Use of Lottery Funds

Transcription

1 The School District o f Hillsborough County has appropriately managed lottery proceeds; however, the program evaluation process should be enhanced. Conclusion The Hillsborough County School District (the district) is using all of the best practices for lottery proceeds. As outlined below, the district uses its lottery proceeds in a manner consistent with its definition of educational enhancement, allocates lottery proceeds as required by law, and accounts for the use of lottery proceeds appropriately. The district has an adequate definition of educational enhancement, which provides the public with a clear understanding. However, the district does not provide an evaluation of the impact of lottery fund expenditures on enhanced student education. During the course of this review, Gibson Consulting Group, Inc. identified two specific district accomplishments in the use of lottery proceeds, as included in Exhibit 8-1 below. Exhibit 8-1 The District has two Notable Accomplishments in the Use of Lottery Proceeds in the Last Three Years The district has a well thought out process of providing district guidance on the development of school improvement plans. The use of the district website to provide a quarterly report on the use of lottery proceeds is an effective device for the provision of a substantial body of information. Source: The School District of Hillsborough County. Overview of Chapter Findings Gibson Consulting Group, Inc. reviewed the district s use of lottery proceeds using the Best Financial Management Practices adopted by the Commissioner of Education and associated indicators. On-site interviews were conducted with district level managers of both the lottery program and the school advisory council process. District materials regarding the lottery process were reviewed. Several area principals were also contacted regarding the procedures used for distribution of lottery proceeds. An overview of chapter findings is presented below. Lottery Proceeds 1. The district has defined enhancement in a way that the public clearly understands. (Page 8-3) 2. The district uses lottery proceeds in a manner consistent with its definition of enhancement. (Page 8-4) 3. The district allocates lottery proceeds to school advisory councils as required by law. (Page 8-5) Gibson Consulting Group, Inc. Page 8-1

2 4. The district accounts for the use of lottery proceeds in an acceptable manner. (Page 8-6) 5. The district does not specifically evaluate or report the extent to which lottery expenditures have enhanced student education. (Page 8-7) Fiscal Impact of Recommendation The recommendation presented in this chapter can be implemented with existing resources. Background Florida law requires that at least 38 percent of the gross revenue from the sales of lottery tickets be deposited in an educational enhancement trust fund. These proceeds are to be used for the benefit of public education. Eligible purposes include the payment of debt service on bonds for school construction. The balance of proceeds is to be used for a variety of public education programs and purposes. The lottery statute further provides that a portion of the revenues distributed to school districts shall be made available to each public school in the district for enhancing school performance through the development and implementation of a school improvement plan. Operating under this statutory framework, the Florida Legislature apportions lottery proceeds to public schools, community colleges, and universities. These proceeds are allocated to the districts on the same basis as the district s K-12 base funding. For fiscal year , the Hillsborough County School District was allocated $19.5 million in lottery proceeds, compared to $13 million for the prior year. This increase in proceeds was primarily associated with a new program to provide a School Recognition Allocation. School recognition proceeds were to be allocated to each school classified as an A school and to each school that had improved by one letter grade from the prior year. Under Florida law and regulations, the district is required to establish policies and procedures defining the use of educational enhancement proceeds and the specific types of expenditures consistent with that definition. The district is also required to use a specific accounting code for the receipt and expenditure of lottery proceeds. Reporting requirements include a quarterly report in an easy to understand format to the public, and an annual report to the Department of Education within 60 days following the end of the fiscal year. From the district allocation, the law requires funding for both the School Recognition Allocation (SRA) and a School Advisory Council (SAC) allocation. For , the School District of Hillsborough County has budgeted $7.8 million for SRA allocations and $1.6 million for SAC allocations. Recognition allocations are $100 per student while SAC allocations are $10 per student. State law provides for specific directions regarding the uses of these proceeds. Administrative staff at both the school and district level are directed not to override SAC approval of these budgets. 8-2 Gibson Consultants, Inc.

