Building and Sustaining the Business Manager

1
Building and Sustaining the Business Managers
Relationship with Board Members

• Luann Mathis, Business Manager, Prospect Heights
  ESD 23
• Lauri Calabrese, Asst. Superintendent of Finance,
  LaGrange ESD 102
• Ann Williams, Director of Business Ops,
  Bradley-Bourbonnais HSD 307

2
Agenda

• School Board Roles and Responsibilities
• Building Sustaining Relationship
• Board Members Should Have a Basic Understanding
  of Business Office Functions
• School Finance
• Business Operations
• Question and Answer Session with Real Life Board
  Members!

3
Origins and Basic Function of School Boards

• Grew out of town meetings dating back to the
  original Thirteen Colonies.
• Basic Function of the School Board remains the
  same represent all constituents within their
  district providing local control over education.
• ALL CONSTITUENTS Administrators, teachers,
  support staff, students, parents, non-parent tax
  payers, local businesses, special interest groups
  etc. etc.

4
IASB Mission Statement

• The mission of the Illinois Association of
  School Boards is Excellence in local school
  governance and support of public education

5
Foundational Principles of Effective Governance

• The School Board is considered a corporate entity
  required by law to govern the school district
  according to State Statute.
• The School Board represents all their
  constituents within their school district
  boundaries.

6
School Board Duties Responsibilities

• IASB Defined Duties
• Employs a Superintendent
• Clarifies the District Purpose
• Connects with the Community
• Delegates Authority
• Monitors Performance
• Takes Responsibility for Itself

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Employs Superintendent

• Single most important job of the School Board.
• Only individual School Board actually employs and
  evaluates.
• Directs and holds Superintendent accountable for
  implementation of School Board Policy and overall
  School District performance.
• School Board is legally required to approve all
  employment contracts, however,
• School Board delegates authority to
  Superintendent to select, employ and evaluate all
  other employees within the standards established
  by School Board policy.

8
Clarifies the District Purpose

• Per IASB, as its primary task, the School Board
  continually defines, re-defines and articulates
  district ends to answer the recurring question
  who gets what benefits for how much?
• As Steven Covey states Begin with the End in
  Mind. Knowing where you want to be as a School
  District will help you to establish your mission,
  values and goals providing clear direction to all
  involved.
• Clearly established goals allows the School Board
  to easily monitor the District performance
  holding the organization accountable.

9
Board Connects with the Community

• Per IASB the purpose of the conversation is to
  enable the Board to hear and understand the
  communitys educational aspirations and desires,
  to serve effectively as an advocate for district
  improvement and to inform the community of the
  districts performance.
• How does your Board communicate?
• Comment time at meetings, web site, email,
  twitter, face book, day/evening coffees, staff
  coffees, newsletters transparency, transparency

10
Board Delegates Authority

• Difficult for some Board Members!
• Board is ultimately responsible for everything,
  however the Board delegates authority to the
  Superintendent who delegates to many individuals
  within the District including the Business
  Manager.
• Successful Boards are able to delegate and
  empower their Superintendent and staff.

11
Board Monitors Performance

• Per IASB A School Board that pursues its ends
  through the delegation of authority has a moral
  obligation to itself and the community to
  determine whether that authority is being used as
  intended.
• Board needs to have a basic understanding of data
  used within District, both student and financial
  based data.

12
Board Takes Responsibility for Itself

• The role the School Board fulfills as trustee for
  their constituents cannot be filled by any other
  person or group the Board is ultimately
  responsible for the operations, success and
  compliance with State Laws.

13
Mandatory Board Training

• Open Meeting Act Effective 1/1/2012
• Board Members elected post 6/13/2011
• Minimum 4 hours of professional development
  inclusive of education and labor law, financial
  oversight and accountability and fiduciary
  responsibilities.
• PERA Effective 6/13/2011

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Thats All Great, But Where Does the Business
Manager Fit in? How do I Build and Sustain My
Relationship with My Board Members??
15
Districts Are Different!

