Monitoring Report - Operational Expectations (OE) Policies

Policy: OE-07

Title: Asset Protection Interpretation and Monitoring Indicators

Status: Active

Adopted: December 23, 2023

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To: School Board, Ferndale School District (WA) 

From: Dr. Kristi Dominguez, Superintendent 

Date: September 26, 2023 

 

Subject: 2023 Monitoring Report 

    Operational Expectations Policy 7 (OE-7) 

    Asset Protection 

 

Superintendent’s Introduction 

This policy’s primary focus is on risk management. Are we ensuring that our facilities and assets are in usable shape and won’t unexpectedly break down? Are we following best practices in hiring and employee conduct so that we avoid lawsuits? Are we being responsible stewards of local taxpayers’ dollars? 

Because we have followed the guidelines clearly outlined in this policy, we can rest easy knowing our students and staff can focus on learning, not crumbling ceilings and funding deficits. 

If there are specific documents in this report that are unlinked due to their size and/or complex nature – such as our insurance policy mentioned in Indicator 2.1 – you can make arrangements to view the documents at the District Office. We can provide paper copies of these documents. If you’d like more details on the settled lawsuits mentioned in Indicator 6.6, you can reach out to me or Assistant Superintendent for Business and Support Services, Mark Deebach. 

Policy 

The Superintendent will assure that all District assets are adequately protected, properly maintained, appropriately used, and not placed at undue risk. 

Interpretation 

We understand this policy expresses that the School District belongs to the citizens of Ferndale. The citizens have elected the Board to serve as their trustees, and the Board has hired me to manage and care for the District’s resources. This means the Board expects us to be diligent in safeguarding the interests, properties, and investments of the District’s owners. I need to be good custodians of the public resources entrusted to us. 

 

The Board expects us to ensure all District assets are: 

• Adequately protected, which refers to taking measures to guarantee the District will be able to continue to function in the event of a major disruptive occurrence or significant loss; 

• Properly maintained, which refers to ensuring all real and intellectual property is cared for and secured in a manner that allows the District to benefit from its full useful lifespan; 

• Appropriately used, which refers to upholding quality standards for the way District resources are allocated, managed, and expended; and 

• Not placed at undue risk, which refers to avoiding activities and situations with levels of identifiable danger that are likely to result in significant loss for the District. 

 

The Superintendent will: 

 

Maintain property and casualty insurance coverage on District property with limits equal to 100 percent of replacement value. 

 

Interpretation 

We understand this component requires us to purchase quality insurance contracts that will replace, repair, or provide financial renumeration for loss of or damage to District assets such that the District is restored to an equal or similar position as prior to the loss or damage, less than the amount of the insurance deductible. This quality insurance must provide protection for all real estate, facilities, furniture, etc. owned or leased by the District with value greater than the amount of the deductible. 

 

Monitoring Indicators  

We will know we are in compliance with this component when we can show: 

 

We have an up-to-date inventory list of all District property – including land, buildings, vehicles, furniture, technology, equipment, food stuff, and curricular materials – and proof that the list has been used to obtain insurance coverage to protect the items recorded on it against loss from crime, casualty, and/or liability. 

 

We employ a variety of tools and lists to account for all food, furniture, and technology in our possession. For example, we contract with GigaTrak to create an inventory of all our laptops and other technology items in the District.  

 

Along with these inventory tools, we work with the Schools Insurance Association of Washington, (SIAW) which protects us against loss from crime, casualty, and liability. That association was formed for the purpose of providing insurance coverage to members, along with a risk management program designed to limit liability exposure. Our policy includes an inventory of all District property.  

 

We are participants in the Schools Insurance Association of Washington. 

 

As mentioned in the above indicator, we are currently members in good standing of the Schools Insurance Association of Washington. 

 

We have adhered to Schools Insurance Association of Washington guidance regarding risk. 

Our annual renewal review and application prove that we are in compliance with the association’s guidelines. 

 

Maintain both Errors and Omissions and Comprehensive General Liability insurance coverage protecting Board members, staff, and the District itself in an amount that is reasonable for school districts of comparable size and character. 

