Running Head: ANALYSIS OF WATERFORD SCHOOL DISTRICTS FINANCIAL CONDITION

Analysis of Waterford School Districts Financial Condition Lauren Bauer Oakland University EA 741 Dr. Maxfield 4/11/13

ANALYSIS OF WATERFORD SCHOOL DISTRICTS FINANCIAL CONDITION For the purpose of this assignment I will take the role of an outside consultant meant to audit Waterford, with an eye on areas that are working well as well as areas that can be improved. My Perspective on the Budget Development Process After analysis it is my opinion that that the budget process in Waterford is in excellent condition. The district budget is prepared and adopted based on the most current information available, based on prior year results, latest revenue information and expenditure adjustments. The district also keeps sight of the human aspect of cuts (a natural product of the process), and makes it a priority to keep cuts away from the classroom. The district also appears to think of the real impact of a budget on people. Additionally, the district continues to find ways to help teachers do what is best for students with less funding and more pressure. Additionally, Waterford School District (WSD) has been creative in their budget cuts. This creativity in the budget process has been a collaborative effort between administration and the teachers union during salary negotiations. The goal of both sides of the table was to impact students as little as possible (larger class sizes, program eliminations, etc.), prevent teacher layoffs whenever possible, keep the salary schedule attractive and competitive, and allow the district to present and maintain a balanced budget. Involvement of Community Members, Staff, and Other Stakeholders Community Members and Other Stakeholders I conclude that for the most part WSD does an excellent job of informing stakeholders with

appropriate information without overwhelming them with too many unnecessary details. District presentations appear to be transparent and free of jargon. The district shares bond updates,

ANALYSIS OF WATERFORD SCHOOL DISTRICTS FINANCIAL CONDITION budget presentations, as well as revised budgets all presented to the community at board meetings. These PowerPoints are also available to the public on their website. District documents reflect a positive vision for the district. The district also keeps the human side of the presentations in mind as well and doesnt project budgets more than 2 years out to the community, as to not unnecessarily alarm stakeholders. Community support of bonds in the district also shows community support and involvement. Community members and stakeholders have access to overviews and detailed plans on our website to further clarify our district budget and fiscal priorities. Staff The district works collaboratively with employee groups to make budget decisions a more collaborative effort. Also, employees and community members can access the budget through their website. In the past employees and the public have been solicited to be involved in the

process by ranking cuts from most desirable to least desirable. Employee groups have also been helpful in taking on additional shares of health care spending as well as pay cuts to help make the budget sustainable as well as keeping cuts away from the classrooms. Suggestions for improvement are as follows: it appears that employees (not on the bargaining committees) could be a bit more informed; perhaps budget document could be emailed to stay more informed. Perhaps if more employees had access to these documents and saw how many ways the district is improving on a tight budget, they may be more likely to understand where bargaining table demands come from during contract negotiations. The district has benefited from almost $5,000,000 in concessions from employee groups, employees appear to be wondering if the district even acknowledges concessions, since they keep continuing to ask us take more cuts. Since the financial documents I reviewed detailed the

ANALYSIS OF WATERFORD SCHOOL DISTRICTS FINANCIAL CONDITION concessions specifically that employees have made to move the district forward in a fiscally responsible way, Im sure it would be of interest to employees. Coherence of Budget Recommendations and District Priorities Coherence of Budget Recommendations

It appears that the recommended cuts that the district have made have been coherent to most stakeholders (employees could be more engaged). The goal of the district and all stakeholders are the same. All stakeholders seek to impact students as little as possible (larger class sizes, program eliminations, etc.), prevent teacher layoffs whenever possible, and allow the district to present and maintain a balanced budget. So since the recommended cuts meet all of the above goals, they appear to be alignment with district priorities. In my research it appears that the only time a budget recommendation has been truly unpopular was when it meant closing an elementary, middle school and repurposing a few other buildings. discussed in detail later in the paper. District Priorities The district priority to maintain programming and keep all budget cuts away from the classroom shows a commitment to continuous improvement. This district priority has been evidenced through creative budgeting where employee concessions have kept our district priorities in line and kept a balanced budget. The district priority of keeping cuts as far away from the classroom as possible also shows a commitment to continuous improvement. Acknowledging that in a professional such as teaching that employees will step up and take part of the cuts themselves to preserve the good things in our classrooms that adequate funding make possible. The districts commitment to not laying off This topic will be

