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SM 102 – School Business Management Ethics & Audit Compliance July 12, 2011

SM 102 – School Business Management Ethics & Audit Compliance July 12, 2011. L. Freeman Wish, CPA Clarksville School District 1701 Clark Road Clarksville, AR 72830 479-705-3200 Freeman.Wish@csdar.org. Presented by:. 6-13-616. Qualifications of directors .

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SM 102 – School Business Management Ethics & Audit Compliance July 12, 2011

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  1. SM 102 – School Business Management Ethics & Audit ComplianceJuly 12, 2011

  2. L. Freeman Wish, CPA Clarksville School District 1701 Clark Road Clarksville, AR 72830 479-705-3200 Freeman.Wish@csdar.org Presented by:

  3. 6-13-616. Qualifications of directors. (a) No person shall be eligible to be a member of any school district board of directors in this state unless he or she is a qualified elector of the school district which he or she serves. (b) No person who is elected to a school district board of directors shall be eligible for employment in that same school district. History. Acts 1935, No. 30, § 4; Pope's Dig., § 11524; Acts 1957, No. 131, § 1; A.S.A. 1947, §§ 80-504, 80-504.1; Acts 1989, No. 242, § 1; 1993, No. 294, § 7; 1993, No. 346, §1; 1999, No. 1390, § 1. School Board Structure

  4. School Board Structure 6-13-608. Length of directors' terms. All members of a school district board of directors shall be elected to a term of office of not less than three (3) years nor more than five (5) years in length and with the expiration of such terms so arranged that, as nearly as possible, an equal number of positions are filled each year. All members of a school district board of directors shall have terms of office of equal length. History. Acts 1981, No. 50, § 1; A.S.A. 1947, § 80-549; Acts 1999, No. 1078, § 35. Effective Dates. Acts 1999, No. 1078, § 92: July 1, 2000.

  5. 6-13-634. School district board of directors — Size. (a) All school districts shall have a board of directors with five (5) members or seven (7) members or nine (9) members in the case of a school district having an average daily attendance of twenty-four thousand (24,000) or more. (b) Subsection (a) of this section shall not apply to those school districts that have a board of directors of seven (7) members, or in the case of a school district having an average daily attendance of twenty-four thousand (24,000) or more, nine (9) members, if that school district is operating under a court order or a consolidation agreement that provides for a board of directors.

  6. 6-13-634. School district board of directors — Size. (c) (1) No board of directors shall have an even number of directors. (2) No less than ninety (90) days prior to the next annual school election, any school district with an even number of directors shall file a petition with the State Board of Education to establish the requisite odd number of directors. (3) If the number of members of a board of directors needs to be reduced to create an odd number of directors, the board of directors in office on August 12, 2005 shall draw lots to determine which board positions will be eliminated. (d) Any change in the number of directors serving on the local school board of directors required under this section shall be effective upon the directors taking office following the 2005 annual school election.

  7. 6-13-634. School district board of directors - Size. (d)  Any change in the number of directors serving on the local school board of directors required under this section shall be effective upon the directors taking office following the 2005 annual school election.  History. Acts 1999, No. 1078, § 29; 2005, No. 2151, § 13.

  8. 6-13-109. School superintendent. (a)  The public school districts in the state shall each employ a superintendent of schools, whose qualifications and duties shall be prescribed by the General Assembly and the State Board of Education. (b)  "Superintendent of schools" is defined as the executive officer of a school district board of directors directing the affairs of the school district and teaching not more than one-half (1/2) of the time in the school day.  History. Acts 1999, No. 1078, § 27. School Board Structure

  9. 6-13-617. Oath. (a)  Each director elected or appointed shall, within ten (10) days after receiving notice of his election or appointment, subscribe to the following oath:     "I,__________________, do hereby solemnly swear or affirm, that I will support the Constitution of the United States and the Constitution of the State of Arkansas, and that I will not be interested, directly or indirectly, in any contract made by the district of which I am a director, except as permitted by state law and that I will faithfully discharge the duties as school director in ____________ School District, No. ____________ of ____________ County, Arkansas, upon which I am about to enter."  (b)  The county clerk, upon receipt of the oath prescribed for a director, shall immediately commission such persons, and they shall enter at once upon their duties as directors.  History. Acts 1935, No. 30, § 12; Pope's Dig., § 11532; A.S.A. 1947, § 80-505; Acts 2001, No. 1599, § 20.

