Wednesday, May 25, 2016

Stop the USDA Rule Change for Selecting FSMCs

The USDA has proposed another new rule change for those participating in the National School Lunch Program.   This is separate from the whole grain waivers that are set to expire.This new rule falls under the “Child Nutrition Program Integrity” rule.  It has two main focuses:
1)      It will change how Food Service Management Companies (FSMC) are selected.
The rule change would eliminate the cost reimbursable contract, which is the only type currently permitted in New Jersey. The proposed change is that the FSMC would be selected on a cost per meal.  This would emphasize price over quality.  It would inhibit district flexibility since all program changes would require a district to re-bid.  This change could include, changes of lunch schedules, increased cafeteria personnel, district requested menu changes, just to name a few.Choosing a FSMC based on the lowest meal cost does not promote quality or healthy nutrition for the students we serve.The USDA’s motivation for this change is based on an audit indicating that some management companies did not properly credit their client school districts with rebates.  This would already be a violation of the current regulations.  The USDA should focus on punishing those that do not adhere to this requirement; they should not punish students with an inferior program and lower food quality.

2)     The USDA will assess more penalties for violations.
The USDA wants more power to fine schools for violation of the Healthy, Hunger-Free Kids Act (HHFKA).  The Washington Beacon reported that a pre-school teacher in West Virginia was targeted to be fined for using candy as a reward for good behavior. The HHFKA has already had a detrimental effect on the number of students participating in the lunch programs.  These fines will make the relationship with our state regulators more adversarial. 

CALL TO ACTION:Let your voice be heard.  The USDA is accepting comments about the proposed rule change through May 31st.  I have included a sample letter you can use as reference.  Let the USDA know how you feel as a Business Administrator.  We have always been and will continue to be the professionals hired by our communities to secure the best service, best quality, and the best financial results for our schools.

Wednesday, March 30, 2016

HHFKA Alert: Relax Whole Grain standard to the 50% currently permitted in New Jersey.

The Healthy, Hunger-Free Kids Act (HHFKA) has had a major impact on participation in the National School Lunch Program.  The new requirements phased in since the 2010 enactment have resulted in a decreased number of students choosing reimbursable meals, increased food waste and an increased paperwork burden.  These changes have adversely affected the economic efficiency of school cafeterias.

It goes without saying that Boards of Education care about the health and well-being of students in their communities.  Concerns about the regulation’s focus on the burdens created by the Act that have little to no benefit in the effort to promote good nutrition.  These raised concerns, resulted in Congress directing the USDA to relax requirements to make meals more appealing to students.  The NJDA responded by granting waivers for the 100% whole grain rich requirements for the 2015-2016 school year. At the same time, they implemented additional paperwork burdens, further increasing the cost for feeding children, with no nutritional benefit.
A Call to Action
Congress is considering actions that will affect these regulations as they prepare for Child Nutrition Reauthorization.  The Senate Agriculture, Nutrition and Forestry Committee unanimously approved a compromise providing more flexibility in the standards and elimination of a portion of the onerous paperwork.  Unfortunately, the relaxed requirement to 80% whole grain rich is tougher than the 50% permitted in the waivers for 2015-2016.  (Many other states did not grant waivers and maintained the 100%).  Simply stated, 100% of grains/breads offered with the whole grain rich requirement must be whole grain rich.  Students did not respond well to this requirement, with all sandwiches, pasta, and pizza served being whole grain rich.  This contributed to the “mystery food” reputation of cafeteria food.
Congress should…
·        Relax Whole Grain standard to the 50% currently permitted in New Jersey.
·        Omit the new Non-Program Revenue Tool that changes the audit and requires all costs to be separated.  This is expensive and produces no benefit.  It is designed to prove that a district is not subsidizing a la carte sales with surpluses generated by the sale of reimbursable meals (no one does this)!

Sunday, January 31, 2016

Dealing with the "CAPs" in Today's Changing Environment

It's no secret the 2% CAP(s) were put into place to provide tax levy relief under the assumption that Public Schools in New Jersey were running inefficiently and without proper oversight or restrictions on spending.  While this may have been the case for a select few, by in large districts have and continue to manage their annual budgets with clear and precise operating procedures that existed long before the Accountability Regulation promulgated in Chapter 23 of Title 6A of the NJ Administrative Code.

What the Accountability Reg's did accomplish in many cases was to provide a strong degree of authority and strength for the School Business Administrators when dealing with enforcement of compliance.  Absent the regulations, BA's were left to rely on their influence and reasoning surrounding sound business decisions and fiscal management skills.

That withstanding, the problem of the 2% CAP or any cap structure is the inability to freeze costs "expenditures" such as wages and benefits for an extended period.   Add to this the complications of containing Special Education costs related to out of district private school tuition and I.E.P (Individual Education Plan) related services including 1 to 1 aides and the task is all but impossible.

Chapter 23 introduced districts to OFAC (Office of Fiscal Accountability), SEMI (Special Education Medicaid Initiative) in Chapter 5 and the Executive County Superintendent Budget Review in Chapter 9.  These measures were designed to enhance oversight and in SEMI's case push more funding away from the state and onto another source, in this case the Federal government.

