Audit Committee Recommendations
Offer Cost Savings, Enhanced Accountability
James Bailey Brislin
The Carpet City Chronicle
The Enfield Press, July 17, 2008
“Management works in the system; leadership works on the system.“
-Stephen R. Covey
“As we look ahead into the next century, leaders will be those who empower others.“
-Bill Gates
“Leadership is getting someone to do what they don’t want to do but to achieve what they want to achieve.“
-Tom Landry
Two weeks ago, the Audit Committee of the Board of Education presented its findings to the Board and the people of Enfield. Its many recommendations echoed the theme that Enfield schools need stronger internal leadership on issues of management and finance.
This examination of school district management practices is book-ended by two significant news stories.
The first of these originates up in Greenfield, Massachusetts. Earlier this year, the Greenfield schools discovered a midyear operating deficit of $1.1 million. Despite a cash infusion of $500,000 from the City Council, Greenfield Schools still ended up having to lay off nine employees and consolidate schools. This deficit was not caused by embezzlement or any other kind of criminal misconduct. Instead, it had its roots in mismanagement and sloppy record-keeping. The audit committee recommended the adoption of processes and procedures to better manage and safeguard school district funds.
The other bookend to the audit is this year’s zero-tax-increase budget. In the face of worsening economic conditions, the Enfield Town Council approved a zero-tax-increase budget. Faced with a miniscule increase, the Board of Education cut its proposed budget by $1.5 million, successfully averting layoffs and program cuts.
There are significant lessons to be drawn from these two stories. In Greenfield, we see just how easily mismanagement can lead to trouble. The consequences of Greenfield’s midyear deficit – layoffs and school consolidation – are outcomes that no one wants to see. The moral to be drawn from this year’s zero-tax-increase budget is that the days of large budget increases are over.
That the Board could cut $1.5 million without teacher layoffs and program cuts illustrates the inadequacy of budgeting techniques. Next year’s budget promises to be even harder to balance. Declining home prices continue to erode the tax base and deteriorating economic conditions preclude the adoption of tax increases. As a consequence, the only way to deliver additional resources to the students is to more effectively leverage funding.
The audit committee broke into four subcommittees: budget and financial management, custodial staffing, teacher internship program, and energy/utility and asset management. Each subcommittee performed research and made recommendations to better leverage funding and assets.
The Budget and Finance subcommittee cited thirteen findings. Among the most significant is that there are not adequate written policies governing financial transactions in the school system. For example, there is no documented procedure for executing a purchase order. Without a documented policy, you cannot hold school district officials accountable for deviations from the process.
The sub-committee also recommended the decentralization of budget management, making principals responsible for budget management in their buildings. This will more effectively align spending with the needs of particular schools, improving accountability and excellence.
They also found that the Board was not budgeting from year-to-date and previous-year actual expenditures. Instead, the board simply added 3 percent to the prior year’s proposed totals. This was most vividly illustrated by the budget request for water, which was budgeted at 230% of actual usage.
Other recommendations focused on the proper assignment of budget categories. For example, last year’s lead clean-up was recorded under custodial supplies, muddying the difference between ordinary custodial expenses and resources utilized for the extraordinary clean up.
Extraordinary expenses like the lead clean-up and insurance deductibles should be recorded using different budget categories. Also, the committee recommended renaming and applying additional scrutiny for an account labeled Student Activities, which also serves as a repository for the contributions and deductions of school district retirees.
An additional recommendation was that Board of Education members and administrators should receive budget training. Following a $10 million embezzlement scandal in Roslyn, NY, the State of New York mandated that all Board members receive annual budget training. The committee recommended that Board members receive comprehensive training similar to that offered in New York.
The sub-committee also examined reporting processes and found them to be deficient. To promote better cash management practices, the sub-committee recommended that principals be provided with monthly budget variance reports and be held accountable for managing the budgets in their buildings.
Last, the sub-committee recommended ending the freeze-and-spend cycle, in which budgets are frozen mid-year and then unfrozen to accommodate a year-end spending binge. Instead the committee suggested that the Board work out an agreement with the Town Council to roll over surplus cash into the next year’s appropriation. This would encourage principals to save money to fund needed expenses and capital improvements.
