NORTH CAROLINA PUBLIC SCHOOL FINANCE

By Kerry Crutchfield, CPA

FUND ACCOUNTING

The primary difference between governmental accounting and private enterprise accounting is Fund Accounting. Other differences in terminology – private enterprise has expenses and retained earnings, while governments have expenditures and fund balances. And of course, governments have far more regulations to deal with!

FUND ACCOUNTING• Fund 1 – State Public School Fund• Fund 2 – Local Current Expense Fund• Fund 3 – Federal Grants Fund• Fund 4 – Capital Outlay Fund• Fund 5 – Child Nutrition Fund• Fund 6 – Trust and Agency Fund• Fund 7 – Local District Use• Fund 8 – Other Restricted Grants Fund

FUND ACCOUNTING• Another way of understanding Fund Accounting is that it

determines which bank account is being impacted by a transaction.

• State Uniform Chart of Accounts specifies the accounting system used in NC to categorize revenues and expenditures

• The required budget codes have five required sections, including the Fund Codes on the previous slide

BUDGET CODE STRUCTURE• Fund Code – one digit• Purpose/function Code – four digits• Program Report Code (PRC) – three digits• Object Code – three digits• Location/school Code – three digits• Example: 1-5110-061-411-308• Every section of the code tells a “story”

BUDGET CODES• Example: 1-5110-061-411-308• 1 indicates State Public School Fund• 5110 indicates regular instructional services• 061 indicates an allotment for classroom supplies,

materials and equipment• 411 indicates consumable supplies• 308 indicates the specific school location

BUDGET CODES• Other purpose/function code examples• 5210: Exceptional Children services• 5810: Media services• 54XX: Office of the principal• 5330: Remedial/supplemental services• 5240: AIG services• 5270: LEP services• 69XX: Policy, leadership, public relations

BUDGET CODES• Other PRC examples:• 001: Teacher positions• 013: CTE months of employment (MOE)/positions• 005: Principal/assistant principal MOE/positions• 007: Instructional support positions• 032: State EC allotment• 060: Federal EC grant• 050: Title 1 grant• 031: Low Wealth allotment• 003: Non-instructional support allotment

BUDGET CODES• Other object code examples:• 121: Teacher salaries• 142: Teacher assistant salaries• 114: Principal salaries• 211: Matching FICA costs• 221: Matching retirement costs• 231: Matching health insurance costs• 311: Contracted services• 312: Staff development costs• 541: Capital equipment

BUDGET CODES• School/location codes• Each school is assigned a three-digit number by DPI

between 300 and 799• Each number is unique within an LEA but not between

LEAs (every LEA can have a school #308)• Originally ordered alphabetically• Central office is location 000

BUDGET CODES• Many LEAs use 2-5 optional digits beyond the

school/location code for specialized categorization (Wake County Schools uses more than any other LEA)

• Every LEA has some local option assigned Program Report Codes (PRC) to categorize revenues and expenditures that are not part of or related to state or federal allotments

State Public School Fund• Supposedly funds instructional needs of school districts• Amounts allotted by various formulas• Formulas approved by the General Assembly or State

Board of Education• Funds remain in a State Treasurer’s bank account and

are never transferred to the local school districts• Districts access the funds by writing warrants (checks) or

through direct deposit payroll transactions

State Public School Fund• Allotment formulas are published annually by DPI in a

document called the Allotment Policy Manual – accessible at the NCDPI website

• The Allotment Policy Manual also describes the intended uses of each allotment and any flexibility in terms of transfers of money into or out of the allotment category

• In recent years, the Manual has not been updated until late in the spring

State Public School Fund• Most school districts receive 25-30 different state

allotments• Most allotments are received by all school districts, but

some are allotted only to selected school districts• Examples of the latter include Low Wealth, Small County,

and Transportation (City districts do not receive a Transportation allotment)

• A few districts receive Child and Family Support Teams (CFST) of nurses and social workers in PRCs 042/043

