Before each school board meeting, our school district staff prepares a meeting agenda packet for review. As business administrator and board secretary, I prepare a Board Secretary’s Report for the meeting.
I am constantly inspired by the hardworking, committed volunteers who serve as local school board members, and who are willing to dive in and learn about educational matters.
It has been my experience that many board members are sometimes at a loss to understand what all the paperwork in their packets means. This is reasonable given our industry’s use of specific terms of art.
Last October my staff and I had the honor of presenting at NJSBA’s annual Workshop conference. Our topic, “How to Read the Board Secretary’s Report,” was designed to acquaint board members with those documents, particularly the board secretary’s report.
We chose this topic due to a question asked by one of our courageous board members who had just received her agenda packet. Her question was simple, but rarely asked: “What does this all mean?” She was referring to the enormous board secretary’s report that she receives each month. In addition to her question, she was acknowledging that she was responsible for knowing about this document upon which she voted each month.
In keeping with the parlance of teaching, I knew that her question was the educational “objective” that I needed to write on my whiteboard. I tried to answer her question, “What does it all mean?” by employing the skills I have learned over the years from my teacher counterparts.
To make the conversation meaningful, we discussed the report in the context of the decisions she must make as a board member. We went through the numbers, the personnel, curriculum, instructional and facilities decisions that the board makes each month. We began with the easy concepts and worked our way to the more difficult concepts. Soon the report began to lose its mystery.
A Financial Snapshot of the District
In the most basic sense, my board member began to see that the board secretary’s report is simply a financial reflection of all of the district’s programs. We discussed the report in terms of resources. That includes resources that have been used to date to achieve board goals as well as resources available for the remainder of the year. Resources unused became opportunities for providing a more thorough education, while lack of resources prompted questions about the choices of which programs we could and could not provide. To begin, I had to teach my board member where she could find, and then monitor, the use of resources.
Finding the resources was easy; they are presented to the full board each month. The Appropriations Report is the spending plan, both original and adjusted, along with how much we have currently contracted for and what invoices we have paid. The unused funds are a topic for conversation about what comes next and whether or not we can complete or enhance our programs.
The Revenue Report identifies the sources of revenue that support the spending plan (Appropriations Report). If we don’t receive our revenue, we cannot spend all of the amount budgeted in the Appropriations Report. We identified the revenue received to date from the municipality (taxes) and funds received from the state (state aid) and the variety of categories of aid and their relative proportion to the total amount of aid received. We found the “Tuition Received” and “Miscellaneous” categories. We explored the significance, timing, and fragility of each source of revenue. We could now communicate with more clarity about possibilities like, “What if this or that happens?”
Ultimately we found ourselves converging on the most daunting part of the report; the Balance Sheet. With what we knew from reviewing the Appropriations and Revenue Reports, we quickly identified that much of the balance sheet is simply a reiteration (a summary) of the items found in the other two reports.
In short order we understood the “cash” section by relating it to the Revenue Report and Appropriations Report. This was easy. The cash was received from the sources listed on the Revenue Report and when it was spent it showed up as an expenditure on the Appropriations Report. Of course each expenditure is also approved by the board on the bills list that comes up for approval each month. The cash is the “balance” in the checkbook and the bills list represents the checks charged against that balance. The Appropriations Report displays the categories showing where we intend to spend resources but it also shows the amount of the total checks which was classified as being charged to those categories.
Understanding some of these mechanics helped my board member to see possibilities. Those possibilities can make policy decisions possible.
The next step in deciphering the board secretary’s report involves making the transition from bean counting (accounting) to bean theory (resource utilization). I like bean theory, but staying in one’s lane is important, so knowing that this is where the superintendent drives, I thought it best to turn our attention to the thing that influences bean theory -bean rules. We needed to address this question: “What are our constraints?”
Our financial resources are constrained by a myriad of rules. The rules are not found in one place but instead in many places, including statute, code, regulations and board policy. The business administrator is the district’s keeper of the financial rules and manages the business processes and advises on board initiatives to make sure that the rules are followed. Remember, your business administrator is a facilitator for the use of resources and not merely a person who accounts for resources.
My hope is that you will read this article and ask your business administrator to sit with you and explain what the Board Secretary’s Report means and how to read the report to find meaning. I hope that you will ask the questions, “What does it mean?” and “How do I know what resources the district has to carry out the board’s policies?”
Once you as a board member are satisfied with what you must know, ask your business administrator what value he or she receives from the Board Secretary’s Report. Ask him or her:
- “Do you use it as a budget monitoring tool?”
- “Do you use it as a tool to monitor the flow of cash?”
- “Do you use the report to assist with internal controls?”
- “How could you use this report to evaluate Business Office staff?”
Your business administrator probably uses the report for one or all of the above purposes to one degree or another, depending on how the business office is organized, the complexity of the budget and the size of your district.
Below are some questions, arranged by section of the Board Secretary’s Report, that board members may use to facilitate a discussion with the district business administrator.
I suggest that you begin to discuss the report by addressing the most familiar topics and work your way up to the balance sheet. Be sure to ask, “When do I act on the items in each section?” Make it meaningful to you. Get to the “rules and regulations” after you understand each concept. Remember that your charge is to understand the resources available to you so that you can make policy decisions, not administrative decisions.
Appropriations Report Questions:
- Budget: When did I adopt this? Does it change?
- Transfers: When are these approved?
- Adjusted Budget:How do we adjust a budget?
- Orders: When do board members approve orders?
- Encumbrances:What is this?
- Expenditures: Do we approve expenditures?
- Available Balances:What does this mean?
Revenue Report Questions:
- Budget: What did we budget as revenue?
- Receivable: How much money does the state still owe the district?
- Realized: What does this mean?
- Unrealized: What do we need to do if we don’t realize this revenue?
Balance Sheet Questions:
- Cash: How do I know this balance is correct?
- Assets: How can I tie these back to our revenue? What is Accounts Receivable?
- Liabilities: How do I tie these into our appropriations? What are Reserve Accounts?
- Fund Balance: What does this mean?
All of the items contained within these reports represent concepts of resource management. Unfortunately there is no one single place you can look to explain each of these concepts. Each has multiple sets of fragmented rules, found in differing publications, established by different governmental agencies that govern its management.
I recommend that you begin your search for understanding the same way my board member did. Ask, “What does it mean?” and couple your new understandings with the policy decisions you need to make. Work with your administrators to help you understand. Take advantage of the excellent opportunities provided at the New Jersey School Boards’ annual Workshop conference to explore and learn.