1
Fiduciary Duty
 Legal authority
 Malfeasance
Who is minding the store?
2
Fiduciary Duty
 Legal authority
 Malfeasance
What this means…
VA Code: 22.1-89
Management of funds
“Each School Board shall manage
and control the funds made
available to the School Boards for
public schools and may incur
costs and expenses.”
The School Board determines how the funds are to be spent. The
local governing body determines appropriation levels.
3
Fiduciary Duty
 Legal Authority
 Malfeasance
What this means…
VA Code: 22.1-91
Limitation on
expenditures
“No school board shall expend or
contract to expend, in any fiscal
year, any sum of money in excess
of the funds available for school
purposes for that fiscal year . . . .”
The School Board can not exceed the appropriation levels
determined by the local governing body.
4
So, who IS minding the store?
 Superintendent
 CFO/Director of Finance/Assistant Superintendent
 School Board
5
BUDGET
6
Budget
Superintendent’s role
School Board role
Local governing body role
Who does what…when?
7
ORIGIN OF WORD “Budget”
Used VIDEO on Budget from
HOTFORWORDS.com
8
ORIGIN OF WORD “Budget”
The origin of our word budget is the Latin bulga,
a little pouch or knapsack.
The word turned up in English in the fifteenth
century, having travelled via the French as
“leather bag” where housewives kept their
money.
Superintendent’s Role
 Development of needs-based budget
 Compensation decisions
 Date requirements
What LCPS does….
10
School Board Role
 Sometimes direction to Superintendent on priorities
 Public hearings (formally advertised)
 Public input (community info)
 Submission to local governing body
What LCPS does….
11
Local Governing Body Role
 Fiscal guidance?
 Appropriation – lump sum or state category?
 It’s all about relationships….
What LCPS does….
12
Budget Development: Key Players
 Board of Supervisors
 School Board
 Superintendent
 Senior Staff
 Department of Business and Financial
Services
 School Administrators
 Parents and School Community
 Education Association
13
Standard Budget Reports
 Budget reports
 Trend data
 Comparisons with previous year
 Explanations of changes – cost of
salaries
 Enrollment projections
 Peer comparisons
14
FINANCE
Finance
 School activity funds
 Finance committee
 School operating fund
 Where the money goes
 How to monitor? Financial reporting
16
School Activity Funds
 Basic principles
 Funds used for purpose collected
 Projects shall contribute to educational experience
 Funds derived by student body used for student body
 Students encouraged to participate in management
 Funds managed with sound business practices
Note no oversight responsibility of PTAs/PTOs/Boosters
17
Finance Committee
 Contracts/Procurement
 Virginia Public Procurement Act (VPPA)
 Sanctions significant
 School Board policy
 Competition thresholds
18
Standard Finance Reports
 Monthly financial reports
 Reporting by state category
 Quarterly financial reports
 Expenditure and revenue summary
 Expenditure detail (by Dept, by Sub
object)
19
LCPS Monthly Report- State Category ex.
State Category
Operating Fund
Original Budget
Revised Budget
Actual
$540,362,397
$560,301,189
$443,090,286
$117,210,903
79.08%
$34,590,145
$38,420,337
$34,496,855
$3,923,482
89.79%
$2,308,489
$4,224,570
$3,059,755
$1,164,815
72.43%
Operation & Maintenance
$65,840,169
$64,436,188
$55,227,551
$9,208,636
85.71%
Pupil Transportation
$52,466,940
$53,052,165
$39,733,172
$13,318,993
74.89%
Technology
$25,277,522
$30,838,772
$22,709,099
$8,129,674
73.64%
$0
$7,434,609
$7,434,609
$0
100.00%
$720,845,662
$758,707,831
$605,751,327
$152,956,504
79.84%
$24,034,272
$24,034,272
$18,318,973
$5,715,299
76.22%
$744,879,934
$782,742,103
$624,070,300
$158,671,803
79.73%
Instruction
Admin, Attend & Health
Facilities
Debt Service & Fund Transfers
Fund Subtotal
Balance Expended
Food Service Fund
Food Services
TOTAL
20
LCPS Quarterly Report – Summary ex.
Expenditures
Salaries
Employee Benefits
Contractual Services
Internal Services
Utilities
Communication
Insurance
Materials, Supplies
Training and Mileage
Continuing Education
Leases & Rentals
Ops & Maintenance
Capital Outlay
Transfer Out
Total Expenditures
FY11 Budget
$443,907,086
$173,175,217
$20,616,004
$11,873,258
$16,236,799
$3,145,404
$1,460,919
$26,103,487
$1,820,412
$548,042
$536,484
$8,500
$1,843,271
$5,168,683
$706,443,566
Revenue
County
State
Federal
Other
Appropriated Fund Bal.
