Financial Audits

I met with our Superintendent of Finance to answer questions about our annual external audit. Here is how the process works. The auditor is selected through a formal RFQ ( request for qualifications) process. Each firm is rated based on several criteria, and a firm is selected who is considered to be the best selection for our district. The auditor conducts the audit with Generally Accepted Principles for State and Local Governments as outlined in the GASB Statements and Interpretations and FASAB Statements and Interpretations. The GASB is the Government Accounting Standards Board and the FASAB is the Federal Accounting Standards Advisory Board. The auditors are governed by the State of Texas Financial Accountability System . The audit concludes that the financial statements are free of material misstatement, and if they are not, to communicate to management and the Board of Trustees. They also determine if the financial statements present fairly, in all material respects, the respective financial position of governmental activities. The results of the audit are communicated at a Board meeting. The auditor is present and presents his or her findings to the school board. We had our audit very recently and our district received a “Superior” rating from the auditor. Our Superintendent of Finance does a great job with the finances of our district.

Understanding Personnel Salaries

I interviewed our Assistant Superintendent of Finance for this assignment.  This was an eye opening experience for me because of the numbers that she gave me. The total personnel cost for the 12-13 school year were $11,689,284. This is 67.52% of the total budget. This only leaves around 33% of the budget left to accommodate other programs. This makes it difficult to cut the budget if a crisis situation were to arise. Personnel would have to be cut through a RIF process. The 67.52% is 5% higher than the state average. Our district can manage this because we have a leaner operating budget. I can attest to a lean budget because since I am the high school principal, I have to look at my budget each year and make appropriate cuts to certain programs. When the state cut  funds to school districts recently, our district was able to keep teaching jobs by cutting budgets across the board, cutting insurance, and limiting travel.

If the district were to have a 5% increase to salaries, there would be positive and negative impacts to the budget. The positive impacts include attracting more desirable teachers. Competing better with local districts for teachers. Moral of staff could be higher. The negative impacts of a 5% increase are that the salary increase is permanent, and the district cannot reduce salaries for the same assignment if money is not  available. With current funding laws, if a district is at the maximum tax rate ($1.17 with rollback election) and student population is stagnant, there will be no additional funding to pay for raises. Money will have to come from a fund balance and a deficit budget will be realized. The district may have to reduce other areas of the budget to fund a salary increase. Taxpayers may not agree with teachers receiving an increase larger than the increase in the cost of living, or larger  than what other industries give as raises. This could result in a change in the Board of Trustees a the next election.