A Summary of Experiences in an Internship in the Area of

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Master's Theses Graduate College

4-1976

A Summary of Experiences in an Internship in the Area of School A Summary of Experiences in an Internship in the Area of School

Business Management Business Management

Lawrence H. Stancliff

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A SUMMARY OF EXPERIENCES IN AN INTERNSHIP IN THE AREA

OF SCHOOL BUSINESS MANAGEMENT

by

Lawrence H. S ta n d iff

A Project Report Submitted to the

Faculty of The G raduate C o llege in partia l fulfillm ent

of theS p ec ia lis t in Education Degree

W estern M ichigan U niversity Kalam azoo, M ichigan

April 1976

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

ACKNOWLEDGEMENTS

The S p e c ia lis t in Education program has been a rich and rew arding

experience capped by a very b enefic ia l in te rnsh ip in school b u s in e ss

m anagem ent. I thank the many un iversity facu lty b u t, sp e c if ic a lly ,

the following people who a s s is te d , guided , encouraged and supported

me through the to ta l experience: M rs. N ellie L. S te ll, Secretary to

Dr. Rodney W . Roth; D r. Rodney W . Roth; D r. C arol W . Sheffer and

D r. W illiam P . V iall.

I a lso ex p ress a s in cere thanks to M r. Ben N . Emdin, B usiness

M anager of the F o rest H ills Public Schools, who superv ised my in te rn

ship and gave many hours of h is time to help m e.

A sp ec ia l thanks goes to my wife and two ch ild ren who contribu ted

a good deal of p a tien c e and understanding a s I sp en t time in a c tiv it ie s

aw ay from home or in se c lu s io n . They a lso have made some financ ia l

sa c rif ic e s w ithout w hich I could not have accom plished th is ta s k .

W hile I ex p ress my thanks to a ll of th ese con tribu to rs , I b e liev e

I have learned a g rea t d ea l and accep t the so le re sp o n sib ility for th e se

w ritin g s .

Lawrence H . S tancliff

ii


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MASTERS THESIS M-8412

STANCLIFF, L aw rence H a ro ldA SUMMARY OF EXPERIENCES IN AN INTERNSHIP IN THE AREA OF SEHOOL BUSINESS MANAGEMENT.

W e s te rn M ic h ig a n U n i v e r s i t y , E d .S . , 1976 E d u c a t io n , b u s in e s s

Xerox University Microfilms , Ann Arbor, Michigan 48106

THIS DISSERTATION HAS BEEN MICROFILMED EXACTLY AS RECEIVED.


TABLE OF CONTENTS

SECTION PAGE

I INTRODUCTION............................................................... 1

II BU D G ET............................................................................... 3

L iterature R e v ie w ...................................................... 3

E x p e r i e n c e s .............................................................. 5

Knowledge A c q u i r e d ....................................................10

G uide lines for B u d g e tin g .......................................... 11

III COM PUTER....................................................................... 13

L iterature R e v ie w .................................................. 13

E x p e r i e n c e s ................................................................... 15


G uide lines for C onsidering Com puters . . . . 17

IV A C C O U N TIN G ........................................................................19

L iterature R e v ie w ..........................................................19

E x p e r i e n c e s ...................................................................24

Knowledge A c q u i r e d ................................................... 25

G u ide lines for A ccoun ting ................................... 26

iii


SECTION PAGE

V MAINTENANCE....................................................................... 27

Experiences .................................................................. 27

Knowledge A cquired .......................................................28

G uidelines for a M aintenance S y s te m ..................29

VI INSURANCE ...........................................................................30


E x p e r ie n c e s .............................................................. 32

Knowledge A c q u i r e d ............................................... 33

G uide lines for E stablish ing anInsurance P a c k a g e ................................................. 34

VII BORROWING F U N D S ........................................................... 35

Literature R e v ie w ..........................................................35

E x p e r i e n c e s ...................................................................36


G uidelines for Borrowing F u n d s .............................. 37

Vni B O N D S ............................................................................... 39


E x p e r i e n c e s ...................................................................40

Knowledge A c q u i r e d ................................................... 42

G uidelines for Bond S a l e s .................................... 43

IX INVESTMENTS........................................................................44

L iterature R e v ie w ......................................................... 44

iv


SECTION PAGE

E x p e r ie n c e s ................................................................. 44

Knowledge A c q u ire d .................................................. 46

G u ide lines for In v e s t in g .......................................... 46

X TAX L E W ................................................................................ 48

L iterature R ev iew ........................................................... 48

E x p e r ie n c e s .....................................................................48

Knowledge A c q u ire d ......................................................49

G uide lines for Levying T a x e s ................................ 50

XI A U D IT .................................................................................... 51

Literature R e v ie w .......................................................... 51

E x p e r ie n c e s ..................................................................... 51

Knowledge A c q u ire d ...................................................... 52

G uidelines Related to A u d i t ......................................53

XII STATE A I D ................................................................................54

L iterature R e v ie w .......................................................... 54

E x p e r ie n c e s ..................................................................... 54

Knowledge A c q u ire d ......................................................56

G uide lines Regarding S tate A i d ................................56

XHI OTHER EXPERIENCES.......................................................... 56

F inancial H istory of th e D i s t r i c t ............................. 57

Bid Opening for a M iddle S c h o o l........................... 57

v


SECTION PAGE

XIV SUMMARY...................................................................................59

XV BIBLIOGRAPHY................................................................... 60

XVI APPENDIX A - PROSPECTUS................................................ 62

vi


INTRODUCTION

This paper is p resen ted as a summary of an in ternsh ip w ith a

school b u s in e ss m anager who is a leg a lly appoin ted officer and adm in

is tra to r in a school d is t r ic t . The b u s in e ss m anager of a school d is tr ic t

may be appoin ted by a board of educa tion a s ind ica ted in the M ichigan

G eneral School L aw s. According to Code 340.118:*

"S ec. 118. The board of any school d is tr ic t of the third c la s s hereunder sh a ll have the power and du ties:

(c) To appoin t in its d isc re tio n , a b u s in e ss manager for the school d is tr ic t and fix h is com pensa tion ."

The law a lso prov ides for allow ing the board of education to charge

the b u s in e ss m anager w ith the care of the school d is t r ic t 's financ ia l2

re so u rc e s . According to Code 340.112 the law s ta te s :

"S ec . 112. The treasu rer of the board sh a ll keep the funds excep t th a t the board may p lace resp o n sib ility for the adm in istra tion of school d is tr ic t money w ith the school d is tr ic t b u s in e ss m anager . . . "

It is in th is frame of reference th a t the b u s in e ss m anager of a

school d is tr ic t rece iv es the authority and is charged w ith the re sp o n s i

b ility for doing the job a ssig n ed to him or h e r.

* L eg isla tive Serv ice Bureau, M ichigan G eneral School L aw s. M ichigan Departm ent of Budget, S ta te Record and Publishing C en te r. L ansing , M ichigan, 1973, p . 32.

2 lo c . c i t . , p . 348.

1


In a school d is tr ic t w ith no b u s in e ss m anager, the au thority for

adm in istra tion of the to ta l d is tr ic t , including b u s in e ss a c t iv i t ie s , l ie s

w ith the superin tenden t.

The pro jec t sum m arized on th e se pages is w ritten w ith the follow

ing format in mind: re fe ren ces to sp ec ific l ite ra tu re , w hen appropriate;

a summary of in te rnsh ip a c tiv it ie s ; sp ec ific knowledge acquired ; and a

se t of suggested g u id e lin es w hich w ill be usefu l to the w riter for future

reference a s he p u rsues h is goal of becom ing superin tenden t of sc h o o ls .

I t is hoped tha t the g u id e lin es may prove usefu l to o thers who may w ish

to u tiliz e them a t some tim e .


BUDGET

L iterature Review

The M ichigan G eneral School Laws refer to budgeting in C odes

2 1 1 .2 0 9 -2 1 1 .210:1

"S ec . 209. Each lo c a l un it a s defined in th is a c t sh a ll prepare e ac h y ear a budget contain ing an item ized sta tem en t of i ts proposed expend itu res and estim ated rev e n u e s , covering a ll i ts departm ents and a c t iv i t ie s ."

"S ec . 210. Such lo c a l un it sh a ll file i ts budget and sta tem en ts provided for in the p receeding sec tio n w ith the county a llo ca tio n board on or before the third M onday in April of each y e a r ."

In both of the re fe ren ces above, the law sp e c ifica lly s ta te s tha t

the budget must be developed on an annual b a s is . The budget must

be p resen ted to the county a llo ca tio n board for review in April of each

y ea r. The data are then u tiliz e d by the a llo ca tio n board in making

a llo ca tio n s to various governm ental b o d ie s , one of w hich is the lo ca l

schoo l d is tr ic t .

2C odes 141.411 through 141.415 of the M ichigan G eneral School

Laws refer to public hearings before a board of educa tion may adopt

the school d is t r ic t 's bu d g e t. The law s define th e school d is tr ic t a s a

^doc. c i t . , p . 348.

^ lo c . c i t . , p . 316.3


4

lo ca l un it of governm ent and specify the m eans of notifying the pub lic

of a budget hearing: " . . . in a new spaper of general c ircu la tio n

w ithin such unit a t le a s t six (6) days prior to such h e a r in g ."

The codes further s ta te tha t lo ca l un its of government must hold

the ir pub lic hearing a fte r the county a llo ca tio n board (a rep resen ta tiv e

body of sch o o l, coun ty , township and c ity o ffic ia ls) has apportioned ,

or a llo c a te d , to each governm ental u n it a sp ec ific portion of a fifteen

(15) mill tax levy (the amount of m illage w hich may be lev ied ag a in s t

rea l property w ithout a vote of the p e o p le ) . Once the public hearing

is com pleted , a board of education may adopt i ts final budget.

F in a lly , the code allow s for changes in th e budget a fte r the public

hearing h as been h e ld . W hile the school codes allow changes Johns

and M orphet* su g g est th a t " . . . the board should have au thority to

reduce the budget for one account and in c rease it for another . . . "

Expenditures w hich a re major in ch arac te r should be tak en to the

board of education for prior approval. This is e s se n tia lly a means of

com m unication and an opportunity for cooperative input in the d ec is io n

making p ro c e s s .

^■Johns, Roe L. and M orphet, Edgar L . , The Economics and F inancing of E ducation . A System s Approach. Englewood C liffs , New Jersey: P ren tice H all, I n c . , 1969, p . 461.


E xperiences

5

During the course of th is in te rn sh ip , many a c tiv it ie s occurred

w hich w ere d irec tly re la ted to budget developm ent and im plem entation.

M any of th e a c tiv it ie s involved d isc u ss io n s w ith M r. Ben N. Emdin,

B usiness M anager of F orest H ills Public Schools and in ternsh ip su p er

v iso r , and other ad m in is tra to rs . O ther a c tiv i t ie s involved com pleting

sp ec ific s te p s in budget p repara tion .