Total Revenue
FY11 Budget Revenue Received
$470,818,084
$470,818,084
$196,451,138
$140,960,915
$120,000
$171,602
$5,654,344
$4,607,493
$33,400,000
$33,400,000
$706,443,566
$649,958,094
Projected Change to
Fund Balance @ June
30, 2011
Expenditures
Encumbrances Current Balance % Spent
$283,244,196
$0
$160,662,890 64%
$122,025,112
$0
$51,150,105 70%
$13,282,156
$3,440,205
$3,893,643 81%
$7,269,088
$0
$4,604,170 61%
$8,340,677
$14,400
$7,881,722 51%
$1,932,485
$5,476
$1,207,443 62%
$1,230,325
$0
$230,594 84%
$15,871,987
$1,654,404
$8,577,095 67%
$1,016,703
$30,253
$773,456 58%
$350,468
$1,385
$196,189 64%
$371,729
$34,946
$129,809 76%
-$24,748
$0
$33,248 -291%
$342,180
$69,984
$1,431,107 22%
$5,168,683
$0
$0
N/A
$460,421,041
$5,251,053
$240,771,471 66%
Current Balance % Rec.
$0 100%
$55,490,223 72%
-$51,602 143%
$1,046,851 81%
$0 100%
$56,485,472 92%
Projection
$149,830,464
$47,980,520
$3,493,643
$4,604,170
$5,261,722
$1,147,443
$230,594
$8,577,095
$583,456
$196,189
$129,809
$33,248
$1,431,107
$0
$223,499,460
Balance
$10,832,426
$3,169,585
$400,000
$0
$2,620,000
$60,000
$0
$0
$190,000
$0
$0
$0
$0
$0
$17,272,011
Projection
Balance
$0
$62,490,223
-$51,602
$1,046,851
$0
$63,485,472
$0
$2,953,903
$0
$0
$0
$2,953,903
$20,225,915
21
VSBA Quarterly Report – Detail ex.
Expenditure Lines
Instruction
Teacher Salaries
Librarian Salaries
Guidance Salaries
Psychologists
Asst. Superintendent
Directors
Principal Salaries
Asst. Prin. Salaries
Coord. Salaries
Ins. Asst. Salaries
Secretary Salaries
Substitute Salaries
Supplemental Pay
FICA
VRS
Legal Services
Medical Premiums
Life Insurance
Other Insurances
Purchased Services
Tuition
Printing
Office Supplies
Educational Supplies
Media Supplies
Textbooks
Equipment
Sub-Total
22
Column A
Org.
Approved
Budget 07-08
______________
Column B
Budget
Adjust
07-08
___________
Column C
Revised
Budget
07-08
______________
Column D
Column E
Column F
Column G
Column H
Expend.
Add. Est.
Est. Expend. Difference Orig.
% Diff
Column I Dollar
Year-to-Date
Expenses to Based on Date Budget and Est. Orig. Budget Diff Rev. Budet
07-08
End of Year
of Report
Exp.
New Est.
and New Est.
__________ _____________ ___________ ____________
____________
_________
___________
$266,303,358
$6,971,110
$10,627,977
$5,569,744
$289,988
$1,012,977
$8,793,449
$11,865,702
$6,827,001
$24,447,863
$14,564,177
$13,009,486
$4,430,768
$28,533,667
$53,086,372
$207,064
$48,245,662
$3,985,553
$1,182,167
$6,002,860
$3,006,096
$57,847
$186,504
$26,094,153
$636,534
$4,945,916
$2,284,935
______________
$553,168,930
$6,875,890
$42,265
$19,863
$79,277
$0
$0
$47,745
$18,717
$68,340
$229,670
$26,170
($2,031,927)
$140,029
($40,562)
$64,690
$0
$87,664
$27,677
$3,786
$2,979,239
($52,000)
$62,904
$98,244
$3,208,038
$127,784
$499,645
($374,898)
___________
$12,208,250
$273,179,248
$7,013,375
$10,647,840
$5,649,021
$289,988
$1,012,977
$8,841,194
$11,884,419
$6,895,341
$24,677,533
$14,590,347
$10,977,559
$4,570,797
$28,493,105
$53,151,062
$207,064
$48,333,326
$4,013,230
$1,185,953
$8,982,099
$2,954,096
$120,751
$284,748
$29,302,191
$764,318
$5,445,561
$1,910,037
______________
$565,377,180
$80,812,228 $188,948,433 $269,760,661
$3,457,303
$2,371,251
$4,554,358
$6,925,609
($45,501)
$3,441,603
$7,072,989
$10,514,592
($113,385)
$1,904,813
$3,673,516
$5,578,329
$8,585
$120,828
$169,160
$289,988
$0
$422,071
$590,906
$1,012,977
$0
$3,621,924
$5,108,631
$8,730,555
($62,894)
$4,615,903
$7,116,165
$11,732,068
($133,634)
$2,873,355
$3,935,697
$6,809,052
($17,949)
$5,942,650
$18,413,391
$24,356,041
($91,822)
$5,339,507
$9,068,255
$14,407,762
($156,415)
$2,740,885
$8,099,300
$10,840,185
($2,169,301)
$1,502,291
$3,011,307
$4,513,598
$82,830
$8,451,041
$20,042,064
$28,493,105
($40,562)
$17,725,014
$36,588,361
$54,313,375
