to ensure completeness. Decentralized receipts should also be compared to expectations.

Locally received revenues make up a much smaller percentage of total revenues but have the highest inherent control risk because they involve the collection of checks and currency. The key controls for these receipts should focus on segregation of duties and safeguarding cash

from the time it is received to when it is deposited in the bank. Point of sale systems, pre-numbered tickets and cash registers should be used wherever practical. Two people should count and sign off on cash collections. A third person should see that this amount was deposited.

Purchasing A purchasing manual should define restrictions on purchases of goods or services. Once the requestor has completed the necessary information, it is submitted for approval. Once approved by appropriate work flow, the purchase order is generated. Purchase orders are not paid until goods are received in the system.

As more districts move to electronic purchasing systems, electronic authorization, approval and receiving must have key controls in place, including: limited access to modules, closely monitored workflows, secure password protection, password integrity and mandatory changing of passwords. The purchasing and payment functions must be segregated.

Payment The payable clerks enter the payments into the software system. If manual changes are recorded on the invoices, the clerks investigate and determine if the manual adjustments are appropriate prior to entering the invoice for payment. Once the invoices are entered, the payable clerks run a trial balance report. Once there are no exceptions to the report, the checklist is uploaded onto a disk. The accounts payable clerk should not have the ability to print the checks. The checks are printed, with the authorized signature, by the accounting department and submitted back to the accounts payable clerk to disburse. The checks are stored in the vault until board approval, after which they are dispersed to vendors.

Payroll From an internal control standpoint, the greatest challenge is maintaining proper employee documentation that supports pay and related benefits and keeps the functions of employee data setup. Payroll timesheet entry and payroll check printing and distribution should be segregated.

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A balancing statement for 941 reporting should be run at the end of each payroll. Any differences should be resolved at this point.

It is difficult to review payroll by spot checking. There are too many similar amounts for this to be effective. The easiest way to review payroll is through the use of exception reporting. An exception report details all changes to the master file since the last payroll was run. Those changes would include rate changes, additions or deletions of personnel and step or lane changes. If using exception reporting, be sure that the data is secure. You will want to make sure that the report is automatically generated and goes directly to the person responsible for the review.

Student Activities A student activity procedure manual should be developed.

Fundraising approval forms that include needs and expectations should be used for each activity. This form creates the expectation as to how much money is required for the event. Ideally, student activity funds should be accounted for centrally. If that is impractical, then the student organizations should have two individuals to count the receipts and sign off on the amount to be deposited. Monthly activity should be forwarded to the district office for review.

Monthly bank reconciliations should be performed by the district office and reviewed in a timely manner.

Identifying Controls and Fraud Common constraints on an effective system of internal controls in a school district include the following: • Cost — Optimal cost to implement proper controls is beyond a district’s budget.

• Documentation — Districts often do not maintain up-to-date descriptions of key control procedures.

• Turnover — Controls get lost over time when they are handed down by word of mouth.

• Staffing levels — Sometimes controls are compromised in order to just get the job done.

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UPDATE Magazine / Winter 2016

Three common elements of fraud include: • Need or pressure — What motivates the crime?

Examples include: problems at home, spouse out of work, lavish lifestyle or gambling.

• Rationalization — Self-inflicted reason the crime is justified. Examples include thinking such things as: I was promised a raise and did not receive it, my child needs this, they will never notice because they have plenty or I am just borrowing.

• Opportunity — The method by which the fraud is committed. Indicates a lack or breakdown of controls.

Examples include: access to the asset, ability to cover it up, lack of review or improper segregation of duties.

Elements of an Effective Control Environment School district personnel have many responsibilities in an effective system of internal controls. The responsibilities for internal control in a school district are as follows: • Board of education oversees management’s performance.

• Management has the primary responsibility of creating the controls and monitoring their adherence.

• Staff executes the controls, along with management.

• Auditor reviews management’s internal control processes and offers suggestions, but is not a part of the controls.

Characteristics of a good control environment include: • Management is knowledgeable about internal controls.

• Management is committed to making internal controls work.

• Management communicates its commitment to all levels.

Effective internal controls include segregating the following duties: • Authorization to execute a transaction.

• Recording of the transaction.

• Custody of or access to the related asset.

ARTICLE / Internal Controls

Internal Control Scenarios The following are excerpts from the Internal Control Handbook, published by the Illinois State Board of Education Department of Finance, June 1993. These excerpts show how to divide up the work to optimize internal controls for an office with three people and a business manager.

Scenario 1 :

Cash Disbursements

1

2 Custody

Bookkeeping • Enters transactions • Reviews bank reconciliations • Prepares bill list

Scenario 2 :

• Compiles necessary documents (requisition, PO, receiving report and invoice) and checks for accuracy • Complies information for check run • Mails checks

2 Custody

Bookkeeping

Scenario 3 : 1 Bookkeeping • Enters transactions from detailed receipt listing • Compares net check amounts to payroll ledger

Custody • Prepares checks after board approval • Compares checks with documents before signature is affixed • Reconciles bank statements

Authorization • Directs checks to treasurer for signature • Reviews monthly bank reconciliations

Cash Receipts

1 • Enters transactions from detailed receipt listing

3

• Opens mail (with position 3) • Prepares detailed listing of receipts (with position 3) • Prepares deposit slips • Makes deposits

3 Custody • Opens mail (with position 2) • Prepares detailed listing of receipts (with position 2) • Compares detailed listing to the postings in the accounting records • Reconciles bank statements

Authorization • Reviews and signs off on receipts listing prior to deposit and entry into accounting system • Reviews monthly bank reconciliations

Payroll

2 Custody • Reviews payroll computations • Prepares checks or AFTs

3 Custody • Performs payroll computations • Processes payroll withholdings • Maintains payroll register • Maintains personnel data records (tax records, authorized withholdings, etc., assuming no separate HR department)

Authorization • Approves hourly wage reports • Directs checks to treasurer for signing or AFT • Reviews any changes to master files, pay rates, etc. as generated by the payroll system

THE POWER OF

PERSPECTIVE

TELLING THE STORY BEHIND YOUR NUMBERS

What is in a number? It is just a figure. By itself, it does not mean anything. Yet, when provided with some context it means much more. As a school business official, it is crucial to use numbers to tell a story about your school district: its successes, needs and desires for the future. There are many common narratives where numbers tell a story of critical importance.

