Education Finance for School Leaders Strategic Planning and Administration

by Garner, C. William

• ISBN13: 9780130978622
• ISBN10: 0130978620
• Edition: 1st
• Format: Hardcover
• Copyright: 2003-12-08
• Publisher: Pearson

Summary

This practical, easy-to-read guide explains the "why," "What," and "how" of school finance to those who need to understand the fundamentals of financial management. It allows readers to make the kind of informed, effective decisions that serve both the student body and the school's bottom line.Coverage incorporates the history of school finance and the changes that have come about in recent years; aligns its content to the most recent NCATE standards; and provides enough of the "nuts and bolts" of financing to ensure that the reader will easily grasp the subject. An expansiveResources for Administratorssection at the end of the book provides the numerical standards used by all state Departments of Education and a comprehensive glossary of specialized financial terms make this book an excellent resource.A must-have desk reference for administrators in all facets of the education system. This book is also useful for those who sit on Education Boards, as well as those who make decisions about their community's use of resources.

Table of Contents

PART 1 Financing Public Education	1	(68)
1 Introduction to School Finance for School Leaders	3	(16)
National Call for Accountability	4	(1)
School Leaders and the Strategic Financial Plan	5	(1)
The Development of Public School Finance in the United States	6	(2)
After the Revolution	7	(1)
The 20th Century	7	(1)
Emerging Developments for School Finance and the 21st Century	8	(3)
Accounting	9	(1)
Charter Schools	9	(1)
Magnet or Choice Schools	10	(1)
Privatization	10	(1)
Vouchers	10	(1)
Open Systems	10	(1)
Site-Based Units	11	(1)
Public Policy	11	(3)
Tactics of Policy Making	13	(1)
Final Thoughts	14	(1)
Discussion Questions	15	(1)
Application Problems	15	(1)
Web Addresses	15	(1)
References	16	(3)
2 Economics and Education: A Synergistic Relationship	19	(18)
The Relationship Between Education and Economics	19	(3)
The Interactions	20	(1)
Symbiosis and Synergism	21	(1)
Economics	22	(4)
Productivity and Education	26	(1)
Monitoring Economic Indicators	27	(2)
Discount Rate	28	(1)
Reserve Requirement	28	(1)
Open Market	28	(1)
Money and Education	29	(2)
The Multiplier Effect	29	(2)
Final Thoughts	31	(1)
Discussion Questions	32	(1)
Application Problems	32	(1)
Web Addresses	33	(1)
References	33	(4)
3 Revenue, Income, and Fiduciary Money: The Base for Financial Planning	37	(16)
Revenue Receipts: Local, State, and Federal Governments	38	(2)
The Four Tax Groups	40	(2)
Income Tax	40	(1)
Wealth Tax	40	(1)
Sales and Excise Taxes	41	(1)
Privilege Tax	42	(1)
Criteria for Evaluating Taxes	42	(2)
Yield	42	(1)
Elasticity	42	(1)
Equity	43	(1)
Incidence/Impact	43	(1)
Progressive, Proportional, Regressive	43	(1)
Cost	44	(1)
Analysis of the Four Tax Groups	44	(4)
Income Tax	44	(1)
Wealth Tax	45	(2)
Sales Tax	47	(1)
Privilege Tax	47	(1)
Bond Revenue	48	(1)
Income	48	(1)
Lottery	49	(1)
Fiduciary Receipts	49	(1)
Final Thoughts	50	(1)
Discussion Questions	50	(1)
Application Problems	51	(1)
Web Addresses	51	(1)
References	51	(1)
Answers to Application Problems	52	(1)
4 Financing Educational Equality: Access, Treatment, and Outcomes	53	(16)
Introduction to Educational Access, Treatment, and Outcomes	54	(1)
The Struggle for a National Public Education Policy	55	(1)
Establishing a Legal Foundation for Equal Access	56	(1)
Legal Actions to Promote Access	57	(1)
Legal Arguments for Equal Treatment	58	(1)
Illustration	58	(1)
Three Hallmark Legal Decisions	59	(1)
Follow-Ups on the Hallmark Decisions	60	(1)
The Legal Call for Equal Outcomes in New Jersey	61	(1)
Horizontal and Vertical Equity	61	(1)
Development of Federal Financial Support for Education	62	(1)
