Financial Oversight

By Dennis K. Chaconas

We must do more in terms of prevention and assistance to keep our local districts in financial health. Collabosration and partnership are the key.

The Alameda County Board of Education has not worked in partnership with local districts to keep them out of financial difficulties. To use a medical analogy, the ACOE should act as a doctor to prevent ill effects from happening and treating illness when it does occur. Instead, they have repeatedly acted as more of a mortician calling in the pall bearers after the patient has died. Counties, such as San Diego, when faced with districts going into financial debt by as much as $126 million have *not* experienced state takeovers. Rather, members of the San Diego County Board of Education rolled up their sleeves and pitched in to resolve the problems through local efforts.

In the last four years we have seen the state called in for eight districts in Alameda County. These are; Oakland, Berkeley, Albany, San Leandro, Emeryville, Hayward, Newark and Livermore. I believe that the ACOE should be aware of financial problems and working on their solutions before they get to this position. While the ACOE has statutory responsibility for the oversight of local district finances, in nearly all instances of financial difficulties in the county, it has been the local district that notifies the County that they have trouble ahead. This is AFTER the County has approved their budget! It is not enough that ACOE rubber stamp the budgets put forward to them by the local districts. They have a fiduciary responsibility to be aware of potential problems BEFORE they become full blown crises.

I believe that there are three indicators that a district is getting into financial difficulties. The information for all of these indicators is at the ACOE's fingertips and all that is needed is for it to be collected and analyzed on a regular basis.

These indicators are:

1) At the end of every September ACOE will have accurate information as to the individual school district's payroll. ACOE cuts the checks. They know what the individual districts are paying! Further, ACOE knows the number of staff vacancies, substitute teacher usage and can extrapolate the monthly payroll costs for each individual district with a high degree of accuracy by making the appropriate projections and holding those projections up against the approved budget for the district. This, as well as a monthly examination of real v.s budgeted expenditures in other spending categories can provide an accurate indicator of the financial health of the local district;

2) The next critical figure is the Average Daily Attendance (ADA) income that the district will receive for the year. If the budget is based on an ADA of 30,000 and by the 20th day of the school year the enrollment numbers are falling short a red flag should be raised immediately. New ADA income projections should be developed and the budget revised immediately! If the ADA is running at 98% of the projections, then it is a safe bet that income is going to be greater than was budgeted for and surplus dollars can be allocated to improve student academic achievement.

3) Actual vs. projected; Finally, I believe that the Trustees of the ACOE should be examining the actual vs. projected spending of each individual district every month. Nothing is a better indicator of financial health than such an analysis. It's as simple as looking at the bottom line. If you're at the 25% mark for the year and you've spent 50% of the projected budget and there are no cyclical expenditures to account for the discrepancy, it's time to start working with the local district to restructure the budget... its NOT time to call in the state to take it over!

One of the ways that financial problems can be prevented before they develop is by the County acting to facilitate partnerships between local districts to reduce costs for common materials and services that all of the districts utilize.

Utility rates are going to continue to sky rocket. All school districts will face an increasing challenge to keep their schools warm during the cold spells and cool during the hot spells. I believe that with the County's assistance, we can achieve financial savings by negotiating uniform billing and service fees under a single contract for all local school districts in the County.

Utilities are not the only area we can achieve savings with this kind of tactic. All local school districts use similar books and classroom teaching materials. An agreement with a single supplier for the entire County can achieve dramatic cost reductions.

Perhaps the greatest area of potential savings that we can achieve by banding together, is in the area of health costs. Nothing is rising faster than the cost of health insurance. Rather than individual districts being forced to negotiate plans that will result in reduced health benefits for teachers and other school workers, I believe that we can maintain our current level of benefits AND realize significant cost savings if we negotiate as a single unit rather than as 18 disparate units.

Another area of critical collaboration can be made in the area of recruitment. All districts are continuously recruiting to replace individuals that have retired or otherwise left the local district. There are 18 district personnel offices that are duplicating these efforts to fill vacant positions. I believe that there are ways that ACOE can explore to assist districts to recruit employees without having to perform these efforts individually.

Finally, ACOE can assist with cost containment. One of the most frustrating expenditures for any local district lies in the area of litigation. Districts are continually expending large sums of money on settling claims against individual schools. ACOE should be staying on top of countywide litigation trends to see if there are legal problems that can be addressed and resolved before a case is filed.

Grant analysis; Local districts, in an effort to improve the quality of education, have been aggressive in seeking out grants and short term funding. Unfortunately, when the grant funds run out, often community and staff believe that the local district should pick up the cost to continue the previously funded program. The County should be working with the local boards to review the impact of the grant funded programs and make sure that they are value added to student achievement and are not simply an activity that is an add-on to curriculum.

Special Education; this is a growing problem throughout districts in the County. Rising standards and academic requirements have forced parents to seek additional assistance for their children. These youngsters deserve a quality education, but such services clearly mean an additional cost for the local district. The locally elected representatives and the County must collaborate to control costs for youngsters that cannot be served in the public, neighborhood school setting. An examination of the trends and services must be made early on in the school year to determine if meeting the special needs of an individual student is legally mandated for the local public school, if it is necessary and if the local school can afford it. I believe that if the local districts combine to work as a single unit on this problem and examine resource allocation, as well as per student costs, we can greatly aid in reducing these costs.