2012-13 Financial Trends and Issues for School Principals

1. 2012-13 Financial Trends and Issuesfor School Principals Bill Bucher, Jr., CPA

2. Trends Impacting The Financial Management of Your School • NEGATIVE (mostly SHORT-TERM): • Increasing automation of activities has created a shortage of qualified technicians • Decreasing staffing both at schools and central offices to handle activities • Decreasing funding for ongoing activities • Decreasing flexibility with the funding you still retain • Increasing demands on your time and the time of your staff members • Increasingly detailed requirements from federal, state and local sources • Increasing disconnect between what is funded and what is expected • POSITIVE (mostly LONG-TERM) • Increasing automation of activities is increasingly empowering administrators • More information about student achievement is available than ever before • More is known about what works, and what doesn’t work in education • Expectations are still high for the performance of our nations public schools • Public school performance in North Carolina as a whole has been improving!

3. Signs of Improvement in NC Public Schools North Carolina’s… … four-year high school graduation rate is 77.9 percent, the highest in state history. … Career and Technical Education completers’ graduation rate is 89.6 percent. … annual dropout rate is 3.43 percent, the lowest in history. North Carolina public schools are » 36th in SAT scores » 22nd in ACT scores » 15th in the percentage of seniors who took at least 1 Advanced Placement exam in high school » 12th in 4th grade math, according to the National Assessment of Educational Progress (NAEP) » 24th in 4th grade reading, according to NAEP » 22nd in 8th grade math, according to NAEP » 34th in 8th grade reading, according to NAEP » Among the bottom 10 states in per pupil funding » 41st in teacher pay (2010-11 school year) (Source: “How Do NC Public Schools Measure Up?” NCDPI, figures as of June, 2012)

4. Increasing Automation…What does it mean to your leadership style? • How to recognize that automation is increasing around you… • How many User ID’s and passwords do you now have to have for your bank, your cell phone, your store accounts, Amazon.com, your 401(k), etc. ? Even my GPS! • When your secretary or your NC Wise staffer is out, can anyone else do their jobs for them? How many others have become “irreplaceable” because of technology? • Hazards of increasing automation…. • Your staff members require more training to do what they do than ever before • You probably have less understanding of what they do and how they do it • Consequently, you are less able to help them and monitor their activities • You learn more from what people tell you than from personal observations • “Delegating to the point of unconsciousness” (a survival tactic) • Greater risk of possible abuses by staff members • Greater risk of failing to recognize incompetence at an early stage • Not knowing whether someone is invaluable until after they leave you • Failure to “cross-train” for situations where someone has an extended leave

5. Increasing Automation…What does it mean to your leadership style? • What can you do to cope with increasing technology? • Learn new technology skills to be able to personally monitor activities • Insist on more technology skills from new hires and existing staff members • Be sure to delegate the “monitoring” function, not just the “job” function • Insist on personal improvement as an ongoing activity, even self-directed. Make suggestions to future principals about skills they can develop NOW. • Insist on ethical behavior from staff, because you can’t supervise everything, and little lapses can become BIG ones! • Hire better! Use the assistance offered to you by HR and Finance, particularly when it comes to qualifying new financial secretaries! • What will happen now that new hires will be through TEMP AGENCY • More on this subject from the HR Department

6. Increasing Automation…What does it mean to your leadership style? • Looking to the future, which strategy is best? • Short-term…. SURVIVAL. • Delegate activities but keep track of what is delegated and to whom • Protect your time, and protect theirs as much as possible. • Insist on regular, planned “touch-point” activities to maintain control • Example: Reviewing monthly payroll printouts with secretary • List of what to look for, and what to ask secretary about • Long-term… Be aware that fewer staff members may be the norm for a while. • Best strategy is to eliminate unnecessary activities first! Then prioritize. • Acquire the skills necessary to use and monitor technology feedback • Recognize that technology-based work goes much faster uninterrupted • How is your financial secretary’s office set up? • Separate from front office, so that work is relatively uninterrupted? • Secure, so that money and valuables are safe? • Scheduled, so that your staff knows when to bring money in? Example: When do YOU answer your e-mail each day?

7. Increasing Automation…What does it mean to your leadership style? • Case Study: The RISE and FALL of Word Processing (Forsyth County) • 1980: Computers and software were EXPENSIVE! County only bought a few. • Experienced “word processors” were scarce. • Selected “WP Specialists” were paid more to learn new skills. • New department of “Word Processing” was created. • Specialists learned to demand more money for their specialized skills. • Other secretaries, eager to earn more money, taught themselves MS Word. • Computers and software came down in price, and software became simpler to use. • New secretaries with computer skills were hired at regular salaries. • Eventually, all secretaries were expected to know MS Word and the Forsyth County “Word Processing Department” was dissolved. • 2000: EVERYONE must know MS Word or they can’t function! • The notion of a “secretary” has now almost completely disappeared; many clerical employees now have responsibilities that used to be handled by para-professionals such as office managers and payroll managers. What does this mean for principals?

8. Decreasing Funding…What does it mean to your leadership style? • Coping strategies from the Front Lines… • Keeping Assistant Superintendents aware of your needs • Building better relationships with Business Partners • Working with parent volunteers • Obtaining funding from parent groups • Discontinuing certain activities • Working more efficiently (example: Magnet Express kids leaving on time) • Key Concept: • Difference between “one-time” money and “ongoing activities” money • Matching “one-time” money with “one-time” activities • Example: Replacing outdated outdoor play equipment in Rowan County • One-time needs, such as an equipment purchase? Hold a fundraiser. • Ongoing needs such as positions? Need a more stable source of funding. (The district discourages fundraisers to fund positions.)

