This evening, five KUSD standing committee meetings were held.  (Please note that what is approved at these committee meetings is then sent on to the full Board of Education for their review.  That meeting will be held on November 22nd.)  Below is a report of the highlights of each meeting:

Audit/Budget/Finance Committee

• The committee voted to discontinue the practice of paying advanced placement (AP) exam fees for all students, except those required by state mandate (those receiving free/reduced lunch), and that parents/guardians cover the AP exam fee for each exam the student opts to take.  Currently, the AP exam fee is $87 per exam.  During the 2010-2011 school year, KUSD paid $79,149 for AP examinations.  Rebecca Stevens suggested a waiver for those students in hardship situations.  One of the committee members asked for statistics on how many students take advantage of these exams in obtaining college credits.

• A financial and process assessment review was completed recently by Crowe Horwath, LLP.  This review does not constitute an audit, but an evaluation used by the leadership of the district to identify key areas for improvement.  Those areas included:

1. The Structural Deficit – The district must increase revenues, decrease expenditures, or both.  The district also needs to focus on managing personnel costs and obtain a more affordable benefit plan.
2. Athletic and Activity Funds - Fundraising activities were not consistently being handled across schools, and numerous accounting software applications were being utilized for tracking student activity accounts.  Twelve of the fourteen projected middle, high and charter schools are fully operational on the new SchoolBooks school activity fund software.
3. Other Post-Employment Benefits (OPEB) Liability – The present value of total projected retirement benefits is in excess of $300 million, while the assets that are earmarked for payment of this benefit are just under $6 million.  In early October, 2011, the district received $5.697 million from a partial settlement in the Collateralized Debt Obligation (CDO) litigation.  The funds have been secured in a trust account until the spring of 2012, earning interest.  Further work is needed in working with labor negotiations to reduce the overall cost of benefits, increase eligibility requirements, and/or increase the cost of coverage borne by the retiree.  Bob Nuzzo wanted to know how much was in this year’s budget for the OPEB liability.  Tina Schmitz did not have the figure available, but said that she’d get Nuzzo the number.  Another committee member wanted to know how much had been spent in attorney fees on this litigation; Schmitz replied that the figure was $1 million since this issue started.
4. Professional Contracts – The district did not have a listing of current professional contracts with vendor names, start/end dates, contract terms, description of service, and amounts.  Since July, 2011, the district has begun work to centralize all contracts using Microsoft Excel.  A committee member felt that spending the money for approprite software might be money well spent.  In addition, it was also observed by the finance department that control of authorized signatures should be in place.  Finance is currently working on revisions to Board Policy 3420 for purchasing so that authorized signatures are properly secured.  (This policy was reviewed in the following meeting.)
5. Board Financial Reports – The board receives summary level information on the district as a whole.  Reports are strictly financial in nature and do not include the overall picture of the district’s funding and uses from a financial and non-financial position.  Since July, 2011, the district has taken steps to improve board reports.  Upcoming plans to improve the monthly fund reporting and quarterly forecasts are underway.  Finance is also exploring a monthly dashboard report that will incorporate non-financial information as well.
6. Organizational Structure – Internal audit work is controlled by the department responsible for any of the processes subject to external audit.  With no plan for internal controls projects, there is no accountability for implementing recommended improvements.  It was also noted that certain secretaries’ roles are not within the scope of a secretarial classification.  In June, 2011, several secretarial positions were eliminated.  In July, 2011, Schmitz thoroughly assessed the needs of the district in finance and accounting and restructured the staff to include key supervisory roles as well as defined accounting positions that include separation of duty of roles and responsibilities.  Each role was filled with personnel that had the proper background and experience to perform the role.  Positions remaining with the “secretary” classification were assessed and filled to perform non-essential accounting, yet assist the department with processing work.  In addition, the payroll department was moved from finance to human resources.  This separation lends itself to better collaboration between human resources and payroll.  Additionally, finance will be better able to provide internal audits of payroll transactions where there is a defined separation of accountability.
7. Debt Refinancing – The district would benefit from refinancing outstanding bonds to achieve savings in the district’s annual debt service payments.  The district has refinanced some debt since the review and continues to seek opportunities for lowering interest payments while managing cash flows.  Challenges are upon the district to maintain an attractive Moody’s rating so that future debt refinancing and annual short-term borrowings are beneficial to the district.  Maintaining a reasonable fund balance will be important to achieve this goal.