The sub-committee on Custodial Staffing Practices in the school district found that the school district employs a total of sixty custodians, of whom seven are skilled tradesmen (carpenter, plumber, and electricians), sixteen are daytime custodians, and thirty-seven are night custodians. Their average salaries were $46,966 for skilled maintenance, $43,999 for day custodians, and $37,365 for night custodians. Custodial benefits include medical, dental, life, accidental death and disability, and retirement. Custodial workers currently contribute 8% to the cost of medical and dental insurance premiums.
This compensation compares favorably against the mean annual wage of $27,150 for custodial work in Connecticut. Although Enfield ranks in the middle of school districts for custodial wages, it pays a premium of $10,000-$15,000 above the market wage for all custodial staff.
Looking at these figures, the sub-committee provided a menu of four potential options to address the custodial staffing situation: (a) maintain the status quo, (b) maintain the status quo and negotiate a more budget-friendly contract, (c) outsource maintenance operations, and (d) outsource maintenance and evening custodial operations. These choices are four logical options that any manager would consider.
Options (b) and (c) deserve particular attention. In the age of skyrocketing healthcare costs, it is inadvisable for the Board of Education to shoulder 92% of the cost of health insurance premiums. Given that Enfield pays more: $10,000-$15,000 above market rates, it is not unreasonable to ask for more: higher benefit contributions and lower wage increases.
Ultimately, this process is about ensuring that school district commitments are sustainable, lest municipal employees become the G.M. autoworkers of the 2020s. In regard to outsourcing skilled maintenance, examination of maintenance work orders found that there were no records of how long it took to fulfill a work order or who was assigned. Given the usage of local maintenance contractors and the apparent underutilization of maintenance staff, it seemed logical to contract out all skilled maintenance operations.
The Board of Education should leave Option (d) on the table as leverage for contract negotiations. Although the most extreme of the options, it should be seriously considered and will at least help dampen demands for wage and benefit increases.
The Teacher Internship Committee looked at the use of teacher interns as a supplement to the current substitute program. It found that in addition to providing cost savings to the town, the use of teacher interns was often a valuable avenue for the recruitment of new teachers. It also found that the use of teacher interns enhanced the education experience of students. In addition to exploring the use of teacher interns, the committee recommended tracking substitute utilization and improving substitute training.
The Energy/Utilities and Asset Management Committee looked at energy usage in the schools and asset management practices. Its recommendations ranged from policy to practical. It recommended the adoption of policies to govern the issuance and usage of vehicles, cell phones, and computers by school district employees.
It also recommended enhanced accountability for energy usage at the building level. Centralized budgeting separates principals and staff from the bills for their energy usage. The sub-committee recommended contracting with the Connecticut Conference of Municipalities for a free energy audit. Last, it recommended the systematic replacement of toilets in the school buildings. Apparently, school buildings with older, less-efficient toilets had much higher water usage.
The bottom line is that Enfield schools need to do a better job at managing their financial resources. Audit Committee Chairman James T. Brislin, the father of this columnist, very effectively illustrated the fundamental issue.
Mr. Brislin held up an inch-thick manual of administrative regulations and showed that they contained only three pages governing budgets and financial management. For a school district with a $70 million budget, this is simply unacceptable.
There need to be more-extensive policies and controls governing the budget process throughout its life cycle. Given the large sums that the people of Enfield appropriate for education, it is not unreasonable to ask for a high level of accountability. The time has come for the school board and administration to step up to the plate and provide that accountability, so that citizens can trust that their dollars are being effectively used.
N.B. You can read the Audit Committee reports by logging on to the Enfield Public Schools website (www.enfieldschools.org), and clicking on Board of Education, and then Audit Committee.
