School FinanceIntroduction

Nancy J. Ross, Business ManagerWork Session, July 16, 2014

“Line Item” Components Budget Reports Budget Adjustment Requests (BAR’s) Council Meeting Reports Other Duties of the Council Periodic Reviews Tips for Financial Oversight

Thanks !

WHAT ARE LINE ITEMS?

XXXXX . XXXX . XXXXX . XXXX . XXXXXX . XXXX . XXXX Fund Function Object Program Location Job Class Data

32 digits is pretty overwhelming !!

Fund Function Object Program Job class

11000 1000 51100 1010 1411

Fund Component

Funds:11000 – State Equalization Guarantee – generated by # of Students, a grade level weighting factor and Unit values (dollar amount)14000 – Instructional Materials – textbooks, materials and supplies24106 – Special Education – generated by the number of students with special needs and the levels of service that is written into their IEP; flows through the Aztec Municipal School District27106 – Student Library Funds - from sale of 2010 GO Bonds at the state level27114 – NM Read to Lead K-3 – Public Education Department (PED) initiative to improve student reading skills26170 – Non-recurring vouchers awarded by the Attorney General as a result of a settlement with Microsoft. There is slightly over $7,000 left in this fund31200 – Lease reimbursement Grant – generated by the number of students enrolled on the previous year’s 40th day count multiplied by a set dollar value31700 – Small guaranteed funding per student; PLUS, new this year, our share of the property taxes collected from residential and business owners. Equipment/software for student use.

Function Component

Fund Function Object Program Job class

11000 1000 51100 1010 1411

Functions:1000 –Instruction – includes all expenses that specifically involve instruction of students in the classroom2000 – Support Services – includes expenses incurred in the support of classroom instruction3100 – Food Services to students4000 – Facilities Acquisition and Construction

These are required reporting codes – additionally, under the 2000 thru 4000, there are further breakdowns of expenditures to reflect exactly where those funds are going.

For instance: 2100 – attendance, counseling, health, speech; 2200 – library, testing; 2300 – audit, council expenses; 2400 - office of the principal; 2500 – finance, human resource and administrative technology; etc.

The PED requires that we report expenditures only to the second digit of the function code.

Object, Program & Job Class Component

Fund Function Object Program Job class

11000 1000 51100 1010 1411

Object: (WHAT is being purchased)Describes the expenditure. For instance – salaries, supplies, small assets, software, construction, other contract services, etc.

Program: (what group of students is BENEFITING from the purchase)General education students, special education students or no specific group of students

Job class: (WHO is being paid a salary)Teacher, educational assistant, clerical, substitute for sick leave, substitute for professional development, etc.

Line items allow us to track expenditures for the purpose of budgeting and ensuring that funds are being expended in support of the goals and needs of the students of the school.

Budget Rollup Report

BUDGET = PLAN FOR SPENDING

So what happens if, in our best planning efforts, we cannot foresee what line items we will actually need or how much we might need in a specific line item. When a line item does not have sufficient budget to support needed expenditures, then a Budget Adjustment Request must be submitted to the Council for approval. If the request is within the same function, it does not require PED approval – only Council approval.

This is referred to as a “Maintenance BAR”

Budget Adjustment Request (BAR)

If we are requesting to move funds from one function to another (T), we must first obtain Council approval and then submit to the PED for their approval. PED has 30 days to provide approval of the request.

If additional funding becomes available (IB or I) or if we are notified of a decrease in funding (DB), we are required to correct our budget through this process as well.

A BAR that is submitted to the PED for approval will look similar to this.

PED Budget Adjustment Request

In your Council Packet you will see the Budget rollup report, both Revenue and Expenditure

Includes % Remaining Column to far right Accounts Payable Check listing Payroll Check listing Bank Reconciliations

Bank Statements for all three accounts Operational Account – revenue for all funds is deposited here Accounts Payable Clearing (zero balance) Account – used to process

checks written to pay vendors Payroll Clearing Account – used to process all payroll expenses

Any maintenance or PED BAR’s being requested

Governing Council Financial Documents

Check Listing

Bank Statements

Bank Reconciliation

Bank Documents

The bank statements are now received electronically. This process allows us to reconcile our accounts much more efficiently and timely.

The Aztec Municipal School District Business Office also transmits our SEG payment electronically; which provides us with quicker access to the major source of our funding.

Bank Statements

Serve on the Audit Committee Participate in the selection process for hiring an auditor Meet with auditors Gain an understanding of the audit process and the audit

report itself Serve on the Finance Committee

Periodically report the financial stability of the Charter to the full Council

Periodically report the efficiency of the organization to the full Council

Serve on the budget committee

WE COMBINE THESE TWO INTO ONE COMMITTEE

OTHER DUTIES OF THE COUNCIL

Documents your “due diligence” requirement

Provides an opportunity to assess the risk factors

Holds management accountable

PERIODIC REVIEWS

Oh, No !!

This is a lot to be responsible for !!

TIPS FOR FINANCIAL OVERSIGHT

Financial Document

Check Listings

Bank Reconciliations

Budget Reports Budget Adjustment

Requests (BAR’s)

Missing check numbers, unfamiliar vendors

Compare ending check # of last month to beginning # of this month

Pending transactions, cash availability Ask for backup of adjusting entries Question lingering adjustments Deficit accounts; % of remaining

budget Understand the purpose of the BAR Are charter goals being met

Watch For

TIPS FOR FINANCIAL OVERSIGHT

Manual journal entries

Vendor check listings

Cash movement from/to bank accounts

Periodically ask to see backup information

Periodically review the supporting documents

Periodically review the supporting documents ACH to vendors From one bank account

to another

Ask questions (some are better asked before a meeting) Question vendors on the check list that you don’t recognize Question checks to individuals that are for large amounts Question recurring checks to a particular individual –

whether large or SMALL Question movement of cash from one bank account to

another Question “stale” adjusting entries on the bank reconciliation Question stale dated outstanding checks Question how the BAR’s affect the accomplishment of

Council goals

ADDITIONAL THOUGHTS

Occasionally Ask us to show you the security available in the

accounting software that decreases the opportunity for fraud

Ask to see manual journal entries and the backup documentation

Ask to see documentation for movement of cash Ask to see original request form for a particular purchase Ask to see documentation of best obtainable price Ask to see documentation that supports control over cash

up to point of deposit Ask to see documentation that supports control over a

fundraising activity Ask to see documentation that shows importance of

safety during a field trip Ask to see the original void check and backup for the void

ADDITIONAL TIPS

QUESTIONS