State Public School Fund• Four types of state allotments

1. Position allotments – categorical

2. Dollar allotments – categorical

3. Dollar allotments – “open chart”

4. Non-allotted funds• Financial management practices vary depending on

the type of allotment

State Public School Fund

Position Allotments

• Examples include classroom teachers, instructional support personnel, CTE teachers, and school-based administrators

• Managed/controlled by months of employment paid through Payroll

State Public School Fund

Position Allotments

• The state pays all eligible salary cost and all eligible matching benefits costs for each person for each month

• If there is a choice, districts should pay the most expensive eligible personnel through position allotments

State Public School Fund

Position Allotments

Example: District employs 500 classroom teachers, and receives a state allotment for 480 classroom teachers. Which 20 teachers should be paid from sources other than the state position allotment? Has the new (2014-15) teacher salary schedules impacted this in any way?

State Public School Fund

Dollar Allotments – Categorical

• Includes allotments for EC, AIG, LEP, CTE (for things, not positions), Instructional supplies, At-risk students, Teacher Assistants, Central office administration, Non-instructional support, etc.

• Most eligible costs reduce the dollar allotment balance, whether payroll-related or non payroll-related

State Public School Fund

Dollar Allotments – “open chart”

• Includes allotments such as Low Wealth and Small County

• Most any cost (other than maintenance and central office administration) is an eligible cost

• Most payroll-related and non payroll-related costs reduce the dollar allotment balance

State Public School Fund

Non-allotted Costs

• Non-allotted costs include longevity, annual/bonus leave final payouts, workers’ compensation, disability, and unemployment

• For state-funded personnel, these costs are paid outside of and on top of any allotment

• Important financial management opportunities in terms of who is paid from state funds

State Public School Fund

Allotment Formulas – Classroom Teachers

Grades K 18:1

Grades 1-3 17:1

Grades 4-6 24:1

Grades 7-8 23:1

Grade 9 26.5:1

Grades 10-12 29:1

State Public School Fund

Allotment Formulas – Classroom Teachers

• Positions allotted must pay for elementary specialists and elective teachers

• Positions allotted do not provide for any planning time/period

• Positions allotted do not include CTE, Title 1, etc.

State Public School Fund

Discussion Question

The following students enroll at an elementary school. How should you allot state teacher positions at the school, and what are the resulting class sizes? Do any of the class sizes exceed state maximums?

Kindergarten 90 Grade 1 102

Grade 2 102 Grade 3 102

Grade 4 96 Grade 5 120

State Public School Fund

Allotment Formulas – Classroom Materials and Instructional Supplies/Equipment

• Basic allotment is dollars per ADM• Also includes funds for students to take the PSAT – this

portion of the allotment is based on ADM in grades 8 and 9

• In recent years, funding for this allotment has been significantly reduced

State Public School Fund

Allotment Formulas – LEP

•Not all allotment formulas seem equitable•Before we talk about the “real” allotment formula for LEP, assume the following information and work with your team to develop what you feel would be a fair allotment formula

• Total Funding = $20,000,000• Total LEP Headcount = 200,000• Total # of School Districts = 100

State Public School FundAllotment Formulas – LEP

• Base allocation equal to one teacher asst.• 50% of remainder based on 3-year weighted average LEP

headcount, with previous year weighted twice and two previous years weighted once

• 50% based on concentration (%) of LEP students to overall student ADM

State Public School FundDiscussion Question

Based on the LEP allotment formula, assuming the districts described in the next slide are the only two districts in the state, and that the total LEP funds to be allotted statewide is $200,000, what amount does each district receive and what does that amount provide in terms of dollars per current year LEP student?