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By Sean P. Carney

ASST. SUP./ BUSINESS ADLAI E. STEVENSON HSD 125

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“Data helps tell stories, but it doesn’t inherently tell a story.

Details like how you used your data to make a difference in your product offering are exactly what make a good story for your stakeholders and customers.”

Melanie Spring Chief Inspiration Officer of Sisarina

PUTTING FUND BALANCES IN PERSPECTIVE District

Fund Balance

District

Fund Balance

HSD 1 HSD 2 HSD 3 HSD 4 HSD 5 HSD 6 HSD 7

$131,493,425 $125,155,503 $123,449,252 $46,639,097 $33,448,159 $25,619,552 $25,011,390

HSD 8 HSD 9 HSD 10 HSD 11 HSD 12 HSD 13 HSD 14

$22,582,887 $17,486,383 $7,314,831 $100,521,066 $90,050,388 $82,846,586 $80,944,357 Table 1

A statistic often used in storytelling is a district’s fund balance. There are many components to understanding a school district’s fund balance. Unfortunately, there are also many sources of information about fund balances that only report the statistic and not the story behind these statistics.

Above is a chart detailing the fund balance of a sample district, HSD 12, compared to surrounding high school districts (see Table 1). This table shows the numbers without context. A fund balance of $90 million seems like a lot, but what if the district’s annual expenditures are $180 million? What if the school district chooses to use a cash basis for accounting?

In that case, some of the money collected and included in the fund balance is early taxes, which belong to the upcoming fiscal year.

When analyzing appropriate fund balance levels, one must look at factors including, but not limited to: • Accounting basis • Property tax distribution schedule

• Board policy • Budgeted expenditures

• Long-term master plans

Let us further examine our hypothetical school district HSD 12. For the purposes of this example we will also assume: • Their budgeted expenses are $80 million.

• Their budgeted revenues are $70 million.

• The board’s policy on fund balance is the same as the State’s suggestion of 25 percent.

• The district is located in Lake County where 50 percent of property taxes are distributed prior to the start of any given fiscal year.

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ARTICLE / The Power of Perspective

At first glance, it appears that HSD 12 has a large fund balance ($90 million) and is opening itself to tax objections for over accumulation. However, over accumulation tax objections are most likely to occur when fund balance is 200 percent or more of expenses.

Since expenses at HSD 12 are $80 million a year, the fund balance would have to be more than $160 million to open itself to tax objections. Therefore, the district is protected from over accumulation arguments.

Some school business officials might also choose to explain the makeup of their fund balance to their community. If the district’s ending fund balance for the fiscal year is $90 million, what does that mean?

As mentioned earlier, the district receives 50 percent, or $35 million, of property tax revenue in June of the previous fiscal year. This means the “true” fund balance of the district isn’t $90 million, but rather $55 million or 68 percent of operating expenses. Is 68 percent too much?

In our assumptions, HSD 12 has a board policy that follows the state policy on fund balances: “A district shall seek to have a fund balance no lower than 25 percent of annual expenditures in any given fund.” This means that HSD 12 should have a fund balance no lower than $20 million.

Often, individuals interpret that the state policy means the district wants to maintain a fund balance of exactly $20 million. To the contrary, $20 million is the level at which the school board should begin to take corrective action to ensure the financial stability of the district. If the district is at 43 percent, or $35 million above the level when the board needs to start taking corrective action, is that too much?

Unfortunately, there isn’t an easy answer to the question of how much is too much. That depends on the story. Let us assume that HSD 12 is planning some large capital expenditures, perhaps an addition or a new school.

Even if HSD 12 issues new bonds to pay for the addition, they will still need money to operate the facilities once the construction is completed.

It is important to communicate that the presence of a fund balance doesn’t mean a school district is over taxing or hoarding money. Rather, it might mean a district is trying to continue to operate without the need to go to a referendum. While some might argue that referenda are a way to control costs and give the community a larger voice, the end result usually means a higher cost, not just financially, but culturally as well.

“Numbers tell you the facts, but you need to place them in context for your audience. Don’t just take a number you’re given at face value — dig deeper into how similar numbers compare.”

Edie Keller Donald W. Reynolds National Center for Journalism www.iasbo.org

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TAX DOLLARS: A TALE OF EFFICIENCY DISTRICT HSD 1 HSD 2 HSD 3 HSD 4 HSD 5 HSD 6 HSD 7

OEPP 2015 $26,509.40 $24,847.65 $23,672.17 $23,059.44 $22,399.89 $22,123.02 $22,038.52

ACT 26.3 25.6 26.6 24.3 26.2 25.1 24.9

DISTRICT HSD 8 HSD 9 HSD 10 HSD 11 HSD 12 HSD 13 HSD 14

OEPP 2015 $21,605.76 $21,254.63 $20,838.40 $19,848.69 $19,733.61 $19,583.63 $19,343.25

ACT 27.1 23.9 24.7 26.6 26.6 25.4 26.3 Table 2

As seen in the first example, HSD 12 has a healthy fund balance. A group of community members are upset with their tax rate and the school for continuing to ask for more tax money year after year. In this situation, the business manager can use a couple of different approaches to help explain their narrative.