Interpretation 

We understand this component requires us to provide insurance protection against potential demands that allege wrongdoing by the District, the Board, or individuals employed by the District when these authorized persons are acting legally within the scope of their duty. All 37 school district members of the SIAW pool, most of which are of a similar size, have the same coverage. 

Monitoring Indicators  

We will know we are in compliance with this component when we can show: 

We have personal liability insurance for Board members, staff volunteers, District staff, and the District itself. 

We have a current liability insurance policy in place. 

We are up to date in our participation in Washington State’s Workman’s Compensation Program. 

We purchase coverage through the Department of Labor and Industries. That department manages all claims stemming from job-related accidents and injuries and pays benefits out of an insurance pool. 

We file quarterly reports to the state documenting all Labor and Industries claims, and that we pay the bills regularly and on time. The Board approves these reports in their role as the Audit Committee, and Secretary to the Board Kris Newberry brings paper copies of the detailed reports to each meeting in case a Board member wishes to review. 

Adequately protect the District against theft or misappropriation of funds by any personnel who have access to material amounts of District and school funds. 

Interpretation 

We understand this component requires us to maintain a system of financial controls that tightly limits direct access to cash and securities by anyone in the District and clearly defines accounting procedures for those who are granted access. The Board expects us to conduct business in an orderly and efficient manner; deter and detect errors, fraud, and theft; ensure accuracy and completeness in our accounting data; and produce reliable and timely financial reports. 

Monitoring Indicators  

We will know we are in compliance with this component when we can show: 

We are following good accounting practices throughout the District. 

Other than two minor findings in three audits since 2022, we have received clean audits from the State Auditor’s Office in the past two years. This is evidence that we have followed good accounting practices. All state audits of the District (or any government agency) can be found on the State Auditor’s website. 

A centralized purchasing “department” has been established and maintains up-to-date administrative procedures, guidelines, and forms to facilitate and monitor the efficient and cost-effective purchase of goods and services. 

Procedures for purchasing are current and have been shared with all staff who have purchasing authority. All purchases are approved by an administrator and reviewed by the Accounts Payable Department prior to being processed. 

Vouchers have been internally audited each pay period. 

Business office personnel audit all vouchers each pay period. 

Clear, accurate financial reports are regularly published. 

Financial reports are provided to the Board every month in two formats at their business meeting. They are published and accessible on BoardDocs.  

Protect intellectual property, information, files, records, and fixed assets from loss or significant damage. 

Interpretation 

We understand this component requires us to put in place industry-standard measures and controls to ensure all District data – including financial records, student files, legal correspondence, and assessment material – are securely monitored and stored, whether on-premise or in the cloud, in a manner that will prevent misplacement, theft, or any kind of permanent and irreplaceable loss. We further understand the Board expects us to safeguard the physical property owned by the District in a similarly stringent fashion. 

Monitoring Indicators  

We will know we are in compliance with this component when we can show: 

We have employed firewalls, backup systems, virus protection, encryption, and other generally accepted best practices for protection of electronic information. 

We have purchase orders and work orders that demonstrate we have these systems in place and that they are functioning. Since the last report in August 2021, we upgraded our firewall and web filter systems with newer, more advanced Cisco firewalls and Lightspeed website filters. 

We also participate in Washington School Information Processing Cooperative, a unique public agency that provides information services at a reasonable cost to school districts. The District’s financial and student software platforms benefit from the Cooperative’s team of dedicated personnel who focus on state and federal policies regarding data privacy and security. They provide us with cybersecurity assistance, training, and regular updates on threats and countermeasures. 

Security privileges have been assigned based on an employee’s role and location within the District. 

We maintain a report within the Skyward Information System that shows the security and access level assigned to each job category. Access is differentiated based on the employee’s role in the organization. 

Staff have been made aware that we expect them to take an active role in identifying potential risks to District information assets within their areas, protecting against risks where that can reasonably be expected, and upward reporting risks that they cannot remediate. 

We provide annual training to staff on FERPA (Family Educational Rights and Privacy Act) and other confidentiality requirements as a part of their annual training through Vector Solutions. We also require staff to maintain passwords compliant with password complexity standards. 

We have in place safety and security plans outlining measures for securing and protecting the District’s fixed assets. 