State Public School Fund

Discussion Question (continued)

District A District B

Current year ADM 20,000 2,000

Current year LEP 1,800 300

Weighted average LEP headcount 1,700 300

Base allotment $30,000 $30,000

State Public School Fund

Formula – Central Office Administration• $360,000 base for City districts• $420,000 base for County districts• Base applies up to 4,999 ADM• Incremental increases of $60,000-$90,000 for each

additional 5,000 ADM• Also a per ADM add-on• Creates large differences in per-ADM funding• Formula was “frozen” several years ago due to across the

board funding reductions

State Public School Fund

Formula – CFST

•LEA must be selected to participate at specific sites•LEA must submit an annual implementation plan with the input of a Local Advisory Committee•Nine specific requirements to be included in the plan•Nurses are allotted as a position allotment – lead Nurse is allotted for 12 months, others for 10 months (PRC 042)•Social worker support at each site is allotted as a dollar allotment (PRC 043) – LEA can “substitute” lower cost Social Workers in this PRC upon request and fund the actual site person from the position allotment PRC 007

State Public School Fund

Formula – Transportation of Students

•Many City LEAs “contract” with county LEAs•LEAs receive an annual “budget rating” specified as a “efficiency percentage”•Rating factors include number of students transported, number of miles driven, and number of buses operated•Efficiency rating is applied to “total eligible state and local operating expenditures” of the previous year to determine the state allotment for the succeeding year•Only a portion of total funding is provided in the initial allotment – remainder in November or December

State Public School Fund

Formula – Transportation of Students

•Total state funding provided in the General Assembly budget bill is a limiting factor•As such, an LEA can increase their efficiency rating and still lose state funding if the other LEAs averaged increasing their ratings more•Until this year, total state funding has been based on inappropriately low estimates of diesel fuel costs•Some years extra funds are allotted later in the year to cover fuel prices – usually depends on whether the state is operating at a surplus or at a deficit in that year

State Public School Fund• Allotment formulas, once adopted, are almost impossible

to change• Changes in formulas create “winners” and “losers”• General Assembly commissioned a study of allotment

practices and formulas several years ago – report included many good ideas, none of which have been implemented

State Public School Fund• Most allotments “expire” June 30• In “normal” years, At-risk allotment carries over to August

31• Instructional Technology allotment is a trust fund that

carries over indefinitely• Textbook allotment carries over indefinitely but is not a

monetary allotment – only usable to order from Textbook Warehouse

• Minimal textbook funding in recent years• Carrying over funds is problematic in terms of sending the

wrong message to the General Assembly

State Public School Fund

Audits• Licensed employees’ salaries are electronically audited monthly against DPI Licensure data and LEAs must correct (immediately) overpayments and underpayments

• All State Public School Fund expenditures must be annually audited by external auditors, with audit steps and procedures prescribed by DPI and the Local Government Commission

State Public School Fund• In the past 12 years, frequently LEAs have had to deal

with reversions and “discretionary reductions.”• Discretionary reduction was eliminated in 2013-14 and

replaced with direct allotment reductions in teachers, teacher assistants, instructional support personnel, and instructional supplies

• Direct reductions exceeded the total of the previous discretionary reductions (in more ways than one!)

State Public School Fund• If “correct” choices are made at the LEA, a discretionary

reduction hurts less than an equivalent amount of direct cuts

• Flexibility to transfer funds between allotments has varied over the years

• With relaxed transfer flexibility, good management can preserve local funds

• Flexibility that had helped preserve local funds was severely restricted in 2012-13 and 2013-14 to close loopholes exploited by some LEAs

• “Excess” local fund balance has become a state-wide political funding issue

Local Current Expense Fund• Primarily funded by County Appropriations• Also includes fines and forfeitures through the County

Clerk of Court and all local law enforcement agencies• Includes supplemental taxes and ABC Board revenues

(only applicable in a very few LEAs based on grandfathered legislation)

• Had become a “catch-all” for other grants and donations before charter school lawsuits resulted in creation of “Fund 8”

Local Current Expense Fund• By law, multiple LEAs within a single county must receive

the same dollars per ADM in Local Current Expense County Appropriation

• Law requires the Board to adopt a budget and present an annual request for funding to the County Commissioners

• Commissioners must approve funding by July 1 (or approve a continuing resolution)

Local Current Expense Fund• Constitutional intent is to fund operational costs (e.g.

utilities and maintenance), plus costs of central services (e.g. HR, Finance, Testing, IT, etc.)