• The First Step is to understand how your District
  operates in terms of
• Board Structure
• Communication with Board
• Board Policy Development
• Trust Between Board Administrators
• Documents for the Board
• Board Involvement in Training IASB

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Dont Forget

• CARDINAL RULE UNDERSTAND clearly your
  superintendents expectations of your
  relationship with Board Members!!
• History of Relationship between Business Manager
  and Board Members
• New to the District - talk to your predecessor
  about their relationship with Board. Take all
  discussions with a grain of salt what worked
  for them, might not be your style what can be
  changed, what needs to remain the same!
• Have a basic understanding of your Board Members
  professional and personal backgrounds. Hot
  Buttons? Platforms? Agendas?

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Board Structure

• This is not a cookie cutter approach! All Boards
  are unique with their own personality!
• How Does your Board Operate
• Committee of the Whole?
• Board Committees with only Board members
• Board Committees plus community members
• Board Committees plus other administrators
• Board Committees plus community members other
  administrators,
• Etc., Etc., Etc.,!!!!!!
• Dont forget What authority do these committees
  have?

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How Do You Communicate?

• Here is where having a clear understanding of
  your superintendents expectations will come in
  handy!
• Again, possibilities are endless
• Individual Board member can email you questions
• You respond only to that Board member,
• You forward question and your response to
  superintendent who will respond to Board
  member(s),
• You respond only to that Board member and
  superintendent,
• You respond to entire Board and superintendent.
• If not already established, early in your tenure,
  talk with your superintendent and possibly entire
  Board on their preferences for communication.

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A Few Last Words on Communication Methods

• Please Note in Ink!!!
• Established methods are subject to change!!!
• New Superintendent new methods
• New Board President potential new methods.
• And your mantra
• Transparency, Transparency, Transparency!!

20
School Board Policy Development

• Well developed School Board Policy has been found
  to make your life easier in some respects..
• Does your Board just implement/approve policy
  pushed out by IASB?
• Does your Board and superintendent allow you to
  further develop policies unique to your district
  that are associated with finance and operations
  of the District?

21
What Exactly Do You Do All Day? Or, Why Does Our
District Need You?

• In meeting with new Board Members it is critical
  that they have a basic understanding of your role
  and responsibilities in the District!

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Top Ten Business Manager Responsibilities

• Tax Levy
• Annual Budget
• Audit/Legally Required Claims (GSA, Grants, NSLP,
  Etc.)
• Payroll Accounts Payable
• Buildings Grounds/Construction
• Risk Management
• Transportation
• Food Service
• Enrollment Projections/Staffing
• Contract Negotiations

23
Board Members Should Have

• Essentials of Illinois School Finance by Jim
  Fritts
• Annual Budget Book
• - ISBE Generated Budget Budget Certifications
• - District Financial System Generated Budget
• - Budget Presentation/Talking Points
• - Long Range Planning Overview How did we
  arrive at
• this budget
• - Fund Summary One Sheet Broken Down by Fund
• - Tax Levy
• - GSA Entitlement

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Board Members Should Have

• Audit AFR
• Current Five Year Financial Projections
• Most Recent Life Safety Report
• Copy of all Collective Bargaining Agreements
• In addition review the Business Office sections
  of your school district website.

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Finance Toolbox
26
Tools for the Business Manager to use with School
Board Members in Understanding School Finance

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Simplify the High Level Concepts

• Budget
• Tax Levy
• Investing
• Borrowing

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FUND ACCOUNTING
OPERATING FUNDS
OTHER FUNDS

• 10 - Education
• 20 - Operations Maintenance
• 40 - Transportation
• 50 - IMRF/Social Security
• 70 - Working Cash

• 30 - Debt Service
• 60 - Capital Projects
• 80 - Tort Immunity
• 90 - Health/Life Safety

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A Good Resource
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How is school income determined?