The Operating Expense Per Pupil (OEPP) statistic provided in every district’s Annual Financial Report (AFR) is an easy way to let your community know you are efficiently using tax dollars. A quick look at Table 2 shows the various OEPP statistics for high school districts surrounding HSD 12. Putting their OEPP in context, it is easy to understand

that HSD 12 is spending less to educate a child than their peers (and therefore more efficient).

HSD 12 could enhance this story by examining how effectively their money is being spent. With an average ACT score of 26.6, HSD 12 is tied for second best amongst their peers. Thus, it can be surmised that not only are they efficient with the money collected from taxpayers, but also effective. To put it another way, this high school district provides the best “bang for the buck.” Perhaps another way to interpret the data is to say other districts must spend more money per pupil to get similar test results.

Numbers in isolation say very little.

As a chief school business official it is important to use data to assist in the creation of a story.

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ARTICLE / The Power of Perspective

TAX ABATEMENTS: A FEEL GOOD MESSAGE YEAR 2008 2009 2010 2011 2012 2013 2014 2015

LEVY 84,525,000 85,255,310 86,909,853 88,467,089 91,246,566 93,620,000 94,630,000 94,018,012

ABATEMENT 400,000 — 2,800,000 4,100,000 4,000,000 3,000,000 2,000,000 —

EXTENSION 83,064,454 84,319,394 84,109,853 84,367,089 87,247,566 91,394,942 92,630,000 94,018,012

NET — 1.5% (1.5%) .3% 3.2% 4.75% 1.35% 1.5% Table 3

Another good story districts can tell is the use of tax abatements. While not possible in every school district, some school districts might be in a position to abate some of their bond revenues back to taxpayers, easing the financial burden on their community.

at large. Or, you could use data from special education grants to explain how little the government contributes to the education of special education students, creating an extremely large strain on a school district budget. There is always a story to be told and data to reinforce the context.

In the table above, this school district used tax abatements to help their community during the most recent downturn in the economy and housing markets (levy years 2010 - 2012).

Then, as the economy and housing markets rebounded, they began to slowly peel away the abatement, ensuring the percentage increase in the average taxpayer was as modest as possible. Not only did taxpayers receive some relief during this economic downturn, but because it was a tax abatement, the district protected its ability to levy for the full amount of dollars it was entitled to. In other words, the district did not lose any future tax money, as it would have if the district chose to under levy.

However, if there is golden rule of storytelling, it is to keep the theme consistent. It is to no one’s advantage to create a different story for each and every problem. An inconsistent theme will cause confusion and create many more problems than solutions. Always bring the story back to a central theme. At Adlai E. Stevenson High School, the crux of every story ends with a similar phrase: “How does this lead to success for every student?”

THE CRUX OF THE STORY There are many other ways to use data to tell a story, both on a macro or a micro level. You could use starting teacher salary to explain to your community your salary costs are low compared to other districts or industries

THE POWER OF PERSPECTIVE Numbers in isolation say very little. When we use data in a thoughtful context, we can communicate more clearly to all stakeholders and maintain our consistent focus and commitment to student growth and well-being. As liaisons to our community, by providing clarity on the data we collect we are allowing for smarter, more dedicated problem solving.

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An

Analytical

Approach

to

Staffing

Many people think of a five-year financial forecast as a mere multi-year budget simulation. Indeed, most projections are developed with the purpose of forecasting revenues, expenses and fund balances into the future. However, embedded in the accounting exercise, the forecast may reveal something even greater than a simulation of debits and credits.

Your multi-year projection may actually present a plan for student success through the strategic allocation of district resources.

ARTICLE

By Michael English

PRESIDENT/CEO FORECAST5 ANALYTICS, INC.

In any public school setting, the largest ongoing allocation of financial resources is made in the area of staffing.

For many school districts, expenditures for salaries and benefits will represent three-quarters or more of the annual budget. This allocation not only embodies the largest amount of dollars spent, but it also represents the key driver for increased organizational performance. Taking an analytical perspective with your planning and accounting for the people involved in your organization will have direct impact on opportunities and growth for your students and community.

KEY QUESTIONS TO CONSIDER As you think about staffing with a multi-year perspective, there are some simple, but critical, fundamentals to focus on. The total cost of your staff is equal to the average amount you pay in salaries/benefits times the number of people you employ. This simple equation points to two critical areas to analyze and manage: 1. The dynamics of the compensation model used by your district and how the costs inflate over time.

2. Your position control process and how well it is managed.

Focusing first on the compensation model, there are several questions to consider: • With your compensation paradigm, can you accurately project costs over time?

• How competitive is your salary model compared to relevant peers?

• How have your benefits costs trended over time and how do they compare to peers?

• Are there strategies that you can consider to remain competitive, but slow the inflation rate of your salaries and benefits?

In regard to the position control process, consider these questions: • Are there processes and sophisticated reporting in place to manage and control FTE counts?

• How do staffing ratios by position compare with high performing peers?

• When new employees are hired, how are they placed within the compensation model?

• Are you able to establish controls on total hours worked for your hourly employees in order to limit exposure to additional benefits expense under the Affordable Care Act? • Do position allocations align with your board’s forwardlooking strategic priorities?

EXPENSE BENCHMARKS IN STAFFING On a statewide basis in 2015, Illinois schools had the following budget allocations: • Salaries and Benefits (Objects 100 & 200) averaged 72% – highest district at 86%.