• No legal definition of “adequate funding”, and law requires boards of education to request mediation or file lawsuits if they believe funding is inadequate

• By doing so you can win the battle, but ultimately it is likely that you will lose the war

• Some districts have negotiated “funding formulas” with their commissioners – not binding but can be helpful

Local Current Expense Fund• State Low Wealth and Small County allotments are an

attempt to help equalize LEA access to adequate operational funding – funding levels and formulas do not adequately accomplish the goal for many LEAs (refer to Public School Forum’s Local Finance Study)

• Perfect example of good ideas implemented very poorly

Local Current Expense Fund• No legal definition distinguishing between current expense

and capital outlay funding – county-by-county and/or LEA-by-LEA decisions

• For example, computer replacements can be current expense funded in one LEA and capital outlay funded in another (and in some cases, the County expects the LEA to use state and federal funds only!)

Local Current Expense Fund

• Employees paid from local funds are considered state employees for purposes of all state employee benefits (health, retirement, pay/longevity rates, and leave)

• Other benefits for all employees are local board option/local board paid

• Mandatory pay and benefits rate increases create funding/funding request difficulties

Local Current Expense Fund• Matching Benefit Rates for 2014-15:• Retirement = 15.21% of salary• FICA = 7.65% of salary• Unemployment = 1% of first $20,900 of salary (forgiven

for the July-September and October-December quarters)• Workers’ Compensation = varying percentages of salaries• Health Insurance = $5,378 per position

Local Current Expense Fund• Fund balance available for appropriation is defined by

formula in state statute – very restrictive• Often, fund balance is a bone of contention in budget

requests of County Commissioners• No official guidelines on amount or %• Fund balance is necessary in order to deal with state

reversions and other emergencies (excessively cold winter!)

• Perceived “excessive” fund balances were a factor in school district employees receiving only a $500 pay increases vs. state employees receiving a $1,000 pay increase

Local Current Expense Fund• Must be audited annually by external auditors• No prescribed audit procedures – auditor judgment• Typically, all fees for audits of all Funds are paid from the

LCEF – state funds cannot be used

Federal Grants Fund• Includes federal grants that flow through NCDPI• Examples are Title 1, Title VI-B Handicapped, Title II

Improving Teacher Quality• LEAs write warrants or process payroll direct deposits

against the same State Treasurer account as for the SPSF

Federal Grants Fund• Flow-through grants are allotted to LEAs using formulas

developed by DPI/the State Board of Education• DPI retains a percentage of most federal grants to employ

program support staff• Approximately 50% of all DPI staff are federal funded

Federal Grants Fund• LEAs access flow-through grants by submitting a plan and

a budget to DPI program staff• No funds are available until DPI approves the plan and

budget proposal• Once approved, LEA must key budget into a state

software package called BAAS• Cannot spend funds until BAAS system accepts budget

Federal Grants Fund• (Essentially) All grants are categorical, most with dozens

or hundreds of pages of regulations in the Federal Register

• All require extra accountability and reporting, especially for people whose salaries are charged to the grants and for equipment (costing more than $5,000) purchased through the grant

• ARRA funds have/had even more onerous requirements

CAPITAL OUTLAY FUND• Various funding sources, including:

• Portions of ½-cent sales taxes sent to the counties by the state and restricted for school capital outlay use

• Lottery proceeds• Variety of county financing alternatives (bonds, COPs, LOBs, etc.)• General county appropriations

CAPITAL OUTLAY FUND• Variety of funding methods, including:

• Monthly remittances (like LCEF)• Reimbursements of direct expenditures• Direct county payments of bills/invoices• Combinations or variations of the above

• If the LEA receives the funds, they are usually comingled in the bank account with the LCEF (and probably Fund 8)

FUND 8• Created to prevent charter schools from sharing in

resources that are intended to be for LEAs only• Most of the intended revenue sources should have been

in Fund 8 all along• What is/is not to be included has become a political

football• Should include all funds not required to be accounted for

elsewhere

FUND 8• Definitely should include the following:

• Direct federal grants• Direct state grants• Local grants and donations• Medicaid, e-rate, and sales tax reimbursements

• For now at least, should also include tuition, rental income, interest income, indirect costs, and other miscellaneous local revenues