ANALYSIS OF WATERFORD SCHOOL DISTRICTS FINANCIAL CONDITION teachers each year (as surrounding districts do) only to recall them, also reflects a priority of employee wellbeing. Additionally, the district focuses the bulk of its money on instruction. The district spent $48,658,107 dollars on basic instruction and additional $14,902,335 on added needs instruction.

The added needs instruction specifically speaks to a district priority to fund instructional items as they arise. Although when you look at WSD at a county level, their 58.38% of the budget for instruction and added needs instruction is below the county average of 60.22%. The district should look at funneling a little more money into instruction to meet county average. However, money spent on non-instructional support is among the better in the county. 19 out of 28 districts spend more on non-instructional services than WSD. Link between District and Building Level Needs and Budgetary Resources Allocated Link between District and Building Level Needs Based on my research there appears to be a direct link between district and building level needs and the districts budgetary resources allocated. For example, when the need for jobembedded professional learning became apparent in buildings, WSD allocated funds for six full time instructional coaches. These coaches lead job-embedded professional learning opportunities throughout the year as well as coaching teams as well as individual teachers with the goal of increasing student achievement. Another example of budgetary responses to building needs came in the form of reading support. WSD hired four full time reading interventionists so support students and teachers in all elementary buildings. In the past we had only half time people in all non- Title 1 buildings. Staffing these building fully shows a commitment to continuous improvement in student achievement.

ANALYSIS OF WATERFORD SCHOOL DISTRICTS FINANCIAL CONDITION Finally, the district has allocated funds for three Professional Learning Community (PLC)

leaders at each high school, two at each middle school and one at each elementary school. These teachers help principals to lead and monitor the work of our PLCs in each building. PLCs have been shown to be highly effective in improving student achievement in buildings where they are fully implemented and supported. Budgetary Resources Allocated There is evidence of a link between needs and resources in WSD. Since the district supports funneling all money to the classroom, cuts have been made in other places. For example in 2009, 2010, and 2011 budget cuts were made in administration, secretarial, and maintenance. Also, budget for instruction has been slightly increasing since 2006-2007. The last two budget years had the highest percentage of the budget allocated for instruction. Additionally, other than 2008-2009 and 2009-2010(where the school board purposefully tried to increase the fund balance) the fund balance has remained below 5%, this indicates that 95% of the money given to the district to spend on educating students that year is spent that year. Also, the Misc. portion of the budget has been decreasing since 2010; this may be the result of various savings roll overs. Another example of meeting this priority is the renegotiated salary schedules for teachers and other employees. There was a pay freeze instituted for all employees in 2009, 2010 and 2011 budget years as well. The only people receiving increases were teachers who received their step raises, teachers who completed additional schooling or employees who were promoted. All other salaries have been frozen. Giving the additional 2% steps to teachers, but not increasing other salaries is an example of keeping the money in the classroom.

ANALYSIS OF WATERFORD SCHOOL DISTRICTS FINANCIAL CONDITION Efficiency and Quality of Auxiliary Services WSDs auxiliary services are broken down into a few different sub categories which include: transportation, general administrative costs, business administration, operations and maintenance, and other support services. Overall, 22 out of 28 districts spend more than Waterford on the non-instructional services mentioned below. Transportation

The transportation department is run by Jim Beaver, Associate Director of Transportation. Jim is responsible to monitor the quality of the transportation department. Jim makes sure that all drivers are certified and able to follow all district guidelines in order to make sure the quality of our transportation department is maintained for the safety and security of all students.

