School Finance

1. Introduction School Finance Nancy J. Ross, Business Manager Work Session, July 16, 2014

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

3. XXXXX . XXXX . XXXXX . XXXX . XXXXXX . XXXX . XXXX Fund Function Object Program Location Job Class Data WHAT ARE LINE ITEMS? 32 digits is pretty overwhelming !!

4. 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 supplies 24106 – 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 District 27106 – Student Library Funds - from sale of 2010 GO Bonds at the state level 27114 – NM Read to Lead K-3 – Public Education Department (PED) initiative to improve student reading skills 26170 – 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 fund 31200 – Lease reimbursement Grant – generated by the number of students enrolled on the previous year’s 40th day count multiplied by a set dollar value 31700 – 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.

5. Function Component • Functions: • 1000 –Instruction – includes all expenses that specifically involve instruction of students in the classroom • 2000 – Support Services – includes expenses incurred in the support of classroom instruction • 3100 – Food Services to students • 4000 – 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.

6. Object, Program & Job Class Component 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.

7. Budget Rollup Report

8. Budget Adjustment Request (BAR) 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”

9. PED Budget Adjustment Request 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.

10. Governing Council Financial Documents • 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

11. Bank Documents Check Listing Bank Statements Bank Reconciliation

12. Bank Statements 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.

13. OTHER DUTIES OF THE COUNCIL • 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

14. PERIODIC REVIEWS Documents your “due diligence” requirement Provides an opportunity to assess the risk factors Holds management accountable

15. Oh, No !! This is a lot to be responsible for !!

16. TIPS FOR FINANCIAL OVERSIGHT Watch For 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 Financial Document • Check Listings • Bank Reconciliations • Budget Reports • Budget Adjustment Requests (BAR’s)

17. 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

18. ADDITIONAL THOUGHTS • 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

19. ADDITIONAL TIPS • 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

20. QUESTIONS