Developm ent of the budget had begun prior to the beginning of th is

in te rn sh ip . How ever, many of the prelim inary d ec is io n s had included

input from my office (A ssistan t Superintendent for In struction ). C o n se

quen tly , I had been involved in early budget developm ent e ffo rts . P re

lim inary d e c is io n s included d isc u ss in g and decid ing such is s u e s a s :

How many d o lla rs are n e ce ssa ry to finance new program s? W hat is

the effect of in fla tion on program budgeting? W ithin the program budg

e tin g co n cep t, d isc u ss io n focused on: Does the school d is tr ic t w ant

to u tilize a lin e -item budget w hich show s budget a llo ca tio n s in gen

e ra l ca teg o ries for the school d is tr ic t ( i . e . , elem entary tex tb o o k s,

secondary su p p lie s , e tc .) or a fund-allow ance concep t w hich show s

e a c h sc h o o l's a llo ca tio n by lin e ( i . e . , Ada Elementary School - te x t

boo k s, C en tra l High School - teach ing su p p lie s , e tc . ) ? If a fund-

a llow ance co n cep t, w hat lin e s and numbers are needed? Who w ill

manage w hich lin e s ? W hat f lex ib ility w ill fund m anagers have?


W hat inform ation w ill be needed to a llo ca te the d o lla rs to the a llow

a n c e ? How w ill surp lus d o lla rs in each allow ance be handled a t the

end of each f is c a l year? The work of developing the budget w as

d ivided in to four p h ases:

Phase I

The d e c is io n w as made to implement a fund-allow ance concept

b ecau se such a system would provide building p rincipals w ith the

opportunity to make d ec is io n s a s to how money would be a llo ca ted

to each departm ent or program in h is or her sch o o l. It a lso allow ed

the principal and h is or her s ta ff the opportunity to e s ta b lis h cur

riculum p r io r it ie s . He or she could a llo ca te funds to a re a s of the

program accord ing to n eed . The p rocess of a llo ca tin g funds accord

ing to program p rio ritie s is the b a s is of program budgeting .

Upon arriv ing a t the d e c is io n , a se t of codes identify ing each

program w as developed showing the coding struc tu re for each program

area; such a s , C en tra l High School, secondary , tex tbooks - sc ien ce

. . . and on through a ll o ther le v e ls , including e lem entary and junior

high sch o o l.

At the tim e the coding w as being com pleted , some future needs

were being c o n sid e red . T hese included coding for a new elem entary

schoo l, a new middle sch o o l, changing the d esig n a tio n of the p resen t

junior high to a m iddle school and the incorporation of media c en te rs


7

in the school d is tr ic t .

Once the coding w as com pleted , a p lan for in -se rv ic e programs w as

developed for the purpose of introducing ad m in is tra to rs , s e c re ta r ie s ,

te a ch e rs and c u s to d ian s to the new system and dem onstra ting how it

would be helpfu l to them once i t w as im plem ented. They w ere a lso made

aw are that im plem entation w ould require p a tien c e and th e ir coopera tion .

To determ ine how many d o lla rs each fund m anager would have in h is

or her fund a llo w an ce , p a s t expend itu res w ere review ed for each line

w hich would be included in the build ing budge t. O nce the figure w as

e s ta b lis h e d , e ach fund m anager w as g iven n e c e ssa ry inform ation regard

ing p a s t expend itu res w hich enab led him or her to make d e c is io n s a s to

how much money should be a llo ca ted to each budget lin e .

The fund m anagers developed the ir own sp ec ific budgets w ith or

w ithout s ta ff involvem ent and subm itted the inform ation to the b u s in e ss

m anager. H e, in tu rn , developed the budget docum ent.

Phase n

The next p h ase in bu ild ing the budget w as to determ ine the a n ti

c ipa ted revenues for the coming school y e a r . Revenues a re received

from lo ca l ta x e s , s ta te a id (general fund and ca teg o rica l a id ) , tran sfe r

a c c o u n ts , in te re s t , tu itio n s and o th e rs . Each category w as analyzed

to iden tify tre n d s . P ro jec tio ns were then made a s carefu lly a s p o s s ib le .

The prim ary unknown fac to r w as s ta te a id , a s the le g is la to rs had not


8

y e t come to grips w ith the is s u e . Known fac to rs included c lose

p ro jec tions of SEV (State Equalized V aluation), enrollm ent, s tuden ts

needing sp ec ia l education and the formula for receip t of tran sfer do l

la r s . O ther known inform ation w as th a t the d is tr ic t rece iv es very few

tu itio n studen ts and in te re s t ra te s on investm ents were fa llin g . There

fore, revenues from th ese sou rces would be le s s than in the p a s t two

(2) y e a rs . W ith a ll of the above inform ation in hand, revenues w ere

p ro jec ted " co n se rv a tiv e ly ."

Phase III

The next phase of budget developm ent w as to estim ate expend itu res.

The b ig g es t expenditu res in school d is tr ic t budgets are s a la r ie s , fringe

b en efits and the co st of the retirem ent program . Because negotiations

w ere in p rog ress during the budget developm ent p ro ce ss , a b e s t-g u e s s

percen tage fac to r w as app lied and a do lla r figure w as derived to e s ta b

l is h estim ated ex p en d itu res . O ther expenditures were pro jected on a

lin e -item b a s is in such a re a s a s in s tru c tio n , community educa tion ,

ad m in is tra tion , tran spo rta tion , opera tion , m ain tenance, fixed ch arg es ,

c ap ita l o u tlay , tran sfer a cc o u n ts , a th le t ic s , t i t le funds and o th e rs ,

including n e ce ssa ry re s e rv e s .

After a ll p ro jec tions w ere com piled, the lin e -item budget w as

e s ta b lish e d and a llo ca tio n s w ere made to program a re a s including

in s tru c tio n , c ap ita l o u tlay , a th le t ic s , sp e c ia l educa tion , u n c la ss if ied


in stru c tio n , tran spo rta tion and o th e rs . The fina l budget figures showed

th a t expenditures exceeded revenues by approxim ately $500 ,000 . There

fo re , the d ec is io n w as made to consum e the school d is t r ic t 's fund equity

w hich had accrued over the p a s t severa l y e a rs .

F ina lly , a prelim inary d raft of the budget, showing the d e fic it , w as

p resen ted to and carefu lly review ed by the Board of E ducation. The

adoption of th e final budget had to be delayed un til nego tia tions w ith

the te a ch e rs ' a s so c ia tio n were fin a liz e d , a t w hich tim e the budget w as

ad ju sted and p resen ted in fina l form.

Phase IV

The next s tep in adopting the budget w as th a t of holding a public

hearing . N otice w as p laced in the new spaper c iting the p lace and

tim e of the hearing . The hearing w as h e ld . F ina lly , in la te August

a t i ts regular m eeting , the Board of Education adopted the final budget

by a unanim ous v o te .

In the Forest H ills School D is tr ic t, an on-going a c tiv ity a fte r

budget adoption has been regu la r m eetings w ith the p rinc ipa ls and

o thers resp o n sib le for budget m anagem ent for the purpose of c la r if i

ca tio n on budgetary m a tte rs .

To aid the b u s in e ss m anager w ith budget p reparation in the fu tu re ,

a notebook exhib iting each budget line w as developed . Each line of

the budget, including the fund a llo w an ces and each line a llo ca tio n in the


10

fund , w as recorded on a sh ee t of paper and en tered into the notebook.

The document w as designed to show how the d o lla rs a llo ca ted to each

budaet line were determ ined and c a lc u la te d . F actors shown included

in fla tio n , decreasing in te re s t r a te s , pe rcen tages of ra is e s for tea ch e rs ,

sa la ry in d ex es, co st of personnel by category ( i . e . , counselo rs and

sp e c ia l serv ice personnel) and the effect of the b o a rd 's paying of

teach e r retirem ent. In the fu tu re , the b u s in e ss m anager w ill be ab le

to re fe r to the notebook and u tiliz e the inform ation a s he develops

the budget.

Frequently the cen tra l office s ta ff review ed w ith the b u sin ess

m anager the s ta tu s of incoming revenues and ex pend itu res . The in

ten t of th is effort w as to a ssu re a com m unication opportunity and to

determ ine w hether sp e c ia l d e c is io n s might be n e ce ssa ry w hich could

a ffe c t the lin e s adm in istered a t the b u s in e ss office or fund manager

le v e l .

Knowledge Acquired

Through the ex p erien ces provided by the in te rn sh ip , I have had

sev era l o ccasio n s to be involved in budget developm ent and in terpreta

tio n . I have a lso had the opportunity to in te rac t w ith adm inistrators

a s they prepared th e ir budgets and implemented them . This helped me

understand the fru stra tions and confusion they w ere feeling a s they had

to make ad justm ents in l in e s . Fortunately , I m anage sev era l budget


l in e s d irec tly , o thers in d ire c tly , and have had some of the same

problem s o thers have e x p erien ced . The adm in istra to rs report they

a re p le a se d w ith their involvem ent in budget im plem entation and

d e c is io n m aking. They are looking forward to more involvem ent in

budget developm ent and managem ent in the fu ture.

In sum m ary, I have learned how to develop budget ra tio n a le ,

a ssem b le a b udge t, in te rp re t a budget, help o thers understand bud

g e ts , proceed through the adoption p rocess and . . . most s ig n ifi

c a n tly , how im portant it is to com m unicate w ith o thers throughout

the w hole p ro ce ss of budget build ing and im plem entation .

G u id e lin es for Budgeting

1. D eterm ine a ca len d a r of even ts and build a time line in the

fa ll of the year.

2 . Review no tes regarding problem s of previous budget and d esired

c h a n g e s .

3 . Review the educa tiona l p lan w ith o thers to determ ine p rio ritie s

for new fund a llo c a t io n s .

4 . P ro ject an tic ip a ted revenues by lin e -ite m .

5. Examine prior y e a r 's budget lin e -b y - lin e for ac tu a l ex pend itu res .

6 . P ro ject an an tic ip a te d in fla tion factor on new budget.

7. Determ ine budget m anagem ent procedure; such a s , lin e -item

versus PPBS (Planning Program Budgeting S ystem s).


8 . D issem inate inform ation to bu ild ing adm in istra to rs w ith fund

allow ance and support f ig u re s , lin e s and appropriate code

num bers, previous expend itu res by l in e , dead line d a te s and

o ther im portant inform ation.

9 . Com m unicate w ith o ther departm ents; such a s , tran sp o rta tio n ,

m ain tenance , curriculum and hot lu n ch , to determ ine their

n e e d s .

10. A ssem ble prelim inary budge t.

11. D eterm ine n ecessa ry ad ju stm en ts and involve appropriate

personnel in making them .

12. Assem ble a seco n d -d ra ft budge t.

13. M ake any final ad ju stm en ts to the docum ent.

14. Hold a public hearing .

15. M ake final ad justm en ts if ap p ro p ria te .

16. P resen t final budget to the board of educa tion for adoption .


COMPUTER

L iterature Review

The M ichigan school codes make no sp ec ific reference to u til iz

ing com puters for managem ent sy s te m s, e ith e r in the in structional or

financ ia l accoun ting realm . However, w ith the adven t of the new a c

counting p rocedures for M ichigan, commonly referred to a s Handbook

1022, it appears th a t the schoo ls w ill be moving toward im plem enta

tion of PPB sy s te m s .

A com puter is not e s se n tia l to manage the fin an c ia l tran sac tio n s

of a PPB system , but i t is an a id to e ffic ien cy . Alioto and Jungherr*

s ta te , "W hile la rger school d is tr ic ts can in s ta ll a program account

ing system w ithout com puter or bookkeeping m achine c ap ab ility , it

may be much more e ffic ien t and e ffec tive if some types of modern

data p ro cess in g equipm ent w ere p rov ided ." The au thors go on to sug

g e s t p o ss ib le app roaches to gaining a c c e s s to such hardware; such a s ,

le a s in g , con tracting for serv ice or purchasing th e ir own equipm ent.