• Property Values
• Tax Rates
• State Appropriations Federal Aid
• Pupil Enrollment

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Revenue (Federal)

• Block Grants - usually based on student
  population and need. Focus resources on
  handicapped children, economically disadvantaged
  students and other targeted special purposes.
• National School Lunch Program

32
Revenue (State)

• General State Aid - Unrestricted. The greater the
  property value results in less General State Aid
  to the district per student. Based on average
  daily attendance.
• Categorical Aid - Restricted. Underwrites state
  required programs such as lunch program,
  transportation and special education.
• Grants - Restricted. Block and Matching

33
GSA the Foundation Level (State)

• The State Legislature increases General State Aid
  (GSA) each year by increasing the foundation
  level.
• 6,119 in FY13 - 5,631?
• General assembly boasts that each school district
  will receive X more per student
• GSA formula reduces foundation level by local
  wealth. Divide it!

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Revenue (Local)

• Property Values
• Determines how much revenue the district is
  capable of raising from property taxes.
• Property value is set by the marketplace, the
  ability to access it is affected by the tax cap.
• Tax Rate
• Maximum tax rates are established by the State of
  Illinois
• Can be raised above the maximum only with
  approval of voters.
• Tax cap keeps the tax rate lower than the
  approved level.

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Revenue (Local - Other)

• School Fees
• Lunch Fees
• Rental Income

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Who decides how the district spends the money?

1. Determined by Board of Education based on
   recommendations from administrators through
   program decisions and negotiated contracts.
2. More and more budget decisions however are forced
   on boards by mandates beyond the boards control
   (federal and state).

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LaGrange School District 102

• BUDGET PRESENTATION
• FISCAL YEAR 2012

38
All Funds Summary

• CHANGES FROM TENTATIVE TO FINAL BUDGET
• Final Stimulus Payment Received 187,945
• Added Retirement Penalty Budget 142,000
• Salary Benefits Increase 178,611
• Reduced Supply Budget 20,000
• Construction Loan 2,000,000
• Net Effect 1,887,334

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Operating Funds Summary

• PRELIMINARY RESULTS FOR FY11
• Operating Fund Balance 1.5m Favorable Variance
• Deliberate Cost Savings Measures
• Conservative Estimates
• Teacher Contribution 660,000 over next two years
• State of Illinois Owed 1.1 Million from FY11
• Promised by December
• Will Receive Four Payments in FY12

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Purchased Services
DESCRIPTION BUDGET
S/E Tuition to LEA's 650,000
S/E Transportation 517,011
Regular Transportation 341,662
Cleaning Service 279,046
Professional Development 189,501
Food Service 170,512
TRS Penalty/Bonus 142,000
Worker's Comp 132,749
Telephone 130,900
Property/Liability Ins. 110,536
Legal 110,000
Treasurer's Office Fee 107,000
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Purchased Services
DESCRIPTION BUDGET
Heating/Cooling 100,000
Grounds 72,000
Equipment Service 65,800
Copiers 62,649
Trash 61,500
Auditing 55,000
Technology Repairs 47,340
Substitute Custodians 44,472
Unemployment 43,360
Custodial Equipment 37,500
Water 28,250
Professional Services 24,726
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Purchased Services
DESCRIPTION BUDGET
Travel 22,500
Plumbing 21,000
Postage 18,000
Discretionary 17,200
Software 17,115
Testing Services 17,000
S/E Diagnostics 15,000
Building Structure 13,000
Electrical 12,000
Printing 12,000
Miscellaneous (ED) 11,114
Miscellaneous (OM) 10,300
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Purchased Services
DESCRIPTION BUDGET
Homebound 10,000
PMA 10,000
BASE 8,790
Field Trips 8,500
OPEB-GASB 45 Valuation 7,000
Officials 6,500
Security 6,000
Vehicle Expense 4,000
Criminal Background 3,500
Appraisal 3,000
Debt Recovery 2,500
Staff Recognition 2,500
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Purchased Services
DESCRIPTION BUDGET
Storage 2,000
Graduation 1,500
Travel (OM) 1,500
Exterminator 1,200

Total 3,788,233

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NON OPERATING FUNDS
Debt Service Fund Debt Service Fund Tentative Final Preliminary FY 2011