In terms of efficiency, the district spends $10,932,386 a year on average to provide transportation to our students. This makes transportation 3.63% of the budget, which is better than the county average of 4.14%. When looking county side at a transportation cost per rider comparison, 25 out of 28 districts spend more than Waterfords $550 per rider. When you factor in cost per mile, 25 out of 28 districts spend more than Waterfords $3.46 cost per mile. Additionally, when you look county wide at transportation comparison costs per student, 20 out of 28 districts spend more than Waterfords $348 per student (all district students).

General and School Administrative Costs

Our general administrative costs include the elementary director, the secondary director, the board of education, and the executive administrators. In terms of efficiency, the district

ANALYSIS OF WATERFORD SCHOOL DISTRICTS FINANCIAL CONDITION spends $1,569,010 a year on average on general administrative costs. Per students this is a $139.00 cost, which makes it higher than the county average of $126.41. This makes general administrative costs 1.44% of our budget, which is worse than the county average of 1.18%. When looking county wide, 16 out of 28 districts spend more than Waterford. In terms of quality, administrators are evaluation yearly by their superior and there staff. Central office administration has also saved costs by all being relocated to one building which saved costs. This is an area I would recommend looking at more closely to align to county averages and save money.

School administrative costs account for $559.08 per pupil, which is better than the county average of $585.41 per pupil. School administration accounts for 5.78% of the overall budget, which is worse than the county average of 5.45%. This is another area I would look closely at for further cost saving options. There are only 7 out of 28 districts in Oakland county than spend more on school administration per student. However when looking back, this is a big improvement from previous years when the amounts and percentages were much higher. This also speaks to the districts commitment to quality and efficiency. School administrators at the middle school and high school have been shrinking, and some assistant positions havent been filled to save money. They also closed a middle school which cut down on costs.

Business Administration Business administration includes mailings, printing for district wide mailers, childcare billing, purchasing at the district level, benefits, payroll and other fiscal services. Tom Wiseman supervises the business administration for our district. Business Services provides the

ANALYSIS OF WATERFORD SCHOOL DISTRICTS FINANCIAL CONDITION operational expertise in the area of business affairs that support the mission, vision, goals, and objectives of WSD. Waterford spends $2,109,870 in the business office. This amount breaks down to $186.92 per student, which is better than the county average of $219.73 per pupil. The

business office accounts for 1.93% of the overall budget, which is better than the county average of 2.05%. When looking county wide at an administrative comparison cost per student, 24 out of 28 districts spend more than Waterford. Operations and Maintenance Operations and maintenance includes: crisis management, warehouse, bond issues, security, plant maintenance, utilities, and plant operations. Waterford spends $10,932,386 total each year on operations and maintenance. Overall Waterford spends 10.02% of its overall budget on operations and maintenance, which is higher than the county average of 8.74%. We also spend $968.51 per pupil, which is more than the county average of $939.14. A county wide operations and maintenance comparison shows that 15 out of 28 districts spend more than Waterfords cost per student. This is another area in which I would look at aligning some items and reducing costs. The district is also considering close an additional elementary building which would improve costs. Plante & Moran have done a facilities and operation audit and found that they could operate more efficiently with one less elementary building. Other Support Services Other support services include: video services, community relations, planning, research and development, human relations, and data processing. The Department also manages a comprehensive communications and marketing plan promotes two-way mutually beneficial relationships between WSD and the community. Other support services also provide many

