an Era of Education Reform

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Nov 10, 2013 (4 years and 3 days ago)

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Internal Controls:

Financial Management in
an Era of Education Reform


AEFFA 2012

Sheara Krvaric, Esq.

Federal Education Group, PLLC

www.fededgroup.com


@
fededgroup


Relationship between Ed Reform
and Financial Management?


The
fiscal side

of
ed

reform is often overlooked, but getting
increasing attention:




CAP/AEI Joint Recommendations on Needed Changes to Title I
http://www.americanprogress.org/issues/education/report/2012/0
3/06/11315/reauthorization
-
of
-
the
-
elementary
-
and
-
secondary
-
education
-
act
-
offers
-
a
-
new
-
chance
-
to
-
improve
-
education/





“Admittedly, our joint recommendations and the papers
undergirding them focus on requirements that are often regarded
as obscure, technical, or otherwise unglamorous. And while it is
certainly true that No Child Left Behind’s accountability system
gets the lion’s share of the attention, we would argue that these
seemingly mundane provisions may well prove more significant
when it comes to what goes on in America’s schools and school
systems day
-
to
-
day.”



© 2012 • All Rights Reserved

2

Ed Reform and Financial
Management (cont.)


Many of today’s education reforms are based on
financial and spending data


for example:


ESEA Flexibility and school turnaround


“Return on Investment”


Civil rights enforcement


Equity



Yet, there is a disconnect between the data
policymakers assume they can get and what
state/local financial systems actually capture


© 2012 • All Rights Reserved

3

Role of Internal Controls


Internal controls are designed to help agencies
meet specific objectives, but what happens when
there are competing objectives?

© 2012 • All Rights Reserved

4

Potential Disconnect #1:

School
-
Level Data


ED began collecting school
-
level financial data
with SY 2008
-
2009



ED is continuing to collect that data under the Civil
Rights Data Collection (CRDC):


Personnel salaries at the school level


total


Personnel salaries at school level


instructional staff only


Non
-
personnel expenditures at school level


© 2012 • All Rights Reserved

5

Key Challenges


Schools must report actual salary costs by school
(cannot be based on averages)



Schools are also asked to report non
-
personnel
expenditures


Includes:


Professional development


Instructional materials/supplies


Computers/software/technology


Contracted services


Library books/media center materials


Other non
-
personnel expenditures


Fine print says
“if this information is available at the school
level”


but that limitation is not always understood by
users

of
the data


© 2012 • All Rights Reserved

6

Internal Control Issues


Capacity of HR systems


Can systems effectively tie specific staff members to
specific schools?


What about staff members hired at the central level, but
assigned to a school?


How quickly are changes input (e.g. transfers,
departures, etc.)?


How often is data reviewed/verified?


Is data consistent across various platforms/reports?


HR vs. payroll


CRDC vs. NCES forms vs. comparability reports vs. FMS

© 2012 • All Rights Reserved

7

Internal Control Issues (cont.)


Capacity of inventory systems


Do systems track goods to the school level?



Capacity of FMS


Can non
-
personnel costs (e.g. contract costs) be traced to a specific
school?



Distinguishing between “central
-
level” and “school
-
level”
costs


What about central level initiatives on behalf of specific schools?


What about staff hired at the central level but assigned to schools?


What about “salary differentials” that might be captured at the district
level, but relate to school
-
based staff?


© 2012 • All Rights Reserved

8

Emerging Issue: Comparability


A lot of attention to the “comparability loophole”
that permits comparability calculations to be based
on averaged salaries



Moves to require comparability based on actual
school
-
level expenditures (personnel and non
-
personnel)

© 2012 • All Rights Reserved

9

Comparability (cont.)


For example, Harkin
-
Enzi bill would require:


By 2015
-
2016 LEA must show that the combined
state/local expenditures in Title I schools are comparable
to non
-
Title I schools


Must be based on actual personnel and non
-
personnel
expenditures in each school


LEA must report the following information to the SEA for
each of its schools:


Per
-
pupil expenditures


Personnel expenditures


Non
-
personnel expenditures


Total expenditures


SEA must report expenditure data publicly


© 2012 • All Rights Reserved

10

Potential Disconnect #2:

Linking Costs to Program Initiatives


In May, ED proposed to collect information about
how districts use Title I funds to support specific
interventions under ESEA Flexibility



This potentially would have required linking
specific costs to specific interventions for specific
schools



In August, ED revised its proposal, and now will
collect ranking and serving data instead


© 2012 • All Rights Reserved

11

Key Takeaway?


Despite the change, ED is moving closer and closer to
expecting data on how federal funds are used to
support specific program activities in individual
schools:



“We are interested in how LEAs in ESEA flexibility
states are using their Title I, Part A funds, particularly
with respect to supporting their priority and focus
schools.”



--

ED response to Public Comments on ESEA

Flexibility Collection through
Ed
Facts



© 2012 • All Rights Reserved

12

Internal Control Issues


Interoffice coordination


What program objectives need to be tracked?


Are objectives aligned (e.g. SIG vs. RTT vs. Title I, etc.)?



Capacity of financial management systems


Can systems handle additional levels of coding?


Do all districts in the state follow the same chart of
accounts/coding conventions?


Does the SEA have authority over the chart of accounts,
or is it controlled by other state agencies?


Can the FMS separately track school
-
level costs?

© 2012 • All Rights Reserved

13

Emerging Issue: Return on
Investment


Goal is to determine whether education spending is
effective by linking dollars to results



This would involve connecting individual costs to a
program objective, and then tying those costs to
specific students and student outcomes



For example:


What is the cost of implementing a new reading intervention
(cost of the intervention plus associated costs such as new
materials, professional development, etc.)?


Which students participate in the intervention?


What are those students’ outcomes?


© 2012 • All Rights Reserved

14

Other Issues to Think About


Impact of program specific fiscal rules


MOE


Comparability


Excess cost


District
-
level vs. school
-
level spending



Double duty for operational systems:


HR


FMS


Procurement


Inventory

© 2012 • All Rights Reserved

15

Internal Control Strategies


Information and communication


Internal: Getting on the same page


External: Critically important to explain facts on the
ground


Opportunities to comment


for example OMB grant reform
proposals, ED ESEA Flex data collection


Our take on OMB proposals:
http://www.fededgroup.com/uploads/Joint_FedEdGroup_STGMassI
nsight_comments_OMB_Federal_Grant_Reform_4_24_2012.pdf


© 2012 • All Rights Reserved

16

Internal Control Strategies
(cont.)


Define and align
objectives


Performance


Financial management


Federal rules


State/local rules


GAAP requirements


Compliance

© 2012 • All Rights Reserved

17

Internal Control Strategies
(cont.)


Strength in numbers
-

states/districts can be
resources for each other:


RI UCOA initiative:
http://www.ride.ri.gov/Finance/funding/uniform%20chart%
20of%20Accounts/


LA school
-
by
-
school financial data:
http://www.louisianaschools.net/310/


© 2012 • All Rights Reserved

18

Disclaimer


This presentation is intended solely to provide general
information and does not constitute legal advice.
Attendance at the presentation or later review of these
printed materials does not create an attorney
-
client
relationship with Federal Education Group, PLLC. You
should not take any action based upon any information in
this presentation without first consulting legal counsel
familiar with your particular circumstances.

© 2012 • All Rights Reserved

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