1 Something that many school districts have in
common these days is budget challenges.
Successful school officials are immersed in budgetary issues and have a
keen understanding of the districts financial position, but what about the
general public? Obtain a copy of a
monthly financial report of a board of education. From it, develop an interpretation of that
could be understood by a reasonably perceptive layperson. Please share what that interpretation might
be.
The monthly financial report I obtained was one of the first that come up in a google search. It is from Smyrna School District in Delaware http://www.smyrna.k12.de.us/financial/financial.htm. The site is very easy to use and obtain financial information on the school district. This looks to be a great report as the site gives three reports for the public to view: 1) Operating Unit Expenditure Summary, 2) Financial Revenue Report, and 3) Annual Financial Statement. All of these reports in conjunction with each other provide a layperson and member of the general public to be well-informed of school financial and budgetary decisions.
ReplyDeleteWhen looking at the current monthly expenditure budget posted for October and comparing it with the posted annual financial statement, the school is currently operating on a budget that is less than in previous years. Seeing how the budget is less than in previous years, it’s also interesting to note that 30% of the budget has been spent as of October. This seems like quite a large percentage of expenditures given the time of year. Granted, there may be greater start-up costs for a school year. However, this can also be an indication that this district may find themselves over budget by the end of the school year.
The revenue report is also interesting to view as it shows where funds are coming from to help support the expenditures for the month Most of the funds for the district are generated through state aid funds and general state funds. Areas such as transportation and drivers education are supported through state funds. The next largest fund generator for the district are local funds. It is interesting that zero dollars are brought in through donations. This could be due to the public’s view of what it means to be a public school – paid by the public through tax dollars. Finally, the smallest fund generator for the district are federal funds. These are funds for programs such as IDEA and Title I which go to primarily fund personnel.
In our school, the principal meets with our organization’s financial representative and the school board to review and set the budget by-monthly. There is also a yearly budget meeting, but the review process is very important for the maintaining of the budget and keeping instructional needs at the forefront of everyone’s minds. The laypeople and other stakeholder can review the budge on the school’s website and can seek further clarification at any board meeting they wish to attend. It is important for an average layperson to understand the school budget as their tax money and the future of their city or town depend on the education of the young people enrolled in the school district.
In order to get a clear understanding of the Hartland Consolidated Schools Board of Ed’s October ‘12 (monthly) financial report http://hartlandschools.us/board_of_ed/board-packets/2012-2013/2012-11-12.pdf, it is essential to also obtain the adopted proposed ’12-’13 budget http://hartlandschools.us/transparancy-reporting/12-13-adopted-budget.pdf. The monthly financial report provided to the board is made available for check register and payroll approval. It does not provide information regarding amounts budgeted, expenditures to date, or any detail regarding the expenditures.
ReplyDeleteThis monthly financial report separates expenditures into 5 categories and has payroll outlined as separate approval. The categories are general fund, athletic fund, cafeteria fund, debt retirement fund, and capitol project fund. It should be explained that teacher salary/payroll is an expenditure from the general fund category and should be added to that of the general fund check register amount. The proposed budget contains information regarding assumed revenue and expenditures for each category and must be referred to in order to make any conclusions regarding monthly spending. With that in mind, based on percentages it may be concluded October general fund, athletic, and cafeteria fund expenditures are as expected. October debt retirement fund expenditures exceed proposed expenditures and October Capitol project expenditures are far less than proposed expenditure. It may also be concluded that .086 % of the total proposed budget was expended in October. Based on the mothly average of .083%, the October expenditures are very close to the proposed budget expenditures. This, however, is based solely on percentages of the total dollar amount of October expenditures compared to the proposed budgeted amount for expenditures. In order to arrive at more accurate results a running total of expenditures would be necessary.
I took a look the October financial report of Willmar Public Schools (www.willmar,k12.mn.us/sites/default/file/pdfs/finances/reports/2013).
ReplyDeleteThis particular report was written in easy to follow segments. The first part of the financial report includes the YTD (Year-to-Date)Revenue and Expenditures Summary of the General Fund, Investment Summary, Cash and Banking Summary and Enrollment Report. This is followed by the Checking & Sweep Account Monthly Summary which explains the spending balances of all funds. The next spread sheet is the cash flow projections followed by the YTD Budget and Revenue (Budget vs. Actual) and Student Enrollment Summary that provides a comparison chart of enrollment trends. Based on the most recent monthly report, the district is roughly 7% over its target spending of the General Funds. However, enrollment is up from the last monthly report and there has been an increase in revenue. The total revenue for this school is considerably more than the projected budget giving the district excess in spending. At this current time of the school year the district will be able to meet its current projected budget meeting all expenditures. This is an increase from the previous school year.
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ReplyDeleteLooking at several pages of hard to read numbers can be intimidating. In order to make this not so intimidating it may be helpful to have a Budget 101nworkshop for those interested. I think it is also the job of the school leader to interject some suggestions to those that develop the financial report so that stakeholders can understand what they are looking at or presented. As the text, Modern School Business Administration discusses there is a real simple formula to understand:
ReplyDeleteAssets = Liabilities + Fund Balance + Revenues - Expenditures
I believe what is needed that does not exist with school budget reporting is a separate glossary of explanations for each of the above words in the equation. This can aid others in understanding the financial report. Sometimes even more confusing is listening to someone present the financial report. The financial report is usually several pages and you have to many times flip pages to get to the corresponding figures that go with the narrative language.
Maybe even a key can be developed and everything that goes together can be marked with the same letter of color to make the explanation of the financial report easier. I think budget and accounting people think and present budgets and financials how they make sense to them; but don’t check to make sure others can comprehend what they have presented. When you are the one that understands the facts and figures it is sometimes difficult to explain to others and check for comprehension, I think it is the school leaders responsibility to bridge the accounting comprehension highway.
A school leader has to take time and make sure they understand the numbers that are in the financial report. I once worked with an accounting professional that was not only great at explaining things, but took the time to make sure I understood. How she did this was by presenting scenarios about the budget and the financial report. She gave me numbers that were easy to understand to enter into the budget and how each item was represented in the financial report.
Financial reports are easy to understand once you understand the format that is used to report the finances. In order to do this the school leader should work beside the business office professional to make the school financial report easy to comprehend.