  10. 6-13-618. Organization - Disbursing officer. (a) At the first regular meeting following the annual school election, the board of directors of each school district shall organize by electing:  (1)  One (1) of their number president;  (2)  One (1) of their number vice president; and  (3)  A secretary who may be, but need not be, a member of the board.  (b) (1)  By resolution adopted by majority vote, the board shall designate one (1) of its members who shall serve as the primary board disbursing officer of the district.  (2)  In addition, the board may designate one (1) or more board members as an alternate board disbursing officer or officers in the absence of the designated primary board disbursing officer.  (3)  Such a resolution must be filed with the county treasurer and the Director of the Department of Finance and Administration.  (c)  No warrant or check other than food service or activity funds warrants or checks shall be valid in the absence of the following manual or facsimile signatures:  (1)  That of the designated board member serving as disbursing officer for the district or the designated alternate; and  (2)  That of the superintendent of the school district.  History. Acts 1959, No. 78, § 1; 1967, No. 187, § 1; A.S.A. 1947, § 80-506; Acts 2003, No. 671, § 1.

  11. 6-13-619. Meetings. (a) (1) The board of directors shall hold regular monthly meetings during the school term and shall meet on call of the president or secretary or any three (3) members of the board of directors or when petitioned to do so by a petition in writing signed by fifty (50) electors in the school district. (2) Regular meetings of the school board of directors and all school board committees, and special meetings of the school board of directors and school board committees that deal with personnel or personnel policies, shall, except in emergency situations, be held after 5:00 p.m. (3) (A) Not less than ten (10) days prior to the date of a regular meeting of its board of directors, a public school district shall publish on the public school district's website a notice of the date, time, and place of the meeting. (B) Not less than twenty-four (24) hours prior to a rescheduled regular meeting, a public school district shall publish a notice on its website of the change in the date, time, or place of the regular meeting.

  12. 6-13-619.Meetings (Continued) (b) (1) Minutes of regular and special meetings of the school board of directors shall be kept by the secretary of the board of directors and filed by him or her in a permanent record. (2) This record shall also contain a copy of all budgets of the school district and all reports of the county treasurer on the financial affairs of the school district. (c) (1) (A) A majority of a quorum voting affirmatively shall be required for the passage of any motion or resolution. (B) Any member who abstains from voting shall be counted as having voted against the motion or resolution. (C) If a member announces a conflict of interest with regard to the issue, the member may leave the meeting until the voting on the issue is concluded, and the member who abstains from voting thereby shall not be counted as having voted.

  13. 6-13-619.Meetings (Continued) (c) (2) For the purposes of this section, a quorum shall be a majority of the membership of the board of directors. (d) (1) Any member of the board of directors who misses three (3) regular and consecutive board of directors meetings during a school year for any reason other than military service of the member or illness of the member verified by a written sworn statement of the member's attending physician may be removed from office by a majority vote of the remaining board members, but only after an opportunity for a hearing before the board of directors upon fifteen (15) days notice received by personal delivery or by certified mail with the return receipt signed by the addressee only requested. (2) If the board of directors takes action to remove the member from office, the remaining members shall then appoint another individual to serve until the next annual school election, when electors shall select in the usual manner a director to serve the unexpired term of the removed member. History. Acts 1931, No. 169, § 96; Pope's Dig., § 11534; Acts 1983, No. 855, § 1; A.S.A. 1947, § 80-507; Acts 1993, No. 608, § 1; 1995, No. 1347, § 1; 2007, No. 1588, § 1.

