Audit and Accountability Committee
MissionMay 26, 2009
Members of the Board of Education,
Hilliard City School District
We, the members of the Audit and Accountability Committee (the Committee) of the Board of Education (the Board), are responding to the request of the Board to advise them on financial matters. This is our first report and reflects the efforts of the Committee to gain the expertise necessary to provide meaningful feedback concerning: the reliability of the district’s financial reporting; effectiveness of internal controls; legal compliance and management efficiency. To successfully accomplish our charter, the Committee further believes that it must provide the Board an unbiased assessment of its findings. In its initial work, the Committee believes it has received unfettered access to all data that we have requested. In attempting to develop the necessary expertise, the members of the committee have met six times since February, notwithstanding that only four meetings per year are required.
Community Concerns
As part of our first report back to the board, we want to clearly state a listing of concerns which members of the community have shared with us and which need to be addressed as part of our meeting the needs of the board. The concerns are as follows:
• Tax levies are too frequent and taxes are too high
• The school budget contains too much fat
• Salaries and benefits are too high
• Until recently, employees made no contribution to health insurance premiums
• Pay increases are high
• Employees are provided vacation time when they have summers off
• Fifteen sick days each year are excessive
• Each school building has too many assistant principals
• The Central Office has too many administrative staff members
• Certain positions such as custodians and bus drivers should be outsourced
• The school district should be more proactive in cutting expenses
• Job descriptions must be more clear in detailing a position’s functions and responsibilities
• School revenue must be increasing as real estate taxes increase
• The school district should report the average of college entrance exams so that the residents know if students are improving or failing
• The School district should report what students do after graduation and what schools students attend after graduation
• There are too many non-teaching staff
As the Committee progresses in its work, it is our commitment to provide the answers to these and other concerns expressed by the community, along with the basis for such answers. While some of the concerns listed above have a qualitative aspect to them, the Committee recognizes that these types of concerns are just as important as concerns relating exclusively to finances.
District Benchmarks and Overview
The Committee assembled some publicly-available data within Appendix A to provide an overview of the cost and the quality of education in the Hilliard City School District (HCSD). Since HCSD is one of the five school districts in Franklin County to receive the highest ranking from the State of Ohio, “A with distinction”, the Committee has compared the HCSD with the other high-ranking districts. While the readers are encouraged to draw their own conclusions, the Committee would like to point out that the district is the largest, is the most diverse and has the highest percentage of economically disadvantaged students as well has having the second lowest cost per student among the five districts. This data is historical in nature and therefore with the addition of a new high-school may change in the near future.
Five Areas of Immediate Concern
After reviewing the financial and other relevant information, the Committee has identified five areas of immediate concern:
1) The rate of increase in employee salaries exceeds the average growth in the cost of living. Salaries and benefits represent over 85% of the expenses from the school district’s general fund.
2) The school district receives almost 40% of its general fund revenues from the State of Ohio, leaving the district vulnerable to changes in state funding.
3) The impact of residential growth in the district and the resulting increase in the number of students entering the district on HCSD’s financial resources. While the residential growth provides additional revenue to the school district, typically the cost of providing services to these students, increases at a much higher rate. There is a concern that commercial real estate growth is not keeping pace with the residential growth.
4) State and federal laws and regulations require HCSD to provide certain services and benefits to both students and employees that have a substantial impact on the school district’s financial resources. The school district must provide these services and benefits without receiving any additional funding from the state or federal government, commonly referred to as unfunded mandates.
5) The school district will face a financial shortfall in fiscal 2012. This is due to the impact of the concerns listed above and many other factors. This shortfall will require the passage of another levy in 2010 in order to insure that collections from the levy will be in place by 2012.
Plan of Work for the Following Six Months
With these observations and community concerns in mind, the Committee is dedicated to assisting the Board in fulfilling its responsibility that HCSD is financially efficient and prudent. Over the next six months, the Committee will review and assess assumptions supporting the 2010 budget and the Five-Year Financial Forecast, benchmark key financial and performance data for HCSD to similar districts, review key assumptions regarding the next operating levy request and determine key financial, operational and educational risks over the next five years. It is the Committee’s intention to report to the Board and the community its findings and recommendations regarding these and other issues on a regular basis. We encourage the Board to share these and future findings with the community-at-large and are willing to accept questions and feedback from the board or the members of the community
Yours Truly,
The Audit and Accountability Committee,
Board of Education,
Hilliard City School District
Don Bell, Terri Berchak, Les Carrier, Shawn Hiller, Nathan Painter, Ed Sarkel,
Mike Stoner, Nathan VanLaningham