Categories of State and Federal Financial Aid	63	(1)
Unrestricted Grants	64	(1)
Restricted Grants	64	(1)
SEAS and LEAs	64	(1)
Final Thoughts	65	(1)
Discussion Questions	65	(1)
Application Problems	66	(1)
Web Addresses	66	(1)
References	66	(3)
PART 2 Constructing a Strategic Financial Plan	69	(70)
5 The Components of a Strategic Financial Plan	71	(22)
Preparation of a School District's Strategic Financial Plan	72	(5)
Mission	74	(1)
Goals	75	(1)
Objectives	75	(1)
Programs, Services, and Activities	76	(1)
Program Targets: Outcomes and Outputs	76	(1)
The Creation of Government Budget Policy	77	(2)
The Origin of Public Budgets	77	(1)
Budgets and the Constitution	78	(1)
Methods of Budgeting	79	(4)
Line-Item Budgeting	79	(1)
Program Budgeting, PPBS, and ZBB	80	(1)
Performance Budgeting	81	(1)
Strategic Budgeting	82	(1)
Strategic Budget System	83	(1)
Decentralization of School District Budgets	84	(1)
Budget Calendar	85	(1)
Preparation of Site-Based Plans	85	(2)
Optional Plans	87	(1)
Site-Based Benchmark Reviews	87	(1)
Final Thoughts	88	(1)
Discussion Questions	89	(1)
Application Problems	89	(1)
Clinical Practicum Exercises	89	(1)
Web Addresses	90	(1)
References	90	(3)
6 The Financial Framework for a School District	93	(14)
Accounting Fund Categories	94	(1)
Names and Purposes of Accounting Funds	94	(2)
An Illustration of Fund Operations	96	(2)
Building Blocks for the Financial Framework	98	(1)
Putting the Financial Framework into the Management Structure	99	(2)
Extending the Financial Operating Structure to Site-Based Units	101	(1)
Final Thoughts	102	(1)
Discussion Questions	103	(1)
Application Problems	103	(1)
Clinical Practicum Exercises	104	(1)
Web Addresses	104	(1)
References	104	(1)
Answers to Application Problems	105	(2)
7 Contents and Process of the Accounting System	107	(18)
What Is Double Entry Accounting?	107	(1)
The Development of Governmental Accounting Principles	108	(2)
Using the Computer to Run the Double Entry Accounting System	110	(2)
Computer Illustration	110	(2)
Accounts Used by the Accounting System	112	(1)
Real Accounts	112	(1)
Nominal Accounts	112	(1)
Encumbering Money	113	(1)
Contra Accounts	114	(1)
The Double Entry Formula	114	(1)
Account Numbers	115	(1)
Overview of the Accounting Process	115	(2)
Linking the Accounting and Budgeting Systems	117	(2)
Closing the Books	119	(2)
Accrual Adjustments	119	(1)
Capital Assets and Depreciation	120	(1)
Inventory: Resale and Consumption	121	(1)
Final Thoughts	121	(1)
Discussion Questions	122	(1)
Application Problems	122	(1)
Clinical Practicum Exercises	123	(1)
Web Addresses	123	(1)
References	123	(1)
Answers to Problems in the Text	124	(1)
Answers to Application Problems	124	(1)
8 Contents and Process of the Budgeting System	125	(14)
Budget Numbering Format	126	(1)
Revenue Budget Numbers	127	(1)
Controlling Revenue Receipts	128	(1)
Fidelity Bonds	129	(1)
Expenditure Budget Numbers	129	(2)
Program Budget Numbers	129	(1)
Function Budget Numbers	130	(1)
Object Budget Numbers	130	(1)
Site-Based Budget Numbers	131	(1)
Controlling the Disbursement of Money	131	(2)
Expenditure Forms	133	(1)
Final Thoughts	133	(1)
Discussion Questions	134	(1)
Application Problems	135	(1)
Clinical Practicum Exercises	135	(1)
Web Addresses	136	(1)
References	136	(1)
Answers to Problems in the Text	136	(1)
Answers to Application Problems	137	(2)
PART 3 Preparing and Administering Site-Based and District Plans	139	(78)
9 Preparation and Administration of Instructional Strategic Financial Plans	141	(18)
An Overview of the Process and Site-Based Agenda	142	(1)
Sources of Instructional Revenue	143	(2)
The Major Revenue Source: The Property Tax Levy	144	(1)
Presenting the District Budget to the Public	145	(3)
Placing the Budgets into Operation	148	(5)
Monitoring Revenues	148	(1)
Monitoring the Budget Plan	149	(2)
Personnel Salaries: Allocation and Turnover	151	(2)