  14. 6-13-620. Powers and duties. The board of directors of each school district in the state is charged with the following powers and required to perform the following duties in order to provide no less than a general, suitable, and efficient system of free public schools: (1) Attend meetings of the school board; (2) Determine the mission and direction of the school district; (3) Adhere to state and federal laws governing public schools; (4) Enact, enforce, and obey school district policies; (5) (A) Employ staff, including: (i) (a) A superintendent of schools to oversee the day-to- day operations of the school district. (b) A superintendent shall be evaluated annually or no less often than prior to any extension of his or her employment contract. (c) Superintendents and assistant superintendents may be employed under contract terms and conditions that incorporate all elements prescribed by the State Board of Education; and

  15. 6-13-620. Powers and duties. (Continued) (ii) (a) School district employees under initial written employment contracts in the form prescribed by the State Board of Education, not including day-to-day substitutes. (b) The employment contract shall: (1) State the duration of employment, specific duties of the employee and the annual salary or hourly wage of the employee and projected annual earnings in the case of nonexempt employees under applicable state and federal law; and (2) Incorporate all personnel policies adopted by June 30 to be in effect on July 1 of the following employee contract year, subject to the requirements and exceptions contained in §§ 6-17-204 and 6-17- 205.

  16. 6-13-620. Powers and duties. (Continued) (5)(B) Copies of initial written employment contracts and renewed written employment contracts issued in accordance with §§ 6-17-1506 and 6-17-1703 shall be distributed as follows: (i) One (1) copy to be given to the employee; (ii) One (1) copy to be retained by the school board of directors; and (iii) One (1) copy to be retained by the school district's treasurer or bookkeeper; (6) Understand and oversee school district finances required by law to ensure alignment with the school district's academic and facility needs and goals, including without limitation: (A) Reviewing, adopting, and publishing the school district's budget;

  17. 6-13-620. Powers and duties. (Continued) (B) Overseeing and monitoring the school district finances, including: (i) Revenues; (ii) Expenditures; (iii) Investments; (iv) Debts; (v) Obligations; (vi) Inventory; and (vii) Real property; (C) Borrowing money as necessary, but in no case shall the school board of directors permit the school district to end the fiscal year with a negative legal balance; (D) Entering into contracts for goods and services necessary to operate the school district; (E) Buying, selling, renting, and leasing real property and personal property on behalf of the school district; (F) Receiving, reviewing, and approving each annual financial audit report and presenting it to the public;

  18. 6-13-620. Powers and duties. (Continued) (7) Ensure that: (A) Necessary and sufficient facilities are built or obtained, furnished, and maintained; and (B) All properties belonging to the district are managed and maintained for the benefit of the school district; (8) Approve the selection of curriculum and ensure that students are offered and taught the courses of study and educational content required by the State Board of Education; (9) Visit district schools and classrooms when students are present no less than annually and attend some events and functions; (10) Obtain the training and professional development necessary to serve as active and informed members of the school board of directors; and (11) Do all other things necessary and lawful for the conduct of efficient free public schools in the school district.

  19. 6-13-620. Powers and duties. (Continued) History. Acts 1931, No. 169, § 97; Pope's Dig., § 11535; Acts 1939, No. 316, § 1; 1941, No. 389, § 1; 1943, No. 96, § 1; 1949, No. 287, § 1; 1953, No. 204, § 1; 1957, No. 280, § 1; 1969, No. 327, § 1; 1973, No. 253, § 3; 1973, No. 690, § 1; 1977, No. 658, § 1; 1983 (Ex. Sess.), No. 41, § 1; 1983 (Ex. Sess.), No. 53, § 1; A.S.A. 1947, § 80-509; Acts 1989, No. 822, § 1; 1993, No. 294, § 7; 1995, No. 233, § 1; 1999, No. 391, § 3; 1999, No. 1078, § 38; 2001, No. 581, § 1; 2001, No. 1747, § 1; 2003, No. 1738, § 1; 2007, No. 617, §§ 5, 6; 2007, No. 710, § 1; 2007, No. 1573, § 45; 2009, No. 1180, § 2.

