- Monitoring Reports
OE-06 Asset Protection Interpretation and Monitoring Indicators
Monitoring Report - Operational Expectations (OE) Policies
Policy: OE-06
Title: Asset Protection Interpretation and Monitoring Indicators
Status: Active
Adopted: June 27, 2018
To: School Board, Ferndale School District (WA)
From: Dr. Kristi Dominguez, Superintendent
Date: January 30, 2024
Subject: 2024 Monitoring Report
Operational Expectations Policy 6 (OE-6)
Financial Administration
Superintendent’s Introduction
This straight-forward report explains how we maintain our stable financial standing. At the time of this report, I believe I am in compliance with the Board’s expectations associated with this policy. I have not, to use language consistent with this policy, caused or allowed any financial activity or condition that materially deviates from the budget adopted by the Board; caused or allowed any fiscal condition that is inconsistent with achieving the Board’s Results priorities or meeting any Operational Expectations goals; or placed the long-term financial health of the district in jeopardy.
Policy
The Superintendent shall not cause or allow any financial activity or condition that materially deviates from the budget adopted by the Board; causes or allows any fiscal condition that is inconsistent with achieving the Board’s Results priorities or meeting any Operational Expectations goals; or places the long-term financial health of the district in jeopardy.
Interpretation
The Board has communicated a strong belief that “the way we allocate resources significantly impacts our ability to serve the growth and learning needs of children.” Therefore, the Board is “dedicated to the careful use of all resources -- people, time, facilities, and money, along with other less tangible but essential resources like trust, vision, ideas, energy, and hope.”
We understand that, through this policy, the Board is directing us to ensure that all District financial resources are maximized in support of their operational expectations and student learning outcomes, especially as those outcomes are spelled out in their Operational Expectations and Results Policies. In other words, the Board wants us to oversee the financial resources allocated to both building-based and district-centered functions to make sure they are used effectively, efficiently, and in a manner most likely to achieve the Board’s goals and priorities.
We further understand that the Board expects us to follow sound financial practices as we direct and control the District’s financial resources in the service of their goals and priorities, starting with the development of an annual budget that is clearly aligned to those goals and priorities. When the District uses comprehensive information to develop a data-driven budget that links spending to desired educational outcomes, and the Board reviews and adopts said budget, it can serve as a blueprint for school improvement.
The Superintendent will:
Assure that payroll and legitimate debts of the district are promptly paid when due.
Interpretation
The Superintendent is responsible for putting policies and procedures in place that will ensure regular and timely payment of the debts of the District to include payroll, contracts, and purchases. The Superintendent is also responsible for monitoring said policies and procedures.
Monitoring Indicator(s)
We will know we are compliant when we can provide:
1.1 Evidence that employee payroll has been processed each month according to the published schedules and all employees receive the correct pay and benefits.
No significant errors occurred that affected compensation of employee groups. All monthly payroll was processed on time at the end of each month.
1.2 Evidence that weekly accounts payable have been completed on all legitimate outstanding debts in the District’s possession in accordance with agreed upon payment timelines.
Payroll taxes, retirement obligations, and other deductions were paid within agreed upon deadlines.
Assure that all purchases are based upon comparative prices of items of similar value, including consideration of both cost and long-term quality.
Interpretation
Washington State law defines requirements for public agencies relative to competitive purchase and procurement processes. These requirements are intended to ensure public entities, like the Ferndale School District, get the lowest possible price for goods, services, and materials. At the same time, the Board expects the Superintendent to ensure that all goods, services, and materials purchased are of suitable quality to meet the Board’s operational expectations and student learning results. The Board understands that being fiscally responsible means selecting the right products to match identified needs, investing in sufficient quality, and considering longevity. Buying cheap can lead to spending more down the line for maintenance and upkeep or replacement costs. Even worse, buying the wrong product can impede the District’s ability to meet its goals. Therefore, the Board expects the Superintendent to develop and implement procedures and processes aimed at getting reasonably high-quality products aligned with the District’s goals and priorities for the lowest costs possible.
Monitoring Indicator(s)
We will know we are compliant when we can provide:
2.1 Evidence that all competitive bid/procurement procedures and laws have been complied with during the previous year.
The May 2023 state audit found purchases to be in compliance with District policy, state law, and federal guidelines.
Coordinate and cooperate with the state financial auditor for an annual audit of all district funds and accounts.
Interpretation
In compliance with Washington State law, the Superintendent will support the annual financial audit with the allocation of time, space, access, and District resources as appropriate.
Monitoring Indicator(s)
We will know we are compliant when we can provide:
3.1 Evidence that the annual financial audit has been completed, including the entrance and exit briefings, with no audit notes relative to the District’s support for the audit.
The Board received the audit result exit packet from the State Auditor’s Office on May 8, 2023.
3.2 Completed annual audits and audited results are reported to all appropriate entities in accordance with statutory guidelines.
All district audit reports are published on the State Auditor’s website in the State Auditor’s Office Audit Reports Section. Annual financial and audit reports are also posted to the Electronic Municipal Market Access website in order to be in compliance with bond financing requirements.
4. Make all reasonable efforts to collect any funds due to the District from any source.
Interpretation
The Board supports the State law prohibiting the gift of public funds. As such, the Board expects the Superintendent to make a reasonable effort to collect funds due to the District from individuals, businesses, and/or corporations. With that said, the Board also understands that, in some cases, the amount of effort required to collect funds exceeds the benefit to the District of the amount due.