Administering the Strategic Financial Plan	153	(1)
Meeting Benchmark Targets	153	(1)
Controlling and Fine-Tuning the Budget	153	(1)
Final Thoughts	154	(1)
Discussion Questions	155	(1)
Application Problems	156	(1)
Clinical Practicum Exercises	156	(1)
Web Addresses	157	(1)
References	157	(1)
Answers to Application Problems	158	(1)
10 Financing School Facility Projects	159	(18)
Overview of the Process	160	(1)
Low-Wealth Districts	161	(1)
Bond Financing	161	(2)
The Sale of Bonds	161	(1)
Bond Bids	162	(1)
Making a Bid	162	(1)
Factors Influencing Bond Bids	163	(4)
Present Value	163	(2)
Taxes	165	(1)
Bond Ratings and Risk	166	(1)
Bond Classifications	167	(1)
Bond Ownership	167	(1)
Professional Services for the Sale of a Bond Issue	167	(2)
Financial Advisor	168	(1)
Bond Counsel	168	(1)
Bond Underwriters	168	(1)
Fiscal Agent	169	(1)
Preparing a Financial Plan	169	(1)
Arbitrage	170	(1)
The Tax Levy for the Debt Fund	170	(2)
Short-Term Loans	171	(1)
Surplus	171	(1)
Bond Recall	171	(1)
Working with the Accounting Funds	172	(1)
Lease-Purchase Agreements	172	(1)
Final Thoughts	173	(1)
Discussion Questions	174	(1)
Application Problems	175	(1)
Clinical Practicum Exercises	175	(1)
References	175	(1)
Answers to Application Problems	176	(1)
11 Financing Noninstructional Operations	177	(18)
Overview of Financial Planning for Proprietary Operations	179	(1)
Financial Planning: Fiduciary Trusts and Donations	180	(1)
Revenues for Noninstructional Operations	181	(1)
Reading Financial Reports of Proprietary Operations	181	(2)
Reading Financial Reports of Fiduciary Operations	183	(1)
Strategic Business Plans for Proprietary Operations	184	(2)
Financial Plans for Fiduciary Trusts	186	(1)
The Administration of Noninstructional Financial Operations	186	(4)
Administering Enterprise Operations	187	(1)
Administering Internal Service Operations	188	(1)
Administering Trust and Agency Funds	189	(1)
Monitoring Payroll	189	(1)
Final Thoughts	190	(1)
Discussion Questions	191	(1)
Application Problems	192	(1)
Clinical Practicum Exercises	192	(1)
Web Addresses	193	(1)
References	193	(1)
Answers to Application Problems	193	(2)
12 Financial Reports, Performance Assessments, and Accountability	195	(22)
What Are Costs?	196	(1)
The Annual Financial Reports	197	(1)
Revenue and Expenditure Reports: Government Funds	197	(3)
The Combined Statement	199	(1)
Receipt and Expense/Disbursement Reports: Nongovernment Funds	200	(1)
Effectiveness and Efficiency Assessments	201	(2)
Effectiveness Assessments	202	(1)
Efficiency Assessments	202	(1)
Conducting Cost Assessments	203	(2)
Horizontal and Vertical Cost Assessments	204	(1)
Basic Types of Cost Reviews	204	(1)
Budget Blueprints	205	(1)
An Illustration of Studies on Cost-Effectiveness and Efficiency	206	(3)
Cost-Effectiveness Studies	207	(1)
Cost-Efficiency Studies	208	(1)
Final Thoughts	209	(2)
Discussion Questions	211	(1)
Application Problems	211	(2)
Clinical Practicum Exercises	213	(2)
Web Addresses	215	(1)
References	215	(1)
Answers to Problems in the Text	216	(1)
Answers to Application Problems	216	(1)
Resources	217	(44)
A Chart of Accounts	217	(4)
B Set of Accounting Funds for a School District	221	(2)
C Revenue Budget Numbers and Sources	223	(4)
D Expenditure Numbers: Program	227	(4)
E Expenditure Numbers: Function	231	(4)
F Expenditure Numbers: Object	235	(2)
G Revenue Numbers: General Fund	237	(2)
H Revenue Numbers: Special Revenue Fund	239	(2)
I Revenue Numbers: Capital Projects Fund	241	(2)
J Revenue Numbers: Debt Service Fund	243	(2)
K Revenue Numbers: Enterprise Funds	245	(2)
L Revenue Numbers: Internal Service Funds	247	(2)
M Revenue Numbers: Fiduciary Funds	249	(2)
N General Fund: Statement of Revenues, Expenditures, and Changes in Fund Balance	251	(8)
O Combined Statement of Revenues, Expenditures, and Changes in Fund Balance	259	(2)
Glossary	261	(6)
Name Index	267	(2)
Subject Index	269

