FINANCIAL MANAGEMENT
This chapter reviews the financial management functions of Dripping Springs Independent School District (DSISD) in three sections:
School districts must practice sound financial management, to maximize limited resources and plan for future needs. Effective financial management ensures that internal controls are in place and operating as intended, technology is maximized to increase productivity and that the reports are prepared timely and accurately.
The planning and budgeting process must support the strategies in place to achieve the district goals. The accounting process must provide safeguards to reduce the risk of losing assets and to ensure appropriate use of assets. These built-in safeguards should be appropriate to the district's size and organizational structure. A key to effective financial management is that the board and administration must receive timely, accurate and useful reports concerning the financial condition of the district.
BACKGROUND
School districts' financial operations must comply with federal, state and local laws and regulations. The Texas Education Agency (TEA) requires districts' financial operations to comply with the requirements of the Financial Accountability System Resources Guide (FASRG). The FASRG combines the requirements for financial management from a variety of sources into one guide for Texas school districts.
DSISD uses Regional Service Center Computer Cooperative (RSCCC) software to maintain its financial records. This software provides the information necessary to manage the district's finances, including the general ledger, subsidiary ledgers and comparative financial reports for both the current period and year-to-date. The RSCCC software produces the information to fulfill the requirements for reporting financial information to the Public Education Information Management System (PEIMS), which is required by the Texas Education Code (TEC) Section 42.006. The system also accounts for revenues and expenditures based on the fund, function, object, cost center and program intent codes described in the FASRG.
Effective financial management provides strong systems of internal controls by aligning the business service functions to provide a system of checks and balances on all transactions. Proper staffing is also necessary to achieve the best results.
The DSISD Business Office includes the assistant superintendent for Business Operations and six employees. The Business Office manages accounting, accounts payable, budgeting, cash receipts, financial reporting, fixed assets, investments, PEIMS, payroll, purchasing and substitute procurement. Exhibit 7-1 presents the organization of the Business Office.
Exhibit 7-1 Source: DSISD, Assistant Superintendent for Business Operations.
Organization of DSISD Business Office
April 2002Each Business Office employee performs multiple functions. For example, the accounts payable clerk prepares the Medicaid Administrative Claims reports for the district. The cash receipts/bids clerk processes food service applications and prepares athletic reports. The payroll clerk prepares the federal tax returns and accounts for employee leave in the district. The PEIMS coordinator assists with budget development, prepares preliminary salary calculations, monitors the cash in the bank and investment accounts and reconciles the payroll ledger. The accountant prepares all bank reconciliations; enters all purchase orders; balances due to and due from accounts; prepares adjusting entries; works with the campus activity funds; prepares budget transfers; and prepares tax reports for the board packets. The substitute procurement clerk implements the new Web-based substitute system.
One way to ascertain the effectiveness of financial management is to compare the district with peer districts. DSISD selected Burnet Consolidated, Eanes, Lake Travis, Marble Falls and Wimberley ISDs as peer districts for comparison purposes. Exhibit 7-2 presents student enrollment, percentage of students economically disadvantaged and property value per student for DSISD and its peer districts.
Exhibit 7-2 Source: TEA, Public Education Information Management System (PEIMS), 2001-02;
Number of Enrolled Students,
Percentage Economically Disadvantaged and Property Value per Student
DSISD and Peer Districts
2001-02
District Student
EnrollmentPercentage
Economically
DisadvantagedProperty
Value per
StudentEanes 7,260 2.6% 832,331 Lake Travis 4,376 7.8% 633,055 Marble Falls 3,677 40.2% 328,458 Dripping Springs 3,311 8.2% 337,911 Burnet Consolidated 2,948 37.4% 252,702 Wimberley 1,734 14.9% 416,995
and State Comptroller's Office, Preliminary Property Values, 2002.Eanes and Lake Travis ISDs have the largest number of students, the lowest percentage of economically disadvantage students and the highest property value per student. DSISD compares closest to Marble Falls, Burnet and Wimberley ISDs in student enrollment and property value per student. Dripping Springs, Eanes and Lake Travis ISDs, however, all share a lower percentage of economically disadvantage students than other peer districts.
DSISD receives revenue from local, state and federal sources. In 2001-02, DSISD received 75.5 percent of its revenues from local property taxes, 23.9 percent from the state and 0.6 percent from federal sources. Exhibit 7-3 presents the sources of budgeted revenue for all DSISD funds and the peer districts for 2001-02.
Exhibit 7-3 Source: TEA, PEIMS, 2001-02.