Another c r it ic a l comment by Alioto and Jungherr^ i s , " . . .

keep d e c is io n s on com puters a t the h ighest le v e l. Make sure the

* A lioto, Robert F . and Jungherr, J . A . . O perational PPBS for E ducation . New York; Harper and Row P u b lish e rs , I n c . , 1971, p . 95.

^ lo c . c i t . , p . 97 .13


14

clim ate is ru th le ss ly hard -nosed about the p rac tic a lity of every sy s tem ,

every program , and every repo rt. "W hat are you going to do w ith tha t

rep o rt?" "W hat would you do if you d id n 't have i t? " . . . "

To e s ta b lis h a com puterized system requ ires a good deal of p re

lim inary considera tion and a look to the fu tu re , a sk in g , "What is the

goal of such a sy s tem ?"

The com puter p rov ides the opportunity to d isp lay econom ic data

in a com prehensive w ay . Such inform ation w ill a s s i s t the d ec is io n

m akers in judging the many separa te a c tiv it ie s of the school and the

system a s a w hole. The p o ten tia l ben efits of u tiliz in g com puters to

implement e lem ents of PPB system s becom e v is ib le a s more and more

c ritic a l d ec is io n s m ust be made regarding the most e ffic ien t and ef

fec tiv e u se of dw indling re so u rc e s .

The A ssocia tion of School B usiness O fficials* proposes the e s

tab lishm ent of PPB system s:

"PPBS concep ts rep resen t a g reat po ten tia l for enabling educa tional lead ersh ip to ju s tify management d ec is io n s;i . e . , to be su c ce ss fu lly accoun tab le for the u se of educa tio n a l re s o u rc e s ."

The A ssocia tion of School B usiness O ffic ia ls does not sp e c ifica lly

po in t out the need for com puters; how ever, if one is to ga ther inform a-

*Foster, C harles W . (e d .) . Educational R esources M anagem ent System . C h icago , I llin o is : R esearch Corporation of the A ssociation of School B usiness O ffic ia ls , 1971, p . 29.


15

tion quickly and e ff ic ie n tly , the computer is tru ly an a s s e t .

E xperiences

Late la s t spring we w restled w ith the question of w hether to move

xrom a bihqh programmable accounting m achine to u sing a compute* *.or

accounting purposes and personnel record keep ing . After question ing

the value of such a program and looking toward the fu tu re , the b u s in e ss

manager recommended th a t the school d is tr ic t co n trac t w ith the Grand

Rapids Public Schools Com puter C enter for the two purposes mentioned

ab o v e .

The Board of E ducation made the d ec is io n to u til iz e the computer

and the b u s in e ss m anager a ttended a number of in -se rv ic e s e s s io n s .

He then began im plem enting the in itia l s ta g e s of program developm ent

w ith the help of th e Grand Rapids Public School p e rso n n e l.

Once the b a s ic program needs were e s ta b lish e d , appropriate forms

w ere filled ou t, beginning w ith p ersonnel. F ile s w ere e s tab lish ed and

the information w as programmed into the com puter. The next move w as

to implement the accoun ting function .

The b a s ic accounting functions were programmed into the com puter

to allow rec e ip ts and expend itu res to be properly a llo ca ted and charged .

Once the prelim inary com puter p rin tou ts w ere m ade, the long job of proof*

reading and ed iting w as d one . T hese ta sk s w ere repeated severa l tim es

un til the p rin tou ts w ere a lm ost free of incorrect d a ta .


Some problem s th a t cau sed frustra tions were: payroll w as inacur-

ra te , thus the old payroll p ro ce ss rem ained in u se un til the new program

w as correct; response time on the CRT (Cathode Ray Tube) w hen a c c e s

sing inform ation from the com puter w as slow and som etim es nonex isten t;

and p o sitio n s w hich had b een key punched tw ice w ere not show ing on the

CRT so that co rrections re la ted to ce rta in p o sitio n s could not be made.

Personnel problem s a t the com puter cen ter becam e ap p aren t. Even w ith

th ese problem s, p rogress had been made to the poin t tha t sev era l other

school d is tr ic ts have con trac ted w ith Grand Rapids for com puter se rv ic e s .

The fu tu re , a s view ed by Forest H ills ' ad m in is tra tio n , is one of

com puterized management system s for in stru c tio n a l p u rp o se s . When

th e se functions are im plem ented, the school d is tr ic t w ill be making

good u se of w hat appears to be a functional tool for e d u c a to rs .

Knowledge Acquired

Throughout the a c tiv it ie s described ab o v e , I w as prim arily an ob

se rv e r . I met w ith M r. Emdin and the data p ro cess in g personnel severa l

tim es when d isc u ss io n s w ere held concerning the next s te p s to be taken

or w hen problem s needed so lv in g . During th ese se s s io n s I lea rned a

good dea l about the procedure and ra tionale for com puterization .

I have developed re sp e c t for the e ffic iency of a com puter in pro

c e ss in g inform ation. I have a ls o learned th a t moving from a hand opera

tion to a com puter operation is a very time consum ing task w ith need for


17

ded ica tio n to the u ltim ate goa l.

I t seem s th a t the c r i t ic a l is su e in determ ining the su c c e ss of a

com puterized system is the a ttitu d e of the peop le involved . If any

person does not fu lfill h is or her re sp o n s ib ility , fru stra tions occur.

F ina lly , I learned th a t the d ec is io n to im plem ent the computer

for accounting p u rposes should not be a h a s ty one . One must con

sider the pros and cons and a s s e s s manpower needs before making a

com m itm ent.

I b e liev e the u ltim ate re su lts w ill prove b en efic ia l if fund mana

gers are provided curren t inform ation regard ing the financ ia l s ta tu s of

each budget l in e . Such inform ation should a llow the manager to make

prudent d e c is io n s a s to w hat can or cannot be spent to support specific

program s. Another advan tage is that one c an determ ine , in a very short

period of tim e, the d o lla rs spent on any g iven program an d , in tim e,

can determ ine the c o s t e ffec tiv en ess of any g iven program .

G u ide lines for C onsidering Com puters

1. D eterm ine the goal of the school d is tr ic t a s i t re la te s to the po ten tia l

of com puters.

2 . Determ ine w hat you w ant to know . . . and w hy.

3 . C onsider a ll a lte rn a tiv e s .

4 . C onsider the c o s t in terms of p e rso n n e l, time and d o lla rs of each

a lte rn a tiv e .


5. Determ ine how you w ill p rog ressive ly implement the program

b ased on p r io r it ie s , goa ls and o b jec tiv e s .

6. D evelop a sp ec ific recom m endation to the board of educa tion .

7. E stab lish a tim e-lin e for com pletion of n ecessa ry a c t iv i t ie s .

8. Implement the program slow ly .


ACCOUNTING

L iterature Review

Accounting is defined in the handbook. F inancial Accounting for

M ichigan School D is tr ic ts , x a s , " . . . the ana lyz ing , record ing ,

sum m arizing, and interpreting of fin an c ia l tran sac tio n s of an econom ic

e n te r p r is e ."

In the M ichigan G eneral School Laws^ the s ta te m andates the

superin tenden t of public in struction to " . . . p rescribe appropriate

uniform ch ild and finance accounting reco rds for u se in the school

d is tr ic ts of th is s ta te . . . " Code 340 .565^ of the law s goes on to

s ta te :

"S ec . 565. All such tax es w hen co llec ted and re ceived sha ll be accounted for under the t i t le of "general fund"; a ll primary money sh a ll be accounted for under the title of "primary fund"; a ll library money sh a ll be accounted for under the t it le of "library fund" . . . "

C odes 340 .851 -340 .856^ grant au tho rity to the superin tendent of

public in stru c tio n to e s ta b lish a "F inancial Accounting System for

1 M ichigan Departm ent of E ducation , F inancia l Accounting for M ichigan School D is tr ic ts . L ansing , M ichigan: M ichigan Departm ent of Budget, S ta te Record and Publishing C e n te r , 1974, p . 7 1 -A -l.

^L eg is la tive Service Bureau, o p . c i t . , p . 58.

^ lo c . c i t . , p . 132.

^ lo c . c i t . , pp . 655-671. 19


20

Public S ch o o ls ." The accounting system as defined e s ta b lish e s

sp ec ific ru les and a chart of accoun ts; such a s :

- G eneral Fund Revenue Receipts Accounts- G eneral Fund Expenditure Accounts (by function)- G eneral Fund Expenditure Accounts (by object)- G eneral Fund A sset and L iability Accounts- D ebt Retirem ent Fund Accounts- Building and S ite Fund Accounts

The accoun ts a s defined by the s ta te departm ent of education are

designed to provide a co n s is ten t and unified system for accounting

on a sta tew ide b a s is .

W ith the im plem entation of PPBS co n cep ts , the S ta te of M ichigan

authorized the developm ent of a manual ca lled F inancia l Accounting for

M ichigan School D is tr ic ts . The book is designed to extend the chart

of accoun ts referred to a b o v e . The manual is in tended to provide

gu idelines for school o fficers in providing inform ation unforeseen in

1963 when the law s w ere rev ised . The purpose of the handbook is to

provide a coding procedure which allow s . . . a n d , in fa c t , encourages

u tiliz a tio n of financ ia l da ta on a program b a s is for decision-m aking

p u rp o se s . Sound d ec is io n s can be made only when th e d ec is io n

makers know the financ ia l condition of the schoo l d is tr ic t .

In the m anual, F inancia l Accounting for M ichigan School D is tr ic ts , ̂

four (4) c rite ria a re l is te d a s minimal to have a working sy stem . They

^M ichigan D epartm ent of Education, o p . c i t . , p p . 11-A -l - l l - A - 2 .


21

are a s follow s:

"1 . A school d is t r ic t 's f in an c ia l record system should be adequate to provide fin an c ia l and re la ted ope ra tiona l inform ation for a l l in te re s te d p a rties — the school board; the adm in istra tion ; the public; aud ito rs; lo c a l, s ta te , and federa l au tho rities; and school em p loyees. The adequacy of the a c counting system depends on w hether both current and h is to rica l inform ation is av a ilab le for d ec is io n making p u rp o ses .

2 . The accoun ting system should be designed to d e mand accu racy and a rea so n ab le degree of in ternal con tro l. If so designed i t w ill au tom atica lly a s s i s t those who are perform ing the d a ily work on the records a s w ell a s th o se who superv ise them .

3 . A school d is tr ic t accoun ting system should be c o n s is te n t w ith g en era lly accep ted governm ental accounting p r in c ip le s . Valid com parisons of monthly or yearly opera tions in d ifferen t time periods can be made only if the item s are trea ted in a c o n s is te n t m anner. C hanges and improvem ents in the accoun ting system may prove n e ce ssary and th e se should be made a t log ical tim es in the accoun ting p e rio d .

4 . School d is tr ic t fin an c ia l accoun ting system s should be uniform to perm it maximum u se fu ln e ss . They should a llow for f in a n c ia l, o p e ra tio n a l, or perform ance com parisons w ith o ther school d is tr ic ts on lo c a l a s w ell a s s ta te and national le v e ls .Uniformity w ill in su re th a t the item s being compared are sim iliar ite m s , and standard term inology and defin itions should be u s e d ."

