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Northern Michigan SBO March 16, 2011

Northern Michigan SBO March 16, 2011. Jeff Kolb Michigan Department of Education. Topics. Deficit roles and responsibilities Deficit procedures Transparency reporting guidelines Transparency reporting statistics Questions. Deficit Roles & Responsibilities.

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Northern Michigan SBO March 16, 2011

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  1. Northern Michigan SBOMarch 16, 2011 Jeff Kolb Michigan Department of Education

  2. Topics • Deficit roles and responsibilities • Deficit procedures • Transparency reporting guidelines • Transparency reporting statistics • Questions

  3. Deficit Roles & Responsibilities

  4. State School Aid ActSection 102 • MCL 388.1702 A district or intermediate district receiving money under this act shall not adopt or operate under a deficit budget, and shall not incur an operating deficit in a fund during a school fiscal year. A district having an existing deficit or which incurs a deficit shall not be allotted or paid a further sum under this act until the district submits to the department for approval a budget for the current fiscal year and a plan to eliminate the deficit not later than the end of the second fiscal year after the deficit was incurred.

  5. Uniform Budgeting and Accounting Act • MCL 141.436 Except as otherwise permitted in MCL 388.1702 the local school board shall not adopt a general appropriations act (Budget) or an amendment to that act which causes estimated total expenditures including an accrued deficit to exceed total estimated revenues.

  6. Uniform Budgeting and Accounting Act • MCL 141.438 The administration of a school district shall not incur expenditures against an appropriation (Budget) account in excess of the amount appropriated (Budgeted) by the local school board.

  7. Uniform Budgeting and Accounting Act • MCL 141.439 A member of the legislative body, the chief administrative officer, or an employee of a school district shall not authorize or participate in the expenditure of funds except as authorized by the general appropriations act (budget).

  8. District School Board and Administration Responsibility • Local School Boards, elected by the constituents of local school districts are charged with the responsibility for allocating scarce financial (revenues) and human (staff) resources to accomplish the various educational objectives of the district.

  9. MDE Responsibility • Establishing Deficit Elimination Plan procedures and forms used to monitor districts that encounter a deficit fund balance • Determining which districts are in a deficit condition • Collecting, analyzing and determining if a Deficit Elimination Plan is reasonable

  10. MDE Responsibility • Monitoring a district’s adherence to a Deficit Elimination Plan by reviewing monthly budgetary control reports • Enforcing penalties on districts that fail to comply with laws related to its fiduciary responsibility • Reporting to the Legislature the status of districts with deficit fund balances

  11. MDE Responsibility • MDE does not make decisions related to the actual expenditures or programs that a district experiencing a deficit will cut to achieve the positive fund balance. Those decisions remain the responsibility of the local school board and administration.

  12. Local Government Fiscal Responsibility Act • Used as a last resort • Lists triggers that can result in the determination of serious financial problem • The State Superintendent notifies the Governor and the State Board • The Governor appoints a Review Team • The Review Team has 30 days to report

  13. Local Government Fiscal Responsibility Act • Following the Review Team’s report the State Superintendent makes final determination • Can result in the appointment of a Financial Manager at the district’s expense

  14. Deficit Procedures

  15. Deficit Procedures District is determined to be in a deficit position by: • District notifies MDE of deficit • MDE “discovers” deficit budget through monitoring of districts’ websites • Constituents notify MDE of district’s deficit • Media articles

  16. Deficit Procedures Once deficit position is determined, the district is notified by MDE via written correspondence that a Deficit Elimination Plan (DEP) needs to be submitted. • Correspondence notifies district of Section 102 provisions • URL to DEP forms are included

  17. Deficit Procedures Year end deficit position is confirmed by audit and FID data by November 15. • District is required to submit their DEP within 30 days of November 15 • There may be extenuating circumstances that prohibit a district to comply with the 30 day due date. Such circumstances will be considered by the MDE and an extension may be granted

  18. Deficit Procedures DEP is reviewed by MDE staff • District is allowed two years from the first deficit year to emerge from deficit • There may be extenuating circumstances that prohibit a district from emerging within two years. These circumstances will be considered by the MDE and an extension of time to eliminate the deficit may be granted.