$1,227,003
$44,611
$162,453
$207,064
$0
$17,718,419
$30,614,907
$48,333,326
$87,664
$1,077,355
$2,935,875
$4,013,230
$27,677
$1,144,706
$41,247
$1,185,953
$3,786
$4,711,323
$4,083,308
$8,794,631
$2,791,771
$1,573,849
$1,318,591
$2,892,440
($113,656)
$62,577
$55,654
$118,231
$60,384
$142,360
$136,622
$278,982
$92,478
$16,949,076
$11,759,737
$28,708,813
$2,614,660
$526,820
$222,020
$748,840
$112,306
$3,682,417
$1,652,870
$5,335,287
$389,371
$1,590,858
$256,380
$1,847,238
($437,697)
__________ _____________ ___________ ____________
____________
$191,109,735 $369,632,197 $560,741,932
$7,573,002
101.30%
99.35%
98.93%
100.15%
100.00%
100.00%
99.28%
98.87%
99.74%
99.62%
98.93%
83.33%
101.87%
99.86%
102.31%
100.00%
100.18%
100.69%
100.32%
146.51%
96.22%
204.39%
149.58%
110.02%
117.64%
107.87%
80.84%
($3,418,587)
($87,766)
($133,248)
($70,692)
$0
$0
($110,639)
($152,351)
($86,289)
($321,492)
($182,585)
($137,374)
($57,199)
$0
$1,162,313
$0
$0
$0
$0
($187,468)
($61,656)
($2,520)
($5,766)
($593,378)
($15,478)
($110,274)
($62,799)
101.37%
($4,635,248)
EXPENDITURES
23
LCPS School Operating Fund
Where the money goes
All other costs 12%
Salaries & benefits 88%
24
Fund Balance/Surplus/Savings
 Coming soon to a Local Governing Body meeting
 Important issue facing School Boards across the
Commonwealth
 Why it happens and why it matters
25
Why it happens and why it matters
What is lapse and turnover?
 Fluctuations of budget to actual
 Position lapse and turnover
 CAUTION, CAUTION
 Only flexibility the division has…
26
How To Address It
 Budget a large negative number
 Make assumptions for vacant / new positions
 Other variables
 Predicting human behavior
27
Surpluses Come From Savings
 Surpluses are not a surprise
 All school division’s budgets should have unspent
funds
 School divisions cannot exceed their
appropriations
28
Unspent Funds
Division
Alexandria
Arlington
Fairfax
Falls Church
Loudoun
Manassas
Prince William
Percentage
6.5%
6.8%
6.5%
6.6%
5.7%
7.1%
6.4%
All school divisions have
unspent funds at the end of
the year.
Source: FY 2010 Comprehensive Annual Financial Reports
REVENUE
30
LCPS - Where the money comes from
FY 2012
 Carryover
 Local/County funding
 State revenue
 Federal funds
 Other Funds
Total
State
Amount ($ in millions)
$10.0
$494.0
$221.6
$13.2
$7.2
$746.0
29.7%
Local/County
66.2%
31
Local/County Funding
60.0%
50.0%
47.7%
47.2%
43.7%
42.2%
39.7%
40.0%
34.6%
30.9%
30.8%
30.0%
20.0%
10.0%
0.0%
Alexandria
City
Arlington
County
Fairfax
County
Falls Church
City
Loudoun
County
Manassas
City
Manassas
Park City
Prince William
County
Source: FY 2012 WABE Guide
Tax Rate
Value of 1¢
$1.285 per $100 of assessed value
$7.5 million
32
State Funding & the Local Composite Index
•
•
•
Components
True Value of Property
Adjusted Gross Income
Taxable Retail Sales
LCPS LCI - .5854
Source: DOE website
According to the LCI, locally we should be able to pay for about 58 percent of
the costs of education and the Commonwealth should pick up 42 percent.
33
Sales Tax Calculation
08 Triennial census statewide
08 Triennial census LCPS
LCPS Percentage
Sales tax statewide
Education share 1.125%
1,511,877
71,489
4.7285%
Basic Aid Calculation
Adjusted ADM (K-12)
61,893
State per pupil amount
$5,448
Total
$337.2 million
$95.9 billion
Less sales tax
($51 million)
$1.1 billion
Total Basic Aid
$286.2 million
LCPS percentage
4.7285%
Sales tax funding
$51 million
State share
State funding
.4146
$118.7 million
OTHER STUFF
35
Other Stuff You Should Know
 Misinformation
 Simplify, simplify, simplify
 Strategies to cut spending
36
Misinformation
Used VIDEO from SNL “Violins on Television”
from HULU.com
Misinformation
 The media sometimes gets it wrong
 If your version isn’t out there, it doesn’t exist.