July 17, 2008
Audit Committee Recommendations Offer Cost Savings, Enhanced Accountability
Posted by James Bailey Brislin under Board of Education, Commentary & Politics, Enfield, The Enfield Press | Tags: Audit Committee, Budget & Financial Management, budget categories, budget training, Budget Variance Reports, Custodial Staffing, deficit, Energy/Utility & Asset Management, Enfield, Greenfield Schools, maintenance, Outsourcing, Substitute Teachers, Teacher Internship, tradesmen |Leave a Comment
Audit Committee Recommendations
Offer Cost Savings, Enhanced Accountability
James Bailey Brislin
The Carpet City Chronicle
The Enfield Press, July 17, 2008
“Management works in the system; leadership works on the system.“
-Stephen R. Covey
“As we look ahead into the next century, leaders will be those who empower others.“
-Bill Gates
“Leadership is getting someone to do what they don’t want to do but to achieve what they want to achieve.“
-Tom Landry
Two weeks ago, the Audit Committee of the Board of Education presented its findings to the Board and the people of Enfield. Its many recommendations echoed the theme that Enfield schools need stronger internal leadership on issues of management and finance.
This examination of school district management practices is book-ended by two significant news stories.
The first of these originates up in Greenfield, Massachusetts. Earlier this year, the Greenfield schools discovered a midyear operating deficit of $1.1 million. Despite a cash infusion of $500,000 from the City Council, Greenfield Schools still ended up having to lay off nine employees and consolidate schools. This deficit was not caused by embezzlement or any other kind of criminal misconduct. Instead, it had its roots in mismanagement and sloppy record-keeping. The audit committee recommended the adoption of processes and procedures to better manage and safeguard school district funds.
The other bookend to the audit is this year’s zero-tax-increase budget. In the face of worsening economic conditions, the Enfield Town Council approved a zero-tax-increase budget. Faced with a miniscule increase, the Board of Education cut its proposed budget by $1.5 million, successfully averting layoffs and program cuts.
There are significant lessons to be drawn from these two stories. In Greenfield, we see just how easily mismanagement can lead to trouble. The consequences of Greenfield’s midyear deficit – layoffs and school consolidation – are outcomes that no one wants to see. The moral to be drawn from this year’s zero-tax-increase budget is that the days of large budget increases are over.
That the Board could cut $1.5 million without teacher layoffs and program cuts illustrates the inadequacy of budgeting techniques. Next year’s budget promises to be even harder to balance. Declining home prices continue to erode the tax base and deteriorating economic conditions preclude the adoption of tax increases. As a consequence, the only way to deliver additional resources to the students is to more effectively leverage funding.
The audit committee broke into four subcommittees: budget and financial management, custodial staffing, teacher internship program, and energy/utility and asset management. Each subcommittee performed research and made recommendations to better leverage funding and assets.
The Budget and Finance subcommittee cited thirteen findings. Among the most significant is that there are not adequate written policies governing financial transactions in the school system. For example, there is no documented procedure for executing a purchase order. Without a documented policy, you cannot hold school district officials accountable for deviations from the process.
The sub-committee also recommended the decentralization of budget management, making principals responsible for budget management in their buildings. This will more effectively align spending with the needs of particular schools, improving accountability and excellence.
They also found that the Board was not budgeting from year-to-date and previous-year actual expenditures. Instead, the board simply added 3 percent to the prior year’s proposed totals. This was most vividly illustrated by the budget request for water, which was budgeted at 230% of actual usage.
Other recommendations focused on the proper assignment of budget categories. For example, last year’s lead clean-up was recorded under custodial supplies, muddying the difference between ordinary custodial expenses and resources utilized for the extraordinary clean up.
Extraordinary expenses like the lead clean-up and insurance deductibles should be recorded using different budget categories. Also, the committee recommended renaming and applying additional scrutiny for an account labeled Student Activities, which also serves as a repository for the contributions and deductions of school district retirees.
An additional recommendation was that Board of Education members and administrators should receive budget training. Following a $10 million embezzlement scandal in Roslyn, NY, the State of New York mandated that all Board members receive annual budget training. The committee recommended that Board members receive comprehensive training similar to that offered in New York.
The sub-committee also examined reporting processes and found them to be deficient. To promote better cash management practices, the sub-committee recommended that principals be provided with monthly budget variance reports and be held accountable for managing the budgets in their buildings.