Another a sp e c t of accounting w hich appears to be c ritic a l is c a sh

v e rsu s accrua l acco u n tin g . A c a sh accoun ting system shows tra n s

a c tio n s only a s c a sh is rece ived or a c tu a lly paid ou t. The c a sh system

fa ils to record s ig n ifican t a s s e ts and l ia b i li t ie s which are im portant to

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission

knowing the fin an c ia l cond ition of the d is tr ic t a t any g iven tim e .

C ash accoun ting is no longer accep ted a s a v a lid system for overall

accoun ting .

The acc ru a l system is superior to the c a sh system in th a t it a c

counts for revenues a s they are rec e iv e d . "R ece ivab les" are recorded

when the d is tr ic t perform s the se rv ice required to ju s tify the revenue.

"E xpenditures" a re recorded when se rv ice s are ren d ered , when m ateri

a ls are put in to s e rv ic e , when encum berances a re in itia ted and l ia

b ili t ie s a re a c c u ra te ly show n.

The m anual, F inancia l Accounting for M ichigan School D is t r i c t s .*

s ta te s , "The a cc ru a l b a s is of accounting is m andatory for reporting

under th is m anual."9

In e s s e n c e , th e manual under d isc u ss io n p rov ides step by s tep

gu idelines for developing an appropriate se t of fund accoun ts and an

appropria te coding s truc tu re for ba lance s h e e ts , revenues and expendi

tu re s . The coding system p resen ted in the m anual a llow s for and en

courages program budgeting . Such a system a ls o req u ires acc ru a l

accounting and a doub le-en try sy stem .

The manual goes on to d e ta il th e budgeting p ro c e ss and makes

many su g g e s tio n s . It a lso p rovides a s e t of g u id e lin es for the follow

ing ta s k s : bookkeep ing , or the recording of tra n sa c tio n s ; management

* loc . c i t . , p . l l - A - 3 .

^ lo c . c i t . , p . l l l - A - 2 .


23

inform ation reporting id eas and defin ition ; a ca lendar of reports to

be filed ; a program c o s t system s sec tion ; and au d it requ irem ents. The

manual is extrem ely com prehensive and in form ative. I t requ ires in te n s i

fied study before one develops com petency for using i t .

One im portant p iec e of accounting inform ation d ec is io n m akers need

to u se is the b a lance sh e e t. The b a lance sh e e t according to D ixon, *

" . . . c le a rly re f le c ts the structure of the accounting mechanism; i t ’s

the b e s t p o ss ib le b a s is for catching onto the a cc o u n ta n t's deb it and

c red it lingo; i t 's ac tu a lly a t the beginning and end of a ll accounting

a c t iv i ty ."2

In fu rther d is c u s s io n , Dixon goes on to sa y , "The a lleged purpose

of the b a lan ce sh ee t is to dep ic t the financ ia l p o sitio n of the en terp rise

a t a g iven po in t in tim e ." However, th a t is only true if it accu ra te ly

re f le c ts the true current cash value of a ll of the a s s e ts and a ll of the

l ia b i l i t ie s . To have an accura te s ta tu s report one must u tilize an a c

crual accounting sy stem .

Some n e ce ssa ry accounting term s w hich one reads and should under

stand are : net worth (referred to a s fund eq u ity ), rev en u es , re c e iv a b le s ,

e x p en d itu re s , encum berances, l ia b i l i t ie s , funds, a s s e ts and ba lance

s h e e ts .

1 D ixon, Robert L . , The E xecu tive 's A ccounting Prim er. New York: M cGraw H ill Book C o . , 1971, p . 1 .

^ ib id .


24

There a re numerous m aterials which could be helpful to the school

b u s in e ss m anager or sm all d is tr ic t superin tenden t. However, he or she

w ill not have time to study a ll or even much of i t . Therefore, it is

e s se n tia l th a t a very com petent bookkeeper be em ployed.

Experiences

The school d is tr ic t in w hich I did my in te rn sh ip has contracted for

the same aud ito r for severa l y e a rs . The aud ito r b e lie v e s that the system

of accounting w hich schoo ls should use is the c a sh system , w ith a touch

of the accrua l system where necessary ; such a s , recording summer s a l

a r ie s a s p a y a b le s . However, he does not support accruing rece iv ab le s

such a s in te re s t, ca tego rica l a id or s ta te a id . He b e liev es that such

item s should be recorded upon rec e ip t. He a lso e lim inates such lin e -

item s a s in v en to rie s , deprecia tion and payab les w hich carry over from

f isc a l year to f is c a l y ear. C onsequen tly , he recom m ends that no re

se rv es be held to cover encum bered e x p e n se s . T herefore, one does not

have a true p ic tu re of the school d is tr ic t’s fund eq u ity .

W ith the advent of the b u s in e ss m anager, who is a lso a lo ca l b u s i

n essm an , the b u s in e ss office began im plem entation of a doub le-en try

system of bookkeeping and an accrua l accounting sy stem . The b u s in e ss

m anager con tends tha t the only way one can rea lly know what the true

fin an c ia l condition of the d is tr ic t i s , is to be on an acc rua l accounting

system .


25

Several d isc u ss io n s have been held w ith the b u s in e ss o ffice

personnel and b u s in e ss m anager regarding a more e ffic ien t sy s tem of

accounting and reporting . One re su lt has been the d ec is io n to en te r

the d is t r ic t 's b u s in e ss opera tions on a com puter w ith a CRT (Cathode

Ray Tube) and entry fa c ili t ie s on s i te . The advan tages of using the

com puter and having equipm ent on s ite include: current inform ation is

read ily av a ilab le ; expend itu res and encum berances may be en tered into

given acco u n ts quickly; revenues may be entered into appropria te a c

coun ts quickly; and the s ta tu s of any sing le budget lin e can be d e te r

mined in a m atter of one (1) to two (2) m inutes.

Knowledge Acquired

During my in te rn sh ip , I had sev era l opportunities to ta lk w ith the

b u s in e ss m anager, office m anager and bookkeepers regarding the prob

lem s of changing from a c a sh system to accrua l accoun ting . H ow ever,

I did not ge t involved in the recording of f ig u re s , nor did I spend a

g rea t d ea l of tim e observ ing , a s they w ere deeply involved in the a c

counting changes required to im plem ent the computer se rv ice sy s tem .

I did lea rn why accrua l accounting is superior to c a sh accounting

and w hat purpose a doub le-en try system se rv e s . W hile a c a sh system

is e a s ie r to m anage, i t is a poor way to rep resen t the net worth or

fin an c ia l condition of the d is tr ic t b e ca u se no tran sac tion is recorded

u n til c a sh ac tu a lly is rece ived or pa id out and certa in revenues and


26

encum bered funds are not shown; therefo re , the b a lan ce sh ee t is not

a c c u ra te .

G uidelines for Accounting

1 . Review the accoun ting procedures in u s e .

2 . Recommend changes if n e ce ssa ry .

3 . Keep in mind th a t change for change sake alone is not n e ce ssa rily

p ro fita b le .

4 . If change is n e ce ssa ry , consider:

a . Why change?

b . W hat do we need to know th a t is not known now?

c . What changes can be made and in w hat seq u en ce?

d . How fa s t is change needed?

e . What are the c o s ts in terms of p eo p le , tim e and money?


MAINTENANCE

Experiences

During the course of the in te rn sh ip , m eetings w ere held w ith the

superv iso r of bu ild ings and grounds. The purpose of the m eetings w as

for the b u s in e ss m anager to comm unicate w ith the superv isor regarding

need s and accom plishm ents.

In the F o rest H ills sc h o o ls , the m aintenance program c o n s is ts of

p rev en ta tiv e m aintenance and re p a irs . Some kinds of m aintenance and

som e kinds of repa irs can be done by school d is tr ic t em ployees and

some must be con tracted to ou tside firm s. The rule of thumb is that

any work w hich can be done by a s ta ff em ployee w ithout d isruptingJ

e s s e n tia l a c t iv i t ie s w ill be done by th a t em ployee. In the event a

ta sk requ ires ex p ertise or sp e c ia l equipm ent, or can be performed more

econom ically by an ou tside con trac to r, the work should be con trac ted .

It is safe to say tha t m aintenance on fu rn itu re , b u ild in g s, equip

ment and grounds w hich can be performed by th e build ing custodian

should be perform ed by him . However, it is p o ss ib le th a t a custod ian

from ano ther build ing might be ca lled upon to perform a ta sk becau se

of h is p a rticu la r e x p e r t is e .

D ec is io n s regarding sp ec ific build ing m aintenance a c tiv it ie s and

who w ill perform them are made by the bu ild ing cu sto d ian in c o n su lta -

27


tion w ith the superv iso r of build ings and grounds if there is any q ues

tio n . If both peop le are in doubt, the d ec is io n should be made by the

b u s in e ss m anager or superin tenden t.

One im portant a sp e c t of m aintenance is th a t of schedu led preventa

tive m ain tenance . Such ta sk s are scheduled by the build ing custod ian

on a regu lar b a s i s . They include lub rica tion of m otors, fans and h inges,

b e lt ad justm en ts and checks on playground equipm ent. Another type is

seaso n a l m aintenance w hich is scheduled by the build ing custod ian or

superv iso r of bu ild ings and grounds. Seasonal m aintenance includes

sep tic tank c le a n in g , bo iler se rv ice , a sp h a lt re p a ir , p a in tin g , floor care

and ground c a re .

Purchasing p rocedures must be c learly a rticu la te d to m aintenance

personnel. Building cu sto d ian s are au thorized to make p u rch ases not to

exceed $3 .00 from b u s in e s se s where the school d is tr ic t has an accoun t.

All other p u rch ases a re p ro cessed through the e s ta b lish e d purchase order

procedure. Purchasing d ec is io n s on item s costing more than $3.00 are

made by the superv iso r of build ings and grounds.

Knowledge Acquired

One need of a school d is tr ic t is to have a w e ll-o rg an ized m ainten

ance program , both for p reven tative m aintenance and for re p a irs . Pro

cedures must be defined a s to who is resp o n sib le to make m aintenance

d e c is io n s . The au thority to implement th e se d e c is io n s must be delegated


29

to the appropria te pe rson . The q uestion of purchasing must be equally

w ell de fined . Each individual must know how much he can spend , w here

he can do b u s in e ss and how p u rch ases may be m ade. A gain, the au th o ri

ty for making d ec is io n s w ithin the e s tab lish ed param eters must be d e le

ga ted to the appropria te peo p le .

The d e c is io n as to who is the d irec t superv iso r for any indiv idual

is one w hich is c r i t ic a l . If a cco u n tab ility is to be charged to anyone,

it is n e ce ssa ry each knows h is job descrip tio n and to whom he a n sw e rs .

G uidelines for a M aintenance System

1. E stab lish lin e s of re sp o n sib ility .

2 . Review ex is tin g m aintenance p rocedu res .

3 . E stab lish a policy regarding con tracted m aintenance.

4 . E stab lish a program of se aso n a l m ain tenance, both preven tative

and rep a ir .

5. E stab lish a regularly scheduled m aintenance program.

6. E stab lish a purchasing po licy and procedure.

7 . E stab lish a regular schedule of program ev alu a tio n .