We have a process for ensuring buildings are secured each night and for inspecting buildings and on-site equipment. 

The Superintendent will not: 

Allow facilities and equipment to be subject to improper use or insufficient maintenance. 

Interpretation 

We understand that this component requires us to use, monitor, maintain, and repair our properties, buildings, building systems, vehicles, technology, and other tangible resources in a manner that maintains the integrity of the asset for its normal lifespan. 

Monitoring Indicators  

We will know we are in compliance with this component when we can show: 

We have an up-to-date assessment of the needs of each of our facilities. 

We are currently in the process of creating an updated facilities assessment, so that we can prioritize what needs to be fixed first with our maintenance budget dollars. This process can take a couple years due to the sheer scope of the project. Accounting for every aspect of every building, and to note where in its lifecycle those aspects are, is a large task. 

Since August 2021, we have already tackled many immediate-need facilities projects, such as building a brand-new Ferndale High School campus, replacing roofs and water heaters, and more. Specific details on all bond-funded projects can be found on the District website. However, there are still some mid-range facilities projects that need to be taken care of, such as replacing our parking lots and updating boilers.  

We have a dedicated budget for the regular maintenance of District assets. 

Budget Responsibility Center 1364 represents our annual maintenance budget, which is under the control of the Director of Maintenance and Facilities. 

We have adequate financial reserves for unforeseen contingencies. 

As shown in our monthly financial reports and the District’s Annual Adopted Budget, we have a fund balance exceeding that which is required by Board policy (4% of the General Fund expenditures). Because of this, we have a financial cushion to fall back on in case something catastrophic happens. 

We have continued to meet board expectations by retaining a fund balance exceeding 4% of our general fund expenditures. Our projected expenditures are about $91.6 million for the 2023-24 school year, 4% of which is about $3.7 million. Our projected 23-24 fund balance is about $4.5 million. As we continue to prioritize our district initiatives, we strive to retain a healthy fund balance. 

Since 2016, we have consistently maintained a Debt Service Fund balance over $2 million at fiscal year-end. As of August 2022, the balance in the Debt Service Fund was nearly $3.6 million. This balance is intended to mitigate against fluctuations in property tax collection. 

Preventative maintenance work orders are included in the District’s online work system. 

Some of the preventative work orders have been added into our work order system, called Hippo, but we are still in the middle of transitioning to a more preventative maintenance focused system. We have contracted with Construction Services Group to assist us with the transition, which should hopefully be finished within the next two years. 

Safety checks have been conducted on systems such as fire alarms, fire extinguishers, smoke detectors, emergency lighting, and generators. 

We have up-to-date tags on all of our fire extinguishers, elevators, and generators. We also have paid invoices from the third-party testers who conducted the compliance checks. 

We have conducted annual inspections and done preventative maintenance on all school buses. 

We have passed our State Patrol inspections of our school buses in the past two years and kept up with preventative maintenance. 

We conduct regular energy assessments, which result in modifications aimed at energy savings. 

Since the elimination of the part-time Energy Manager position following the 2020 levy failure, our approach to energy management has evolved. Regular energy assessments, once a routine part of our operations, have been discontinued. Nevertheless, we maintain vigilance over our energy usage, although our monitoring practices are no longer as structured or scheduled as they were before 2020. 

  Despite these changes, we continue to secure energy-saving grants. In July 2022, Cascade Natural Gas awarded the District a grant of $105,465.50 as an incentive for the efficient construction of the new FHS campus. Additionally, we have successfully obtained several grants aimed at replacing our fluorescent light fixtures with energy-efficient LED lighting systems. 

Preventative maintenance, minor repairs, and unscheduled maintenance have been performed in such a way that all District facilities and equipment are operational and functioning in their necessary capacity for 99% of students’ annual instructional time. 

While our buildings have been operational and functioning for 100% of student instructional time in the past two school years, our equipment has occasionally broken down.  We prioritize the repairs to ensure the instructional environment is not disrupted.  

Recklessly expose the District, the Board, or staff to legal liability. 