Beginning Fund Balance 1,455,351 1,455,351 1,556,281

Revenues 2,577,668 2,577,668 2,399,889

Expenditures 2,452,667 2,452,667 2,500,819

Ending Fund Balance 1,580,352 1,580,352 1,455,351


Capital Projects Fund Capital Projects Fund

Beginning Fund Balance 60,513 60,513 1,463,446

Revenues/Loan Proceeds 10,000 2,010,000 10,618

Expenditures 1,520,000 1,520,000 1,534,217

Ending Fund Balance 1,570,153 429,487 60,513
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2011 Property Tax Levy

• Presented By Lauri Calabrese

49
2011 Tax Levy

• Timeline Truth in Taxation Act
• Tax levy must be estimated twenty days prior to
  the adoption
• If the proposed levy increase is more than 105
• Public notice must be given via local media
• Public hearing must be held
• Tax Levy filed with Cook County by the last
  Tuesday in December

50
2011 Tax Levy

• Equalized Assessed Valuation (EAV) should be
  approximately 1/3 of a parcels Fair Market Value
• Property tax burden is shifting from
  commercial/industrial to residential property
  values in recent years

51
2011 Tax Levy
Cook County collects and distributes property
taxes as follows 55 of prior year in the spring
and the remainder in the fall TAX COLLECTION
CYCLE
LEVY YEAR CPI COLLECTED
2010 Levy 2.7 Spring 2011 FY11
2010 Levy 2.7 Fall 2011 FY12
2011 Levy 1.5 Spring 2012 FY12
2011 Levy 1.5 Fall 2012 FY13
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2011 Tax Levy
53
2011 Tax Levy

• TOTAL LEVY 25,130,881

1.8
2010 EXTENSION
54
2011Tax Levy

• Limiting tax rate
• The calculated total allowable tax rate for all
  operating funds.
• Bond and interest rate
• The rate for bond and interest payments is in
  addition to the limiting rate, and OUTSIDE of the
  tax cap.

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2011 Tax Levy

• Step 1
• Compute the limiting rate
• Numerator Multiply the previous years extension
  by the CPI
• 24,680,171 101.5 25,050,374
• Denominator Subtract the new construction from
  current year EAV
• 931,924,834 - 3,000,000 928,924,834
• Divide 25,050,374 / 928,924,834 2.6967

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2011 Tax Levy

• Step 2
• Multiply the limiting rate by the EAV for the
  current year
• 2.6967 931,924,834 25,130,881
• Step 3
• Distribute the total extension to the operating
  funds

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2011 Tax Levy

• Limiting Rate 2.6967
• Bond Interest .2748
• Total Estimated Tax Rate 2.9715

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2011 Tax Levy
59
2011 Tax Levy
Seeking approval of the final resolutions at the
December 8,2011 Board Meeting. Thank You
60
2011Tax Levy

• NEW PROPERTY TIFS
• When tax increment financing districts expire
  they are returned to the tax rolls as new
  property
• These tax dollars were already being collected,
  they were just redirected to the municipality for
  redevelopment projects
• This increase in EAV will not impact individual
  taxpayers
• Individual resident taxes will adjust based on
  the new EAV of their individual property and the
  Consumer Price Index (2.7)

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2011Tax LevyHow TIFs Work
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A Tax Bill

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State of School Funding from State of Illinois

• Current Hot Topics
• Pension Reform
• General State Aid Funding
• Transportation Funding

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Financial Forecasting

• Importance of a three to five year projection
• Standard format
• Revisit no more than 3 times per year
• Reaffirm the Philosophy
• Maintain Programs Deficit Spend?
• Achieve a Balanced Operating Budget?

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Analyze Revenues Expenses

• How are we doing?
• Quarterly Benchmarking
• Monthly Cost Center Reporting
• Dashboards
• Monthly Board Run

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Financial Profile Score
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Investment Policy

• Policy 430 in accordance with 30 ILCS 225

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Borrowing

• General limit
• Separate Elementary H.S. Districts 6.9 EAV
• Unit Districts 13.8 EAV
• Rating Agencies
• Long Term Borrowing for Operations
• EAV Changes
• Bond Levy Be Aware

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Collective bargaining agreements

• Review current environment
• How many years is the current agreement?
• Is there language that we need to focus on
  modifying or removing?
• During negotiations what will be our focus?
• Salary schedule
• Benefit plan
• Language changes
• What is the current relationship with the union?

