02/02/2015 – Financial Report

December 2014 Financial Report
02/02/2015 Work Session
eboard link icon  Agenda Item – Approval of Monthly Financial Report


Dr. Bell – Chief Financial Officer
The last page of the monthly financial report connects to the mid year budget adjustment.
Dec 2014 Report
Page 1
We have collected $37 million more YTD this year than we did last year at this time.  We have spent $21 million more YTD this year than we did last year at this time.
Page 3
We are 8.7% ahead on expected local revenue and 2.28% ahead on state revenue.
Page 8
There is a COMPARABILITY ASSESSMENT of $491K.  That’s an area we are discussing with the state.  It’s a classroom staffing issue.
Page 13
Fund Balance report.
Page 35
Variance Report – Compares the main budget categories to our expected position.  We are ahead of our expected local receipts by $30 million and ahead of our expected state receipts by $3.6 million.
Dr. Michael Erwin – Board Rep
On page 8, can you elaborate on the COMPARABILITY ASSESSMENT?
Bell
It’s a classroom staffing issue.  We have so many Title I and Non Title I schools.  We assure the state and federal government that we will staff non Title I schools comparable to the Title I schools.  The state takes the data and looks at how we did.  The state said we under expended at our Title I schools using an elaborate formula.  Our experts disagree with the state.  The $491K is what we currently agree to pay.
The payment last year was $570K.  Fulton county paid $887K.  The state seems to be much more aggressive.
Dr. Preston
One of our issues when talking about student teacher ratios at Title I schools is talking about special needs.  When special needs services are at a premium, it throws things off.  DeKalb has made a commitment to serving our special needs students.
[00:10:44]
Michael Thurmond – Superintendent
Up until now, the state DOE hasn’t budged.  Last week we were told they are ready to negotiate.  It’s encouraging that they would like to speak with our special ed experts as well.  The historical commitment to servicing the special needs population is what is driving the comparability issues in DeKalb County.  Children with special needs require more staff.  It’s irrational to compare a school with a high level of special needs population with one with a lower level.  By definition you will have a disproportionate number of staff.
I have great faith that both sides will come to a resolution that we can support.
Stan Jester – Board Rep
Is the instruction accrued over 9 months?  Page 1
Bell
We pay the teachers over 12 months.  We accrue two months in liability.
Jester
The monthly numbers reflect one month’s accrual, right?
Bell
The monthly numbers reflect a graduated accrual amount as we move toward the end of the year.
Jester
Our goal is to look at the number and try and guess where we’re going to be at the end of the year.  A number of LUAs smooth it out over 12 months so we can multiply this and figure out where we are going to be after 12 months.
Currently, the monthly accruals over the Summer fall way down.
Bell
Yes.
Jester
If that’s what we’re trying to do, then smoothing out this number would be something to consider.  In trying to figure out where we are going to be at the end of the year, we have the prior year’s fiscal numbers in there.  That would be useful if the budget items were roughly the same.  Since they’re not the same, they don’t serve much purpose in here.
It is something to consider taking that out and putting in a monthly variance column.  We already do a variance on the budget categories, right?
Bell
Yes.
Jester
So we could also do that on the sub categories.
Bell
We could but it would be a great deal of calculation.
Jester
We’ve done that in the past and it was extremely helpful.  We find the last page variance report very helpful.
GASB is the Governmental Accounting Standards Board.  LUAs are Local Units of Administration.  The school district is considered an LUA.
The Georgia Department of Education financial manual specifically says “Liabilities that LUAs normally pay in a timely manner and in full from expendable available financial resources, for example salaries and utilities, should be recognized when incurred.”
In the case of electricity, the expense happens when the light switch is flipped.  That’s when we use the electricity and the expense is incurred.  The county incurred this liability for electricity long before we get the invoice and pay it.  It seems logical that the expenditure for this should be recognized during the reporting period.
This report shows electricity for two periods.
