1. Controllership Function in School Districts Texas Association of School Business Officials Annual Conference - Austin Texas March 2008 James Terry PhD, CPA, CTSBO Executive Director of Finance and Accounting Services North East ISD

2. Controller’s Job More than Financial Control Systems • Accounting controls • Safeguarding of assets • Reliability of the financial records • Administrative Controls • Plan of organization • Operational efficiency • Managerial policies • Operational Controls • Achieving the business objectives

3. The Controller’s Job Functions • Planning • Organizing • Directing • Measuring/Reporting • Financial analysis/Modeling • Process analysis/Statistical analysis • Forecasting

4. The Organization Annual Planning (Budgeting) Strategic Planning Execution Strategies Processes Revisions Activities Tasks The Community Evaluation Six Sigma Balanced Scorecard Dashboard Source: Robert N. Anthony and Vijay Govindarajan, Management Control Systems

5. The Controller’s Job Functions • Planning • Organizing • Directing • Measuring/Reporting • Financial analysis/Modeling • Process analysis/statistical analysis • Forecasting

6. Department Of Finance Executive Director of Finance & Accounting Services E9 Departmental Secretarial Pool Secretary to the Executive Director – C9 Administrative Support Specialist – C7 Finance Secretary– C3 Director of Accounting Services & Payroll E8 Director of Budgets & Financial Control E8 Director of Procurement & eCommerce E7 Director of Risk Management & Employee Benefits E8 Director of Grants Administration / Comptroller E6

7. Secretarial Pool Director E8 Payroll Manager Senior Accounting Manager Senior Accounting Manager Data Technician E4 E5 E5 C4 Leave Coordinator District Cashier Accounting Clerk E3 C6 Part Time C3 Payroll Technician Accounts Payable Supervisor Accounting Technician C10 E1 C10 Payroll Specialist Accounts Payable Specialist Accounting Specialist C8 C8 C8 Accounts Payable Specialist Accounting Specialist C8 Payroll Deductions C8 Accounts Payable Specialist C8 Payroll Clerk C4 Accounts Payable Specialist C8 Assistant Payroll Manager Accounts Payable Specialist E3 C8 Accounts Payable Specialist C8 Payroll Technician C10 Accounts Payable Specialist C8 Payroll Specialist C9 Payroll Specialist C9 Payroll Specialist C9 Office of Accounting Services and Payroll

8. Office Of Grants Administration Assoc. Supt. of Campus Support Assoc. Supt. of Instruction Director for Grants Administration/Comptroller E6 SecretarialPool Executive Director of Athletics All Executive Directors and Principals Athletic Accountant Reports to Jerry Comalander E1 Grant Writer Consultant Executive Director of Finance & Accounting Services Senior Accountant – Grant Administration E2 Corporate Development Consultant Special Education Accountant E1 Instructional Program Specialist C9 Senior Accountant – Curriculum Compliance & School Improvement E2 Executive Director of Curriculum Compliance Senior Accountant – Continuing Education / KIN E2 Director of Community Education

9. Facility Usage & TextbookC9 Part-time Specialist/Facility Usage & TextbookC9 Bid CoordinatorC10 ProcurementSpecialistC9 Office of Procurement & eCommerce DirectorE7 SecretarialPool Assistant DirectorE6 Technology Specialist C9 Financial Technology CoordinatorT3 Finance Clerk C3 Textbook CoordinatorTemporaryX1 ManagerE3 Procurement CoordinatorE2 Specialist/OWS InventoryC9 Specialist/TWS InventoryC9 Specialist/GWS InventoryC9 Procurement SpecialistFrozenC9 Contract CoordinatorC10 Specialist/PO ProcessorC9 Specialist/PO ProcessorC9 Specialist/PO ProcessorC9 Material HandlerO4 Material HandlerO4 Material HandlerO4 OWS WarehouseSupervisorE1 Material HandlerO4 Material HandlerO4 Material HandlerO4 Material HandlerO4 Material HandlerO4 Material Handler/TestingO4 Procurement Warehouses GWS WarehouseSupervisorE1 Material HandlerFrozenO4 Material HandlerO4 Property ManagementTechnicianO1 Property TransferCoordinatorPending Property ManagementTechnicianO1

10. Office Of Budgets & Financial Control Secretarial Pool Director of Budgets & Financial Control E8 Budget Analyst Vacant E1 VOE Student Assoc. Supt. of Auxiliary Services Div Comptroller for Operations E5 Assoc. Supt. of Business Services Senior Accountant E3 Executive Director of School Nutrition Sr. Accountant for School Nutrition E2 Assoc. Supt. of Campus Support Comptroller for Campus Support Assoc. Supt. of Business Services E5 Campus Support Technician C10 Comptroller for Business Services Assoc. Supt. of Business Services & Treasurer E5 Staff Accountant - Treasury E2

11. The Controller’s Job Functions • Planning • Organizing • Directing • Measuring/Reporting • Financial analysis/Modeling • Process analysis • Forecasting

12. The Controller’s Job Functions • Managing • Coaching • Managing by Objective (MBO) • Priorities • Mediation • Praise • Reprimand

13. The Controller’s Job Functions • Planning • Organizing • Directing • Measuring/Reporting • Financial analysis/Modeling • Process analysis/Statistical analysis • Forecasting

14. The administrative cost ratio administrative costs divided by instruction costs, expressed as a percentage. The state standard for the administrative cost ratio is 11.05%

15. INSTRUCTIONAL EXPENDITURES PER REFINED ADA

16. CAMPUS ACADEMIC RATINGS 77% of NEISD’s districts are rated Exemplary or Recognized. Fort Bend is the only large district with similar results.