  20. 6-13-622. Publication of budget. (a)  The requirement of Arkansas Constitution, Amendment 40, for publication of the budget shall be discharged by the board of directors of each school district by publication of its budget one (1) time in some newspaper published in the county in which the district lies or, if the district lies in more than one (1) county, in the county in which the district is administered.      (b)  The publication shall be made not less than sixty (60) days before the school election at which the annual ad valorem property tax for the district is decided by the electors.  History. Acts 1951, No. 403, § 4; A.S.A. 1947, § 80-538; Acts 2003, No.1280,§ 1.

  21. “The secret of managing is to keep the guys who hate you away from the guys who are undecided.” Casey Stengel

  22. Voting Public/Board of Directors Superintendent Curriculum Maintenance/Transportation Financial Principal Staff Teachers/Staff The Organizational Chart

  23. First Exercise of the Day Take a few minutes and using any piece of paper. Sketch a rough diagram of your school’s organization chart. You will not have to show anyone your chart, but you can refer to it during the presentation.

  24. Structure in School Management The secret to how a structure works is not the position of the agents…but the condition of the LINES IN BETWEEN!

  25. “Life is like a dogsled team. If you ain’t the lead dog, the scenery never changes.” Lewis Grizzard

  26. “Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall.” Steve R. Covey Author The Seven Habits of Highly Effective People

  27. Why Can’t A School Be Run Like A Business? • Business Stockholders invest in a business voluntarily. vs. • Voters pay mandatory property taxes to invest in schools.

  28. Why Can’t A School Be Run Like A Business? • Businesses are generally run by a board of directors that has intimate knowledge of the business environment and industry. vs. • School Board of Directors only qualification is that they be a registered voter and be breathing.

  29. Differences Between Managers and Leaders The manager administers. The leader innovates. The manager is a copy. The leader is an original. The manager maintains. The leader develops.

  30. Differences Between Managers and Leaders The manager relies on control. The leader inspires trust. The manager has a short-range view. The leader has a long-range perspective. The manager asks how and when. The leader asks what and why.

  31. Differences Between Managers and Leaders The manager has his or her eye on the bottom line. The leader has his or her eye on the horizon. The manager accepts the status quo. The leader challenges it.

  32. Differences Between Managers and Leaders The manager is the classic good soldier. The leader is his or her own person. The manager does things right. The leader does the right thing. Managers are necessary. Leaders are essential.

  33. “You can have brilliant ideas, but if you can’t get them across, your ideas won’t get you anywhere.” Lee Iacocca

  34. Results of a Ford Motor Company Management Study • Senior Management could identify only 4% of the problems of the organization • When middle management was added, it went up to 9% • Adding all supervisors increase it to 74% • When all staff were included it was up to 100% • We need to let those under us see how they can help improve the organization

  35. “You do not lead by hitting people over the head – that’s assault, not leadership.” Dwight D. Eisenhower

  36. 6-20-1805. Training requirements for bookkeepers. (a)  The State Board of Education shall establish by rules or regulations appropriate training and continuing education requirements for individuals whose job responsibilities include preparing a budget or classifying, recording, or reporting receipts or expenditures of a school or school district.  (b)  The State Board of Education shall establish rules or regulations to assure the proficiency of school employees or other individuals to properly classify, record, and report the fiscal transactions of schools or school districts. (c)  If the State Board of Education determines that a school or school district is not properly recording or reporting the fiscal transactions or budget of the district, the superintendent and school board may be required to appear before the State Board of Education to explain why the school or school district has not complied with the fiscal recording and reporting requirements.  History. Acts 2003 (2nd Ex. Sess.), No. 40, § 2.