Bell
I talked about this last month.  The question was why was last month so low, because we didn’t receive the bill during the accounting period.  I know what you’re saying about the fluent dollar and about what GASB recommends, I’ve dealt with GASB over the years.  I went through GASB 34 when they were giving awards to ENRON and TYCO and WORLDCOM.  A lot of people went up the river.
We show two electrical bills in this December report because we didn’t get one in November.
Jester
I write software and I just assumed GASB was the gold standard.  Are you saying we feel it’s better to go against GASB on this?
Bell
We’re not going against GASB.  I can assure you.  GASB standards mean more to the rating agencies than to any other institution.  So, if we’re trying to get an upgrade in our rating, if we’re doing something that can be interpreted not in GASB, that’s meaningful.  But, that’s not the case.
We don’t pay any money to participate in GASB.  GASB, in my experience over the years, sent out invoices to a lot of local governments that looked very fishy.
The last change was GASB 34 where they forced governments to format financial reports along the lines of the private sector.  I reference those companies again, they were wining all kinds of CFO awards.  So, now we deal with governmental activities like business like activities.
Jester
The November bill was actually received in December?
Bell
Yes.
Jester
The November report wasn’t until January 12.  That would be 4-6 weeks later.  Why can’t we get that back into the November report if we’re not actually reporting on it until 6 weeks after the invoice was sent?
Bell
We could if it really made a difference.  It’s a relatively uniform payout.
Jester
My concern is that this is indicative of other the way we report other items.  We have thousands of items in the vendor spend report.  If we do electricity this way, then it seems logical that we account for many things this way.  Therefore, that makes this report suspect.  That’s my only concern.
Bell
I would disagree with you on that.
[00:20:03]
…
[00:32:18]
Dr. Bell, thank you for your report and all your hard work.  It would be prudent to recognize that we are voted in by the constituents in order for us to be able to have the education so we can educate them.  For us to be learning and educating at the same time, then why are we voted in?
I believe in open forums.  I believe in transparency.  I have a problem with the word transparency constantly being utilized … what do you mean by transparency?  You can be transparent and show something, but it’s the truth behind it.  Is it being honest and really open?  Or is there another agenda behind it?
I think that we have to be aware that we should allow the public to know what we’re doing.  And if we’re going to have these kind of questions and answers.  The first thing that comes for a parent, as an educator, we need to get the education ourselves first.  Then we can go in and have questions that we’re asking that are prudent, but also to the benefit of this educational organization which is a monumental task to take on.
I have a problem also with … stated that the report is suspect when we have someone that has worked diligently and fervently in order to be able to put these reports together.  As a board we’re going to have to be able to respect the time and respect the professionalism of the people who sit here and work every day tirelessly to get these things done.
We’ve come a long way.  It bothers me because for 10 years we sat in this county and allowed this ship to almost sink.  The more we try to get back on track, there are attacks.  Can we not begin to see the glass is half full and stop seeing it as half empty?  The public wants something from us, but I don’t think they’re asking us to rewrite the budget.  That is not our responsibility as board members.
Until we can begin to look at our task at hand, what are we voted in here for, to be able to run this district, hire and fire the superintendent, set policy and making sure it’s enforced.  We need to recognize what we’ve been able to do, be able to do that.
But, I’d like to be able to see those workshops.  I think it would be very helpful for all of us.  It would cut down on a lot of us trying to be educated at the board meeting.  There’s a time and a place for all of that, and I don’t think this is the time.
Jester
Thank you Dr. Morley, I couldn’t agree with you more.  We definitely need to recognize what we are here to do.  For 10 years or more, the ship was sinking.  That is despite the diligent and fervent efforts of the administration, despite their professionalism.  The constitution tells us that we have a fiduciary responsibility.  The constitution doesn’t say the CFO has a fiduciary responsibility.  If the ship sinks, he doesn’t get in trouble.  We get in trouble.
I think it’s our responsibility, even if it goes a little too far, to ask those questions.  It’s us on the line.  We were the ones elected.  The constitution says it’s up to us.  The buck stops with us.