• The cash and investment quarterly report was then reviewed.  It showed a three-year comparison by fund and investment.  Also, the monthly financial statements were reviewed, showing the budget to actual expenditures for the period ending September 30, 2011.  On this report was displayed the $8.2 million deficit which has been discussed.
• Nuzzo asked, “So, we should have laid off 80 more?”  The answer was “Yes.”  Next year, with the income being the same, KUSD will have at least a $10 million deficit.  “So then, we may have to lay off 180 next year to balance the budget?”  Stevens strongly expressed her sentiment that “the union come to the table or else it would hurt the school system.”
• Superintendent of schools, Michele Hancock told the group, “We are in a fiscal nightmare.  But, during times of adversity come times of opportunity.  We have a chance to put in place some real reforms now.  We can re-design ourselves, re-tool our thinking.  We can make this work.  We’re going to need creativity, innovation, and guts to re-think public education.  This will not destroy us.  There are ways to solve this.  We need to do it differently, come up with a ‘new normal’ for education today.  We’re going to need technology as a tool to help us get there.  I’m hoping for tremendous support from the community.  We will have some challenging choices to make, better choices.  We must re-invent our schools for the 21st century.”
• Schmitz also distributed copies of the 2011-2012 updated budget to the committee members.  She highlighted the top variables in the state funding formula.  The difference in the July 1st and October 14th (third Friday counts) affected the revenue limit.  The general tax levy was lowered to the maximum, which was 1.04% less than last year, a $2 million difference.  The primary increase in benefits had to do with the payment of unemployment compensation for the layoffs.  Another factor was the number of people who’ve migrated to the district’s health plan.  The percentages went from 68% to 89% in the plan; the actual member count went from 5,550 to 7,834.

Joint Audit/Budget/Finance & Personnel/Policy Committees

Policy/Rule 3420 – Purchasing, was reviewed and approved.  Currently, the policy lacks direction on signing authority for contracts or agreements for purchases of equipment and services.  The changes to this policy designate two authorized signers (the budget manager and the assistant superintendent), and lowers the authorized amount from $50,000 to $25,000.

Personnel/Policy Committee

• The Wisconsin Administrative Code requires school boards to evaluate the status of nondiscrimination and equality of educational opportunity in school districts at least once every five years and report the results to the Wisconsin Department of Public Instruction (DPI).  Three subject areas need evaluation:  (1) Methods, practices, curriculum and materials used in counseling; (2) Participation trends and patterns and school district support of athletic, extracurricular and recreational activities; and (3) Trends and patterns in awarding scholarships and other forms of recognition and achievement provided or administered by the district.
• KUSD was identified by DPI as disproportionate in the number of African American students with disabilities placed in programs for emotional behavioral disturbances and cognitive disabilities, as well as in the overall number of children with disabilities who have received out-of-school (OSS) suspensions.  The district should continue to monitor the placement of these students and the number of these students’ suspensions.
• The district has experienced an increase in the cohort graduation rate for all subgroups; however, an achievement gap still exists between African American students, Hispanic students, students with disabilities, and economically disadvantaged students when compared to their demographic counterparts.
• There are many scholarship opportunities available for graduating seniors.  Over $5 million in scholarships were awarded to students in the 2010-2011 school year.
• “Beyond Diversity” training should be provided for members of the counseling staff that did not receive the training during the 2010-2011 school year.  Stevens requested this training for the board.
• The district must embrace the Transformation Plan to insure that all students are engaged, demonstrate proficiency, show continuous growth, and graduate from high school.
• The district should utilize the results of the District Staff Survey to enhance the leadership of those making decisions, improve the climate of the KUSD learning community, generate a culture of open communication, and appreciate the importance of diversity within the district so that every student reaches his/her maximum potential.

Joint Personnel/Policy & Curriculum/Program Committee

• Two other policy/rules were reviewed and approved to be sent to the board.  The first was Policy and Rule 6300 – Curriculum Development and Improvement and Administrative Regulation 6300, and the second was Policy and Rule 6621 – Interlibrary Loan Procedures.  The superintendent explained that the district didn’t have an instructional handbook for its employees when she arrived.  The intent behind reviewing these policy/rules was to separate those which will be placed into a handbook of procedures from those which will guide the board and its committees.
• Hancock then distributed a book to the committee members entitled  “Stretching the School Dollar,” by Frederick M. Hess, and an article from the Phi Delta Kappan magazine, entitled “How to Steer the Tough Budget Road Ahead – Accelerate Your Performance.”  (Click to read the article.)  She asked that the committee members read this material and expand their knowledge on innovative practices that are being used by other school districts.  They were also invited to a “My Big Campus Training” session on December 6th.  At this training session, the committee members will obtain access to an on-line collaborative discussion board and will be asked to discuss the topic of a “Four-Day School Week.”

Curriculum/Program Committee

• The topic of the AP examination fees was also discussed by this committee.  Elizabeth Daghfal expressed her opposition to this.  She felt that this was one small way the district could help the students.
• The four-year graduation rate for the 16th cohort was reviewed.  The following list of significant findings included:

1. KUSD achieved an overall graduation rate of 79.4%, a decrease of 1.7% from last year’s rate of 81.1%.
2. As in previous years, African American and Hispanic students graduated at a rate lower than their Caucasian counterparts.
3. The graduation rates for students with disabilities and economically disadvantaged students decreased, from 60.3% to 59.2% (a decrease of 1.1%).
4. With the exception of Asian students, all female students graduated at considerably higher rates than male students of the same ethnicity.

• The committee accepted the report and voted to forward the report to the full board for its review and acceptance.

Hancock encouraged committee members to think about innovative alternative ways to generate revenue.  “We need to come up with different ways to maintain the things we value.  Creativity and guts are needed.”