• Benefits alone (Object 200) averaged nearly 14% – highest district at 24%.

• Instructional expenses (Function 1000) averaged 53% – highest district at 69%.

Interestingly, in Illinois the budget allocation averages for “Cook and collar county” districts are nearly identical to the statewide averages.

INVESTING IN HIGH-IMPACT AREAS How can you start to look at these benchmarks in relation to your budgetary allocations in the area of staffing? One way is to compare Function expense benchmarks. Examine how you compare to statewide allocations and how the trends look in each functional expense area. By using comparative analytics, you may be able to identify the functional expense areas in which you want to invest. Looking at this idea in the context of a five-year forecast, think about your ability to maintain or increase your budget allocation in the areas of instruction and support that can lead to the highest return on investment. Ask the question, “Do we have other expenses that are crowding out the opportunity to invest in these areas of high potential impact?” www.iasbo.org

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EXAMPLE OF A COMPARATIVE ANALYSIS OF EXPENSES ALLOCATED BY FUNCTION

EXPRESSED IN TERMS OF BUDGET PERCENTAGE AND DOLLARS SPENT PER STUDENT IN 2015: School District 1

$19,526

School District 2

$18,817

School District 3

$17,973

School District 4

$15,698

School District 5

$15,632

School District 6

$15,423

School District 7

$15,403

School District 8

$15,311

School District 9

$15,075

School District 10

$15,050 0%

20%

40%

60%

80%

100%

$0

Percent of Operating Expense

$5,000

$10,000

$15,000

$20,000

Actual $ Per Student

DISPLAY 1000 Instruction

3000 Community Services

2000 Support Services

4000 Payments to Other Districts and Government Units

A deeper drill-down on functional expenses and comparative analytics might examine the following ideas: • How do high-performing school districts allocate their functional expenses?

• Do early childhood investments cost less over time than later grade interventions?

• Would an investment in instructional aides and coaches increase teaching performance?

• Are there curriculum investments that your district wants to make in the future that should be budgeted for?

IDENTIFYING THE TRENDS Another accounting perspective to examine is object level expenses. Identify your trends in benefits and how they compare to statewide benchmarks. Examine your benefits costs and evaluate whether they are rising and beginning to represent a larger slice of your “budget pie.” Also, if your benefits costs are increasing, this may be impacting your ability to put more money into salaries by either enhancing your schedule or hiring more FTE. With regards to the statewide and regional salary benchmarks, think about the following ideas and how they might impact your costs over a five-year period: • Is your schedule competitive in your region and in comparison to relevant peers?

• Can you hire and maintain quality talent in your area without having to leapfrog your schedule into the top-paying position in your market?

• When filling a position, do you have systems in place to identify the appropriate level of experience needed?

• When filling a position, do you set hiring limits based on the experience needed to bring new employees in at the lowest possible price point?

• Do you have position control systems in place to ensure that the hiring is done within the limitations set forth in your budget projections?

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ARTICLE / Analytical Approach to Staffing

SETTING THE STAGE FOR BUDGETARY SUCCESS Some of these ideas point to the importance (and the investment) that your district is making in the area of human resources. A coordinated effort with your HR group can set the stage for budgetary success by identifying talent and creating an environment for professional growth that is not dependent on having the best salary schedule in the region. Using a professional football analogy, the highest performing teams in the NFL are able to consistently identify great talent in the later rounds of a draft and then “coach those players up” into great performers.

Using the ISBE statewide salary data in this analogy, districts that can hire great prospective talent at a BA-1 level will save at least $20,000 per FTE over a five-year period compared to hiring a MA-1. The savings is even greater when considering salary steps. With a spread of more than $10,000 between a MA-1 and a MA-10, you can start to extrapolate significant savings per FTE over a five-year period. These savings may allow you to invest in instructional coaching or technology that elevates the performance of your entire team.

By carefully examining each opening that your district is trying to fill, you may be able to find opportunities to bring

AVERAGE SALARY SCHEDULE COSTS BY DEGREE/STEP $60,000

2016 ISBE SALARY SURVEY

$55,000

in lower cost staff without compromising team performance.

For example, if you are filling a 3rd grade teaching position and the rest of the 3rd grade team is comprised of veteran teachers, it might be a great opportunity to bring in a “rookie” in order to generate financial savings.

As stated previously, these budgetary strategies must be complemented by solid systems and procedures in the area of position control in order to produce the potential savings.

UTILIZING THE FIVE-YEAR FORECAST In many cases the five-year forecast is presented in the context of financial stewardship and accountability, which is certainly a necessary and valuable use of the projection.

However, as the national debate in the education sector continues to grow regarding student testing, administrators are recognizing that assessments are a lagging indicator of performance. By incorporating analytics and widening the presentation of the five-year forecast to include a strategic plan for staffing and educational resource allocations, the financial projection can become the plan for student growth and opportunities. In this new era of analytics, school business officials are positioned to be lead strategists in both the areas of finance and resource planning, ultimately helping to create the roadmap and leading indicators for student success.

Looking at the 2016 ISBE salary survey, for the 795 districts that participated the following averages can be calculated: • The average starting salary for a teacher with a Bachelors degree (BA – Beginning) is nearly $38,500.

$50,000 $45,000 $40,000

• The average starting salary for a teacher with a Masters degree (MA – Beginning) is nearly $42,500.

$35,000 $30,000 $25,000

• The average salary for a Masters degree with ten years’ experience (MA – 10) is approximately $53,500.