17. SUBSTITUTE DAYSPARAPROFESSIONALS HS & MS

18. HS ADA by Year by Campus A/B Schedule Automated Calling System TTAD Linked to PEIMS Discipline

19. Auxiliary Services

20. 15

21. Capital Expenditures 16

22. The Controller’s Job Functions • Planning • Organizing • Directing • Measuring/Reporting • Financial analysis/Modeling • Process analysis • Forecasting

23. Financial Analysis • Statistical Section of CAFR • Inventory Carrying Costs • Bank Earnings Credit vs. Investments • Cash inflows and outflows • Benchmarking – ERG • Desktop Analyst • APi • FPI 18

24. Financial Analysis • Variance Reports • Staffing Analysis • Teacher Utilization • Classroom Utilization • Magnet Program Costs • Utility Usage 18

25. Financial Analysis • Course Costs • Mindsphere • Performance Measures • APQC • OSBC 18

26. The Controller’s Job Functions • Planning • Organizing • Directing • Measuring/Reporting • Financial analysis/Modeling • Process analysis/Statistical • Forecasting

27. Performance Measures Measure what you want to change. Source: NEISD Finance Department

28. E X E C U T I O N Processes • Planning/Budgeting • Teaching • Reading • Writing • Arithmetic A C T I V I T I E S

29. 3 by a deterministic function 2 is operated on… 5 into an outcome! (the dependent variable) 1 The independent variable… 4 To transform it… Determining Performance y = f (x)

30. Using actual data to identify world-class performers in Enterprise Performance Management • Effectiveness (Examples) • Industry relative total excess return • Operating profit volatility • Analysts seen as business partners • Balance of both financial and non-financial performance measures • Quality metrics • Accuracy of forecasts and analysis • Use of balanced scorecards, simulation models • Percent managers describing budget process convenient and easy • Percent of time analytic focus is on proactive decision making • Percent of time reports and commentaries address future actions • Efficiency (Examples) • Overall planning cost as a % of revenue • Process cost as a % of revenue • Percent of business reports distributed electronically • Operations managers use of on-line budgeting tools • Staffing levels of process • Cycle times • Budget iterations • Performance reporting productivity • Utilization of self-service for inquiry • Application complexity

31. Value Stream Maping High Level Process Flows (HLPF) Transportation

33. PEIMS Reporting Process

34. Expenditure Reclassification Process

35. The Controller’s Job Functions • Planning • Organizing • Directing • Measuring/Reporting • Financial Analysis/Modeling • Process Analysis/Statistical Analysis • Forecasting

36. Forecasting Into the Future • Big numbers vs. small numbers • One number vs. many numbers • Multiple periods over time vs. limited periods over short periods of time 36

37. Linear Correlation • Two distributions are correlated when a change in one causes a change in another • Example: People who eat lots of peas may eat less broccoli (or may eat more…) • Usually doesn’t have much effect unless significant correlation (||>0.75)

38. Correlation is a dependency between your Xs • Correlation does not mean causality! • Correlation coefficient • Always lies between -1 and 1 • Measures strength of the linear relationship between two Xs Correlation coeff < 0 Correlation coeff = 0 Correlation coeff > 0

39. Crystal Ball Forecasting • Crystal Ball offers opportunities to quickly run Monte Carlo Simulations in Excel to improve services • Crystal Ball can be customized to do several what-if analyses to achieve quality performance and reduce cost

40. Monte Carlo Simulation • Computer-based “experimental” method estimating statistical distribution of output (Y) • Steps for Crystal Ball Simulation: • Assign each input (X) a value chosen “at random” from its assumed distribution • Substitute values of inputs (Xs) into the system transfer function and compute a value of output (Y) • Record value of output (Y) • Repeat until enough samples of output (Y) characterize its statistical distribution

41. Controller’s Functions Example • Measuring/Reporting • Financial Analysis/Modeling • Forecasting/Statistical Analysis • Planning

42. Identifying Inputs & Outputs Cash Inflows Concentration Cash Outflows Sales Employees Fees Bond Holders Subsidies Vendors Inv. Income Stock Holders 4

43. Enter Historical Daily Rates into a Spreadsheet

44. Create a Line Graph Using the Information in Your Spreadsheet

45. 90 Days of Rates from Three Different Sources - Example

46. Forecast New Chart with Information

47. The Break Even Point Break Even Point (~2/4/02)

48. See the Additional Earnings after Break Even Point Break Even Point (~2/4/02) Potential Additional Earnings

49. Actual Rates vs. Projected Rates

50. Example of the Model Showing Potentially Higher Earnings Break Even Point (~7/1/02) (after maturity date!)