Issues to Watch 2014: Manatee School District budget

EAST COUNTY — It was Friday the 13th, in December, and Rick Mills, sporting a pink dress shirt with the top button undone and a black sport coat, crashed a holiday lunch his finance staff was holding.

Within a month before this festive gathering, the Manatee County School District had received two State Auditor General’s Office reports revealing the district could spend more than $9 million to recover from major financial errors past leadership had made.

“I appreciate the work each and every one of you are doing during this difficult time,” Mills, the district’s superintendent since March, told his team. “I’m here to say I believe in the team, and I believe in this district, and we’re still on track to make it one of the best school districts in Florida. Happy holidays.”

Mills promptly took the elevator to his upstairs office, where he and two top aides squished onto two couches.

Even as their task becomes more challenging by the day, the leaders — Mills and his deputy superintendents, Don Hall and Diana Greene — vow to keep the district afloat.

“I don’t regret taking this job at all,” Mills said. “There were times during the last budget process when the three of us worked 80-hour weeks. That’s what the job required. When we find a challenge, we handle it.”
Mills has conceded he may have to persuade the state to permit a deferred payment plan to meet required reserves — or extra cash on hand to use in its operating budget.

Mills’ financial recovery plan, which the Florida Department of Education approved in June, promised to restore a required 3% fund balance — $10.3 million — by June 30, 2014.

The plan helped the district avoid state turnover, which was possible because the district has not met state-mandated reserves in three years.

“We are going to ask for forgiveness of certain areas or payments in future years,” Mills said. “We want to show the state the control systems we have now. We have a set plan that we plan to follow and monitor.”

Through a series of action plans presented to the state, Mills says the district can reduce the more than $9 million in extra costs — required by audits that exposed a series of mistakes caused by poor record-keeping and misused spending.

Those unexpected costs, combined with another $3.9 million in costs the district failed to account for last fall, show that plans change.

Mills believes he can reduce the costs because he says the district has addressed some of the state’s concerns already; the external audit accounting firm Mauldin & Jenkins conducted in the spring confirmed many of the problems the state would soon find.

“My goal going in was to balance the budget, which we have, and restore the fund balance,” Mills said.

“That hasn’t changed.”

A team to lead a new way
The goals haven’t changed because Mills believes he has assembled a steady, capable team.

Hall, the deputy superintendent of operations, came here with Mills from Minneapolis Public Schools.

Greene, the deputy superintendent of instruction, competed against Mills for the top job in the district. Mills hired her a month later.

Mills created new budget and finance director positions.

He also hired an executive director of human resources and recreated the district’s organizational chart.

“We have the right people in the right seats,” Mills said. “The new team has uncovered the majority of the challenges we have. I feel good most of it is behind us.”

Another audit, this one conducted by Navigant and released in January 2013, investigated a $3.4 million budget deficit from 2011-12 that preceded the resignation of former Superintendent Tim McGonegal.

It cited the district for slow reaction time, minimal communication, a lack of written policies and procedures for the preparation of budgets and insufficient staff and automated systems to manage it.

Creating buy-in
When he interviewed for his position, Mills made promises related to overcoming the Navigant report’s findings.

He believed a lack of transparency meant the district had lost the trust of the community.

He tries to empower the public.

The district began the budget process for 2014-15 in October, nearly a year before the document would be approved.

Administrators will use results from surveys administered to parents late last year to set goals for the district’s five-year strategic plan, which will span 2014 through 2019.

The strategic plan — to be published in March — will guide how the district funds its budget.

For three days in December, principals, teachers, community members, students and administrators participated in a strategic-planning conference at Manatee Technical Institute, where survey results were revealed and discussed.

“There was lots of concern about the budget,” Mills said. “It was constructive feedback.”

Transparency translates among the school district staff, as well.

The talk is not always what people want to hear.

“If a principal wants a new staff member and it’s not already budgeted for, the answer is no,” Hall said. “If a employee is leaving, it’s a two-step review process. Can you combine classes? Can you redistribute the students?”

Position control, payroll encumbrances and requisition have been built back into the budget process.

The encumbrance system only gives administrators access to available money. If the money isn’t there, it won’t allow the expenditure — a new hire, for example.

Regaining control
Even with controls in place, a school district budget is a working document that depends on federal and state funds that are tough to project, Hall said.

“There are so many unknowns in building a budget,” Hall said. “You’re preparing it around all of these projections. But you can respond faster to change if you have accurate data. Now we have accurate data.

Now we can make educated estimations.”

Mills says the district has re-launched a student information system that tracks how schools manage attendance and demographics and give grades.

The system determines state funding for full-time equivalent (FTE) counts.

Mills and his staff determined, in the past, that system was used at 25% to 30% of its capacity and produced 27,000 errors.

The district worked with each principal to correct those errors, and it has reduced the mistakes to 90, an improvement that will give the district an extra $2 million.

Mills believes the district can attain other savings by simply following protocol that was neglected in the past.

For example, under the Medicaid system, school districts can bill back a portion of costs to the federal government for district activities such as bus transportation for exceptional student education (ESE) students and remediation.

Mills will likely encounter more challenges — but he and his team have learned from past mistakes.

“I told my team that we can make mistakes — if it’s an honest error — but we can never have a repeat finding. We learn,” he said.

BREAKDOWN
Overview: Superintendent Rick Mills hopes a competent team, stronger controls and community support help the district right its budget.

Players: Rick Mills, Don Hall and Diana Greene

Timelines: October 2013 — The school district began the budget process for 2014-15; December 2013 — The State Auditor General’s Office released a two-part report unveiling more costs to the district; March 2014 — the district’s five-year strategic plan will be published.

Contact Josh Siegel at [email protected]