Budgeted Revenue Sources for All Funds
DSISD and Peer Districts
2001-02
District Local and
IntermediatePercent
of TotalState Percent
of TotalFederal Percent
of TotalTotal Eanes $103,802,581 95.9% $4,489,932 4.1% $0 0.0% $108,292,513 Lake Travis $47,629,946 94.5% $2,481,000 4.9% $266,000 0.5% $50,376,946 Marble Falls $20,952,077 75.3% $6,171,101 22.2% $707,717 2.5% $27,830,895 Dripping Springs $18,114,451 75.5% $5,740,748 23.9% $139,913 0.6% $23,995,112 Burnet Consolidated $12,646,493 58.2% $8,535,474 39.3% $540,000 2.5% $21,721,967 Wimberley $12,527,001 89.2% $1,419,436 10.1% $91,382 0.7% $14,037,819 Like Eanes, Lake Travis and Marble Falls ISDs, DSISD generates most of its funds from local and intermediate sources. DSISD and Marble Falls ISD receive 75.5 percent and 75.3 percent, respectively, of their total revenue from local sources; Eanes and Lake Travis ISDs receive 95.9 percent and 94.5 percent, respectively, while Wimberley ISD receives 89.2 percent. Burnet ISD receives the lowest percentage (58.2) of total revenues from local sources.
Burnet receives almost 40 percent of its total from the state; DSISD and Marble Falls ISD are the next highest at 23.9 and 22.2 percent, respectively. The two districts with the highest percentage of federal funds are Burnet and Wimberley-both at 2.5 percent.
Since 1997-98, revenues from local DSISD sources have increased by 94.7 percent; revenues from state sources have decreased 20.1 percent; and total revenue for DSISD has increased 41.9 percent. Increased property values and tax rates account for the increase in local revenue. The decrease in state revenue reflects the inverse relationship between property wealth and state funding. The decrease in state funding was not equivalent to the increase in local funding because of the growing number of students in DSISD and the increased tax effort by DSISD (Exhibit 7-4).
Exhibit 7-4 Source: TEA, PEIMS, 1997-98 through 2001-02.
DSISD General Fund Revenue by Source
1997-98 through 2001-02
Revenue Source 1997-98
Actual1998-99
Actual1999-2000
Actual2000-01
Actual2001-02
BudgetPercent Change
From 1998Local and Intermediate $7,202,938 $8,322,296 $9,603,176 $11,951,590 $14,021,799 94.7% Percent of Total 53.9% 55.9% 56.1% 65.2% 73.9% State $6,159,776 $6,576,973 $7,487,797 $6,365,390 $4,922,766 (20.1%) Percent of Total 46.1% 44.1% 43.8% 34.7% 26% Federal $0 $0 $17,301 $27,688 $20,000 Percent of Total 0.0% 0.0% 0.1% 0.2% 0.1% Total Revenue $13,362,714 $14,899,269 $17,108,274 $18,344,668 $18,964,565 41.9% Compared to its peer districts, DSISD budgets the highest percentage of its expenditures for payroll (80.5 percent) and other operating costs (4.5 percent). In the areas of supplies and debt service, the district is comparable with its peer districts (Exhibit 7-5).
Exhibit 7-5 Source: TEA, PEIMS, 2001-02.
Budgeted Expenditures for the General
Fund by Object Code Description
DSISD and Peer Districts
2001-02
District Payroll Contracted
ServicesSupplies Other
OperatingDebt
ServiceCapital
OutlayTotal Dripping Springs 80.5% 8.7% 4.8% 4.5% 0.3% 1.2% 100% Burnet Consolidated 79.7% 7.7% 5.2% 1.9% 0.4% 5.1% 100% Marble Falls 79.1% 8.4% 5% 2% 0.8% 4.6% 100% Wimberley 74.1% 11.7% 7.3% 4.1% 0.7% 2.1% 100% Lake Travis 58.3% 35.5% 3.2% 1.3% 0.0% 1.7% 100% Eanes 46.5% 50.5% 2% 1% 0.0% 0.0% 100% Chapter 1 of the FASRG, Financial Accounting and Reporting Guide, mandates school districts' use of functional codes to track expenditures for different school district operations. Exhibit 7-6 presents the percentage of funds budgeted by function for DSISD and peer districts.
Exhibit 7-6 Source: TEA, PEIMS, 2001-02.