$20,000 BA-1

MA-1

MA-10

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ZEN AND THE ART OF SUPPLEMENTAL AUDITS An Inquiry into Audit Preparation

If it has not already, your district could soon find itself subject to several types of supplemental audits in addition to their annual financial statement audits. Proper planning and preparation can facilitate a smooth process that satisfies auditors and wraps up on a timely basis, with minimal disruption.

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ARTICLE

By Sean P. Carney

ASST. SUP. / BUSINESS ADLAI E. STEVENSON HSD 125

Matthew Geerdes, CPA SENIOR MANAGER CROWE HORWATH LLP

Christine Torres, CPA PARTNER CROWE HORWATH LLP

You are probably familiar with the headaches and hassles involved in undergoing annual audits, but your district cannot afford to let its guard down when it comes to the supplemental audits, which have become increasingly common between yearly examinations. With the recent implementation of Uniform Grant Guidance, as well as additional regulatory reviews from agencies such as the Illinois State Board of Education (ISBE), Teachers’ Retirement System (TRS) and Illinois Municipal Retirement Fund (IMRF), school districts have been subject to greater numbers of supplemental audits and the potentially costly funding recaptures that can result when significant noncompliance is detected.

It is critical that SBOs understand why these audits are occurring, how to prepare for them and how to respond to the results.

Audit apprehension is understandable, but with careful preparation SBOs can make it more likely that supplemental audits proceed in an expedited, organized manner.

It is critical that SBOs understand why these audits are occurring, how to prepare for them and how to respond to the results.

SUPPLEMENTAL AUDITS IN ILLINOIS In contrast to annual financial statement audits, supplemental audits consider specific pieces of a school district’s operations. Those pieces could affect financial statements, but supplemental audits dig into them in much more depth than is typical for the annual audit. In Illinois, school districts are typically subject to supplemental audits conducted by three regulatory agencies:

Illinois State Board of Education (ISBE)

Illinois Municipal Retirement Fund (IMRF)

As the oversight agency for all school districts in the state, ISBE has the discretion to look at whatever it chooses. In recent years, it has primarily scrutinized four main areas: general state aid (specifically, the factors that go into the calculation of aid, including average daily attendance), transportation, child nutrition and special education.

IMRF conducts spot checks of participant census data, too. In addition, it selects certain districts for review in the same manner TRS does. Large districts that are responsible for providing a larger proportion of the plan’s net position can expect IMRF visits, but the fund also randomly selects some smaller districts for visits. In general, due to the new pension accounting requirements, districts will see more of both IMRF and TRS in the future.

Teachers’ Retirement System (TRS)

TRS can review a district’s payroll records to check that they correspond with the amounts the district withholds from paychecks and submits to the system. It also determines whether the district funded the plan with employer and employee contributions in accordance with applicable statutory rates. In addition, TRS reviews the participant census to confirm that the district is providing accurate census data. Notably, this is happening in the wake of the recent implementation of Governmental Accounting Standards Board (GASB) Statement Number 68, “Accounting and Financial Reporting for Pensions,” which requires sampling of participant data, including data from the annual census. TRS has added more spot checks to its routine site visits performed annually on a sample basis.

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PLANNING FOR A SUPPLEMENTAL AUDIT Like any annual financial audit, a successful supplemental audit requires appropriate preparation. First and foremost, SBOs should respond promptly when they receive an audit notice from a regulator. A surprising number of districts fail to respond in a timely manner and suffer unnecessary negative experiences as a result.

Upon receiving a notice, an SBO should reach out to the regulatory agency to determine the scope of the audit to come. For example, is the agency interested in participant-related issues for pension accounting or other areas of concern?

If possible, SBOs also should learn which type of agency personnel will be dispatched to their district offices. For example, a field representative will be well versed and probably seek more detailed material, while a senior

administrator from the agency might be more interested in high-level discussion about the district’s general overall operations. Knowing the audience can help to guide a district’s audit preparation.

It is also wise to consider the objective of the supplemental audit. For an ISBE General State Aid audit, usually the objective is to verify that the data reported to calculate general state aid is accurate. IMRF and TRS audits, on the other hand, may want to know if all of the employees categorized as “active” for pension reporting purposes are actually active and whether the withholding has been calculated correctly. SBOs must understand the auditor’s objective and scope to best prepare for their requests for materials.

PREPARING FOR A SUPPLEMENTAL AUDIT School business officials can expedite the supplemental audit process for all involved by preparing materials for the auditors in advance. Most agencies provide a specific list of requested materials; other times, the audit objectives might provide a road map. If the objective is to check the general state aid calculation, for instance, the district needs to provide attendance data for the year in question, the relevant attendance policies, the amount of other grant revenues received that year and the amount of property taxes received that year.

One common approach is to provide the auditors with information on the population of data that is available a week or so before the site visit. The auditors can then select samples of detailed records from that data population to examine on-site. The samples could be large or small.

Some auditors have discretion in this area, but others must act according to guidance from their agency.

Be sure to take the time to discuss the request for materials with the appropriate district personnel. The chief school business official should have access to the necessary 36 |

UPDATE Magazine / Winter 2016

information, but he or she should alert the superintendent, transportation coordinator, principals, attendance clerks, human resources and payroll that an audit is coming, so that additional information requests do not catch those functions unprepared. Follow-up questions and material requests are bound to happen. If personnel do not respond promptly, the process can come to a halt.

SBOs can also avert delays by preparing all requested materials in the format specified by the agency. When districts fail to provide data in the correct format, it can slow the audit process and create problems with calculations.

Following the formatting instructions will enable auditors to complete their work sooner.

It is advisable to review the assembled information before transmitting it to confirm that it satisfies the requested specifications and can be followed easily, meaning that the relevant backup detail is provided near the corresponding summary information. Again, it is all about making the process quicker and easier for the auditor.

