Controllership function in school districts
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Controllership Function in School Districts. Texas Association of School Business Officials Annual Conference - Austin Texas March 2008. James Terry PhD, CPA, CTSBO Executive Director of Finance and Accounting Services North East ISD. Controller’s Job More than Financial Control Systems.

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Controllership function in school districts

Controllership Function in School Districts

Texas Association of School Business Officials

Annual Conference - Austin Texas

March 2008

James Terry PhD, CPA, CTSBO

Executive Director of Finance and Accounting Services

North East ISD


Controller s job more than financial control systems

Controller’s Job More than Financial Control Systems

  • Accounting controls

    • Safeguarding of assets

    • Reliability of the financial records

  • Administrative Controls

    • Plan of organization

    • Operational efficiency

    • Managerial policies

  • Operational Controls

    • Achieving the business objectives


The controller s job functions

The Controller’s Job Functions

  • Planning

  • Organizing

  • Directing

  • Measuring/Reporting

  • Financial analysis/Modeling

  • Process analysis/Statistical analysis

  • Forecasting


The organization

The Organization

Annual Planning (Budgeting)

Strategic Planning

Execution

Strategies

Processes

Revisions

Activities

Tasks

The Community

Evaluation

Six Sigma

Balanced Scorecard

Dashboard

Source: Robert N. Anthony and Vijay Govindarajan, Management Control Systems


The controller s job functions1

The Controller’s Job Functions

  • Planning

  • Organizing

  • Directing

  • Measuring/Reporting

  • Financial analysis/Modeling

  • Process analysis/statistical analysis

  • Forecasting


Controllership function in school districts

Department Of Finance

Executive Director of Finance & Accounting Services

E9

Departmental Secretarial Pool

Secretary to the Executive Director – C9

Administrative Support Specialist – C7

Finance Secretary– C3

Director of Accounting Services

& Payroll

E8

Director of Budgets &

Financial Control

E8

Director of Procurement

& eCommerce

E7

Director of Risk Management

& Employee Benefits

E8

Director of Grants

Administration / Comptroller

E6


Controllership function in school districts

Secretarial Pool

Director

E8

Payroll Manager

Senior Accounting Manager

Senior Accounting Manager

Data Technician

E4

E5

E5

C4

Leave Coordinator

District Cashier

Accounting Clerk

E3

C6

Part Time

C3

Payroll Technician

Accounts Payable Supervisor

Accounting Technician

C10

E1

C10

Payroll Specialist

Accounts Payable Specialist

Accounting Specialist

C8

C8

C8

Accounts Payable Specialist

Accounting Specialist

C8

Payroll Deductions

C8

Accounts Payable Specialist

C8

Payroll Clerk

C4

Accounts Payable Specialist

C8

Assistant Payroll Manager

Accounts Payable Specialist

E3

C8

Accounts Payable Specialist

C8

Payroll Technician

C10

Accounts Payable Specialist

C8

Payroll Specialist

C9

Payroll Specialist

C9

Payroll Specialist

C9

Office of Accounting Services and Payroll


Controllership function in school districts

Office Of Grants Administration

Assoc. Supt. of Campus Support

Assoc. Supt. of Instruction

Director for Grants Administration/Comptroller

E6

SecretarialPool

Executive Director of Athletics

All Executive Directors and Principals

Athletic Accountant Reports to Jerry Comalander

E1

Grant Writer

Consultant

Executive Director of Finance & Accounting Services

Senior Accountant – Grant Administration

E2

Corporate Development

Consultant

Special Education Accountant

E1

Instructional Program Specialist

C9

Senior Accountant – Curriculum Compliance & School Improvement

E2

Executive Director of Curriculum Compliance

Senior Accountant – Continuing Education / KIN

E2

Director of Community Education


Office of procurement ecommerce

Facility Usage & TextbookC9

Part-time Specialist/Facility Usage & TextbookC9

Bid CoordinatorC10

ProcurementSpecialistC9

Office of Procurement & eCommerce

DirectorE7

SecretarialPool

Assistant DirectorE6

Technology Specialist

C9

Financial Technology CoordinatorT3