3 Enhancement of Educational Programs 1 The district has defined enhancement in a way that the public clearly understands. The term enhancement is defined for the purpose of appropriating discretionary lottery proceeds allocated by the Legislature to be expended for program activities and services that contribute to student learning and achievement. The program and/or services are as follows: 1. To help sustain programs which were previously funded through state categorical appropriations; 2. To supplement partially funded state categorical programs; 3. To develop and implement school improvement plans as required by the Accountability law; and 4. To enhance funding to charter schools. Annually, the school district holds a public hearing regarding the adoption of the school year budget. The definition of enhancement is located in the board agenda item titled Public Hearing to Adopt the Millage Rates & Budget for fiscal year The district has an appropriate definition of enhancement. Although the components of the district definition are generic, they effectively communicate that the district is using the proceeds for the specified purposes. The current use of the proceeds permits a more specific understanding, which is communicated to the public in district documents. According to district documentation, the district uses the proceeds for school recognition allocation ($7.8 million), PREP programs ($4.8 million for school health screening, and class size reduction), $5.1 million for general transportation funding, $1.6 million for school improvement, and $0.2 million for charter school enhancement. The periodic review of the definition of enhancement provides an opportunity for meaningful stakeholder input. The district requests input from various stakeholders for any changes to its definition of enhancement. Letters are sent to members of the Central Facilitating Team (CFT) and the public is also able to make suggestions via the district s web site under the Ask Special Projects link. The CFT is an advisory committee to the district regarding accountability. The CFT is comprised of school board administrators and teachers, school advisory members, parents, and business/community members. Stakeholder input letters are mailed out annually to those on the CFT committee for review. During the month of January, letters are mailed to the CFT describing the current definition and use of the lottery proceeds. The letter provides an opportunity for community members to comment on the district s definition of enhancement. The district provides procedures relating to use of lottery proceeds to the Department of Education. The district adopts general procedures for the use of educational enhancement proceeds and specific procedures for the adoption of school improvement plans. These plans and procedures are provided to the Department of Education in August of each year, together with a financial report. Gibson Consulting Group, Inc. Page 8-3

4 The provided procedures do not constitute a full definition of all procedures, which are used in the distribution of proceeds. The provided information contains a general summary of the procedures and the purposes for which the proceeds are to be used. 2 The district uses lottery proceeds in a manner consistent with its definition of enhancement. Given the broad definition of enhancement, the district faces little problem in using lottery proceeds in a consistent manner. Expenditures of lottery proceeds are consistent with the adopted definition of enhancement. Both quarterly reports to the public and annual reports to the State indicate that the district uses its lottery proceeds in a manner that is consistent with its definition of enhancement. However, the tie between the district s definition and the specific purposes requires unnecessary translation, and could be improved. The district s definition of enhancement has four components: (1) previously-funded state categorical programs, (2) partially-funded state categorical programs, (3) school improvement plans, and (4) charter schools. The uses of the proceeds include: (1) the school recognition program, (2) the primary education program, (3) the transportation program, (4) the school improvement program, and (5) charter schools. These two definition sets may be tied together. The primary education program supports activities associated with health screening, individualized programs, grade K-3 class size reduction, and staff development for grades K-3. These programs all fit within the definition for previously funded state categorical programs. The transportation allocation meets the requirements of a program not fully funded by the State. The school improvement program, and by extension, the school recognition program are both connected to the general area of school improvement plans offered in the definition. Finally, the charter school allocation directly correlates to the charter school component of the definition. The district reports on a quarterly basis, to the board and public, how the lottery proceeds are expended, and annually reports to the Department of Education. The quarterly report defines enhancement and can be viewed on the district web site. Lottery proceeds are provided for use in each school's improvement plan. The district is able to demonstrate that a portion of the lottery proceeds provided to each school is used in conjunction with the school s improvement plan. The review process used for the school improvement plans is comprehensive. The SAC plans are maintained in the Assessment, Accountability, and Evaluation Department. The School Infrastructure Thrift (SIT) project was established for the ease of schools to track revenue and expenditures for their own SAC dollars. Allocations are initially set in July, based on an award of 90 percent of the prior-year FTE, with revised allocations set in February based on current year distributions. For fiscal year allocations of $1,586,956 were made to the district s schools. The largest allocation was made to Sickles High School ($26,702), while the smallest allocation was made to James Exceptional School ($680). Allocations are made for each fiscal year, and proceeds must be encumbered or expended in that year. Use of lottery proceeds by schools is reported in improvement plans. The school improvement plans are reviewed and submitted annually to the school board for approval. Beginning with the fiscal year, a comprehensive report on expenditures was provided to the 8-4 Gibson Consultants, Inc.