FUND 8• Should not have a fund balance• Revenues should equal expenditures in the budget and in

actual each year• Grants and donations are easy to balance revenues and

expenditures• Other expected revenues should be balanced against

expected expenditures• Logical choices include utilities, supplies and materials,

custodial overtime

CHILD NUTRITION• Goal should be for the food service operation to be fully

self-sufficient and paying full eligible indirect costs• Must pay $45,000 of manager/supervisor salary/benefits

out of the SPSF central office administration allotment• Staffing is the primary area to look for ways to contain

costs – minimal necessary people and hours

CHILD NUTRITION• Food must be of sufficient quality to attract and retain

participation• The higher your LEA free/reduced lunch eligible

percentage, the more revenues produced for the program• Some schools or entire districts have gone to universal

free meals – jury is still out on the net financial impacts• Usually operates with a separate bank account• Usually has funds to invest

CHILD NUTRITION• Huge number of federal, state, and local regulations to

deal with• Managing free/reduced lunch applications and eligibility is

onerous, but extremely important• Schools cannot sell food or drinks outside of the program

until after the final lunch has been served unless the revenues are given to the Child Nutrition Fund

• Adults may participate, but must pay at least the full cost of the meal

CHILD NUTRITION• Most LEAs use an electronic point of sale system at the

end of each line• Many LEAs are now allowing/encouraging electronic

prepayments from parents• Charged meals are not allowed to go uncollected• This program has the most voluminous and onerous

required audit procedures

CHILD NUTRITION• Outsourcing or management contracting are possibilities

worth exploring• Teacher/principal support of the program are keys to

successful programs• Many factors can adversely affect financial performance,

such as number of forgiven inclement weather days, early release days, late start days (breakfast impact), field trips, etc.

• Indirect costs are legitimate costs the program should reimburse the local budget – DPI calculates the eligible percentage annually for each LEA – usually 10%+ - applied to expenditures other than equipment/contracts

BUDGETING• For-profit businesses budget primarily as a planning tool• LEAs budget because they are required to by law and

because they are held accountable for keeping expenditures at or under their budgeted amounts

• Beyond state law, budgets should be the LEA’s operating plan for the fiscal year

BUDGETING• Budget calendar deadlines are in state law• The legal budget calendar deadlines are “backward”• The LCEF and COF budgets are required first, but

generally make up 15%-30% of the LEA’s total funding• Federal budget amounts are generally known no later

than May and approved in July, but make up 10%-15% of total funds

BUDGETING• State budgets have no legal deadline, and make up 50%-

75% of total funding• Recent General Assemblies have been better than

previous ones at adopting budgets before the end of July – a few have come as late as October!

• Some years, state planning allotments received in February are accurate enough to use for planning for all budgets

• Big legislative change in 2014 – expected enrollment growth funding is no longer part of the state’s continuation budget – it remains to be seen what impact this has on funding and budget planning

BUDGETING• Some major factors are almost always guesswork,

including:• Pay increases• Matching benefits rates• State allotment funding increases/decreases• Charter school/virtual public school funding impacts

• These are generally determined by the State Budget Bill (A few other factors involved in charter/VPS funding)

BUDGETING• State Budget Process:

• Governor’s Budget Office gets budget requests from all state agencies (including the State Board of Education)

• Governor releases his/her budget• Either the State House or State Senate (rotates from year to year)

begins budget building processes through Appropriations Committees

BUDGETING• State Budget Process (continued):

• House or Senate adopts their version of the budget• Other Chamber (Senate or House) begins budget building process

through Appropriations Committees• Other Chamber adopts their version of the budget

BUDGETING• State Budget Process (continued):

• Unless both budgets are identical, a Conference Committee composed of members of both Chambers is appointed

• Conference Committee debates and proposes a compromise budget

• Conference Committee budget must be adopted by both Chambers to become law

• Governor can veto or threaten to veto• Governor can fail to sign – after a statutory period of time it would

become law without the Governor’s signature

BUDGETING• Other State Budget Information:

• Other than the threat of veto, the Governor has little real influence over the final budget

• The budget request prepared by The State Board of Education has little or no impact

