Wednesday, June 26, 2013

Financial Transparency

What does it mean for a school district to be financially  transparent.

It's not an easy question and each reader probably has a different opinion.

For me, financial transparency means providing information about revenues and expenditures in the district. Sounds simple, doesn't it, until you start thinking about the details.  The information should be provided in multiple formats and in multiple levels of detail to satisfy the demands of a diverse constituency. The documentation should attempt to answer questions that can be reasonably anticipated while also providing information that ties the financial health of the district to the academic and programmatic goals of the district. For example, if we are increasing staff as is the case for the upcoming school year, we owe you an explanation as to why. Financial decisions cannot be divorced from programmatic and operational decisions.

Our district has made tremendous strides in financial transparency under our current treasurer, Jeff McCuen.  His department produces several documents each year, including a five year forecast, a PAFR, a CAFR and a comprehensive budget document. If you are looking for a rough idea of how we are spending your money and how much of your money we are spending, the Popular Annual Financial Report will suffice. If you want much greater detail, one of the other reports would probably do the job. The comprehensive budget document details revenues and expenditures for all funds, not just the general fund. With this document, you can see the various grants received by the district and what we do with them, as well as a wealth of other financial information about our district.

Here is a list of financial documents from the district's web site:

1) Popular Annual Financial Report (2012)

2) Consolidated Annual Financial Report  (2012)

3) Five Year Forecast  (May, 2013)

4) Monthly Financial Report (May, 2013)

5) Comprehensive FY14 budget document 

In addition, in conjunction with the district's issuance of bonds after the successful 2012 bond levy, there is an "official statement" - the document that municipal bond buyers will read to determine the credit worthiness of the district. It makes for some interesting reading. In addition, the district received updated ratings from Moodys and S&P in conjunction with the issuance of bonds. These ratings are also used by municpal bond buyers.

6) Official Statement from the 2013 Bond Issuance.

7) Moodys and S&P ratings.

All that said, financial transparency remains a work in progress. For example, we (and most other districts)  obfuscate the compensation of some staff members by including in their contracts provisions such as the taxpayer pickup of the employees portion of STRS and the ability to buy back unused vacation days. I'm not saying these fringe benefits aren't deserved, but my preference would be to include the value of these provisions  in any report that describes the total compensation of a public employee. Some school districts are eliminating these provisions in favor of just offering the employee the equivalent in salary, or encouraging the employee to use vacation time.

Still, I'm happy with the progress we've made towards financial transparency. What do you think? Does our district providing enough financial information and if not, what would you like to see in this area?