  19. Deficit Procedures DEP is reviewed by MDE staff • All tabs of DEP worksheet must be filled in completely • If MDE determines that additional work needs to be done, the district will be notified and given time to rectify the plan (usually two weeks)

  20. Deficit Procedures DEP is reviewed by MDE staff • Once DEP is determined to be satisfactory, MDE sends formal correspondence confirming approved status • Correspondence includes contingencies that must be complied with, including monthly reporting requirements • Such monthly reports monitor district’s adherence to approved DEP • Non-compliance with contingencies may cause MDE to withhold State Aid payments

  21. Deficit Procedures DEP process is repeated annually (if not more often) until district emerges from deficit • Each year presents new assumptions/changes

  22. Deficit Districts 10 Went into deficit ?? Deficit districts at June 30, 2010 43 Deficit districts at June 30, 2010 33 Remained in deficit 41 Deficit districts At June 30, 2009 8 Emerged from deficit

  23. Transparency Reporting Guidelines Summary

  24. Guidelines Summary MCL 388.1618(2) : • MDE Guidelines for Budget and Salary/Compensation Transparency Reporting Published on February 4th, 2010 (revised July 2010) • http://www.michigan.gov/mde/0,1607,7-140-6530_6526_34913---,00.html

  25. Guidelines Summary MCL 388.1618(2) : • Information was to be available on the website within 30 days of the date the 2010-11 Fiscal Year Budget was adopted by the local school board.

  26. Guidelines Summary MCL 388.1618(2) : • Standard Icon • Must be no smaller than 150 x 150 pixels • Must be visible when Main Home Page loads

  27. Guidelines Summary MCL 388.1618(2) : • Budget within 30 days of adoption (ISDs must provide this data) • URL to CEPI’s website with the pie charts • Personnel Expenditures (ISDs must provide this data) • Current Operating Expenditures

  28. Guidelines Summary MCL 388.1618(2) : • Current Bargaining Agreements (pdf) • Employer Sponsored Health Care Plans • Audited Financial Statements (ISDs must provide the 3 data elements above) • Employee Compensation Information • District Paid Association Dues • District Paid Lobbying Costs

  29. Transparency Reporting Compliance Statistics

  30. Transparency Compliance Analyses done in September and October • Three Criteria • Icon usage – Is there an icon? If so, is it properly sized and placed? • Data inclusion – Are all of the required data included? • Heading formatting – Do the headings follow the guidelines?

  31. Icon Usage September 2010 October 2010 Proper size, placement 61% Proper size, placement 52% No icon 29% No icon 17%

  32. Data Inclusion September 2010 October 2010 All required data 39% All required data 45% No icon 17% No icon 29% Data missing 32% Data missing 38%

  33. Heading Formatting September 2010 October 2010 Properly formatted 44% Properly formatted 54% No icon 29% Not properly formatted 20% Not properly formatted 19% No icon 17% Close 8% Close 9%

  34. Overall Transparency Compliance Compliant 28% 1 or more issues Non- compliant 55% No icon Non- compliant 17%

  35. ??? October 2010 No icon 17% 28% 100% Compliance Compliance Progression September 2010 No icon 29% 23%

  36. What followed • On November 10, 2010 non-compliance memos were emailed to those districts that did not comply with all of the requirements • I received several emails and phone calls • Many districts revised their websites

  37. What’s Next? • Another analysis will be done in the next couple of months. • Districts not in compliance will be notified as such and will be given a deadline to comply. • If any district is not in compliance at the deadline, direct contact will be made.

  38. Questions?

  39. MDE Contact Information Jeff Kolb Office of State Aid and School Finance Phone: (517)373-1908 Email: kolbj2@michigan.gov

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