 Tell the story better
 Everyone has to help
38
Simplify, Simplify, Simplify
 What kind of information do employees need?
 What can be easily understood?
 The right data will tell your story.
 Peer comparisons
 Pupil/teacher ratios



Cost per pupil
Compensation packages
School-based and non-school based positions
39
Strategies to Cut Spending
 Last in first out

 Reduce staffing greater

than SOQ
 Review current vacancies

 Reduce extended
contracts

 Increase class size

 Healthcare co-pays and
deductibles
Reduce employer share
of healthcare
Defer equipment
replacement plans
Mid-year salary
enhancements
Increase fees
Selective elimination of
programs
40
Random thoughts about work…
….and life in general
The nice thing about teamwork is you
always have others on your side.
Margaret Carty
American Author
I can’t remember the last time I
wasn’t at least kind of tired.
Author Unknown
Can we all just agree to ignore whatever
comes after Blue Ray? I don't want to
have to restart my collection...again.
Author Unknown
Snowflakes are one of nature’s most fragile
things, but just look what they can do
when they stick together.
Author Unknown
I disagree with Kay Jewelers. I bet on any given
Friday or Saturday night more kisses begin
with Miller Lite than Kay’s.
Author Unknown
A positive attitude may not solve every
problem, but it makes solving any problem
a more pleasant experience.
Grant Fairley
Motivational Speaker
Obituaries would be a lot more
interesting if they told you how the
person died.
Author Unknown
Delegating work works, provided the one
delegating works too.
Robert Half
Founder of Staffing Firm
The trouble with doing nothing is you never
know when you’re done.
Author Unknown
It is amazing how much you can
accomplish when it doesn't matter who
gets the credit.
Harry S. Truman
33rd President, United States
I hate it when I just miss a call (Hello? Darn
it!), but when I immediately call back, it rings
nine times and goes to voicemail. What'd you
do after I didn't answer? Throw the phone
and run away?
Author Unknown
It is hard to lead a cavalry charge if you think
you look funny on a horse.
Adlai Stevenson
Former Vice President &
Congressman
No one can whistle a symphony, it takes a
whole orchestra to play it.
Halford E. Luccock
American Methodist Minister
I totally take back all those times I didn't want to
nap when I was younger.
Author Unknown
Men have never been individually
self-sufficient.
Reinhold Niebuhr
American Theologian
I think part of a best friend's job should be
to immediately clear your computer
history if you die.
Author Unknown
I keep some people’s phone numbers in
my phone just so I know not to answer
when they call.
Author Unknown
Nothing sucks more than that moment
during an argument when you realize
you're wrong.
Author Unknown
Map Quest really needs to start their
directions on #5. I'm pretty sure I know
how to get out of my neighborhood.
Author Unknown
What separates those who achieve from
those who do not is in direct proportion
to one’s ability to ask for help.
Donald Keough
Former Coca Cola President
You moon the wrong person at an office
party, and suddenly you aren’t
“professional” anymore.
Author Unknown
Teamwork is the fuel that allows common
people to attain uncommon results.
Andrew Carnegie
Entrepreneur & Philanthropist
I'm always slightly terrified when I exit
out of Word and it asks me if I want to save
any changes to my ten-page document
that I swear I did not make any changes to…
Author Unknown
The best way to appreciate your job is to
imagine yourself without one.
Oscar Wilde
Irish Writer/Poet
You never know when it will strike, but
sometimes there comes a moment at
work when you just know that you aren't
going to get anything productive done
for the rest of the day.
Author Unknown
A pat on the back is only a few vertebrae
removed from a kick in the pants, but is
miles ahead in results.
Ella Wilcox
American Author/Poet
I hate leaving my house confident and
looking good and then not seeing
anyone of importance the entire day.
What a waste.
Author Unknown
The only place where success comes before
work is in the dictionary.
Donald M. Kendall
Former CEO Pepsico
There is a great need for a sarcasm font.
Author Unknown
Working together works.
Author Unknown
Bad decisions make good stories.
Author Unknown
Simply stated, it is less me and more we.
Author Unknown
I think the freezer deserves a light as well.
Author Unknown
None of us is as smart as all of us.
Ken Blanchard
American Author &
Management Expert
We are all in this together….
QUESTIONS?
Jennifer.Bergel@LCPS.org
Leigh.Burden@LCPS.org
78