Catching Up: Audit and Finance

So much to talk about but I did want to put up some interesting highlights from last week's Audit and Finance Committee meeting on Jan. 13th.

There was some discussion of how to get Director Patu up to speed (as she is new to the Committee and, seemingly, finance).

Enrollment: district is up by 188 kindergarteners and over 900 9th graders. Wow.

There was some discussion about the various ways that BEX and BTA dollars were being spent as well as the bond sale late last year to get even more capital money for the reopened schools. I tell ya, the money just gets moved around and around.

So those who were waiting on the item about the Audit Response to AE3.1 conflict of interest issue. It was reported that:

• this was about NWEA which the Superintendent did not disclose that she was on their Board. What was said at the meeting is that the district noted that this was a specific item and not just "you did not fully disclose all the boards you sit on".
• the wording on audit response should be less vague
• conflict of interest forms will be out at next week's Board meeting.

What I got from this is report was that in some ways the district should be more specific "no financial relationships" but in other ways more vague (not necessarily calling out every specific board). It was kind of confusing.

Some of the discussion was around having to disclose boards that directors/executive leadership are automatically on. (This came up at the Board meeting last night. Apparently both the MOUs with the Alliance for Education and the Council of Great City Schools require that a Board member and the Superintendent be on their boards.) Sherry was asking about a way to track these types of "automatic" membership versus boards where you actually have "an obvious activity". Which leads to an interesting question: does the School Board President and/or Superintendent ever really go to an Alliance Board meeting?

Michael also mentioned the idea of getting something back from being on a board (even if not direct financial compensation but rather prestige, access to other members, etc.).

There was a general discussion of the audit response with yet another abbreviated sheet from staff. Not even a half-page, it is an "Audit log" that states that as of Jan. 12th, they have "fully remedied 53 items (79%) and have 14 still "in progress." My response would have been to say, prove it, but I'm not on the Committee. Looking at that audit I find it hard to believe.

Michael asked what "fully remedied" meant and just got an example rather than a clear definition. Michael asked about a timeline for follow-up and was told "We have not been as formal as establishing that" and Don Kennedy said, "Does the audit call for that?" The answer would be yes, you need to follow-up because, based on the audit, the district does very poorly at following-thru and following up on recommendations and findings. Sherry said it is very important to do follow-thru based on her professional experience.

Then there was a walk-thru of the new Ethics policy by Noel Treat. I will see if I can get the pdf of the handout because it is interesting. There will be a protected hotline number (meaning it won't show your phone number if you call in). Betty asked if this was new and Noel said they had a policy since 2002 but not a program. Duggan Harmon explained that they did find the money for the hotline ($12K and yes, I know; where do they find this money?).

There was a discussion about the "end stage" for an investigation and I believe they meant - does it end at a personnel file or with the police (if a criminal activity). Noel said that it could be either or both. Michael asked about fining violators and Noel said the district could look at that.

All the Board members spoke out strongly for real consequences and Betty especially wanted managers to be held responsible as they are supposed to have explained the policy and be monitoring their own departments. Sherry talked about the training "cascading" down from one manager down to another and then through the departments.

Then my favorite fun time (and get out your pencils - there's math involved) - the Pay for K presentation. Now Michael said it was better than last time but I would say only marginally. I have NO idea why the woman in Accounting thinks this info she gives out passes for accounting but the Board let her off on it. So you do the math and tell me what you get/think:

Total Kindergarteners 4,058
totals from schools where fees waived 1,915
subtotal 2593

minus F/RL families 538
Total accounts with fees 2055

Okay, so the total number of kindergarten families who have to pay is 2,055. Multiply that times $207 per month for 10 months and I get $4,253,850. So that's how much the district needs to get back to cover the costs.

Here's where it gets tricky because of the way the information was presented.

accounts with payments 1725
current 1292
past due 280
year paid in full 153
revenue $1,708,927

So tell me, where are we with Pay for K? It's unbelievable. Here's how I sussed it out:

# of paying Pay for K kindergarteners 2,055
# paid in full for year 153
subtotal of people who pay each month 1,902

What is confusing to me is if there are:
accounts with fees 2,055
minus current 1,292
763
minus paid in full 153
610

So why does the district say there are 280 past dues when it looks like there are 610?

From there, I'm lost because:

• does current include those who paid in full for the year?
• past due - one month, two months,three months?
• revenue - does that include all payments including full year paid?
  

If you are an accountant, run these figures and help me out. Sherry didn't seem happy with this report. The head of accounting said they hadn't created a summary report (to which I ask, why not? Again, it is real money.)

What was also interesting was that the district will give notice to parents (twice, I think) on past due and then refer the bill to a collection agency and if not paid, the child is exited from full day and has to go home at noon. Michael asked if there might be an educational detriment to doing this to a child? The accounting manager, Kathie, looked perplexed. Noel chimed in that there is a legal obligation to provide half-day kindergarten which would be what the district is doing.

Sherry asked what role the school office has in accounting. Kathie said they are not assigned any but if a parent comes in with a check, the office can take it and send it in. Duggan did say that principals are cc'd on past due notices on the idea that they can help send the message home or answer questions that come up.

I was a little taken aback at this point. Sherry asked if we can afford the busing to take kids home at noon. Sherry said it was an issue about what happens to a child if the past due is enforced. Don mumbled something about it being something for the transportation department. Sherry once again said this needs to be in place before they send any children home from school and that Pay for K is NOT revenue but cost recovery.

My other issue is that I don't know how I would feel if my principal knew I owed the district money. I guess they did in previous years when they handled Pay for K payments.

They went over some budget issues and Don Kennedy did say that not all 85 central administration cuts last year were in central office but over 4 areas including central administration. Finally. Don pointed out that some areas had little flexibility because of state reimbursement or contracts. Don said that if they make the cuts to central that the Board wants (mentioned at the last Work Session) there was a question of how things get done centrally?

My final note reflects Michael saying he would feel more confident in knowing how other district in WA state operate in functional areas that are not schools. He said SPS had more resources and levy money than most districts and that Bellevue operates without spending as much on non-school areas.