ANALYSIS OF WATERFORD SCHOOL DISTRICTS FINANCIAL CONDITION 10 integrated services that benefit the schools and community. Other support services total $4,979,870 of our overall budget. Other support services account for 4.56% of the overall budget, which is higher than the county average of 3.73%. Other support also accounts for $441.17 per student, which is higher than the county average of $400.33. Across the county, 10 out of 28 districts spend more than on other support services. This is an additional place where some cuts could be made. Effectiveness in Dealing with Current Funding Restraints While Achieving District Mission/Goals I believe the district has dealt effectively with funding restraints while achieving district goals. Since the district visions for dealing with funding restraints includes not issuing layoff notices for teachers, keeping cuts away from the classroom, and proactively looking for ways to attract additional funding. The district has looked for ways to attain additional funding through grants such as Safe Schools/Healthy Kids, Fuel up to Play 60, best practices and best financial practices bonuses from the state. They are also currently raising money through renting out facilities to public, including fitness centers and pools. Also, as discussed earlier in the paper the district priority of keeping cuts as far away from the classroom through creative budgeting in collaboration with employees. This creativity in the budget process has been a collaborative effort between administration and the teachers union during salary negotiations. This way some employees receive steps, but others receive freezes or find that the numbers of steps have lengthened. This solution has proven to be an effective way to deal with funding constraints while still keeping cuts away from the classroom.

ANALYSIS OF WATERFORD SCHOOL DISTRICTS FINANCIAL CONDITION 11 Facility Usage and Effective Management of Maintenance and Other Facility Needs In 2009, a Plante & Moran facility usage survey found that WSD could save considerable dollars by repurposing a few buildings (including an elementary a middle school, and multiple administrative buildings). They also recommended to sell off land and a few unused buildings. This represented a big improvement in effective facility management for the district. Since these closings also recommended that in a few years an additional elementary should be closed, but it still remains open with low enrollment, I wouldnt say that our facility usage is at 100% effective. The move to consolidate the multiple administrative buildings into the middle school and adding in a few other programs into the building (alternative high school, cyber academy etc.) has been an improvement to the facility usage in the district. They also earn additional funds through rental of school facilities after hours. A fee will be charged for facility usage as well as any additional custodial charged incurred. Other facilities are also available to rent including athletic fields, our community pool and the fitness and athletic courts. These sites are available under certain conditions and with a contract. Making these buildings available after hours has helped to maintain facility usage at a higher level than before. Effective Management of Maintenance and Other Facility Needs As mentioned above Waterford spends $10,932,386 total each year on operations and maintenance of facilities, without outsourcing. Overall, Waterford spends 10.02% of its overall budget on operations and maintenance, which is higher than the county average of 8.74%. They also spend $968.51 per pupil, which is more than the county average of $939.14. A county wide operations and maintenance comparison shows that 15 out of 28 districts spend more than

ANALYSIS OF WATERFORD SCHOOL DISTRICTS FINANCIAL CONDITION 12 Waterfords cost per student. They are also considering close an elementary building which would improve our costs. Plante & Moran have done a facilities and operation audit and found that we could operate more efficiently with one less elementary building. If this trend continues, they may need to look at outsourcing custodians and maintenance as other surrounding districts have. They have also been aided in funding facility needs through our acquisition of the Safe Schools and Healthy Students Grant from The United States Departments of Education, Health and Human Services, and Justice. We were awarded a total of $5,745,460 to be used over the course of four years, allowing the District, in partnership with local public mental health, law enforcement and juvenile justice entities, to implement comprehensive and community-wide evidence-based strategies to improve the safety of the school environment, amongst other things. Overall the district appears to be in great shape. Further places for cuts/consolidation include: Suggestions for improvement are as follows: it appears that employees (not on the bargaining committees) could be a bit more informed; perhaps budget document could be emailed to stay more informed. The district should look at funneling a little more money into instruction to meet county average. Look closely for further cost saving options with School administration and general administration to align to county averages and save money. Look for ways to aligning some items and reducing costs in the areas of operations and maintenance.

ANALYSIS OF WATERFORD SCHOOL DISTRICTS FINANCIAL CONDITION 13 Other support also accounts for $441.17 per student, which is higher than the county average of $400.33. Across the county, 10 out of 28 districts spend more than on other support services. This is an additional place where some cuts could be made. Since an additional elementary has been recommended to be closed, but it still remains open with low enrollment, I wouldnt say that our facility usage is at 100%. Feel free to contact me for any further assistance, Lauren Bauer