• In recent years, the final budget has resembled the Senate version more than the House version

• The really important budget decisions are made by a select few legislative leaders

BUDGETING• Local Budget Processes:

• 115 different processes employed!• Should be part of your total budget (all Funds) planning (should not

be prepared in isolation)• Maintenance, utilities, and central office departments are always

important pieces of the local budget• Also, supplemental salaries and instructional enhancements

beyond state and federal funded staffing and support

BUDGETING• Local Budget Processes (continued):

• If ADM is increasing and new schools or classrooms are being added, there are a multitude of local staffing and other costs to consider

• Always helpful to have a template and/or formulas in place for these positions/costs

• Don’t forget potential impacts of state transportation funding (or lack thereof)

BUDGETING• Capital Outlay Budget Processes:

• A major part of the capital budget process should involve a longer-range capital construction/renovation plan

• It is very helpful to share that plan with or make it in conjunction with County staff

• In many LEAs, the regular annual capital funding stream is so small that there is very little budget planning necessary

BUDGETING• Federal Budget Processes:

• Too often federal budgets are prepared in isolation and operated in silos

• While the funds are usually categorical, there are always different options and choices that can be made with the funds

• Federal funds should help address the LEA’s overall top budgetary priorities

• Coordination with state and local budgets can help avoid some time-consuming regulations

DISCUSSION QUESTION: What are some of the different eligible uses of the following two federal programs?• Title I Low Income• Title II Improving Teacher Quality

BUDGETING• Child Nutrition Budget Processes:

• With a clear understanding of expectations in terms of supplemental funding (hopefully none) and indirect costs (hopefully full eligible amount) this budget can be prepared in isolation

• Should be reviewed carefully for reasonableness of assumptions (inflation, reimbursement rates, impacts of new regulations, pay/benefit rates, etc.)

BUDGETING• Miscellaneous Grant Budget Warnings:

• Grant applicants sometimes use grants to reward themselves inappropriately

• Some grants require in-kind matches• Some grants require cash matches• Some grants have sustainability requirements• Most grants have interim and final reporting requirements• Many grants are reimbursement-based

BUDGETING• Miscellaneous Grant Budget Warnings:

• All grants end, but people employed by them do not always wish to end employment

• For miscellaneous donations, it is always best to get donors wishes in writing

• If legal/ethical, always abide by donor’s wishes• It is possible that it would be in the LEA’s best interest to decline a

grant or donation

BUDGETING• Other Information:

• Give me a few hours with an LEA’s budget and I can tell what their priorities are, and they might not match up with what is written in their Strategic Plan!

• Budgets are seldom documented well enough to be useful as an operating plan

• Boards of education seldom spend adequate time analyzing and understanding budgets

BUDGETING• Amendments and Transfers

• Budgets will need to be amended or changed during the year, and the law anticipates the need for amendments and transfers

• Some, by law, require board approval and some just superintendent approval

• Those approved by the superintendent are to be reported to the board at their next meeting

• Federal budget amendments require approval through NCDPI

BUDGETING• Budget should be built from schools up• How many teachers, specialists, counselors, assistant

principals, teacher assistants, clerical, custodial, etc.?• How much instructional supplies, textbooks, office

operating costs, custodial supplies, etc.?• State categorical allotments are generally inadequate to

cover all of these needs

SCHOOL ALLOCATIONS• Allocate budgeted positions and dollars to schools using

formulas• Formulas can be based exclusively on enrollment• Formulas can be weighted based on student risk factors• Formulas can include a base amount per school• Formulas can be a combination of two or three of the

above

SCHOOL ALLOCATIONS• Teacher position decisions:

• How many and what type of elementary specialists? (Specialists provide planning time, but the alternative could be lower class sizes)

• Planning periods at middle and high schools? (require teacher positions not allotted in the state categorical allotment unless class sizes are larger)

SCHOOL ALLOCATIONS• Teacher Assistants:

• Funding reduced such that there is maybe enough left for one full-time position for every K-1 classroom

• Many LEAs have reduced days and/or hours to “save” a few positions

• Many LEAs have TAs also drive buses, which can limit their time available for school needs