When an audit notice arrives, school districts must take the necessary steps to understand the purpose of the audit and prepare accordingly.

HANDLING THE FINAL REPORT Many districts consider it worthwhile to conduct a closing meeting with the auditor to review the draft findings (although many auditors consider this meeting part of standard procedures). Even in the absence of a formal meeting, however, business officials should carefully review the draft findings, including the calculations and the potential impact of the findings. SBOs need to understand the reasoning behind auditors’ conclusions, particularly any exceptions or adverse findings and verify that the auditors are acting on valid evidence. If an SBO disagrees with the findings, they can pursue additional follow-up with a higherlevel authority in the agency. It is best to resolve such issues before the final report is issued.

After the auditors’ report has been finalized, SBOs must present the findings to the district board of education as part of their responsibility as “those charged with governance.” In some circumstances, SBOs receive and agree to a draft report and then the board looks at the draft and approves the language before the auditors submit it as the final report.

School business officials should bear in mind that, with today’s greater emphasis on transparency, audit reports might well be released to the public. Adverse findings, therefore, could cause fallout for both business officials and elected board members.

FINDING YOUR AUDIT ZEN When an audit notice arrives, school districts must take the necessary steps to understand the purpose of the audit and prepare accordingly. Proper planning can go a long way toward the timely completion of a supplemental audit with as few disruptions as possible. A careful review of the final audit report can provide valuable guidance on improving operations, which would help minimize audit pain in the future.

Proper planning can go a long way toward the timely completion of a supplemental audit with as few disruptions as possible.

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THE

ADVANTAGE Putting dollars into anything outside of the classroom is often a hard sell. Consider for one minute the influence that inventory has over our operations. Inventory plays an important role in our ability to resolve work requests by creating a buffer against demand variations and potentially harmful supply disruptions. Inventory can also significantly impact cash flow. The challenge is to select the appropriate warehousing and inventory system and to clearly understand the cost and benefit implications to operational performance.

A centralized district warehouse is necessary to ensure an inventory system is properly implemented. The warehouse will not only provide the space for development of an inventory system, but will also help alleviate many existing storage issues as school occupants compete for limited storage options in the buildings.

ARTICLE

Important elements of a fully functioning warehouse include the ability to: 1. Receive and store large bulk items (typically palletized) vertically.

2. Sort and store smaller supplies by craft or item type.

3. Keep assets in a conditioned environment where temperature and humidity are controlled.

4. Track what supplies are on hand and replenish those items through an inventory control system.

Key Benefits of a District Warehouse Economy of Scale in Purchasing Notably one of the strongest arguments for having a district warehouse is the effect on purchasing. Many items such as custodial supplies, maintenance supplies and even district copy paper can be purchased in bulk quantities. Suppliers are willing not only to discount the bulk purchase, but also to reduce the cost of shipping if the delivery is taken in one lump sum.

Your maintenance operation, for example, requires hundreds of bags worth of different types of salt for various activities throughout the year. Water softener salt is not only used to control the mineral deposits in our drinking water, but is a critical element used to maintain water chemistry in the closed water systems that are used to heat and cool the buildings. Purchasing the supply in bulk can yield a savings of 30 percent over monthly deliveries to the buildings. In a district with eight to ten schools one could expect to need 20 to 24 pallets worth of product. To take advantage of volume purchasing, a warehouse with solid pallet racking is needed to store such volumes.

Having Product On Hand When Needed During the 2013-14 school year, Chicago and the surrounding suburbs were hit with 82" of snow. Districts were sent scrambling for both bulk and bag salt to throw down during this time. Districts dependent on regular deliveries of palletized salt found that suppliers were cut off and could do nothing to get mid-season shipments. Those who purchased a year’s supply in

By Patrick S. Browne, Jr., CPMM DIR./FACILITY OPERATIONS YORKVILLE CUSD 115

advance along with a little contingency reserve were able to provide a safe means of getting students and staff into the buildings.

Again, using the example of a district with eight to ten buildings, a winter with total accumulations of 30" to 50" inches could require around 900 bags of sidewalk salt or 18 pallets worth of product. Space is needed if we are to ensure product is on hand, but also to take advantage of price breaks found when taking a full year’s supply at once.

Increased Efficiency Having product on hand can also help decrease the length of time to close work order requests. This means learning environments disrupted due to a thermal comfort issue or lighting issues are returned to a state where learning is no longer hindered by the facility. Having supplies on hand, such as actuators and bulbs, allows a district to combat when common resources used industry-wide are on back order. We can better prepare ourselves to ensure continuity of services when we have what is needed to maintain levels and standards in the warehouse. Through the implementation of a requisition program, warehousing can have the benefit of reducing the time your delivery drivers and maintenance staff spend traveling to and from supply houses and stores.

Accurate Reporting A significant amount of any budget can get tied up in supplies used to maintain facilities. A well thought out warehouse and inventory system allows the business manager the ability to know: • What is on hand at any given time.

• When inventory is typically needed.

• The value of the inventory.

• How often inventory is turning.

Each of these points are important to ensure a district does not have excessive item counts and thus excessive resources tied up in inventory that could be used in the classroom instead.

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Keep A Watchful Eye:

Implementing Fundraising Controls The relationship between a school district and their boosters or foundations can be challenging.

Because these organizations are staffed by volunteers who give freely of their time, school districts have been reluctant to require the same level of accounting controls required of school district funds and in some instances have no control over the accounting.