Finance Clerk

C3

Textbook CoordinatorTemporaryX1

ManagerE3

Procurement CoordinatorE2

Specialist/OWS InventoryC9

Specialist/TWS InventoryC9

Specialist/GWS InventoryC9

Procurement SpecialistFrozenC9

Contract CoordinatorC10

Specialist/PO ProcessorC9

Specialist/PO ProcessorC9

Specialist/PO ProcessorC9

Material HandlerO4

Material HandlerO4

Material HandlerO4

OWS WarehouseSupervisorE1

Material HandlerO4

Material HandlerO4

Material HandlerO4

Material HandlerO4

Material HandlerO4

Material Handler/TestingO4

Procurement Warehouses

GWS WarehouseSupervisorE1

Material HandlerFrozenO4

Material HandlerO4

Property ManagementTechnicianO1

Property TransferCoordinatorPending

Property ManagementTechnicianO1


Controllership function in school districts

Office Of Budgets & Financial Control

Secretarial Pool

Director of Budgets &

Financial Control

E8

Budget Analyst

Vacant

E1

VOE Student

Assoc. Supt. of Auxiliary Services

Div Comptroller for Operations

E5

Assoc. Supt. of Business Services

Senior Accountant

E3

Executive Director of School Nutrition

Sr. Accountant for School Nutrition

E2

Assoc. Supt. of Campus Support

Comptroller for Campus Support

Assoc. Supt. of Business Services

E5

Campus Support Technician

C10

Comptroller for Business Services

Assoc. Supt. of Business Services

& Treasurer

E5

Staff Accountant - Treasury

E2


The controller s job functions2

The Controller’s Job Functions

  • Planning

  • Organizing

  • Directing

  • Measuring/Reporting

  • Financial analysis/Modeling

  • Process analysis

  • Forecasting


The controller s job functions3

The Controller’s Job Functions

  • Managing

  • Coaching

  • Managing by Objective (MBO)

  • Priorities

  • Mediation

  • Praise

  • Reprimand


The controller s job functions4

The Controller’s Job Functions

  • Planning

  • Organizing

  • Directing

  • Measuring/Reporting

  • Financial analysis/Modeling

  • Process analysis/Statistical analysis

  • Forecasting


Controllership function in school districts

The administrative cost ratio administrative costs divided by instruction costs, expressed as a percentage.

The state standard for the administrative cost ratio is 11.05%


Instructional expenditures per refined ada

INSTRUCTIONAL EXPENDITURES PER REFINED ADA


Campus academic ratings

CAMPUS ACADEMIC RATINGS

77% of NEISD’s districts are rated Exemplary or Recognized. Fort Bend is the only large district with similar results.


Substitute days paraprofessionals hs ms

SUBSTITUTE DAYSPARAPROFESSIONALS HS & MS


Hs ada by year by campus

HS ADA by Year by Campus

A/B Schedule

Automated Calling System

TTAD

Linked to PEIMS Discipline


Controllership function in school districts

Auxiliary Services


Controllership function in school districts

15


Controllership function in school districts

Capital Expenditures

16


The controller s job functions5

The Controller’s Job Functions

  • Planning

  • Organizing

  • Directing

  • Measuring/Reporting

  • Financial analysis/Modeling

  • Process analysis

  • Forecasting


Financial analysis

Financial Analysis

  • Statistical Section of CAFR

  • Inventory Carrying Costs

  • Bank Earnings Credit vs. Investments

  • Cash inflows and outflows

  • Benchmarking – ERG

    • Desktop Analyst

      • APi

      • FPI

18


Financial analysis1

Financial Analysis

  • Variance Reports

  • Staffing Analysis

  • Teacher Utilization

  • Classroom Utilization

  • Magnet Program Costs

  • Utility Usage

18


Financial analysis2

Financial Analysis

  • Course Costs

    • Mindsphere

  • Performance Measures

    • APQC

    • OSBC

18


The controller s job functions6

The Controller’s Job Functions

  • Planning

  • Organizing

  • Directing

  • Measuring/Reporting

  • Financial analysis/Modeling

  • Process analysis/Statistical

  • Forecasting


Measure what you want to change

Performance Measures

Measure what you want to change.

Source: NEISD Finance Department


Controllership function in school districts

E

X

E

C

U

T

I

O

N

Processes

  • Planning/Budgeting

  • Teaching

  • Reading

  • Writing

  • Arithmetic

A

C

T

I

V

I

T

I

E

S


Determining performance

3

by a deterministic function

2

is operated on…

5

into an outcome!