Interpretation 

We understand this component requires us to follow all laws, maintain tight financial controls, conduct background checks when hiring, investigate and respond appropriately to all reports of staff or volunteer conduct that represent inappropriate risk, provide risk management training and maintain facilities in a manner that limits liability exposure, comply with all Federal and State mandates related to employment, and adhere to the guidelines of the Washington Risk Management Pool when it comes to assessing the risk level of various activities. 

Monitoring Indicators  

We will know we are in compliance with this component when we can show: 

The Human Resources Department is employing effective hiring practices, including fingerprinting and review by Washington State Patrol for criminal history. 

We completed fingerprinting and Washington State Patrol criminal history reviews for every newly hired employee. More details on our hiring practices can be found in the Operational Expectations Policy 4 (OE-4) monitoring report on personnel administration.  

We have established a District-wide safety and prevention focus aimed at reducing risk of student and/or staff injury, including active safety committees at all sites, clear protocols for reporting potential hazards, and timely response to all such reports. 

Each building has a Safety Committee that keeps the minutes of its meetings. An example from Central Elementary School can be found at this link. Personnel at each building have been trained to enter safety-related work orders into the Hippo work order system. Our custodians perform regular inspections of their facilities, including weekly playground inspections. 

Effective and timely investigative practices have been followed in all cases related to alleged employee misconduct. 

The process for handling an investigation begins with the receipt of a complaint with the Human Resources department. The complaints can come from within the district, outside the district, or other interest parties, such as a parent raising a concern.  

When it is determined that an outside investigator is needed due to complexity, potential conflict of interest, or potential exposure to legal risk, independent agency Clear Risk Solutions is notified and a request for a prelitigation investigation is made. Clear Risk then assigns an investigator that works collaboratively with the district to get background information, schedule interviews, and finally make any essential information available. In cases where the district is named in the complaint and there is a potential conflict of interest, the parties or individual involved are removed from any roles that may be suspect.  

Following the investigation, a report is written and presented for legal review by Clear Risk. The report is then made available to the district. When appropriate, the report in total, part, or summary is shared with applicable parties. Reports not protected under attorney client privilege are subject to public disclosure. 

During the 2021-22 school year, 10 investigations rose to the level requiring Clear Risk to step in. There was also an investigation completed by another agency, at the request of legal counsel and separate from the Clear Risk prelitigation program. Seven of those claims were determined to be unfounded. If Clear Risk finds enough evidence to support a claim, then the District takes the corrective or disciplinary action that is appropriate to the situation at hand. 

During the 2022-23 school year, Clear Risk performed 13 investigations, all a part of their pre-litigation program. All 13 were determined to be unfounded. 

We have made effective use of The Washington Risk Management Pool’s pre-litigation program offered through Clear Risk Solutions. 

As mentioned in the previous indicator, we have effectively used Clear Risk’s pre-litigation program. 

District staff have received trainings to reduce the likelihood that they will engage in practices that could expose the district to claims of liability by ensuring they stay current on such topics as concussion protocols and response to life-threatening allergies. 

All employees are required to complete risk management training annually through Vector Solutions. Some staff will take additional training if it’s applicable – for example, coaches take lessons on concussion and cardiac arrest protocols, CPR/First Aid. The state also requires coaches to take a series of classes every three years, including information on risk management and safe practices. 

The number of accidents, injuries, claims, and/or lawsuits filed against the District falls within an “acceptable” range. 

According to our Human Resources department, 78 accidents/injuries and 20 claims were filed against the District during the 2021-22 school year. Those numbers fell to 32 accidents/injuries and 19 claims during the 2022-23 school year. 

Two lawsuits filed in 2015 were recently settled by the District. Only one lawsuit has been filed against the district since 2016. The number of accidents, injuries, and claims are trending in a positive direction, and we believe only one filed lawsuit in a eight-year time span is a reasonable amount. 

 

Invest funds in investments that are not secured or that are not authorized by law. 

 

Interpretation 

We understand this component refers to committing District money or other assets to gain financial return. The Board expects us to make all such investments in accordance with governing law and District policy, ensuring safety, availability, and competitive market rate, subject to the District’s investment risk constraints and cash flow needs. 

 

Monitoring Indicators  

We will know we are in compliance with this component when we can show: 

 

We have earned a clean financial audit conducted by Washington State Auditors’ Office. 