School Foundations Public school foundations are “privately operated, nonprofit organizations established to assist public schools1.” They are often set up as 501(c)(3) charitable organizations. Most public school foundations are independent entities and have no formal legal relationship to the school district. They have their own board of directors, staff and volunteers. They are guided by bylaws that specify what role the school district will have. School foundations can decide to accept unrestricted or restricted donations. The foundation determines the use of funds from an unrestricted donation, but the donor specifies the use of funds from a restricted donation. Studies suggest that the closer the donor is to the school or school district foundation the more likely they are to donate. Many school districts utilize payroll deductions for school foundation donations.

Oversight School districts often work very closely with their foundations, but because foundations are separate entities school districts cannot mandate how they operate.

However, school districts can provide some oversight to help them. For example, most school districts have a link to their foundation from the school district website. In order to be listed on the school district website, a school district can request access to certain finance-related items. These items may include a copy of 501(c)(3) paperwork, bylaws and annual financial statements. By requesting annual financial statements, specifically Form 990 for 501(c)(3), from school foundations, the school district is ensuring that financial information is prepared. This can be helpful for foundations that are small or have high turnover.

Fundraising School districts and their foundations should work collaboratively to decide the type and purpose of fundraising. Donations to school foundations that are a 501(c)(3) are often easier to receive than donations given directly to school districts because 501(c)(3) donations are 40 |

UPDATE Magazine / Winter 2016

tax deductible. Items received by a school district from a school foundation are considered gifts. As such, the school foundation and district should ensure that funds raised by the foundation for a particular purpose are something that the school district can accept as a gift. Most boards of education have policies on the acceptance of gifts; most require formal board approval. In addition to board approval, capital gifts should be included in fixed assets as an addition the year they are accepted. This ensures that the fixed asset and depreciation calculations are correct, as well as ensuring that the asset is insured.

Controls for Concession Stand Sales • Utilize cash registers that reconcile sales to cash received.

• At minimum, have two people in the concession stand taking the cash and counting it at the end of the event.

• Once the cash is counted it should be locked in a secure location.

• All money should be secured and remain on site to be deposited the next work day.

Expenditures should not be reimbursed through sales, but should be submitted separately and paid by a check. Original detailed receipts should be required for reimbursement.

Controls for T-shirt Sales • For cash receipts, a simple reconciliation of inventory and cash receipts should be performed. ºº For example: If 100 shirts are purchased to be sold at the concert for $10 each and 80 are sold, one person can reconcile the $800 in cash (80 times $10).

A second person can verify the cash and that 20 shirts remain.

• Deposits and expenditures should be handled just like in the concession stand example above.

ARTICLE

By Mary B. Kalou

ASSISTANT SUPERINTENDENT MAINE TWP. HSD 207

ARTICLE / Fundraising Controls

School districts should have a written process for having fundraisers approved by administration. This process should include discussion on the type of fundraisers, the timing of fundraisers and the personnel responsible.

After fundraisers are approved the responsible personnel should be provided written guidance on how to handle cash receipts and expenditures.

Booster Organizations with Separate Financial Records Booster organizations are often separate legal entities and some may be 501(c)(3) organizations. School districts can require booster organizations to comply with school district policies in exchange for becoming a recognized organization and using the school’s name. As part of the school district policies, the school district may want to require annual financial information to be provided.

Items received by booster organizations are considered gifts and should follow the same approvals as foundations.

Booster Organizations with Shared Financial Records The school district is considered a fiduciary of these funds. As such, the school district is responsible for the oversight of these funds and all school district policies and procedures should be followed, just like any other student activity fund. A large portion of the fundraising done by booster organizations involves handling cash.

(See the previous page for examples of accounting controls booster organizations should adopt for cash handling.)

Crowdfunding In the online age in which we live, many schools and student organizations are turning toward crowdfunding.

Crowdfunding is a method of raising money for a particular purpose from a large number of people, generally donating small amounts via the Internet. Because crowdfunding is a fundraiser, it needs to be approved just like any other fundraiser. There are several of the advantages and drawbacks of crowdfunding.

Crowdfunding Opportunities and Pitfalls Advantages • Crowdfunding reaches beyond your local community. People from all over the world con contribute to the project.

• Projects can be shared easily through social media.

• Donors can see the progress toward the fundraising goal.

• A personal touch with pictures and/or videos can be added to the request.

Drawbacks • Crowdfunding companies charge a fee. These fees can be a percentage of the money collected and can be quite large.

• Some crowdfunding companies require funds to be deposited through ACH, which means they need the school district’s bank account information.

• School districts must have procedures to pre-approve.

Groups should not be fundraising in the name of the school or districts without it. They could end up getting donations the school district cannot support.

All of the drawbacks above can be overcome. Some basic research can provide the fees that companies charge and school districts can determine if what they are receiving from the company is worth the fee. School districts can set up a separate bank account for ACH deposits that can block withdrawls. It is also recommended that a procedure to access and transfer funds be created.

Implementing Fiscal Controls As school district resources become tighter, foundations, booster groups and student organizations are becoming more creative. Fundraising is increasing. School districts need to have solid fiscal controls in place that protect both the school district and the various organizations that they work with.

Resources: 1. Clay, K., Hughes, K.S., Seely, J.G., & Thayer, A.N. (1989) Public school foundations: their organization and operation. Arlington, VA: Educational Research Service.

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RESOURCES Learning from International Success While the U.S. remains the largest economy and superpower in the world, the rapid economic growth of other nations show that no country’s global position can be taken for granted. In her book, A World-Class Education, Vivien Stewart explores the reasons why so many nations have begun to surpass the United States in quality of education.

In her words, “a great transformation is taking place around the world — and it is taking place in education as well.”