(the dependent variable)

1

The independent variable…

4

To transform it…

Determining Performance

y = f (x)


Controllership function in school districts

Using actual data to identify world-class performers in Enterprise Performance Management

  • Effectiveness (Examples)

  • Industry relative total excess return

  • Operating profit volatility

  • Analysts seen as business partners

  • Balance of both financial and non-financial performance measures

  • Quality metrics

  • Accuracy of forecasts and analysis

  • Use of balanced scorecards, simulation models

  • Percent managers describing budget process convenient and easy

  • Percent of time analytic focus is on proactive decision making

  • Percent of time reports and commentaries address future actions

  • Efficiency (Examples)

  • Overall planning cost as a % of revenue

  • Process cost as a % of revenue

  • Percent of business reports distributed electronically

  • Operations managers use of on-line budgeting tools

  • Staffing levels of process

  • Cycle times

  • Budget iterations

  • Performance reporting productivity

  • Utilization of self-service for inquiry

  • Application complexity


Controllership function in school districts

Value Stream Maping

High Level Process Flows (HLPF)

Transportation


Peims reporting process

PEIMS Reporting Process


Expenditure reclassification process

Expenditure Reclassification Process


The controller s job functions7

The Controller’s Job Functions

  • Planning

  • Organizing

  • Directing

  • Measuring/Reporting

  • Financial Analysis/Modeling

  • Process Analysis/Statistical Analysis

  • Forecasting


Forecasting into the future

Forecasting Into the Future

  • Big numbers vs. small numbers

  • One number vs. many numbers

  • Multiple periods over time vs. limited periods over short periods of time

36


Linear correlation

Linear Correlation

  • Two distributions are correlated when a change in one causes a change in another

  • Example: People who eat lots of peas may eat less broccoli (or may eat more…)

  • Usually doesn’t have much effect unless significant correlation (||>0.75)


Controllership function in school districts

  • Correlation is a dependency between your Xs

    • Correlation does not mean causality!

  • Correlation coefficient

    • Always lies between -1 and 1

    • Measures strength of the linear relationship between two Xs

Correlation coeff < 0

Correlation coeff = 0

Correlation coeff > 0


Crystal ball forecasting

Crystal Ball Forecasting

  • Crystal Ball offers opportunities to quickly run Monte Carlo Simulations in Excel to improve services

  • Crystal Ball can be customized to do several what-if analyses to achieve quality performance and reduce cost


Monte carlo simulation

Monte Carlo Simulation

  • Computer-based “experimental” method estimating statistical distribution of output (Y)

  • Steps for Crystal Ball Simulation:

    • Assign each input (X) a value chosen “at random” from its assumed distribution

    • Substitute values of inputs (Xs) into the system transfer function and compute a value of output (Y)

    • Record value of output (Y)

    • Repeat until enough samples of output (Y) characterize its statistical distribution


Controller s functions example

Controller’s Functions Example

  • Measuring/Reporting

  • Financial Analysis/Modeling

  • Forecasting/Statistical Analysis

  • Planning


Identifying inputs outputs

Identifying Inputs & Outputs

Cash Inflows

Concentration

Cash Outflows

Sales

Employees

Fees

Bond Holders

Subsidies

Vendors

Inv. Income

Stock Holders

4


Enter historical daily rates into a spreadsheet

Enter Historical Daily Rates into a Spreadsheet


Create a line graph using the information in your spreadsheet

Create a Line Graph Using the Information in Your Spreadsheet


90 days of rates from three different sources example

90 Days of Rates from Three Different Sources - Example


Forecast new chart with information

Forecast New Chart with Information


The break even point

The Break Even Point

Break Even Point (~2/4/02)


See the additional earnings after break even point

See the Additional Earnings after Break Even Point

Break Even Point (~2/4/02)

Potential Additional Earnings


Actual rates vs projected rates

Actual Rates vs. Projected Rates


Controllership function in school districts

Example of the Model Showing Potentially Higher Earnings

Break Even Point (~7/1/02)

(after maturity date!)


