Due to cuts in state aid, many school districts are in the position where they have to budget for significant cuts to their staff. Whether by attrition or additional cuts in existing staff, school districts will have to conduct business very differently.
We all understand the initial impact of reducing the number of teachers, which results in larger class sizes, etc. However, what is often overlooked is the effect of reducing the number of administrators and administrative staff.
Administrators and administrative staff, whether they work in the business office or not, play an important role in the work flow throughout the district. They are actively involved in inputting data, monitoring the status of data, reviewing data for accuracy, and overseeing compliance with state and federal mandates. In short, they are responsible for carrying out the Board of Education's policies and performing the necessary procedures to make sure the school district runs in an effective and efficient manner.
As cuts are made or positions are not filled, it is important for a school district to reassess the roles of the administrative personnel in the day to day operations of the district. Often when an individual's position is eliminated, that work is disseminated to others in the same department or the work is assumed by the supervisor. What does this do to the controls that were in place?
Does this new work put an additional burden on another employee who may be more prone to error because they are trying to accomplish more in the same amount of time?
Has the supervisor taken on additional responsibilities? If so, have they delegated other responsibilities or are they working longer hours?
Are issues being overlooked that normally would be caught?
Are problems not being followed up on as timely?
Are shortcuts being taken that by-pass the necessary controls in place, just to get the work done?
Are the new duties of administrative personnel compatible with the duties they already had? If not, are there fraud concerns present that were not there before?
What about computer system access? Can employees carry out an entire transaction without any checks and balances?
What should a Board member do?
As mentioned earlier, one of the roles of Board members is to establish proper policies at the school district and to provide oversight to ascertain that management has implemented the necessary procedures to comply with those policies. However, what happens when there is no longer the necessary number of employees to allow for proper segregation of duties or checks and balances?
Inquire of management what processes are changing as a result of the cuts to staff and gain an understanding of what management's plan is to address the concerns raised above. Management should have a well thought out plan in place to address reductions in staff, have an understanding of the risks created and have thought through how to mitigate those risks.
Raise your awareness of what is behind the data in the reports that are presented to the Board by management by asking additional questions and scrutinizing reports more closely. By gaining a further understanding, Board members can provide the additional oversight that may be necessary in the absence of ideal checks and balances.
Establish a finance committee comprised of community members. Some individual's on the Board of Education lack the financial background to properly challenge management's explanations. A finance committee can provide the Board of Education with additional insight as to what the financial data that they are presented with means as well as be a source of information for members of management.
Work with the district's internal auditors and external auditors through the audit committee. Auditors work for the Board and are there to provide an independent voice as to the conditions of the books and records, the internal controls, and the risks within the district. Often they can provide additional insight as to how systems can be enhanced, and where trouble areas may lie.
Dermody, Burke & Brown, CPAs, LLC is thankful for the opportunity of working with the Association of School Boards, and enjoys our relationship with our existing internal and external audit clients throughout the region. If any Board member from any school district has a question regarding this correspondence, we encourage you or a member of the district's management team to contact Brian DuMond, Partner, or Johanna Dorrance, Internal Audit Manager at (315) 471-9171.