Understanding Global Trends The United States leads the world in the proportion of 35 to 64-year-olds with college degrees, reflecting the astounding educational success the country experienced in the latter half of the 20th century. But the U.S. ranks only 10th in those same rankings when it comes to young adults age 25 to 34.

American educators need to understand that the accelerating pace of globalization and profound technological advances are changing the way students need to be educated, thus creating a new standard of excellence. By examining practices of countries that have surpassed or will soon surpass the United States educationally we can begin to understand what U.S. schools might be able to do differently and better.

How are They Doing It? How are other countries outperforming our K-12 education system? What education policies and practices have they adopted? How do these differ from American educational policies?

Stewart points out that answering these questions is a challenging proposition, but entirely worth the investment.

Some factors to pay special attention to are common success factors that cut across all international highperformance systems, how other nations are developing modern curriculum, instruction and assessment systems and how other nations are utilizing technology in education.

Attaining Excellence and Equity By learning from countries that have effectively ramped up their educational performance and considering how they might be adapted in our national context, we can broaden the range of options under consideration and draw on a wider evidence base.

On My List A World-Class Education: Learning from International Models of Excellence and Innovation

By Vivien Stewart

Overview: In the 20th century the United States dominated the world stage as the premier superpower, leading the way economically, politically, militarily and culturally.

In the second half of the 20th century, the United States was also the global leader in education, becoming the first nation to achieve mass secondary education.

Stewart points out that “what highperforming countries show is that performance does not have to be flat, that substantial improvement on a wide scale is possible, and that both excellence and equity are attainable.”

We as educators need to understand global trends in education in order to create schools that equip our students for the world of tomorrow, not the world of yesterday.

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The Power of Perspective

Resources to help you tell your story.

Know Your Audit and Accounting Standards pg. 34

Governmental Accounting Standards Series Brush up on the standards of governmental accounting and financial reporting.

www.iasbo.tools/statement68

Grow Your Fundraising Options pg. 40 Education Crowdfunding Options In a time where shrinking budgets are adversely impacting education, educators and officials at all levels are forced to think outside the box to make ends meet.

Learn about an increasingly popular method of doing so – crowdfunding.

www.iasbo.tools/edcrowdfunding

Internal Controls Best Practices pg. 20 ISBE Internal Controls Handbook Learn how to address and improve your district’s internal control practices.

www.iasbo.tools/isbehandbook

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UPDATE Magazine / Winter 2016

RESOURCES

Understand the Sources of SPED Funding pg. 14 Division of Funding and Disbursement Services, Overview of State Special Education Funding Learn how school districts obtain special education funding throughout the state of Illinois for all areas from summer school to transportation.

www.iasbo.tools/spedfunding

FY17 IDEA Part B Program Information and eGrant Application Instructions This instruction booklet provides instructions for completing the grant application through the eGrant system.

www.iasbo.tools/egrantapp

State

Excess Cost

Medicaid Administrative Claiming Medicaid administrative claiming can be a complicated process. Learn which about different Medicaid services, which costs can be covered and payment exceptions.

www.iasbo.tools/medicaidclaim

Block Grant

Secondary Transitional Education Program (STEP) The Illinois Department of Human Services’ Division of Rehabilitation Services (DRS) is the state’s lead agency serving individuals with disabilities. DRS works in partnership with people with disabilities and their families to assist them in making informed choices to achieve full community participation.

www.iasbo.tools/edtransition

Workforce Innovation and Opportunity Act (WIOA) Learn the five rules of WIOA, legislation that is designed to improve the nation’s workforce system by helping those with significant barriers to employment find highquality jobs and careers.

Medicaid

State

Excess Cost

MOE

Federal

www.iasbo.tools/workforceopp

Block Grant

Illinois ASBO members can find all of these resources on the peer2peer Network online community under UPDATE Resources.

www.iasbo.org

Medicaid

MOE

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T

THE FINAL WORD SPEAKING UP ABOUT SCHOOL DISTRICT ACCOUNTING STACEY L. MALLEK Asst. Supt./Business, CSBO Arlington Heights SD 25

I believe my role as a business official is to manage and safeguard district assets.

This supports the ultimate goal of ensuring success for every student. To do this, I must provide the necessary physical, financial and human resources to support teaching and learning in the classroom while maintaining the financial stability of the district.

Proper accounting leads to better-informed decisions.

Proper accounting of revenues and expenditures in a timely manner provides reliable information for decision making and forecasting purposes. Proper and consistent accounting can help the CSBO identify irregularities when comparing budget to actual throughout the fiscal year and identify cost trends over multiple years. Good accounting procedures allow one to be able to tie back every transaction recorded in the general ledger to supporting documentation. All of these things make the financial information more transparent and reliable, which builds trust in the school district’s financial reporting.

Disclosure will be key in the coming years.

Over the past 5-10 years, the Governmental Accounting Standards Board (GASB) has issued a number of new requirements for pension plan disclosures in school district financial statements. With the heightened focus still on pension plans and their funding levels, along with the possibility of a pension cost shift, I could foresee additional requirements related to accounting for pension costs and other retirement benefits.

One practice districts should adopt to improve their accounting…

Pay invoices from the proper expenditure account, even if it will cause the account to go over budget. I tell everyone a supply doesn’t suddenly become a purchased service just because there is money left in the purchased service budget. As long as budget holders don’t exceed their budget in total, they can overspend in one line item and underspend in another to ensure transactions are recorded in the proper account.

Available in print and in an online digital edition, The Journal of School Business Management gives you in-depth coverage of all phases of school business management including budgeting, cash flow analysis, facilities, data processing, planning, professional development, finance, risk management, maintenance and operations, food service, transportation and selected legal issues.

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