Excerpts

In the latter part of the 20th century, the financial practices of school districts began to change. Specifically, some of these developments included: new accounting and budgeting rules along with stringent accountability demands, acknowledgment of the economic importance of education to people and society, which generated measures of effectiveness and efficiency from the national to the local level, legal directives from state legislatures and courts that placed new regulations on the distribution of educational money, and implementation of new standards for programs to prepare and license school administrators.Indeed, these and other changes opened the 21st century to a new and shifting perspective on the financing of public schools and new financial skills for school leaders.In response to these emerging rules, legal directives, standards, and other operating expectations, I developed a conceptual framework over a 12-year period while teaching a school finance course to aspiring school administrators. At the outset, I set a course parameter that future school administrators, as well as the professors who teach a school finance course, although needing a certain fluency with the process, could not be expected to become accountants. This book is a product of that work. AUTHOR'S CONCEPTUAL AND THEORETICAL FRAMEWORKConceptual Framework.School finance, as presented in this book, is conceptually perceived and involves the following four interrelated components or features: The management structure that is unique to education and varies from setting to setting, such as the differences between small rural and large urban school districts. The programs, services, and activities of school districts that are both at the heart of education and assigned to school leaders located in the management structure. The financial budget plan prepared for the programs, services, and activities. The financial framework that houses the accounting and budgeting systems that, in turn, are used to administer the financial budget plan. To complete the circle, this financial framework must operate within the management structure and not outside of it.Theoretical Framework.With these interrelated components in mind, a basic premise for the book is that adequate financial resources for public education are tied to the economic vitality of the country and a community, and vice versa. To maximize the economic benefit gained from the scarce resources made available to a school district, school leaders must merge financial and strategic plans into one plan, which is referred to in this book as astrategic financial plan.School leaders must then administer the plan to achieve its intended ends.To attain the full potential offered by a strategic financial plan, school districts must incorporate site-based units into the process. Once strategic financial plans are developed and administered by all schools, programs, services, and activities within a district, the district will be able to strive to meet the financial needs at the operational level. In other words, the needs of the unit define the budget and not vice versa.Therefore, budget planning and management becomes the responsibility of site-based units and not the sole responsibility of a business office. To meet this expectation, school leaders must understand the accounting and budgeting systems and process, the financial framework mandated by the Generally Accepted Accounting Principles (GAAP), and the reports generated by the systems. ALIGNMENT WITH ACCREDITATION AND LICENSURE STANDARDSAn important feature of this book is its alignment with accreditation standards set for programs in education administration by the National Council for the Accreditation of Teacher Education (NCATE) published in January 2002 by the National Policy Boar