INSURANCE

Literature Review

Insurance rep re sen ts a w ide area of coverage , some of which is

required by law and some of which is p e rm iss iv e . In Code 340.579*

of the M ichigan G eneral School Laws it s ta te s :

"S ec . 579. In school d is tr ic ts o ther than d is tr ic ts of the 1st and 2nd c la s s e s the board of educa tion sha ll insure school d is tr ic t property u n le s s o therw ise d irec ted by the school e lec to rs . . . "

2Codes 129.201 through 129.206 speak of in su rance required of

con tracto rs who a re involved in construction p ro jec ts of $50,000 or

more for a governm ental u n it. The types of in su rance are perform ance

and paym ent bonds and are purchased for the p ro tec tion of the govern

mental agency a t the co n trac to r 's e x p en se .3

Code number 340.112 refers to the bonding of the board of educa

tion o ff ice rs . The sec tio n s ta te s :

"S ec . 112. . . . The Board may p rescrib e th e du ties of th e sec re ta ry and provide for the sa la ry to be paid the sec re ta ry and treasu rer thereo f and may require proper bonds from such o ffice rs , excep t th a t when the board treasu rer is not d irec tly handling school d is tr ic t money or signing ch eck s no bond is n e c e s -

^L eg isla tive Service Bureau, op . c i t . , p . 138.

2 lo c . c i t . , p . 287.

3 lo c . c i t . , p . 29 .30


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sa ry , and where the au tho rity for the adm in istration of school d is tr ic t money re s ts w ith the school d is tr ic t b u s in e ss m anager, he and a ll persons connected therew ith sh a ll be bonded . . . "

Such bonds are ca lled su re ty b o n d s. The purpose of sure ty bonds

is to p ro tec t the school d is tr ic t from lo s s due to d ishonesty of an ind i

v idual a n d /o r m aiperformance o r nonperform ance of an ind iv idual pub lic

o f f ic ia l .

O ther in su rances required by law are w orkm en's com pensation and

autom obile insurance; the f i r s t , by federal law . . . the la t te r , by s ta te

law .

Johns and M orphet, in The Economics and Financing of E ducation , *

provide a com prehensive overview of in su ran ce . They l is t sev era l types

of required and perm issive in su rance and a b rief descrip tio n of e a c h .

E sse n tia lly , the concept of insurance is to have enough coverage

to p ro tec t the school d is tr ic t from a lo s s which it could not absorb

w ith in the f is c a l budget. T herefore, it is w ise to build an in su rance

program b ased on the needs of the specific school d is tr ic t and not on

w hat ano ther d is tr ic t has p u rch a se d . Once the insurance needs are

de term ined , a se t of sp ec ific g u id e lin es should be w ritten . Insurance

com panies should then be inv ited to review the in su rance sp e c if ic a

tio n s and subm it a sea led b id w hich sp e c if ie s the coverage and the

c o s ts .

l jo h n s , Roe L. and M orphet, Edgar L . , op . c i t . , p p . 515-546 .


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E xperiences

During the co u rse of the in te rn sh ip , in su rance w as d isc u sse d se v

era l tim es; how ever, the to ta l in su rance package for the schoo l d is tr ic t

w as not review ed th is y ear.

The d isc u ss io n s w hich w ere held evolved around sp e c ific qu estio n s

regarding f le e t coverage (brought about by the add ition and de le tio n of

driver educa tion au tom ob iles), l ia b ility due to a bus a c c id e n t, m edical

m alp rac tice , l ia b ili ty for teach e rs who do or do not adm in ister f irs t aid

and school board l ia b ili ty due to a c a se in court regarding in teg ra tion .

The rep re se n ta tiv e of th e d is t r ic t 's in su rance agency w as in the

office for se v e ra l m eetings to rev iew problem s and make recom m enda

tio n s . One s ig n ifican t recom m endation w as th a t the Board of Education

should have m alp rac tice in surance to p ro tec t i t and i ts ind iv idual mem

bers from litig a tio n brought about by nonperform ance of d u tie s ; such

a s , fa ilu re to in teg ra te or to c au se seg rega tion by v irtue of a d e c is io n ,

or graduating a s tu d en t who canno t re a d . Acting upon the a g e n t 's recom

m endation, in su ran ce w as pu rchased to cover th e Board of Education and

the d is t r ic t 's ad m in is tra to rs .

Another o c c a s io n to co n su lt w ith the in su rance rep resen ta tiv e came

about w ith the ad v en t of a bus a c c id e n t. Several s tu d en ts w ere in

jured and the q u e s tio n of lia b ili ty w as ra is e d . The re su lt of the d is

c u ss io n w as th e developm ent of a b e tte r understand ing of the n o -fau lt


33

insurance law . In the c a se d is c u s s e d , i t w as reso lved th a t the

injured c h ild 's p a ren ts ' au to in su ran ce w as the covering a g en t for

p e rsonal in ju ry . The school d is t r ic t 's insurance company becom es

lia b le only when m edical e x p e n se s exceed the lim its of the p a re n ts '

in surance p o licy .

A third a rea d isc u sse d w as one of lia b ility or neg ligence when a

tea ch e r e ither did or did not ad m in iste r f irs t a id . The d isc u ss io n

brought out the fac t th a t if a s ta f f member did nothing he or sh e could

conceivab ly be neg lig en t. If f i r s t aid w as adm in istered im properly

and the person adm inistering it w as trained in f irs t a id , he or she

might be charged w ith m alp ractice by an injured party b e ca u se a

tra ined person is expected to e x e rc ise a ll of h is or her know ledge in

providing "proper" trea tm en t.

Knowledge Acquired

The most s ig n ifican t lea rn in g s I have gained from the in su rance

d isc u ss io n s are : Be c e rta in th a t su ffic ien t insu rance is purchased ;

u se the insurance agen t and h is knowledge when a q uestion a r is e s ;

a n d , f in a lly , monitor the in su ran ce program to be c e rta in new add itions

to property , rea l or p e rso n a l, a re appropria te ly added .


G uidelines for E stab lish ing an Insurance Package

1. E stab lish the school d is t r ic t 's needs for coverage using a re liab le

insurance agen t for a s s is ta n c e .

2 . Review ex is ting insurance p a c k a g e .

3 . D eterm ine a u sab le format for bidding a package.

4 . Accept b id s only from an agency th a t has in stitu tiona l e x p erien c e .

5 . M onitor the insurance package to the ex ten t p o ss ib le .


BORROWING FUNDS

Literature Review

A Cph i e a 11 f a k A»n r\T*T mAnAir aAainef efafo a n rd O i i v u / X U i d b l l v / V A W M A A V V * W U b V M W A t VfV U » W 1 4 « « * j r W k ^ b * AlilJ W U t . U h C U i U \Ji

tax es receivab le to carry it through the f irs t few months of school

prior to receip t of th o se re v e n u e s .

The M ichigan G eneral School Laws a llow such borrow ing. Code

388.1231* s ta te s :

"Sec. 1231. . . . the board may borrow money for school o p e ra tio n s , issu e notes therefor and p ledge for the paym ent thereof s ta te aid av a ila b le to the d is tr ic t under th is a c t ."

Code 340.115^ states:

"Sec. 115. Temporary Purposes.(a) To borrow , su b jec t to the p rov isions of Act No.202 of the Public Acts of 1943, a s am ended, for tem porary school purposes such sum or sums of money and on such term s a s it may deem d e s irab le and to give no tes of the d is tr ic t therefor, . . . "

3Code 340.567 s ta te s :

"S ec. 567. The board of education of any d is tr ic t may borrow money in an tic ipa tion of the co llec tio n of tax es . . . "

^L egislative Service Bureau, op. c i t . , p . 469.

2lo c . c i t . , p . 31.

3lo c . c i t . , p . 133.

35


■r

36

E xperiences

During the course of the in te rn sh ip , it w as determ ined th a t the

school d is tr ic t needed to borrow sev era l hundred thousand d o lla rs to

meet ex p en se s un til taxes w ere co llec ted in D ecem ber, January and

February . To determ ine the am ount needed and the time of need , a

prelim inary c a sh flow chart w as developed w hich showed the amount

of money the school d is tr ic t an tic ip a ted rece iv in g , source of the revenue

and the d a te s i t could be ex p ec ted . The c a sh flow chart a lso showed

the a n tic ip a te d expenditures and the d a te s the paym ents would be

ex ec u te d . After i t w as developed , the chart w as rev iew ed , ad ju sted

and accep ted by the superin tenden t.

The next s tep in the procedure w as to req u e s t the Board of Educa

tion to adopt a reso lu tion to borrow the n e c e ssa ry funds. Upon e n ac t

ment of the re so lu tio n , perm ission to borrow w as requested from the

s t a te .

The forms w hich were to be filed w ith the s ta te required a record of

c a sh flow showing ac tua l rec e ip ts for M ay and June and estim ated re

c e ip ts for the f is c a l year 1975-76. The form a lso required subm ission

of ex p en d itu res , bo th known and p ro jec te d . The expenditure p ro jec tions

w ere tak en from the cash flow chart p repared prior to requesting per

m ission to borrow .

Upon com pletion , the forms w ere subm itted to th e s ta te d ep art

ment of educa tion for approval and perm ission to borrow w as g ran ted .


The b u s in e ss m anager co n tac ted sev era l bankers by le tte r and inv ited

them to subm it se a le d b id s to lo an the school d is tr ic t the n e c e ssa ry

money. In the le t te r , sp e c ific inform ation w as req u ested and the tim e

and p lace for bid openings w ere s ta te d . The key p ie c e s of inform ation

w ere: the net e ffec tiv e ra te of in te re s t, number of days in te re s t w as

com puted, penalty (if any) for early paym ent and the net c o s t to the

d is tr ic t if the lo an w as re ta in ed over th e fu ll tim e period sp ec ified in

th e b id .

Three b id s w ere rece ived and the money w as borrowed from the

low est b idder by reso lu tio n of the Board of Education a t i ts regu lar

m eeting. Once the bid w as a c c e p te d , the term s of the note had to be

filed w ith the s ta te departm ent of educa tion on a form prov ided .

Knowledge Acquired

The experience gave me opportunity to acqu ire knowledge regard

ing the follow ing: to rev iew the financ ia l needs of the d is tr ic t; to p re

pare cash flow s; to com plete s ta te departm ent of education forms; and

to meet w ith b a n k e rs .

G u id e lin es for Borrowing Funds

1 . E stab lish a tim e lin e for determ ining if and w hen money w ill be

n eed ed .

2 . D evelop a c a sh flow ch art show ing b a la n c e , revenues and expend i

tu re s .


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3 . P resen t a reso lu tio n to the board of educa tion a t le a s t one month

before the money is needed .

4 . R equest pe rm ission to borrow from the s ta te departm ent of edu

c a tio n .

5. Request b id s for m oney, sta ting :

a . Amount of money to be borrow ed.

b . D ate money is needed .

c . How b id s are to be p resen ted (sealed envelopes).

d . Time and p lace of bid open ings.

e . Length of time of the lo an .

f . C o lla te ra l s ta tem en t (against s ta te a id ) .

g . When bid w ill be aw arded by the board of education .

h . Net ra te of in te re s t per annum.

i . Net in te re s t co st to the school d is tr ic t if held full term ,

j . Right to re je c t any or a ll b id s .