 

The Board has been provided exit documents from the state Auditor’s Office each year upon completion of their annual audit. Those reports have consistently commended the District for its strong fiscal controls and include no significant adverse opinions. All audit reports can be found on the State Auditor’s website. 

 

Adequate funds have been available at all times to meet the financial obligations of the District when due. 

Since we wrote our last monitoring report on OE-7, the monthly financial reports shared with the Board via BoardDocs demonstrate that adequate funds have been available to meet all of our financial obligations in a timely manner. 

The District has earned a competitive market rate of return on legally permitted investment of available funds. 

All District funds are invested with the Whatcom County Investment Pool. 

Purchase or sell real estate, including land and buildings. 

Interpretation 

We understand this component requires us to seek and obtain approval of the Board through resolution, following legal counsel, before we purchase or sell real estate. 

Monitoring Indicators  

We will know we are in compliance with this component when we can show: 

No deletions or additions of real estate have taken place without appropriate Board action. 

The District has not purchased or sold any real estate without Board approval in the past two years. We did purchase a 0.49-acre parcel near Pioneer Park earlier in 2023, but that was only after Board approval. 

Take any action that damages the District’s public image or credibility. 

Interpretation 

We understand this component requires us to cultivate a positive reputation for the District by demonstrating sound resource management; a favorable financial condition; and overall staff conduct that is legal, ethical, and prudent. 

 

Monitoring Indicators  

We will know we are in compliance with this component when we can show: 

 

The District has maintained a positive image in the community. 

The District has taken major steps to boost its public image among the Ferndale community during the past two years. Since Superintendent Dominguez joined the district in June 2022, she has emphasized a spirit of belonging throughout the district with her You Belong campaign. This campaign – encompassing t-shirts, Belonging Awards for staff, videos, and much more – has majorly boosted morale among Ferndale school staff, which in turn has strengthened our reputation as a quality employer and caring educational system. The overall mood in our schools is much brighter in comparison to previous years.   

Although it can be difficult to precisely measure how the community at large feels about Ferndale School District, there are a few factors that point toward our district being thought of in a more positive light. First, there have been far fewer vitriolic social media comments on our Facebook posts in the past year compared to 2021 and we have noticed an increase in positive remarks at our Board meetings, especially in the last few months.  

Secondly, our most recent levy comfortably passed in February 2022, with nearly 60% of voters voting “yes.” This is a major improvement compared to our failed levy attempt in early 2020 and is proof of confidence in our district. We have also seen a positive shift in community perception and trust as a result of the direct involvement of the Bond Oversight Committee.  

Furthermore, community events such as the open house for our new FHS Academic Wing and the opening athletic events in our new Golden Eagles Stadium have drawn large, excited crowds. While watching the first football game in our new stadium, one resident and parent said in regards to the new stadium, “It feels like the community values (our students) and they have something to be proud of.” 

We also continue to maintain positive working relationships with the Lummi Nation, Ferndale Chamber of Commerce, and City of Ferndale; Moody’s Investment Services has maintained our higher-than-average credit score and bond rating; and relations with our labor unions have remained amicable and productive. 

Corrective action has been taken to address errors, omissions, and/or violations of any of the standards addressed by this policy. 

Corrective action has been taken on any violations of this policy’s standards. Indicator 5.1 above is a great example of this – during our last report in August 2021, we noted that our assessment at the time was not up to date. We have taken steps to remedy that. 

Superintendent’s Final Remarks 

We believe this report proves that our district has successfully protected and maintained our property, and has even improved our public image, during the past two years. We will continue these processes going forward, particularly as we strive to keep our brand-new Ferndale High School campus in top-notch condition. 

(A question the Executive Team has for the Board is if they would prefer this policy to be simplified by removing some indicators. We believe that this report should only cover a few questions more specifically related to risk management: Are you covered by insurance, doing safety trainings, keeping facilities in good shape, and so on. Some of these indicators are very similar to indicators already found in the Personnel Administration, Financial Administration, and Relationship with the Community monitoring reports. We understand the Board prefers these reports to be less overly broad and more pinpointed to the item at hand, and we believe these changes could do that.)