5 school board at year-end. This report detailed lottery-funded expenditures of $1,584,053 among a variety of school expenditure accounts. The most significant items included teaching supplies ($623,644), salary and benefits ($146,772), books for existing libraries ($63,754), travel ($47,849), other personal services ($78,133), and computer hardware ($139,013). 3 The district allocates lottery proceeds to school advisory councils as required by law. The district allocates proceeds to school advisory councils based on a formula methodology, which meets the specifications of current statutes. The methodology provides for an initial allocation of 90 percent of the proceeds on estimated student counts and a reallocation procedure for the remaining 10 percent of the proceeds, when actual student counts are available. Approved School Improvement Plans (SIPs) are in place, with discretionary proceeds for School Advisory Councils (SACs). Florida law requires a system of school improvement and education accountability. One of the critical elements of this process is the adoption of school improvement plans which directs the district to annually approve and require implementation of a new, amended, or continuation SIP for each school in the district. The plan is designed to address the achievement of State education goals and student performance standards. The law also requires the district to address issues relative to budget training, instructional materials, technology staffing, student support services, safety and discipline strategies, and other matters as determined by board policy. Each school in the district is operating according to an approved SIP. However, due to a change in procedures, most schools are operating on the basis of a carry-over plan from the prior year. Current district procedures provide for the development and adoption of school improvement plans within the current school year. Therefore, a number of plans have not yet been submitted, reviewed, or approved. Guidelines for the development of SIPs, as well as district financial records clearly indicate that the required allocation of $10 per student has been made to the individual schools. SAC lottery proceeds may be spent without impediment. SAC teams may expend their dollars as appropriated and approved by each school s SAC team. Each prescribed advisory plan includes a section designated as school advisory council projected budget accountability dollars. Under this structure, a budget based on a local format is adopted by the SAC and submitted as part of the overall plan to the district staff for review, and to the school board for approval. Expenditure requests are monitored against this adopted budget. Approval of these items by the district finance officer is automatic unless the expenditures fall within an area generally prohibited by district accounting policy. In this case, an intervention may be necessary to provide district concurrence with the adopted school budget. Appropriate guidelines are distributed. District guidelines and training for SACs are appropriate and comprehensive, given the limited resources available in the Department of Assessment, Evaluation, and Accountability for this purpose. The guideline documents call for the election of a SAC, the use of a whole school effectiveness model, development of a SIP, conduct of the meeting of the SAC, procedures for use of accountability proceeds, Gibson Consulting Group, Inc. Page 8-5

6 and provisions for use of waivers from school board policy, union contracts, operating procedures, or state statutes. The board has also adopted a comprehensive set of Guidelines for School Improvement for fiscal year The guidelines were issued after a substantial modification of the SIP procedure, which now calls for the election of members in the spring, a needs assessment in the summer, and submission of the plan to the central office in the fall. This process, new for fiscal year , has experienced some difficulty in initial implementation, but is designed to increase the usability of the plans during the school year. Under the guidelines, the school improvement plan is to be developed collaboratively by the SAC and have the approval of the principal and at least two-thirds of the individuals who will be affected by the plan. The plan is submitted to the Assessment, Accountability, & Evaluation Unit who coordinates review of the plan prior to submission to the superintendent and the board for approval. 4 The district accounts for the use of lottery proceeds in an acceptable manner. The current accounting system tracks lottery proceed expenditures in an acceptable fashion. Exhibit 8-2 presents the account codes used by the district for lottery-related expenditures. Exhibit 8-2 The District Uses 24 Account Codes to Track SAC s Use of Lottery Proceeds Account Description Salaries/Benefits Professional and Technical Services Benefits Travel Repairs and Maintenance Telephone Postage Other Purchased Services Transportation Print/Bind/Reproduce Supplies Teaching Supplies Office Other Materials and Supplies Source: The School District of Hillsborough County. Unique funding source code has been adopted. Books Existing Libraries A-V Material (under $750) Equipment (over $750) Equipment (under $750) Computer Hardware (over $750) Computer Hardware (under $750) Remodel and Renovate Software (over $750) Software (under $750) Dues and Fees Other Personal Service Miscellaneous Expense Lottery dollars are placed in the general fund and are earmarked by specified site, project, and program numbers. This allows schools, SAC teams, and district employees to track revenues and expenditures. The district has a unique funding code (function 3344) for educational enhancement proceeds. Use of this code permits tracking specific expenditures for SIPs. 8-6 Gibson Consultants, Inc.

