Dollars and Sense of Adult Education

1. Dollars and Sense of Adult Education A Business Manager’s Perspective Presented by: Deb Roberts Business Manager MSAD #52 Greene, Leeds, and Turner

2. Today’s Objective To give attendees a clear understanding of the financial components of an Adult Education Program.

3. Topics • Budget – Revenue and Expenditures • Account Codes • Subsidy • Financial Statements • Grants • Fraud Prevention

4. Budgets Budgets have two sides to the equation– Revenue – Monies received in your program Course fees Local appropriation State subsidy Expenses – The costs to run your program Payroll and related benefits for employees Supplies/Materials Employee training

5. Revenue • Ask yourself these questions at budget time – • How much revenue should I anticipate to receive from my programs? • How much subsidy should I expect to receive next year? • How much local contribution should I ask for from my community(ies) next year?

6. Expenses • Ask yourself these questions as well at budget time – • What programs do I plan to run next year? • How much will it cost to run each of these programs? • How much will it cost for the operations and maintenance of my adult ed facility? • How much will it cost for the administration • of our program?

7. Example

8. Subsidy • There are two different types of Subsidy that are generated by Adult Ed programs: • Subsidy based on program revenues and expenditures from the prior fiscal year • Subsidy that is based on Academic Adult Education courses taken by 16 – 20 year • old students

9. Subsidy Calculator Your annual subsidy is calculated using the following subsidy calculator sheet: Adult Ed Subsidy Calculator.xlsx

10. Account Codes • Why does it matter? • DOE uploads financial data from MEDMS to determine your district’s subsidy each year • AEFLA match compliance is determined by the correct cost center

11. Account codes XXXX-XXX-XXXX-XXXX-XXXX Fund - 1500 Adult Education Program 6150 Enrichment Program 2950 AEFLA/ABE Federal Grant Cost Center – 400 – Adult Education 409 – Adult Education AEFLA grant match eligible

12. Account codes Program/Function – 6000-2329 - Advisory Council 6000-2300 - Administration 6000-2600 - Custodial 6000-2610 - Operations/Maintenance 6050/1000 - ITV programs 6060/1000 - Adult Transitions* 6090/1000 - ASPIRE/Work Ready* 6095/1000 - Community Service 6100/1000 - Federal Literacy *Eligible for AEFLA match – must use cost center 409

13. Account codes Program/Function (Continued) – 6200/1000 - Enrichment (only use with fund 2015 or 6150) 6300/1000 - Workforce Training* 6400/1000 - Handicapped 6500/1000 – High School Completion* 6600/1000 – Local Literacy* 6700/1000 – Adult CTE (Carl Perkins programs) 6800/1000 – Even Start – Family Literacy 6900/1000 – Other Family Literacy Programs *Eligible for AEFLA match – must use cost center 409

14. Account codes Expense Object – 1000 series – Employee salaries 2000 series – Employee benefits 3000 series – Purchased professional/technical services 4000 series – Repairs/maintenance/support contracts 5000 series – Utilities/postage/printing 6000 series – Supplies and materials 7000 series – Equipment 8000 series - Miscellaneous

15. Account Codes Revenue object – 1114 – Local Assessment 1358 – Subsidizeable Course Fees 1359 - Non-subsidizeable Course Fees 3240 – State Subsidy 4581 – AEFLA grant funds

16. Account codes Quiz • 1500-400-6000-2610-6000 • 2950-000-0000-0000-4581 • 1500-409-6500-1000-7300 • 6150-400-6200-1000-3590 • 1500-400-6000-2300-5310

17. Translations • Adult Education Operations/Maintenance Supplies/Materials • AEFLA Grant Revenue • Adult Education AEFLA match eligible High School Completion Equipment • Enrichment Purchased Professional Services • Adult Education Administration Postage

18. Account codes For more information please go to the following DOE link: http://www.maine.gov/education/data/handbook/handbookmenu.htm

19. Financial Statements • Give you a snap shot of where your revenue and expenses stand throughout the year • Should be reviewed on a monthly basis at the very least –Both Revenue and Expenditures • revenue financial statement.pdf • expenditure financial statement.pdf

20. Grants • Grants can be a wonderful resource of additional funding for Adult Education programs, but they certainly require extra work for you – Here are a few guidelines to follow – • If required - Get prior approval from your Business Manager and Superintendent before submission of your application

21. Grants • Once you are notified that you have been awarded the grant: • Provide a copy of your grant application, budget, and award letter to your Business Office • Follow all grant reporting deadlines • Follow all grant expenditure deadlines • Be sure to follow the process required to attain the funds

22. Fraud Prevention Did someone say “Frog Protection?

23. Fraud Prevention That’s right, we’re definitely on the same page!

24. Definition of Fraud Fraud is deliberately deceiving someone else with the intent of causing damage. This damage may not be physical damage --in fact, it is most often financial.

25. The Fraud Triangle • According to Donald Cressey, author of Other People’s Money, there are three factors that must be present at the same time in order for someone to commit fraud: • Motivation • Opportunity • Rationalization

26. Internal Controls Help Prevent Fraud Internal controls are simply “good business practices” that limit the opportunity for fraud to take place. They include anything which serves to: •          Safeguard assets •          Ensure the validity of financial records and reports •          Promote adherence to policies and procedures • Improve the effectiveness and efficiency of the program • Avoid the risk of public scandal

27.          How are internal controls implemented? • Separation of duties: Duties are divided so that no one person has complete control over a key function or activity •       Authorization and Approval: Proposed transactions are authorized when they are consistent with policy and funds are available •    Review and Reconciliation: Records are examined and reconciled to determine that transactions were properly processed and approved.

28.          How are internal controls implemented? • Physical Controls: Equipment, inventories, cash and other assets are secured physically, counted periodically and compared with amounts shown on records. • Training and Supervision: Well trained and supervised employees help ensure that control processes function properly • Documentation: Well documented policies and procedures promote employee understanding of job duties and help ensure continuity during employee absences and turnover

29. Internal Control Problems Frequently Noted • Financial reports not prepared timely •         Inadequate documentation to support activity •          Failure to reconcile cash balances monthly •          Errors within reports •         Bank reconciliation does not agree to general ledger balance •        Stale dated checks •       Untimely deposits • Lack of purchase requisition orders and approval •       Lack of segregated duties •       Lack of administration oversight

30. Internal Controls and Fraud •         Internal controls are meant to keep honest people honest •         No internal control is going to be “perfect” •         Audits are designed to test internal controls- not monitor • Cost/Benefit: Costs associated with control processes should not exceed expected benefits

31. Case Study An employee skims $30,000 from Adult Education course fee payments

32. How was it identified? • The district was looking to hire a full time administrator for the program and identified funding they believed to be available for the position wasn’t really available • An administrator reviewing the cause of the shortfall identified irregularities between the cash received and the deposits actually made to the district office

33. How did it happen? • The Adult Education program allowed cash payments to be collected by several employees • No receipts were written for payments received • Program records were paper based and not integrated with the district’s financial software program • Program had an annual budget of $870,000 without a full time administrator in charge of oversight of the program

34. How Could It Be Prevented? • All payments should be accepted by only one employee (if at all possible) • Receipts should be written any time money is collected • Accounting records for Adult Education should be integrated with the district’s financial software • Oversight of the program should be increased

35. Conclusion As far as I know no Adult Education Director has ever been fired due to a poor curriculum--- Sooooo…… Pay attention to the dollars and sense

36. Questions?

37. Surveys

38. Thank you My contact information should you have any further questions: deborah.roberts@msad52.org 225-1006