10/07/2013 – Financial Report – DeKalb Schools Board Meeting

Financial Report

• Analysis
• Video and Recap

Financial Report Analysis
Two big ticket items need to be reconciled with actuals and the vendor report is alarming.
DE46 Financial Report
We need to see the DE46 data turned into the state last month. The DE46 is the form used to send the final YTD fiscal report to the state. In August, the board was presented with the June Fiscal Report containing the YTD FY’13 information. During the months of July and August, the administration kept dumping expenses into the FY’13 budget, but the Fiscal Reports for those months only reflect FY’14. Final transmission and Superintendent sign-off of the FY’13 DE46 was due September 30.
QBE Funding
We need a reconciliation report on QBE earnings for the FY’14 budget. The largest component of the QBE Formula is QBE Earnings derived from the FTE count and the QBE weighted table. The state has published the FY’14 weighted table and official FTE count day was 10/01/2013, so we can now reconcile the QBE earnings in the budget. The QBE Formula also contains Categorical Grants, Equalization Grants and Austerity Reductions, but those line items in the budget can be reconciled at a later date.
Vendor Report Analysis
Budget Documents

• Original August Vendor Spend Report as of 9/15
• August Vendor Spend exported into Excel
• August Financial Report
• FY’14 Budget exported into Excel
• FY’14 School Board Members.xls

Connecting the Vendor Report and the FY’14 Budget
The FY’14 Budget has a line item for “School Board Members.xls”. The School Board Members.xls budget is broken out and the bulk is legal fees and settlements. In the School Board Members.xls budget, BOARD LEGAL FEES, are assigned the account number 101.48.93.01 which correspond to the ACCOUNT number in the Vendor Spend Report.
Legal Fees
The August Vendor Spend Report indicates that $846K was paid to various law firms in June and July for work done in FY’13.  The vendor report further indicates those expenses to be paid out of the FY’14 budget.  Dr. Bell said, “if this stuff was moved forward after we closed the books completely on ’13, then there’s no other place to pay it accept for out of ’14”.  So, where are these legal expenses reflected in the August Financial Report?
Other Questions

1. The Aug Vendor Spend Report only shows paid invoices. Where are the invoices that haven’t been paid yet?
2. On average, it takes 40 days to enter an invoice into the system. That needs to be addressed.
3. MLA (McKenna Long & Aldridge) has been billing $50K/month since February. The first 3 months show up on the FY’13 vendor report. Where are the rest of the MLA invoices?

Modified Accrual Basis For Accounting
Dr. Bell, CFO, said, “The financial report is on a modified accrual basis. This spend report is really on a cash basis.”

1. Salaries appear to be reported on a cash basis. The total budgeted amount for salaries should be divided by 12 and accrued monthly at that rate ($335,834,812/12 = $27,986,234 per month).
2. How can the financial report be on a modified accrual basis when 95% of the data is salaries and vendor spends report, both of which appear to be reported on a cash basis?