Cash flow forecasting

Cash Flow Forecasting

  • Ensures liquidity

  • Enhances cash management practices

  • Forecasts problems

    • Revenues not being collected properly

    • Expenditures exceed budget

  • Increase investment income

    • Amounts available for investment

    • Period of time to hold the investment

52


Controller s functions example1

Controller’s Functions Example

  • Developing Cash Budgets

    • Measuring/Reporting

    • Financial Analysis/Modeling

    • Forecasting

    • Statistical Analysis

    • Planning


Assumptions

Assumptions

  • Cash flows for the current year will follow a pattern similar to that of the previous year

  • All of the budgeted revenues will flow in as cash within the fiscal year

  • All budgeted appropriations will flow out as cash during the fiscal year

8


Controllership function in school districts

12


Controllership function in school districts

13


Assumptions1

Assumptions

  • Increase (decrease) in cash balance at the end of the year will be approximately equal to the excess (deficit) of budgeted revenues over budgeted expenditures

9


The theory

The Theory

  • Identify an optimal allocation of Funds

    • Funds that need to remain short-term for upcoming disbursements

    • Balance that could be invested longer-term

  • Management of short-term funds based on cash flow analysis

  • Management of longer-term funds based on market conditions

10


The process

The Process

  • Review historical cash balances (typically monthly data for 2-5 years)

  • Determine if there are any “statistically significant” seasonal changes in monthly balances

  • Identify any growth trends

  • Project future balances

11


Current year cash flows

Current Year Cash Flows

  • Use the percentages calculated and the current budgets for revenue and expenditures to determine the cash flow for the year

  • Determine next year’s cash flows by multiplying percentages times next years budgeted revenues and

    expenditures

28


Information required

Information Required

  • Beginning cash balance of liquid investments

    • Bank Accounts

    • Pool Accounts

    • Money Market Accounts, etc.

  • Par value of outstanding investments

34


Current year cash flows1

Current Year Cash Flows

  • Using the Forecasted Excess (Deficiency) of Cash along with the beginning cash balance and expected fixed income maturities, determine if there are any cash shortages

  • If there are no shortages, determine where fixed income securities could be purchased and when they should mature based on the forecast

35


Controllership function in school districts

DAILY CASH MGT.SPREADSHEET

Purch Sold Int. CFO CFI

9/01/93 ( - ) ( + ) ( + ) ( - ) ( + )

……

…...

8/31/94

( - ) MEANS REDUCING THE BALANCE

( + )MEANS INCREASING THE BALANCE

CASH MANAGEMENT PROGRAM

Weekly Cash Flow Management Spreadsheet

Cash Budgets

ACTUAL CASH 93-94

FORECASTED RECEIPTS

RECEIPTS

SEPT 93………AUG 94

Week

1

2

3

4

SEPT…………………….  AUG 95

1 $

$

4 $

ACTUAL CASH %

RECEIPTS

SEPT 93 ………AUG 94

1 % % %

2

3

4 % % %

PROJECTED MATURING INVESTMENTS

SEPT…………………….  AUG 95

1 $

$

4 $

+

ACTUAL

EXPENDITURES

SEPT 93………AUG 94

Week

1

2

3

4

GRAND TOTAL 100%

FORECAST EXPENDITURE

SEPT…………………….  AUG 95

1 $

$

4 $

-

ACTUAL CASH %

EXPENDITURES

SEPT 93 ………AUG 94

1 % % %

2

3

4 % % %

ACTUAL

EXCESS/DEFICIT

SEPT 93………AUG 94

Week

1

2

3

4

FORECAST CASH Excess/Deficit

SEPT…………………….  AUG 95

1 $

$

4 $

=

GRAND TOTAL 100%

FISCAL YEAR

FISCAL YEAR

21


Controllership function in school districts

Actual Receipts: Cash Flows in

Actual Disbursements: Cash Flows Out

Excess (Deficiency) of Actual Cash Flows:

24


Controllership function in school districts

% of Receipts: Cash Flows in by Week

% of Disbursements: Cash Flows out by Week

27


Controllership function in school districts

Forecasted Receipts: Cash Flows In

Forecasted Disbursements: Cash Flows Out

Forecasted Excess (Deficiency) of Cash:

32


Controllership function in school districts

  • To help make Investment Decisions

    • Short Roll vs. Going Out

  • Make Payroll (Do we have enough money)

    • Matching Maturities to Cash needs

  • End of Year Forecasting

    • Determining Final Budget Amendment

    • Or Fund Balance

  • 7


    Forecasting end of year

    Forecasting End of Year

    • Using the calculated cumulative cash flows to project end of year expenditures

    68


    Forecasting end of year1

    Forecasting End of Year

    69


    Forecasted ending cash balances before purchase of any investments

    Forecasted Ending Cash Balances(before purchase of any investments)

    36


    The controller s job

    The Controller’s Job

    Jack Welch of General Electrics once said, “If the rate of change outside your organization is greater than the rate of change inside your organization, then the end is in sight.”


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