7 Proper accounting for educational enhancement proceeds is in place. The district can demonstrate that it properly accounts for educational enhancement proceeds. In contrast to a number of other districts, the proceeds are virtually fully expended, and there is internal agreement between various accounting records and state reports as to the total amount provided. The financial tracking system adequately tracks the expenditure of lottery proceeds. The district s financial system has the ability to track the receipt of lottery proceeds and the expenditures within the specific areas designated by the district through its definition of enhancement. Additional information is available to measure outcomes of the programs funded by lottery resources. The measurement of outcomes with regard to these proceeds is measured by a variety of resources appropriate to the specific areas in which the proceeds are expended. The results of lottery proceeds invested in SIPs may be measured by the overall achievement level of the individual school, while information regarding district-wide programs for such areas as transportation may be measured through information designed to show the results of the overall program area. 5 The district does not specifically evaluate or report the extent to which lottery fund expenditures have enhanced student education. The evaluation and reporting of lottery fund expenditures is designed to track minimum state requirements for this purpose. The process is generally acceptable, given the uses of these proceeds by the district. If the district were able to become more flexible and innovative in the uses of these proceeds, evaluation and reporting activities would have to be enhanced. The district submits the required state reports. The fiscal year expenditure level of $13.2 million compares with revenue of $12.9 million. The difference is explained by the district s use of approximately $250,000 of unexpended proceeds from the prior year. The district submits within 60 days from fiscal year end the Discretionary Lottery Proceeds report to the Department of Education. Exhibit 8-3 compares the allocations and expenditures of lottery proceeds for fiscal year Exhibit 8-3 Reported Expenditures In Agreement With District Allocations (Amounts in Millions) Program or Activity Amount Allocated Amount Expended (as reported to DOE) Accountability $1.7 $1.8 Primary education program $5.1 $5.1 Transportation $5.9 $6.1 Charter schools $.2 $.2 Total $12.9 $13.2 Source: The School District of Hillsborough County. Quarterly web-based reports are available to the public. District staff provides lottery expenditure information and where the dollars were being expended to the Gibson Consulting Group, Inc. Page 8-7

8 board on a quarterly basis. Starting in fiscal year , the information has been provided via the district web site: Additional information needed for specific projects. The district does not provide cost analysis for specific projects funded from lottery proceeds. In contrast, projects funded through school improvement programs are described in detail and are evaluated by the SAC. Information regarding district-wide projects is not presented to district advisory committees or the board. Specific cost information with regard to the impact of these programs could provide the district a basis for improved utilization of these proceeds in the future. Projects designed to compensate for underfunded state programs such as transportation would not necessarily be exempt from the cost analysis. Recommendation We recommend that the district expand data collection and analysis functions for projects specifically financed by lottery proceeds. Action Plan 8-1 provides the steps needed to implement this recommendation. Action Plan 8-1 Provide improved cost analysis for lottery-funded projects Strategy Expand data collection and analysis functions for projects specifically financed by lottery proceeds. Action Needed Step 1: Determine projects for which cost analysis should be undertaken. Step 2: Establish information requirements for cost analysis. Step 3: Collect and analyze information. Step 4: Prepare reports summarizing the results of the cost analysis. Who is Responsible Time Frame Fiscal Impact Source: Gibson Consulting Group, Inc. Assistant Superintendent for Business Information and Technology school year. This recommendation can be implemented with existing resources. 8-8 Gibson Consultants, Inc.