DSISD and Peer Districts
Percentage of Funds Budgeted by Function
2001-02
Function Burnet
ConsolidatedDripping
SpringsEanes Lake
TravisMarble
FallsWimberley Instruction 51.3% 43.3% 28.1% 33.7% 47.4% 46.8% Instructional Resources 1.2% 2.6% 0.9% 1.0% 1.5% 1.6% Curriculum and Staff Development 1.0% 0.5% 0.2% 0.2% 0.3% 0.5% Instructional Leadership 0.7% 0.3% 0.6% 0.8% 1.7% 0.7% School Leadership 5.0% 5.2% 2.7% 2.7% 4.6% 5.6% Guidance and Counseling 3.0% 2.1% 2.0% 2.0% 3.2% 1.8% Social Work Services 0.0% 0.0% 0.0% 0.0% 0.3% 0.3% Health Services 0.9% 0.7% 0.5% 0.4% 0.9% 0.9% Student Transportation 5.1% 4.5% 1.2% 3.6% 4.5% 3.2% Food Services 4.6% 5.3% 2.5% 2.2% 4.8% 3.8% Co-/Extracurricular Activities 3.7% 3.0% 1.3% 1.7% 3.1% 4.3% General Administration 4.4% 3.5% 2.0% 3.0% 4.4% 4.8% Plant Maintenance/Operations 11.3% 10.4% 5.9% 6.2% 10.5% 10.3% Security and Monitoring Services 0.1% 0.1% 0.1% 0.0% 0.0% 0.0% Data Processing Services 0.5% 0.3% 0.7% 0.6% 1.4% 1.7% Community Services 0.0% 0.0% 0.0% 1.2% 0.3% 0.0% Debt Service 6.7% 16.2% 13.1% 16.0% 9.4% 11.2% Facilities Acquisition 0.5% 0.0% 0.0% 0.0% 1.9% 1.0% Contracted Instructional Services 0.0% 0.0% 37.8% 24.7% 0.0% 0.0% Incremental Chapter 41 Costs 0.0% 0.0% 0.2% 0.0% 0.0% 0.0% Payments to Fiscal Agent 0.0% 2.0% 0.0% 0.1% 0.0% 1.6% Payments JJAEP 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total 100% 100% 100% 100% 100% 100% It is important to note that the percentage of funds by function is different from what is shown in Chapter 2; in particular, Exhibit 2-25 shows the percentage DSISD and its peers spend on instruction. The reason for this difference is that the calculation of percentage spent on instruction in Chapter 2 includes only the operating budget and does not include any funds budgeted for debt service or capital outlay. This difference in calculation results in the different percentages of funds spent on instruction and other functions.
The contracted instructional services budgets represent payments for Chapter 41 of the FASRG, Wealth Equalization. DSISD budgets a greater percentage of its total expenditures for instructional resources, food services, debt services and payments to a fiscal agent than any of the peer districts.
Exhibit 7-7 presents functional expenditures for the general fund on a per-pupil basis for 1997-98 through 2001-02. These functional expenditures do not include facility acquisition and construction expenditures.
Exhibit 7-7 Source: DSISD Audit Report; TEA, AEIS and PEIMS, 1997-98 through 2001-02.
DSISD General Fund Functional Expenditures
1997-98 through 2001-02
Description 1997-98
(Actual)1998-99
(Actual)1999-2000
(Actual)2000-01
(Actual)2001-02
(Budget)Percent
ChangeFrom
1997-98Number of Students 2,889 3,018 3,100 3,197 3,320 14.9% Instruction $2,664 $2,882 $3,283 $3,071 $3,078 15.5% Instructional Resources $100 $140 $155 $176 $186 86.2% Curriculum and Staff Development $27 $30 $27 $34 $38 39.7% Instructional Leadership $18 $17 $19 $19 $20 13.5% School Leadership $302 $298 $332 $344 $367 21.5% Guidance and Counseling $130 $123 $141 $140 $152 16.6% Health Services $39 $36 $44 $50 $50 28.3% Student Transportation $246 $220 $260 $292 $318 29.1% Co-/Extracurricular Activities $175 $195 $211 $209 $214 22.4% General Administration $222 $235 $314 $246 $252 13.3% Plant Maintenance/Operations $489 $549 $613 $689 $740 51.4% Security and Monitoring Services $11 $10 $2 $1 $4 (64.4%) Data Processing Services $36 $0 $0 $0 $18 (49.9%) Community Services $0 0% Debt Service $47 $63 $69 $16 $16 (65.1%) Payments to Fiscal Agent $107 $109 $128 $133 $140 30.6% Total $4,613 $4,907 $5,598 $5,421 $5,593 21.2% DSISD's 2001-02 student enrollment has increased by 14.8 percent since 1997-98. During this same time, total expenditures per student have increased 21.2 percent, with a 15.5 percent increase in funds budgeted for instruction. The greatest increase in functions occurred in the instructional resources function with an 86.2 percent increase over 1997-98. Instructional leadership and general administration have both increased by lower percentages than instruction.