9. Decreasing Staffing…What does it mean to your leadership style? Source: www.ncpublicschools.org, August 2012

10. Decreasing Staffing…What does it mean to your leadership style? • What’s usually cut? • Teacher assistants, clerical, non-classroom administrators, teachers and other professionals in non-core areas. • What do many of these positions have in common? • Trying to avoid “core” functional areas, such as classroom activities. • Trying to avoid any activity directly related to test scores and other measures. • Many positions cut either perform a “customer service” function or their duties allow someone else to perform a “customer service” function. • “Customer service” isn’t just for parents; customers include parents, students, members of the public, state agencies, federal auditors, newspaper reporters, elected officials, other administrators trying to do their jobs and even your own staff members, who need some of your time to do their own jobs. • “Customer service” appears to many to be an unnecessary luxury, but it is critical to making things happen smoothly and successfully. (Scientifically referred to as “feedback.”)

11. Decreasing Staffing…What does it mean to your leadership style? • What effect does Decreased Staffing have on School Financial Management? • Many schools have placed increased duties on their Financial Secretaries • Many do not allow enough uninterrupted time in a day to complete mandatory activities • Many schools have placed financial secretaries in offices where constant activity makes working conditions difficult, if not impossible. • Please don’t misunderstand! School secretaries should be expected to participate in a wide range of school front office activities! When they need to count money, do financial reports or key payroll, however, they need an office environment which allows them to complete their work quickly and efficiently, with a minimum of interruptions. Give them the tools they need to get the job done well! Q. If you had to dig a large hole, which would you rather have? A backhoe, or a hand-shovel?

12. FY 2012-13 Budget…Changes in Salaries and Benefits • SALARY CHANGES: • All Positions: 1.2 % salary increase • Teachers: Experience one-step increase which results in 1.2% salary increase. • Substitutes: Was $92 (certified), $80 (ETT) and $74 (noncertified); now $93 (certified+), $76 (ETT-) and $72 (noncertified-). • BENEFITS CHANGES: • Five “Special Annual Leave Bonus” Days • Earned by anyone currently earning Annual Leave (permanent, full-time) • Must be used by June 30, 2013 • May be paid out ONLY if employee retires by June 30, 2013 • Some may wish to use these days, some may wish to save for later. • We will allow employees to choose and automatically charge leave according to employee preferences.

13. FY 2012-13 Budget…Change in Travel Reimbursements for Principals • Attempt was to standardize payments to principals based upon a common calculation, and craft a plan which preserves principal travel funds for principals, and avoids the conflicts of interest inherent in a single school travel allocation to each school. • Principals will get a constant, standard monthly amount every month for 12 months. • Amount is calculated using key factors including distance from central office and level (elementary, middle or high school). • Principals will still need to turn in mileage forms if they wish to avoid having income taxes withheld for travel payments. • As long as mileage turned in exceeds mileage reimbursed no taxes will be assessed. • Mileage forms for all prior months must be turned in by December 1st of each year; for December 1, 2012 we will need to have your July 2012 through November, 2012 mileage reports in hand by that date.

14. Results of Individual School Audits (so far)… • The No. 1 audit problem identified in schools this year is the failure to make bank deposits as often as needed. • Fully a third of the schools have had this problem at some time during the year. § 115C‑445. Daily deposits. Except as otherwise provided by law, all moneys collected or received by an officer, employee or agent of a local school administrative unit or an individual school shall be deposited in accordance with this section. Each officer, employee and agent of a local school administrative unit or individual school whose duty it is to collect or receive any taxes or other moneys shall deposit his collections and receipts daily. If the board of education gives its approval, deposits shall be required only when the moneys on hand amount to as much as two hundred fifty dollars ($250.00), but in any event a deposit shall be made on the last business day of the month. All deposits shall be made with the finance officer or in an official depository. Deposits in an official depository shall be immediately reported to the finance officer or individual school treasurer by means of a duplicate deposit ticket. The finance officer may at any time audit the accounts of any officer, employee or agent collecting or receiving any taxes or other moneys, and may prescribe the form and detail of these accounts. The accounts of such an officer, employee or agent shall be audited at least annually. (1975, c. 437, s. 1; 1981, c. 423, s. 1.)

15. Results of Individual School Audits (so far)… • Cash Management the next biggest problem… and this is relatively new! • We have several schools who have spent their funds down to the point that they are forced to use “restricted” funds for “unrestricted” purposes. For example, if your club or class-level funds have money in your accounts, but your general fund is negative, you have effectively spent the “restricted” funds for “unrestricted” purposes. Policy 3450 Special Funds of Individual Schools A. Restricted Funds - Certain funds received, obtained or deposited into individual school accounts are restricted as to use and may only be expended for limited or specific purposes; for example, (1) Funds specifically restricted by action of the Board of Education, e.g. P. E. fees, Occupational Education Supply Funds. (2) Funds of school clubs and organizations which require the approval of the organization and the principal for expenditure, e. g. Drama Club, Key Club, Debate Club. (3) Funds for which school is acting only as a depository and disbursing agent, e. g. student insurance, charitable contributions, damaged book fees. (4) Funds raised specifically for special school projects, e.g. band uniforms, field trips.

16. Proposed “Handbook for New Principals” • Topics to include: • Accounting Policies and Accounting System • Accounting structure • Faculty Funds • Scholarships • Donations from parents and the public • Business partners • Year-end procedures • Travel Reimbursement Policies, including gas card procedures • Budgeting requirements – forms, deadlines and allotments • Fixed Assets recordkeeping requirements • Intrusion/Accident Reporting • Payroll – Deadlines, requirements, reporting • Purchasing – Policies, procedures, reference materials • Child Nutrition Procedures • Textbooks – Ordering, tracking, returning, year-end

17. Thank you! Bill Bucher, CPA bbucher@wsfcs.k12.nc.us (336) 727-2821