Last, the sub-committee recommended ending the freeze-and-spend cycle, in which budgets are frozen mid-year and then unfrozen to accommodate a year-end spending binge. Instead the committee suggested that the Board work out an agreement with the Town Council to roll over surplus cash into the next year’s appropriation. This would encourage principals to save money to fund needed expenses and capital improvements.
The sub-committee on Custodial Staffing Practices in the school district found that the school district employs a total of sixty custodians, of whom seven are skilled tradesmen (carpenter, plumber, and electricians), sixteen are daytime custodians, and thirty-seven are night custodians. Their average salaries were $46,966 for skilled maintenance, $43,999 for day custodians, and $37,365 for night custodians. Custodial benefits include medical, dental, life, accidental death and disability, and retirement. Custodial workers currently contribute 8% to the cost of medical and dental insurance premiums.
This compensation compares favorably against the mean annual wage of $27,150 for custodial work in Connecticut. Although Enfield ranks in the middle of school districts for custodial wages, it pays a premium of $10,000-$15,000 above the market wage for all custodial staff.
Looking at these figures, the sub-committee provided a menu of four potential options to address the custodial staffing situation: (a) maintain the status quo, (b) maintain the status quo and negotiate a more budget-friendly contract, (c) outsource maintenance operations, and (d) outsource maintenance and evening custodial operations. These choices are four logical options that any manager would consider.
Options (b) and (c) deserve particular attention. In the age of skyrocketing healthcare costs, it is inadvisable for the Board of Education to shoulder 92% of the cost of health insurance premiums. Given that Enfield pays more: $10,000-$15,000 above market rates, it is not unreasonable to ask for more: higher benefit contributions and lower wage increases.
Ultimately, this process is about ensuring that school district commitments are sustainable, lest municipal employees become the G.M. autoworkers of the 2020s. In regard to outsourcing skilled maintenance, examination of maintenance work orders found that there were no records of how long it took to fulfill a work order or who was assigned. Given the usage of local maintenance contractors and the apparent underutilization of maintenance staff, it seemed logical to contract out all skilled maintenance operations.
The Board of Education should leave Option (d) on the table as leverage for contract negotiations. Although the most extreme of the options, it should be seriously considered and will at least help dampen demands for wage and benefit increases.
The Teacher Internship Committee looked at the use of teacher interns as a supplement to the current substitute program. It found that in addition to providing cost savings to the town, the use of teacher interns was often a valuable avenue for the recruitment of new teachers. It also found that the use of teacher interns enhanced the education experience of students. In addition to exploring the use of teacher interns, the committee recommended tracking substitute utilization and improving substitute training.
The Energy/Utilities and Asset Management Committee looked at energy usage in the schools and asset management practices. Its recommendations ranged from policy to practical. It recommended the adoption of policies to govern the issuance and usage of vehicles, cell phones, and computers by school district employees.
It also recommended enhanced accountability for energy usage at the building level. Centralized budgeting separates principals and staff from the bills for their energy usage. The sub-committee recommended contracting with the Connecticut Conference of Municipalities for a free energy audit. Last, it recommended the systematic replacement of toilets in the school buildings. Apparently, school buildings with older, less-efficient toilets had much higher water usage.
The bottom line is that Enfield schools need to do a better job at managing their financial resources. Audit Committee Chairman James T. Brislin, the father of this columnist, very effectively illustrated the fundamental issue.
Mr. Brislin held up an inch-thick manual of administrative regulations and showed that they contained only three pages governing budgets and financial management. For a school district with a $70 million budget, this is simply unacceptable.
There need to be more-extensive policies and controls governing the budget process throughout its life cycle. Given the large sums that the people of Enfield appropriate for education, it is not unreasonable to ask for a high level of accountability. The time has come for the school board and administration to step up to the plate and provide that accountability, so that citizens can trust that their dollars are being effectively used.
N.B. You can read the Audit Committee reports by logging on to the Enfield Public Schools website (www.enfieldschools.org), and clicking on Board of Education, and then Audit Committee.