BONDS

L iterature Review

A school d is tr ic t has the au thority to s e ll bonds for the purpose

of constructing buildings., rem odeling b u ild in g s , equipping build ings

and improving grounds. The board of education receives i ts authority

to s e l l bonds for the purpose of construction in the M ichigan G eneral

School L aw s, Code 340.115:*

"(b) To borrow, su b jec t to the p rov isions of Act No.202 of the Public Acts of 1943, a s am ended, such sum or sums of money a s it may deem necessa ry to pu rchase s i te s for b u ild in g s , p laygrounds, a th le tic f ie ld s , or ag ricu ltu ra l farm s, and to purchase or e rec t and equip any build ing or bu ild ings which it is au thorized to pu rchase and e re c t, or to make any perm anent improvements w hich it is authorized to m ake, and to accom plish th is by the is su e and sa le of bonds of such school d is tr ic t . . . "

C hapter 12 of the M ichigan G eneral School Laws^ d isc u sse s the

is su e of bonding . Before a school d is tr ic t s e l ls bonds for the purpose

of co n stru c tio n , renovation or o ther accep tab le purpose , the school

d is tr ic t must have the approval of the MFC (M unicipal F inance Com

m ission) and the v o te rs . The MFC guaran tees the payment of the b o n d s,

e s ta b lish e s maximum in te re s t ra te s and the leng th of time the loan may

*loc. c i t . , p . 31.

^ lo c . c i t . , pp . 150-156.

39


cover. The chap ter goes on to d esc rib e p rocedures for gaining approval

of the MFC, advertis ing the bond s a le , e s tab lish in g the minimum pay

ment am ounts and the handling of m onies re la te d to bonds.

The school law s are com prehensive and sp ec ific a s to the p rocedures

and lim ita tions w hich must be considered when bonding for school bu ild

ing p u rp o se s .

E xperiences

Prior to th is in te rn sh ip , the school d is tr ic t re s id en ts had voted to

bond them selves in the amount of $ 6 ,8 0 0 ,0 0 0 for school co n stru c tio n .

The bonds were to be sold in two is s u e s b ecau se of p revailing in te re s t

ra te fluc tuation and market u n c e rta in tie s . The f irs t is su e w as sold

in the spring of 1975 and the second is su e w as advertised and so ld in

the f a l l , O ctober, 1975.

Prior to the bond s a le , the superin tendent and b u s in e ss m anager

met w ith the school d is t r ic t 's financ ia l a d v is o rs , the C ertified Public

Accounting firm of Sherk, DeVries and Krenz, to determ ine the b e s t time

to s e ll bonds and make specific arrangem ents. The financ ia l ad v iso rs

were d irec ted by the Board of Education to proceed w ith the d e ta ils of

the bond s a le .

The da te for the bond sa le w as e s ta b lish e d and the financia l a d

v iso rs developed a p ro spec tu s w hich w as u sed to ad v ertise the b o n d s.

The p ro sp ec tu s showed the bond i s s u e 's v a lu e , the h istory of the


41

school d is tr ic t in term s of growth and fin an ces and the p resen t fin an c i

a l condition of the d is t r ic t . The p ro sp ec tu s e s ta b lish e d the conditions

of the sa le ; w hen b id s would be rece iv ed , th e tim e of opening b id s , th e

p lace of opening b ids and the date and hour lim ita tio n s for subm itting

b id s .

The sea led b id s w ere opened a t the board of education office in th e

p resen ce of two board m em bers, a bond a tto rn e y , the school d is t r ic t 's

a tto rn ey , the school d is t r ic t 's financia l a d v iso r , severa l b idders and

school adm in istra tive p e rso n n e l.

As each bid w as opened , the amount of the purchase w as read ,

the b idder’s nam e, bond m aturity d a te s and re sp e c tiv e in te re s t r a te s ,

and premium w as d e c la re d . F ina lly , the n e t e ffec tiv e ra te of in te re s t

w as s ta te d .

The bond a tto rney and the financ ia l a d v iso r proceeded to eva lua te

each bid for accu racy and recommended the b id the Board of Education

should acc ep t a t i ts regu la r m eeting.

After the Board of Education aw arded the b id , th e bond delivery

da te w as e s ta b lish e d w hich w a s , in e ffe c t, a d v e rtised in the p ro sp ec tu s

assum ing the Board of E ducation accep ted a b id . The bonds w ere ordered

to be p rin ted a t the school d is t r ic t 's e x p e n se .

Prior to p rin ting the b o n d s , proofs w ere read by the a tto rney for

accu racy and number se q u en c e . After ap p ro v a l, th ey w ere prin ted and

delivered to the board of education o ffices for one board o ffice r’s s ig n a -


42

tu re , tha t of the se c re ta ry . The second school board o ffice r, the

p re s id e n t, did not sign the bonds u n til they w ere delivered to the

buyer in C h icago .

Prior to de livery of the bonds and rece ip t of the money in C h icago ,

the b u s in e ss manager received an expense schedu le from the school

d is t r ic t 's a rc h ite c t w hich w as u sed for the purpose of developing a

build ing and s ite c a sh flow c h a r t. The chart showed the tim es sp ec ific

am ounts of money would be n eeded . Once the c a sh flow chart w as

e s ta b lis h e d , an investm ent program w as developed . W hen the money

w as received by the b u s in e ss m anager, investm ents were made by

w ire w ith in the hour.

One note of cau tion w a s , be c e rta in to p lan for c ap ita liz ed in te re s t.

C ap ita lized in te res t is the in te re s t paid for the time lap se betw een re

ce ip t of the bond money and rece ip t of ta x e s .

Knowledge Acquired

The sp ec ific knowledge gained included an understanding of the pro

c e s s of e s ta b lish in g bond sa le d a te s , issu in g of the p ro sp e c tu s , taking

of the b id s , evaluating b id s , aw arding of the b id , signing of bonds and

developing the investm ent sc h ed u le .

I a ls o had an ex ce llen t opportunity to work w ith the school d is t r ic t 's

f in an c ia l a d v iso r, a tto rney and the b u s in e ss m anager during the bond

s a le .


43

G uide lines for Bond Sales

1 . M eet w ith the schoo l d is t r ic t 's financ ia l adv iso r regarding sa le

da te and sp e c ifica tio n s for the s a le .

2 . M eet w ith the schoo l d is t r ic t 's a tto rney to be ce rta in leg a l requ ire

m ents are ou tlined and being m et.

3 . Authorize the sa le of the bonds and ad v ertise sam e.

4 . Open b ids prom ptly a t the ad v ertised tim e.

5. See th a t b id s are properly a n a ly zed .

6. Have bonds prin ted - a tto rney should review proofs for accu racy .

7 . Have bonds de livered to the board of education o ffice .

8 . Have bonds signed by the p res id en t and sec re ta ry of the board of

ed u ca tio n .

9 . Develop an investm en t sch ed u le .

10. In v est money im m ediately upon rec e ip t.


INVESTMENTS

L iterature Review

Investm ent of funds has i ts leg a l reference in the M ichigan G eneral

School L aw s.. Cede 3 4 0 .5 6 8 ,^ w hich provides perm ission to invest funds

and id en tifie s sp ec ific re s tr ic tio n s :

"S ec . 568. The treasu re r of any school d is tr ic t , when au thorized by reso lu tio n of the board of ed u ca tio n , may in v es t deb t retirem ent funds, building and s ite funds, build ing and s ite sinking funds, or general funds of the d is t r ic t . Such investm ents sh a ll be re s tric ted to the follow ing:

(a) Bonds, b i l l s , or no tes of the United S ta te s , . . .

(b) C e rtif ic a te s of d ep o s it issu ed by any s ta te or na tional bank . . .

(c) Commercial paper rated prime a t the time of purc h a se and maturing not more than 270 days from the da te of purchase . . .

M oneys in the sev era l funds of a d is tr ic t sha ll not be commingled for the purpose of making an investm ent . . . a ll earn ings on any such investm ent sha ll becom e a part of the fund for w hich the investm ent w as m ade."

E xperiences

The law s are sp ec ific in guiding the type of investm ents w hich can

be made; how ever, the type of investm ent can be d ifferen t depending on

h o c . c i t . , p p . 133-134.

44


45

the av a ilab le d o lla rs and the time period over w hich one can in v e s t.

SDR's (Savings D eposit Receipts) can be purchased from a bank

for any number of d a y s . The in te re s t is genera lly le s s than on other

types of in v es tm en ts .

C D 's (C ertifica tes of D eposit) can be purchased when the investo r

has $100,000 or more and can invest for th irty (30) days or more.

In te re s t is generally higher than on daily c e r t if ic a te s .

Commerical paper may be purchased through a bank . However,

frequently a fee must be paid for the serv ice w hich can affect the net

in te re s t earn ed . Com mercial paper is g enera lly purchased as an in v es t

ment w hich p rov ides a h igher in te res t ra te than the CD.

To provide for proper investm en ts, a c a sh flow chart should be

developed show ing revenues and expenditures for building and s i te ,

debt retirem ent and general fund w ith tim es noted when each would be

tra n sa c te d .

A second ta sk should be that of preparing an aud it sheet for each

ce rtif ic a te - SDR or CD . The in tent of the a u d it sh ee t is to check on

the amount of in te re s t w hich can be expected a t m aturity .

M aking investm ents is a c ritic a l function of the b u sin ess o ffice .

In te rest can be earned by investing payroll funds w hich accrue a s a

re su lt of te a ch e rs e lec ting tw en ty -s ix (26) paydays a s opposed to

tw enty-one (21). The reserv e funds can be in v e s te d . Investm ent of

FICA fu n d s, re tirem ent funds and other quarterly paym ents required by


46

law can make s ig n ifican t impact on the investm ent d o lla rs earned .

It is prudent to obtain tax checks from tow nship trea su re rs by per

sonally p ick ing them up , rather than w aiting for the m ail, so th a t

money can be invested without delay . . . thus earning more in te re s t.

Sound c a sh flow procedures a llow the b u s in e ss office to make the

b e s t investm ents for the longest period of time and s t i l l meet o b lig a

tio n s . A ca lendar showing the d a te s on which c e r tif ic a te s mature is

helpful in keeping on top of the investm ent program .

Knowledge Acguired

My experience w ith investm ents taught me sev era l th ings: F irs t,

w as the value of a good cash flow chart; seco n d , I learned w ays to

manage investm ents to be able to accrue the b e s t in te re s t earn ings;

th ird , I experienced the procedures of making investm en ts and learned

which forms to u se for dep o sits and the purchase of investm ent c e r t i

f ic a te s .

In summary, I learned that the investm ent program requ ires a tte n

tio n . Appropriate management can earn a s ig n ifican t amount of money

for the school d is tr ic t .

G uidelines for Investing

1. Prepare a c a sh flow chart for each fund to check ex is tin g in v e s t

ments and p ro jec t future in v es tm en ts .


47

2 . E stab lish a procedure for obtain ing tax revenues a s soon a s they

becom e a v a ilab le a t the tax co llec tio n c e n te rs .

3 . Prepare an aud it sh ee t for each c e rtif ic a te on hand and w hen one

is pu rch ased .

4 . E stab lish an investm ent c a len d a r.

5 . Review procedures for pay ro ll investm ents - avoid checking

acco u n ts w hich hold a la rg e amount of m oney.