Monitoring Indicator(s)
We will know we are compliant when we can provide:
4.1 State and federal payments are monitored against expected revenue.
The Board receives monthly financial reports showing the current financial conditions of the district.
4.2 Procedures that have been put in place to recover overdue amounts and evidence that these procedures have been reasonably exercised.
Reminders are sent home to families and repayment plans are offered.
5. Keep complete and accurate financial records by funds and accounts in accordance with State guidelines.
Interpretation
The Board expects us to use the budget process to allocate financial resources to support their goals and priorities. To ensure this happens, our District’s finances must be recorded and tracked (1) in compliance with the Washington State Accounting Manual, and (2) in alignment with Board’s operational expectations and desired learning outcomes.
Monitoring Indicator(s)
We will know we are compliant when we can provide:
5.1 The annual district financial audit confirming that all District audited operations are in compliance with the Washington State Accounting Manual.
The financial statement audit resulted in an unmodified opinion that financial statements are presented fairly, in all material aspects. The results indicated no internal control weaknesses on financial reporting.
5.2 Evidence that resources were allocated according to the Board’s operational expectations and desired learning outcomes.
At the July 25, 2023 meeting, the 2023-24 District budget was reviewed and approved by the Board. There was not a study session prior to this meeting where the Board held a more in-depth discussion of the budget. Based on Board feedback, we resumed that practice, starting with a study session about the upcoming 2024-25 budget on January 16, 2024.
6. Publish a financial condition statement annually.
Interpretation
The Board expects us to administer the District’s finances in a manner designed to achieve its Operational Expectation (OE) Policies and Results (R) Policies, and annually to provide monitoring reports to the Board specifying the extent to which we have done so. These annual monitoring reports on each OE and R Policy will be published on the District website and become part of the public record. In addition, the Board expects us to communicate at least once a year with the District stakeholders about the current and projected future financial health of the District.
Monitoring Indicator(s)
We will know we are compliant when we can provide:
6.1 A public report summarizing the current and projected future financial health of the District.
Monthly financial statements are published via BoardDocs monthly. The District’s F-195 and F-196 documents are published on the district website.
The Superintendent may not:
Expend more funds than have been received in the fiscal year unless revenues are made available through other legal means, including the use of fund balances, and/or the authorized transfer of funds from reserve funds or tax anticipation notes.
Interpretation
We understand the Board expects the District to plan a budget that includes ongoing expenditures that do not exceed revenues. To this end, any time cash reserves are used to project spending in excess of revenues, the excess should be used for identified one-time expenditures that will not be required in future years. The previous year-end budget summary presented to the Board should verify that expenditures were less than revenues, unless the unreserved fund balance remaining from the previous year was in excess of 5%, and budget plans were approved to utilize these excess funds, while still projecting an ending unreserved fund balance of no less than 5% of proposed expenditures for the upcoming year.
Monitoring Indicator(s)
We will know we are compliant when we can provide:
7.1 Evidence that the previous year’s expenditures did not exceed revenues.
As reported in the annual financial audit, expenditures at the fund level do not exceed appropriate amounts originally adopted by the Board.
7.2 The previous year-end F-196 Annual Financial Statement showing an unreserved fund balance for the following year of at least 5% of expenditures.
The previous year’s F-196 confirms a unreserved fund balance of at least 5%.
8. Indebt the organization.
Interpretation
The borrowing of money is a function over which the Board wishes to retain authority. Therefore, any debt taken on by the District must have prior Board approval.
Monitoring Indicator(s)
We will know we are compliant when we can provide:
8.1 Evidence that any debt taken on by the District during the previous year was pre-approved by the Board.
The District has not borrowed any money between now and the previous OE-6 report in 2022.
9. Allow any required reports to be overdue or inaccurately filed.
Interpretation
The Washington State Accounting manual sets forth requirements for state reporting of financial information. The Superintendent will ensure that all required reports are filed accurately on or prior to the required deadline.
Monitoring Indicator(s)
We will know we are compliant when we can provide:
9.1 Evidence that all financial reports from the past year were filed on time and accurately, including the F-195, F-196, S-275, and F-200, if applicable.
The external auditors found there to be no material internal control weakness inherent in the district’s financial statements. The clean audit report was provided to the Board. The District did not receive any notification from the ESD or OSPI related to untimely or inaccurate processing of reports.
10. Receive, process or disburse funds under controls that are insufficient under applicable State law and regulations.
Interpretation
We interpret this to mean that internal controls over the financial reporting process and over compliance are annually evaluated and documented and are in compliance with OSPI accounting guidance. Internal controls will also be in compliance with other related requirements as established by law.
Monitoring Indicator(s)
We will know we are compliant when we can provide:
10.1 Budget staff monitor school site and program transactions to ensure expenditures are in compliance with required guidelines.
The financial statement audit resulted in an unmodified opinion that the financial statements are presented fairly, in all material aspects.
Superintendent’s Final Remarks
As this report shows, we have maintained our stable financial standing through diligent practices and a consistent process. This will be further improved by our return to budget-focused study session meetings. I believe we are in compliance with the board’s expectations and district policy.
- OE