DRAFT 12/1/13

D200 Finance Advisory Committee Financial Practices Recommendations Continue (or adopt) the following practices:
1. Prepare annual budgets and five-year plans: a. Detail assumptions on key drivers (using historical experience and current/expected experience as data inputs) b. Risks to budget to be identified with appropriate contingency plans i. Closely monitor status of teacher pension fund status and potential legislative actions/decisions that will impact the school ii. Maintain appropriate levels of property and liability insurance c. Model best, worst and most likely case scenarios d. Identify efficiency and effectiveness projects that minimize long-term costs e. Establish limits on and monitor marginal deficits, defined as change in expenses minus change in revenue, with guidelines as to whats included f. Budgets and five-year plans to include revenue/expense statement, balance sheet, projected cash flows, and capital plan. Compare actual revenues/expenses and cash flows to budgets no less often than quarterly; meaningful variances from budget to be analyzed and explained to the Board; impact of variances going-forward to be discussed and also understood Project fund balance on a regular basis with clear triggers and early warning regarding a need for a referendum. Minimum fund balance to be no less than 25% (3 months) of annual operating expenses. If five year plans project a minimum fund balance approaching 25%, planning for a referendum needs to commence. Have a cash investment policy to be focused on safety and security rather than yield (i.e., so cash should always be available/liquid with little risk of loss of principal) Maintain non-referendum borrowing capacity (to be able to short-term finance operating shortfalls, if needed) Maintain at least a AA Standard & Poors rating and an equivalent rating with one other agency (to enable district to long-term finance its needs, as necessary) Generally focus on producing the best student outcomes in the short- and long-term with the most efficient and effective use of resources. The following metrics and benchmarks, as well as others, could prove helpful in decision-making: a. Develop and monitor financial benchmarks, including: i. Costs per student ii. Fund balance per student iii. Taxes per student b. Identify student outcome measures and monitor correlation with financial benchmarks c. Determine appropriate comparison districts for benchmarking i. Districts with similar enrollment ii. Districts with similar demographics iii. Districts with desired academic achievement 8. Communications a. Be transparent and balanced in reporting to the community on financial status, key changes to be anticipated (enrollment changes, staffing changes, physical plant changes), impact of key changes b. Provide evidence of being appropriate financial stewards of a key community resource c. Seek alignment of interests between the school and the community d. Anticipate key community objections and thereby garner community support

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