6 . E xercise an ag g ress iv e investm ent p o lic y .


TAX LEW

Literature Review

The board of educa tion is responsib le for levy ing tax es for the

purpose of meeting i ts e x p e n se s . It draw s the righ t of taxation from

the M ichigan G eneral School L aw s. C odes 340 .563 and 340.564:*

"S ec . 563. The board of every d is tr ic t sh a ll vote to levy such ta x e s a s may be n e ce ssa ry . . .

S ec . 564. The secre tary of the board of every school d is tr ic t sh a ll f ile a certified copy of a reso lu tio n of the board certify ing the taxes to be lev ied on the tax ab le property w ith in the d is tr ic t a s approved by the e le c to rs . . . before Septem ber 1 of each year . . . "

Experiences

The tax es were lev ied a t a sp ec ia l m eeting of the Board of Educa

tio n . The amount of the levy w as determ ined for two (2) funds; the debt

retirem ent fund and the general fund. The deb t retirem ent fund is a fund

se t a s id e for the purpose of repaying lo an s on b u ild in g s . The general

fund is the fund w hich is to be used for operating the school d is tr ic t .

To determ ine the n e ce ssa ry m illage to be lev ied for debt retirem ent,

th e superin tenden t referred to the aud it report in w hich each bond issu e

is l is te d w ith the am ount due for principal and in te re s t paym ents. Each

* loc . c i t . , p . 132.

48


49

is su e w as evaluated a s to the m ills required to make the paym ents;

i . e . , 1955 = .2-5 m ill, 1958 = .25 m ill, e tc . The m ills , or portions

thereof, w ere to ta led and the m illage for deb t retirem ent w as d e te r

mined.

To arrive a t the am ount of operating m illage needed , the super

in tendent added the a llo ca ted m ills and the ex tra -vo ted operating m ills

and arrived a t a to ta l m illage le v y .

Upon determ ination of d is tr ic t n e e d s , a tab le showing the m illage

to be lev ied w as drawn for p resen ta tio n to the Board of E ducation.

U sing th is inform ation, a motion to levy the tax e s for deb t retirem ent

and the general fund w as made and approved by the Board of E ducation .

Taxing un its w ithin the d is tr ic t were notified of the levy and the proper

tax au tho riza tion form w as filed w ith the co u n ty 's O ffice of the Bureau

of E qualization .

Knowledge Acquired

The p ro cess of levy ing tax e s i s not d iff ic u lt. However, one must

be carefu l to analyze the needs for each fund accu ra te ly and a ls o be

aw are of the leg a l tim e l in e s . Taxes must be lev ied by the board of

education and the inform ation m ust be filed w ith the governm ental un its

before Septem ber 1 .


G uidelines for Levying Taxes

1 . E stab lish a philosophy for managing the deb t retirem ent funds -

determ ine how much money should be held in re se rv e .

2 . Review the au d it to determ ine the amount of money needed in the

deb t retirem ent fund to pay in te re s t paym ents, p rincipal paym ents

and carry a rese rv e (based on the philosophy).

3 . Prepare a ch art showing the millagte requirem ent for each debt

is su e and the to ta l of the d eb t.

4 . D evelop a chart showing the general fund needs and how the need

w as determ ined:

a . SEV

b . Local d o lla rs ava ilab le

c . S ta te a id receivab le

d . Budget

e . Total m illage needed

5 . Schedule a m eeting of the board of education to levy the tax e s .

6 . File the n e ce ssa ry forms w ith the treasu rer of each governm ental

unit w ith in the school d is tr ic t and w ith the co u n ty 's Bureau of

E qualiza tion .

7 . Prepare a spread form w hich can be used a s a management tool

a s tax es a re rec e iv e d .


AUDIT

L iterature Review

The s ta te law m andates an annual au d it of school funds. In the

M ichigan G eneral School L aw s, Code 3 8 8 .1 1 1 8 ,* the law s ta te s :

"S ec . 18. . . . (2) For the purpose of determ ining the rea so n a b len e ss of expenditu res and w hether any v io la tio n s of th is a c t have occu rred , the d e partm ent sh a ll require th a t d is tr ic ts have aud its of the ir fin an c ia l and child accounting records a t le a s t annually a t the expense of the d is tr ic t . . . "

The reason for the a u d it, the frequency of the aud it and the re

sp o n sib ility for c o s t are c lea rly defined so there should be no error.

Experiences

During the course of the in te rn sh ip , acco u n tan ts from the CPA firm

aud iting the school d is t r ic t 's financ ia l records worked in the adm inis

tra tio n o ffice . A few brief d isc u ss io n s w ere held to c la rify questions

e ith e r for the aud ito rs or the adm in istra to rs .

The aud ito rs review ed the board m inutes and checked the revenues

and expenditures of each fund. They checked each entry and purchase

order for confirm ation of expend itu res and e ac h en try in revenues for

accu racy .

* loc . c i t . , p . 448.

51


52

Upon com pleting the survey of a ll re c o rd s , the au d ito rs took the

d a ta to th e ir o ffice and wrote the au d it report and the "B" repo rt. The

"B" report is a form required by the s ta te for the purpose of keeping

the departm ent of educa tion informed of the financ ia l cond ition of the

schoo l d is tr ic t . Accompanying the reports w as a m anagem ent le tte r

w hich made su g g estio n s for b e tte r p rocedures in acco u n tin g , pur

ch asin g and m anaging the tran s fe r of m onies from investm en ts to fu n d s .

Upon rec e ip t of the aud it rep o rt, a n appointm ent w as scheduled

w ith the aud ito r to d isc u ss each lin e of the repo rt. S evera l qu estio n s

w ere prepared by the b u s in e ss m anager prior to the v is i t w hich helped

focus on a re a s in q u estio n .

One q u estio n a sk ed w a s , "Why do es the aud ito r not in s is t on

an acc ru a l accoun ting sy s tem ?"

His re sp o n se w a s , "Accrual accoun ting is too com plex and most

school b u s in e ss o ffic ia ls d o n 't even know what is going on w ith a c a sh

accoun ting sy s tem . T herefore, we do not u se acc ru a l a cc o u n tin g ."

Knowledge Acquired

Through the experience w ith the au d it and the a u d ito rs , I learned

au d ito rs work for the d is t r ic t , not the re v e rse . T herefore , the auditor

may be req u ested to a s s i s t in e s tab lish in g a system of acco u n tin g ,

purchasing p ro ced u res , tech n iq u es for handling investm en ts and make

them se lves a v a ila b le a s fin an c ia l a d v iso rs . I a ls o understand th a t


53

the aud it report should be com pletely understood . The aud ito rs w ill

review it and exp la in any q u e s tio n s . F ina lly , a summary of the aud it

report should be p resen ted to the board of educa tion .

G u ide lines R elated to Audit

1 . D isc u ss the au d it procedures w ith the aud ito rs prior to th e ir v is i t

to e s ta b lis h w hat is n eeded , w hen they plan to be in the office

and where they w ill work.

2 . Review the au d it report and prepare q u e s tio n s .

3 . D iscu ss the report in d e ta il w ith the audito r.

4 . D iscu ss the managem ent le tte r to c la rify any q u e s tio n s .

5 . Review the au d it w ith the board of educa tion .


STATE AID

L iterature Review

The s ta te a id b ill is one w ith w hich le g is la to rs w restle an n u a lly .

The most recen t s ta te a id a c t , c a lle d the "G ilbert E. Bursley School

D is tric t E qualization Act of 1973 ," is d e ta iled in the M ichigan G eneral

School Laws, C hap ters 1 -1 1 .* The Act d ea ls w ith d e fin itio n s , a llo c a

tion of s ta te funds, the school y ear, payout d a te s , u se s of s ta te a id ,

membership a llo w a n ce s , com pensatory ed u ca tio n , sp ec ific program s,

sp e c ia l ed u ca tio n , vocationa l ed u ca tio n , tran spo rta tion , a id to in te r

m ediate d is t r ic ts , community school and tu itio n reg u la tio n s .

The chapters c ited a re ex p lic it in the approach a d is tr ic t tak es in

qualify ing for s ta te a id and they sp e ll out ce rta in re s tr ic tio n s . The

Act a lso sp ec ifies to ta l am ounts a llo ca ted to sp ec ia l funds and lim ita

tions on a per-pup il b a s is w here a p p lica b le .

E xperiences

The in ternship experiences re la ted to s ta te a id were d isc u ss io n s

regarding the s ta te a id form ula. The "Bursley Bill" is b ased on the

concept that a ll s tu d en ts in the s ta te should have equal educa tional

1lo c . c i t . , pp . 444-468 .

54


op p o rtu n ities . T herefore, equal funding should be guaran teed up to a

maximum am ount. T hus, school d is tr ic ts w ith a very low valua tion

(to tal property value) would have the sam e amount of money per student

for b a s ic educa tion a s a school d is tr ic t w ith a h igh v a lu a tio n . Another

fac to r w as th a t the ac tu a l d o lla rs av a ilab le to a school d is tr ic t d e

pended on the amount of lo ca l tax es school d is tr ic t re s id en ts w ere

w illing to p a y . If a d is tr ic t only paid tw en ty -th ree (23) m ills , they

would n e t few er to ta l d o lla rs than a d is tr ic t paying tw en ty -five (25)

m ills . H ow ever, the amount received on the tw en ty -th ree (23) m ills

would be the sam e.

This y ea r, the formula w as eq u a lized , or b a lan ced , so each school

d is tr ic t w as guaranteed a va luation per student of $42,400 on the f irs t

tw enty (20) m ills and $38,250 on the next seven (7) m ills , le s s .6 of

1%. T herefore, to co llec t fu ll benefit on s ta te a id , a school d is tr ic t

has to levy tw en ty -sev en (27) m ills of lo ca l ta x e s .

Since the orig inal cu t of .6 of 1%, the s ta te is p ro jec ting ano ther

cu t in February , 1976, of 1 .7% . The cu ts w ill amount to approxim ately

$115,000 in lo s t revenues to the Forest H ills Public S choo ls.

O ther a re a s of the s ta te a id a c t w hich seem to have been d e te r

mined a t le a s t on a ten ta tiv e b a s is are sp ec ia l e d u ca tio n , community

e d u ca tio n , vocationa l education and tran sp o rta tio n . D iscu ss io n is

s t i l l being heard on the ad justm en ts w hich might be requ ired .


56

Knowledge Acquired

The most s ig n ifican t thing I learned is th a t the s ta te a id b ill w ill

continue to be com plex and a su b jec t of conversa tion and m anipula

tion a t the s ta te le v e l. The net e ffec t w ill be th a t many school

d is tr ic ts w ill be hard p ressed to m aintain a sound f isc a l position

th is year and probably next .

G uidelines Regarding S ta te Aid

The only gu ideline is to ac tiv e ly com m unicate w ith knowledge

ab le persons regarding annual nego tia tions a t the s ta te le v e l.


OTHER EXPERIENCES

F inancia l H istory of th e D is tr ic t

During the cou rse of the in te rn sh ip , I p repared a te n -y e a r h is to ry

of the school d is t r ic t . The data w ere ga thered for the purpose of having

a so lid data b a se w hich could be u sed for making p ro jec tio n s .