  37. 6-15-2302.General business manager. (a)As used in this section, “general business manager” means a chief financial officer or business manager, however the position is titled, who:(1)Is responsible for the fiscal operations of the public school district; and(2)Performs his or her duties under the direction of the superintendent of schools of the public school district.(b)(1)On and after July 31, 2007, a general business manager for a public school district shall meet the minimum qualifications established by rule of the Department of Education.(2)This subsection (b) is intended to require minimum qualifications for a general business manager that support the implementation of best financial management practices for public school districts.(c)A general business manager who was employed prior to July 31, 2007, shall be exempt from the provisions of subsection (b) of this section.History. Acts 2007, No. 1591, § 1.

  38. Why Record Management? • Important to the way the school operates • Evidence of decisions, transactions, operations • School history • Strategic Planning

  39. What is a Record? Recorded information, regardless of medium or characteristics, received by an organization that is evidence of its operations, and has value requiring its retention for a specified period of time. Information created, received and maintained by an organization or person in pursuance of legal obligations or in the transaction of business.

  40. Sources of Information/Records • Correspondence • Invoices • Purchase Orders • Payroll Records • School Board Meeting Minutes • Bond Issues • Elections • E-Mail • Telephone Calls

  41. What is Record Management? The systematic control of all records from their creation or receipt, through processing, distribution, organization, storage and retrieval to their ultimate disposition.

  42. Why Do I Need Record Management? • Comply with Government Regulations • Reduce Legal Liability • Control Valuable Company Assets • Reduce Record Archive Size

  43. Essential Elements ofRecord Management • Record • File Plan • Retention Schedule • Records Retrieval • Disposition

  44. The Andersen Lesson • After a 6-week trial and 10 days of deliberation, a jury found Arthur Andersen guilty of obstruction of justice when it destroyed Enron Corp. documents while on notice of a federal investigation by the SEC.

  45. The Andersen Lesson • The jury rejected Arthur Andersen’s defense that the documents were destroyed as part of its housekeeping duties and not as a ruse to keep Enron documents away from the regulators.

  46. The Andersen Lesson • Arthur Andersen received the maximum sentence of 5 years probation and a $500,000 fine. • 35,000 people lost their jobs worldwide. • Court did overturn the Arthur Andersen conviction, but it was too late to save the company.

  47. The Andersen Lesson The lesson to be learned from the Arthur Andersen experience is that a Document Retention Program, an otherwise critical part of a company’s risk management program, will not save you from sanction if the policy does not conform to law, either in content or in implementation.

  48. Act 1599 of 2001 • Applies to Board Member, Administrators, and Employees. • Act 1599 sets the guidelines for business transactions between the school district and its board, administrators and employees. • May require both local board approval and state board approval. • Refer to Arkansas Code 6-24-100 through 6-24-120 for detailed information.

  49. Act 1599 of 2001 • The spirit of this act is to provide for full disclosure of business activities between the local school district and its board members, administrators and employees. • Board Members and Administrators are held to higher ethical standards, since they are in a position of control.

  50. Act 1381 of 2005 SECTION 2. Arkansas Code § 6-24-105 is amended to read as follows: (a) General Prohibition. Except as otherwise provided, it is a breach of the ethical standards of this chapter for a board member to contract with the public educational entity the member serves if the board member has knowledge that he or she is directly or indirectly interested in the contract. (b)(1)(A)(i)Employment of Family Members. This chapter does not prohibit family members of board members from being employed by the public educational entity the board member serves if the board determines that the employment is in the best interest of the public educational entity A board member's family member may not be initially employed by the public educational entity the member serves during the member's tenure of service on the local board for compensation in excess of five thousand dollars ($5,000) unless the Director of the Department of Education issues a letter of exemption and approves the employment contract based on unusual and limited circumstances.

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