Dear Ms. Seagren,
The enclosed packet includes the Statutory Operating Debt (SOD) Recovery Plan for the Carlton School District. We are aware that the deadline for plan approval is August 31, 2010 and we were informed that it would take the Department up to three weeks to approve the plan. We are sending this by express mail so that it reaches you no later than August 10, 2010.
2007 SOD Recovery Plan Reconciliation
The Board has prepared a detailed worksheet that compares revenues and expenditures from the SOD Recovery Plan approved in January of 2007 to the actual revenues and expenditures through 2009. We have also included a summary narrative sheet discussing some of the variances.
To be blunt, the Board failed to make sound financial decisions.
ADVERTISEMENT
The Board was not fully involved in the creation of the 2007 SOD Recovery Plan.
The Board should have been involved in the planning process.
The Board should have been involved in determining reductions to be made.
The Board did not fully understand the severity of the financial position of the district.
The Board was not fully informed on the progress the district was making towards SOD recovery.
The Board did not receive financial updates comparing progress to the SOD Plan.
The Board did receive annual audits, but auditors softened the delivery of the financial position when community members and teachers were present and questioned outcomes.
The Board did not ask questions and did not follow through to get complete answers.
ADVERTISEMENT
The Board was not provided communications from the Minnesota Department of Education regarding our SOD status.
The Board approved budgets that were based on past budgets and not historical trends of actual data. Budgets approved were not based on 2007 SOD Plan.
As enrollment continued to decline, the Board did not reduce staff accordingly, particularly at the high school level. We (incorrectly) assumed that our financial position would support staffing levels.
The Board failed to ask questions. The Board failed to follow through. The Board failed to plan. The Board failed to fully understand the situation.
Going Forward
We have included financial detail and narrative including SOD Recovery Plan assumptions on three SOD Recovery Plans going through fiscal year 2016. Community members working on the upcoming operating referendum wanted to be sure that a successful vote would keep the district out of SOD beyond 2013 so that is why three additional years were added.
Plan A
Assumes a successful $1,100 operating referendum vote in November 2010.
ADVERTISEMENT
Plan B
Assumes that the proposed operating referendum does not pass.
Plan B.1
Assumes that the proposed operating referendum does not pass and our student enrollment declines an additional 5% beyond our original projection.
Plan B and B.1
We are aware that both Plan B and Plan B.1 show the district returning to SOD in fiscal year 2016. The Board will continue to work with administration as the years progress to make sure that additional reductions are made in 2016 to remain out of SOD.
Plan C
We understand that we are also required to complete a plan that will illustrate the course the district will take to consolidate or dissolve the district should plans A, B or B.1 not be successful plans. The Board understands that this plan must be approved by December 31, 2010. We will have it to MDE by December 10, 2010 to ensure that you have adequate time to review and approve the plan.
ADVERTISEMENT
Benchmarks and Verification
The Board understands that we must take an active role in ensuring that our district follows the SOD Recovery Plan as submitted. The following are actions that we will implement to help us achieve our goal:
The Board has hired a new Superintendent who fully understands the financial position of the district. We have had frequent meetings and communications with him regarding our financial position and we believe he will be instrumental in guiding the district out of SOD.
The Board has hired a new Business Manager. She has school district experience in the area of human resources and payroll for 21 years and 1 year as a Business Manager. We have added budget dollars so that she can work with our regional center to be trained and to attend every session they hold as well as sessions presented by MASBO and other organizations.
The Board has increased the hours of the Superintendent's secretary to complete payroll. In the past this process was completed by the Business Manager and it took time that should have been spent doing financial planning and reporting.
The Board has added budget dollars for both the Superintendent and Board to attend training.
The Board has established a relationship with our regional management information center and will continue to work with their staff on financial reporting until our new Business Manager is comfortable with financial reporting.
The Board is asking that the Minnesota Department of Education send a copy of ALL CORRESPONDENCE to the Board Chair.
ADVERTISEMENT
The Board will require monthly financial reports BEYOND cash balances. We will ask questions and require the new Business Manager to attend all regularly scheduled Board meetings.
The Board will require quarterly financial statements comparing the district's financial progress to the SOD Recovery plan.
Normally school budgets are set up in finance systems on an annual basis because schools do not do a "hard" close monthly like for profit businesses do. Setting up the budget in this method does not allow us to periodically review the progress.
Working with our regional management information center our new Business Manager will set up the SOD Recovery Plan budget into our finance system using historical trends so that we can monitor progress quarterly.
The Board in cooperation with school district administration will prepare quarterly updates to send to MDE. We will prepare these reports at the end of October, January, April and July.
Changes in expenditures will result in purchasing and staffing changes in the current year, as contracts allow and in subsequent years to make up the difference for the change in the current year.
Administration and the Board will review enrollment mid-September each year. This enrollment information will be part of the report sent to MDE each October.
If the enrollment falls below the benchmarks set in our Student ADM Projection worksheet submitted as a part of the SOD Recovery Plan, the Board will:
ADVERTISEMENT
Make purchasing and staffing reductions as contracts allow in the current year.
Make purchasing and staffing reductions the following year to make up the difference for the loss in enrollment.
The Board will require our building principals to be accountable for their budgets, both for supplies and staff. We will require that they provide student to teacher ratios per class and will work to make sure that classes offered reflect this information.
Department heads will be involved in the budget process. Historical data will be reviewed and considered when setting the budget. The SMART Payroll system will be used to generate staffing budgets. At all times, the approved budget will reflect number provided in the enclosed SOD report (they may vary by object or source, but will not vary in total).
Department heads will receive monthly reports generated through our SMART Finance system comparing their approved budget to the actual expenditures to date.
The district will implement the SMART Finance Purchase Order System. This will ensure that purchases will only be made in areas where there are available budget dollars. It will ensure that Administration is aware of the status of purchasing and purchasing requests and will provide a level of oversight not previously employed by the district.
Staff will provide two price quotes for all purchases.
All time cards will be signed by the department supervisor. All items considered PAY will be processed through payroll and not through accounts payable.
All invoices must have a matching purchase order and receiving report. In cases where a purchase order is not necessary, the invoice will have the signature of the department head approving the payment of the invoice.
All invoices will be reviewed by the Superintendent and he will sign off on them prior to payment.
The SMART HR Payroll system will be used to its full potential. Separate worksheets tracking hours or other amounts will not be continued. All information regarding rate tables, hours, steps, lanes, pay codes will be maintained and made available through the payroll system to Administration so that informed decisions can be made.
SERVS data will be updated monthly.
Residency for ALL tuition bills will be verified before the tuition bills are paid.
MARSS staff will attend training and will complete ALL MARSS functions. We need to ensure that we are coding every student correctly so that we maximize general education revenue.
The Board will investigate collaboration, pairing, sharing with neighboring districts and other cost saving methods.
We look forward to hearing from you in the near future regarding the status of our plan. If there are any details that we can clarify for you or other information you would like to see, please feel free to contact us.
Sincerely,
____________________________ ________________________
Randy Schmitz, Chair Mike Soderstrom, Clerk
____________________________ ________________________
Peggy Kiehn, Vice Chair Brenda Tischer, Treasurer
____________________________ ________________________
Ryan Schmidt, Director Tim Hagenah, Director
____________________________ ________________________
Peter Haapala, Superintendent Date