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Operations
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Purchasing

• Purchasing Official
• Purchase Orders
• Request for Proposals
• Bidding
• Expenses over 25k must be bid (50k relating to
  Operations Maintenance)
• Bids should be awarded to the lowest responsible
  bidder who conforms in all material aspects to
  the requirements and criteria set for in the
  invitation to bid
• In house services
• Contracted services
• Vendor relations
• Gift ban act

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Purchasing-Bidding

• Specifications
• Vendor selection
• Bid opening
• Public notice 10 days before
• All bids must be sealed
• All bids must be opened during a public bid
  opening where the contents are announced
• Bid analysis
• Low, responsive, responsible
• Bids should be awarded to the lowest responsible
  bidder who conforms in all material aspects to
  the requirements and criteria set for in the
  invitation to bid
• Board approval

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Facilities

• Describe current environment
• Custodial and Maintenance
• Cleaning schedule
• Summer/spring/holiday break schedules
• Intergovernmental agreements
• An agreement between two or more government to
  cooperate in some specific way
• Facility planning
• Facility committee
• Long range facility plan
• Facility inspection schedule
• Life safety
• Life safety fund
• 10 year life safety survey

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Food Service

• Describe current environment
• In house or contracted out
• Services provided
• Lunch
• Free/Reduced participation
• National School Lunch Program
• Breakfast
• Snack
• Before and after school programs
• Milk
• Preschool and kindergarten programs
• Nutritional requirements for grant funded programs

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Transportation

• Describe current environment
• In house
• Own or leased bus fleet
• outsourced
• Special ed transportation
• Parent concerns often come from this service-be
  knowledgeable!
• Service must be provided for students living 1.5
  miles from the school
• Distances under 1.5 miles may be approved as
  serious safety hazards
• Business Manager or Transportation Director files
  an annual claim for reimbursement

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Technology

• Current environment
• Hardware
• Software
• Replacement schedule
• Telephone system
• Copier/printer management
• Security
• E-rate program

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Risk Management

• Lines of Insurance
• Property
• General liability
• Board legal liability
• Student accident insurance
• Workers compensation
• Insurance Cooperatives
• Medical/Dental
• Workers Compensation
• Risk Management
• Unemployment Compensation

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School Board Member calendarWhen to do what you
do

• July 1st First day of fiscal year
• July/August Prepare Tentative Budget OR Hold
  Public Hearing on the Final Budget (105 ILCS
  5/17-1)
• September 30 last day to adopt the annual budget
  (105 ILCS 5/17-1).
• October 15 Annual Financial Report (ISBE 50-35)
  due
• November IASB, IASA, IASBO Joint Annual
  Conference in Chicago
• November 30 Annual Statement of Affairs due
• Last Tuesday in December (December 27)
  Certificate of Tax Levy (ISBE 50-02) due

• December 30 Last day for the school board to
  adopt a resolutions putting policy questions on
  the ballot at the March 20, 2012 General Primary
  Election. (10 ILCS5/28-2).
• March Approve Staffing Plan for next fiscal
  year and release certified staff (if needed) at
  the March Board Meeting.
• April 1 School Board must give written notice
  and reason of intent not to renew
  Superintendents expiring contract (105 ILCS
  5/10-21.4)
• May 1 Statement of Economic Interests
  Completed form filed with county clerk (5 ILCS
  420/4A-105)
• June 30 Last day of the fiscal year for most
  Illinois school districts.

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In summary

• As the Business Official you need to
• Understand the Board Members Role
• Communicate and work with your Board Members to
  help them understand your role as the Business
  Official.
• Last Piece of Advice Remember!! Superintendent
  is the Orchestra Leader! Follow their lead in
  developing your relationship with your Board of
  Education.