• Most LEAs still have full-time TAs for Kindergarten classrooms• If TAs handle car/bus duty in the mornings and afternoons, it is

difficult to reduce their hours per day

SCHOOL ALLOCATIONS• Assistant Principals:

• State allotment provides one 10-month position for every 985.3 students

• Most LEAs allocate more positions at secondary schools• Some LEAs give some/all assistant principals extended terms of

employment beyond 10 months• Allocation formula needs to take into account student/faculty safety

needs

SCHOOL ALLOCATIONS• Instructional Support Positions

• State allotment is one position for every 218.55 students• Must cover counselors, media specialists, psychologists, social

workers, nurses, lead teachers and (non federally-funded) instructional coaches

• Again, allocations are typically weighted more toward secondary schools

• State position allotment is generally not adequate to meet all of the needs

SCHOOL ALLOCATIONS• Instructional Supplies:

• Usually allocated based on enrollment• Different rates for different levels?• Separate allocations for (possibly) more expensive elective

classes?• CTE has a separate allotment (PRC 014), plus some federal

funding• Can fund some essential things centrally (e.g. expensive

calculators for math classes)• Title 1 must supplement, not supplant

FLEXIBILITY• Once allocations are made, do principals have any

flexibility to use resources differently?• While there is not total flexibility with state and federal

funding, the combination of all funding sources, if managed and understood properly, provides the LEA with significant flexibility to move budgets around to meet individual school needs

FLEXIBILITY• Pros Include:

• All students and all schools are not created equal• Principals should be in the best position to know the specific needs

at that school• Ideas from the school level can be more effective because of

faculty “buy in”• The General Assembly and State Board encourage site-based

decision-making

FLEXIBILITY• Cons Include:

• Lack of consistency (student transfers, etc.)• Sometimes a request is an attempt to work around or get rid of an

ineffective faculty member• Can exacerbate the “haves” and “have-nots” (one school might

have other resources to cover what they are “giving up”)• Requires some initial effort and continuous tracking at the central

office

HUMAN RESOURCES• Finance and Human Resources functions must be

coordinated and flowing smoothly• Payrolls are dependent on accurate and timely

information from HR and from schools• For some important functions, HR is dependent on

information from the schools in order to provide accurate, timely information for payrolls

• Depending on the school district, some HR functions might be “housed” in Finance

HUMAN RESOURCES• Important HR-related communications from schools

include:• Hiring decisions (if principals have that authority)• Workers’ Compensation claims• Injured in an episode of violence claims• Extended and/or unexplained employee absences• FMLA-eligible absences• Employee disciplinary needs/actions• Potential changes in assignment of duties (possible pay

classification impacts)• Encouraging employees to communicate all family status changes• Potential employee assistance program referrals

HUMAN RESOURCES• Timeliness of communications are essential – errors

created by lack of timely information are often difficult and costly to correct

• Faculty members dealing with HR and/or financial “issues” (e.g. having to pay back salary overpayments, not having access to a benefit that they assumed they had, etc.) are likely not completely focused on their jobs

• Small “issues” not dealt with promptly or completely can become bigger issues very quickly

HUMAN RESOURCES• Leave benefits are state regulations that have the force of

law in North Carolina• Employees are not eligible to use sick leave unless they

or an immediate family member for whom they are a caretaker are ill or injured

• Teachers must request and be approved for personal leave in advance of the day’s absence

• Principals must monitor the work hours of classified employees to limit overtime to whatever is absolutely necessary (FLSA)

• Principals must ensure that employees report exactly the hours worked, nothing more and nothing less (FLSA)

NC DIFFERENCES• Fiscally dependent boards of education• Counties responsible for all debt• Many layers of governance• State-required pay and benefits• More allotments and more categorical allotments• No direct access to state/federal cash• Backwards budget timelines/calendar

ASSIGNMENT• After-Class Assignment

• Obtain and read “Study Group 8 – The Things That Matter”• Published by the Public School Forum• Focus primarily on Guiding Principles 1, 2, and 3, pages 4-13