The h isto ry included population grow th, v a lu a tio n grow th, m illage

ra te in c re a s e s , le v e ls of s ta te a id , in s tru c tio n a l e x p e n se s , opera tiona l

e x p e n se s , tran sp o rta tio n c o s ts , m aintenance c o s ts , adm in istrative

c o s ts , fixed c h a rg e s , sp e c ia l education ex p en se s and cap ita l ou tlay

e x p en se s .

This inform ation, combined w ith b e s t-g u e s s e s about the fu tu re , h a s

helped the b u s in e ss m anager p ro jec t the m illage needs for the next five

y e a rs .

Bid Opening for a M iddle School

An a c tiv ity observed w as the opening of con stru c tio n b ids for a

new middle sch o o l. Sealed b id s w ere opened and read aloud by the

secre ta ry of the Board of Education a t a sp e c ia l m eeting in the p re sen c e

of b idders and the schoo l d is t r ic t 's a rc h ite c t a t a preannounced tim e.

Once th e b id s w ere opened, the a rc h ite c t analyzed each b id . He

then recom mended th a t the Board of E ducation award the con trac t to th e

lo w est b idder.57


One cond ition of the bid w as th a t e ach b idder p resen t a bid bond

w ith h is b id . The b idder awarded the c o n trac t w as required to pro

vide a perform ance bond and a paym ent bond w hich in su res the d is tr ic t

a g a in s t nonperform ance or nonpayment for m ateria ls by the con trac to r.


SUMMARY

My in te rnsh ip w ith the F o rest H ills Public Schools has been a very

fine learn ing ex p erien ce . I have b een exposed to many d a y -to -d a y

b u s in e ss functions on a n in -d ep th b a s is a s opposed to a superfic ia l

look a s I have had in th e p a s t . I have a lso had the experience of m eet

ing w ith severa l people ( i . e . , b an k ers , a cc o u n ta n ts , a tto rn e y s , e tc .)

who are b u s in e ss o rien ted and serve a s agen ts to the school d is tr ic t .

The b en efits of my in te rn sh ip w ill show w hen I am in a p o sitio n

w hich requires th a t I u se the knowledge I have a cq u ired . Such a c tiv i

t ie s a s developing and m anaging the budget, managing in v es tm en ts ,

taking b id s , e s ta b lish in g a m aintenance program , levy ing ta x e s , re

viewing the d is t r ic t 's in su ran ce n e e d s , borrowing money and o thers

w ill be performed more e ffic ien tly than if I had not had the experience .

The in ternsh ip has turned out to be a true cap sto n e experience to

my sp e c ia lis t program .

59


BIBLIOGRAPHY

I . BOOKS

A. A lioto, Robert F . and Jungherr, J. A ., O perational PPBS for E ducation . New York: Harper and Row,1971. Pp . ix + 322.

B. D ixon, Robert L . , The E xecu tive 's Accounting Prim er. New York: M cG raw -H ill, I n c . , 1971. Pp. x i i i+ 320.

C . F o s te r, C harles W . (e d .) , Educational R esources M anagem ent System . C hicago: R esearch Corporation of the A ssocia tion of School B usiness O ffic ia ls , 1971. Pp . iii + 353.

D . Johns, Roe L. and M orphet, Edgar L . , The Economics and Financing of E ducation , Second E dition . Englewood C lif fs , New Jersey: P rentice H a ll, I n c . , 1969. Pp . v ii + 574.

E. N esw onger, Rollin C . , PhD, CPA and F e s s , Philip E . , PhD, CPA, Accounting P rincip les - N inth E dition. C hicago: South-W estern Publishing C o . , 1965.Pp . iii + 816.

II . BULLETINS

A. D epartm ent of E ducation , F inancial Accounting for M ichigan School D is tr ic ts . M ichigan D epartm ent of M anagem ent and Budget, S tate Record and Publica tio n C en te r, L ansing , M ichigan , 1974. Pp. i + APP-B-2.

B. G regory, M arvin G . , Bits and P ie c e s . Vol. C , N o. 6, The Economics P re s s , I n c . , Fairfie ld , New Je rsey , 1975. Pp . 24.


C . Jaco b s , James W . (Chairm an). Show and Tell - A Handbook on Im plem entation of PPBS/ERMS in E ducation. R esearch C orporation of A ssociation of School B usiness O ff ic ia ls , C h icag o , I l lin o is , 1974. Pp. 123.

D . L eg isla tive Service Bureau. S ta te of M ichigan G eneral School Law s. M ichigan D epartm ent of M anagement and Budget, S ta te Record and P ub lica tion C en ter, L ansing , M ichigan, 1973. Pp. 823.

E. R oberts, C harles T. (ed . ) . F inancial Accounting C la ss if ic a tio n s and Standard Terminology for Local and State School S y s tem s. U . S . Government Printing O ffice , W ashington, 1973. Pp. 194.


Appendix A

P rospectus for an

In ternsh ip in

School B usiness M anagem ent

by

Lawrence H. S tancliff

62


63

O rganization: F o rest H ills Public Schools

F ie ld Supervisor: M r. Ben Emdin, B usiness M anager

U niversity Advisor: Dr. Carol Sheffer, W estern M ichigan U niversity

M ajor Focus of Experience: School B usiness M anagem ent a t ForestH ills Public Schools

D uration: Summer and Fall Terms 1975

R ationale:

The b u s in e s s operations of any school d is tr ic t can determ ine the

d irec tio n in w hich the school d is tr ic t w ill m ove. If a b u s in e ss opera

tion is sound , the people re sp o n sib le for d e c is io n s can u til iz e the

inform ation in making informed and appropria te d e c is io n s .

The superin tenden t of a sm all school d is tr ic t must be aw are of the

econom ics of the d is tr ic t when planning academ ic program s, m aintenance

program s, major investm ents and expend itu re .con tro l accord ing to th ese

p la n s .

To develop the n e ce ssa ry know ledge, an in tern should be exposed

to se v e ra l a re a s of b u s in e ss o p e ra tio n s . Such opera tions include the

follow ing: bookkeeping and o rgan izational sy s te m s , the accounting

sy stem , the borrowing of money to carry the d is tr ic t through the pre

s ta te a id and p re - ta x p e rio d s , the inventory sy s tem , the s a le of school

b o n d s , the m aintenance program , the in su rance program , the budgeting

p ro c e s s , the levying of tax e s and a n exam ination of the a u d it . Through


64

th ese kinds of ex p o su res , the in tern should have the b a s ic back

ground to help him be a su c ce ss fu l superin tenden t.

It is expec ted th a t the in ternsh ip w ill provide experiences which

w ill teach the in tern the b a s ic elem ents of th e school b u s in e ss opera

tions .

Lawrence H. Stancliff


Reproduced

with perm

ission of the

copyright ow

ner. Further

reproduction prohibited

without

permission.

O bjectives

A. CONCEPTUAL

1. To understand the purpose of using a computer for bookkeeping and organizational system s.

Experiences and C ontacts

The intern w ill -

d isc u ss with the b u sin ess manager and data p ro ce ssing personnel the rationale for the use of the com puter.

Terminal Skills

The intern w ill -

be able to d isc u ss the rationa le for using the computer for the bookkeeping and organizational system s.

2 . To understand the d ifferences betw een cash and a c crual accounting.

read m aterials and d isc u ss with the b u sin ess manager the accounting sy stem s.

be ab le to explain or write the advan tages of one system over another.

3 . To understand the law and p ro ce sse s involved in borrowing money.

read the law and study the p rocess involved in borrowing money for a school d is tr ic t .

be ab le to d isc u ss the law and procedure for borrowing money.

4 . To learn the reasons for an inventory system .

work w ith the b u sin ess manager in developing a rationale and system for creating an inventory system .

be ab le to explain the inventory system and how it w orks.

5. To understand w hat is involved in se lling b onds.

observe the procedures in volved in bond s a le s .

be ab le to d isc u ss bonds and the sa le p rocedu res.

o>01

with perm

ission of the

copyright ow

ner. Further


without

permission.

CD■ o- 5OQ .CoCDQ .

6. To understand the d ls - t r ic t 's m aintenance program,

review with the b u sin ess manager and supervisor of building and grounds the program for maintenance of build ings and grounds.

be able to d isc u ss the elem ents of a building and grounds m aintenance program.

7. To know the schools insurance needs and package and learn the bid p ro cess .

study the ex isting package and d isc u ss any n ecessa ry changes In the package.

be ab le to d isc u ss the elem ents of an insurance package and procedures for acquiring sam e.

8 . To understand the concep t of building a budget.

review the budget w ith the b u sin ess manager and d isc u ss questions I have.

be ab le to analyze the school budget and its c rea tion .

9. To learn the p rocess involved in levying ta x e s .

lis te n to the auditors and b u s iness manager in developing the levy .

be ab le to d isc u ss the procedures involved in determ ining the tax levy and the procedure for levying ta x e s .

10. To understand an audit repo rt.

review the aud it report w ith the auditors and b u sin ess m anager.

be able to d isc u ss the au d it.

11. To know investm ent p rocedures.

u tilize the prepared data and o lsc u ss with the business manager the philosophy and procedures for making investm ents.

be ab le to explain the ph ilo sophy and procedures for in v estm ents.

CDCD

Reproduced

with perm

ission of the

copyright ow

ner. Further


without

permission.

B. HUMAN SKILLS

1. To Investigate the role of the b u sin ess manager with other a g e n ts .

The intern w ill -

accompany the b u sin ess manager in the course of his work to m eetings w ith bankers, auditors and o thers.

The intern w ill -

be ab le to explain the role of various a g e n ts .

2 . To re la te w ith other bu sin ess managers in the county .

accompany the b u sin ess manager to local m eetings.

be able to d isc u ss the functions of the local b u s iness managers a sso c ia tio n .

3. To experience the in terac tions of the b u sin ess manager and m aintenance personnel.

s i t in m eetings and v is it with m aintenance personnel and the b u sin ess manager.

be ab le to d isc u ss the re la tionships which ex is t betw een the b u s in e ss manager and m aintenance personnel.

4 . To develop a feeling for other adm inistrators in budget management.

meet w ith a ll adm inistrative staff on budget.

be able to talk about re ac tions of adm inistrators re: budget d e c is io n s .

C . TECHNICAL SKILLS

1. To develop an increased understanding of the use of data p rocessing in b usiness func tions.

The intern w ill -

develop an outline of a c tiv itie s for implementing a data p ro cessing system for bookkeeping and organizational system s.

The Intern w ill -

be ab le to d isc u ss the procedures a s ou tlined .

Reproduced

with perm

ission of the

copyright ow

ner. Further


without

permission.

2 . To be able to Invest funds properly.

work with the b u sin ess manager in deciding investm ents.

be able to l is t or d iscu ss the types of investm ents.

3. To be able to develop an inventory system .

a s s is t the b u sin ess manager in developing a system for inventory control.

be ab le to d isc u ss the system developed.

4 . To develop a b asic knowledge of necessary in su ran ces.

review the existing package and d isc u ss new needs or c h an g es .

be able to report on b asic insurance n eed s.

5. To u tilize audit information .

review the audit with the b u siness manager and aud ito rs .

be able to d isc u ss the audit and what it is for.

6. To gain much understanding of the economic factors influencing the budget.

review prelim inary and final forms of the budget for revenues and expenditures.

be able to explain where the do llars come from, how the amounts are determined and how expenditures are arrived a t and contro lled .

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Documents

A Summary of Experiences in an Internship in the Area of