It is Chapters 10 and 11 that deal with "Spending Growth Limitation" and Tax Levy Growth Limitation."
(c) The Commissioner shall complete by the end of the 2010-11 school year a study of the tax levy growth limitation enacted pursuant to N.J.S.A. 18A:7F-37 through 40, for the purpose of analyzing any effects that the tax levy growth limitation has had on disparities in spending among the school districts. The study shall include a recommendation by the Commissioner on whether the tax levy growth limitation should be continued after the 2011-12 school year, or whether the spending growth limitation under N.J.S.A. 18A:7F- 5, and N.J.A.C. 6A:23A-10.2 and 10.3 (banked cap) would be more effective in 153 addressing any identified disparities in school district spending, or whether a revised growth limitation method might be warranted.       
Since inception of the CAPs which include Superintendent Salaries, I could not help compare the attempt to artificially halt or contain budgetary price and salary increases with the failed attempts throughout history such as the "wage & price controls" of the Nixon administration in the early 70's or the "Law of Maximum" in revolutionary France in the 1790's.  Neither of which proved effective nor where they sustainable.

Bottom line is we are in the "Business of Education" and like any business the laws of supply and demand ring true.  Giving an effective wage and annual increase allows schools to attract and retain high quality administrators, teachers and clerical staff that do and will compete for higher wages and benefits in other sectors of the market.

The chief reason most district's have been able to manage within 2% environment over the past four years has been in large part due to the additional revenues captured under Chapter 78 through employee contributions; however, this has only exacerbated the already strenuous employee dissatisfaction of declining (take home) net pay.  The unrest has morphed into disgruntled feelings of oppression for the unions that is making its way into collective bargaining.

Although the CAPs are with us for the 2016-17 budget, we should consider the potential damage and long term effects of erosion in our programs that come from forced choice to make extreme cuts by eliminating program and staff in order to adjust to those CAPs.

Friday, September 18, 2015

GASB 68's Impact on NJ Audits

The Governmental Accounting Standards Board released Statment No. 68 "Accounting and Financial Reporting for Pensions" to improve accounting and financial reporting by state and local governments for pensions.  While the goal is to enhance the value of the the overall financial reports for assessing accountability and interperiod equity through disclosure of net pension liability, the move presents an immedite concern for all New Jersey School Districts in the form of timing and impact on the statutory deadline for submission.
GASB 68 - Wake up call!
Audit Submission N.J.S.A. 18A:23-1 provides that the annual audit must be completed no later than five months after the end of the fiscal year (December 1). N.J.S.A. 18A:23-3 requires “…such accountant shall within five days thereafter file two duplicate copies thereof certified under his signature in the office of the commissioner” (Monday, December 7, 2015). No provision is made for the issuance of extensions beyond the statutory due date. 
The concern centers on the State's ability to deliver the required information to districts by the November 1, 2015 target date based on the field work of KPMG working on behalf of the state to gather this data.  Keep in mind, KPMG is still completing field work and even once the state provides this data to districts, the information (reported information) will have a material impact on audits, reflected in changes to footnotes, schedules A1, A2, statistical J sections and other areas of the budget thus requiring significant modifications and entry on the part of district auditors state wide.  The concern then becomes the auditors ability to wrap up and present such audits in accordance with the statutory deadline of December 1, 2015.

Why this matters... If a district elects to or agrees to a Modified (Qualified) Opionion in order to meet the deadline of December 1 while awaiting the final revisions and inclusion of the GASB 68 Pension Liability reporting, that district faces a host of negative actions including but not limited to:

1.  Impact on QSAC (Quality Single Accountability Continuum) 
2.  Flags the district for potential State Monitoring
3.  Lowers the district's "Bond Rating" which equals potential higher interest rates
4.  Effects ability to apply for National awards such as ASBO's Certificate of Excellence in Financial Reporting [CEFR] and GOA recognition

Most important is the delay on reporting of Surplus status and or deficit position in the face of budgetary planning for the subsequent budget year 2016-2017.

We need a waiver!  Short of a waiver, we need to work through NJASBO to provide a clear understanding of the impact and seek relief.

Wednesday, May 27, 2015

Don't Miss Dan Thurmon in person at NJASBO Conference


"If you want to motivate, inform, educate, entertain and deliver a presentation that your team will not forget... by all means pick Dan Thurmon to 'deliver the difference' for you."
− Ken Myers, President, Romacorp, Inc.

"You challenged us to use our gifts, and to take action when we have the chance. On behalf of everyone who attended, and all 72,000 members of the Raytheon team, please accept my deepest thanks and very best wishes."
− William Swanson, CEO, Raytheon Company

"The valuable strategies you were able to visually convey through your presentation gave our participants a strong image and affiliation with our goals and objectives."
− Pam Elledge, Director of Business Development, Delta

"You took the issues, challenges, every day stresses and strains of our plant and turned them into part of an educational but entertaining action-packed message."
− Jack L. Murphy, Johnson Controls, Inc.

Sunday, May 10, 2015

Ill-Conceived Legislation (Pending) Opposed by NJASBO

  • Ø  A1566-Requires each school district to offer a summer payment plan for school district employees
  • Ø  S125/S1674 – Requires school districts to allow charter school students, county vocational school students, and students receiving equivalent instruction elsewhere than at school to participate in interscholastic sports programs on resident district’s sports teams
  • Ø  S679 – Allows establishment of county-wide purchasing system for certain school district services in certain counties; offers employment protections for certain food or custodial services employees; and regulates subcontracting by districts and public higher education
Once again we are looking at legislation pending before the NJ Assembly and Senate that is not thought through as to the impact and ultimate value for efficient operations of the public school districts.  Perhaps that is not goal; however, it will be the outcome.  Let's look at these two bills:

First, A1566 requiring all district's to provide a summer pay.  The fact is most district's are moving in the other direction for two reasons: 1) the unmanageable IRS regulations related to tracking and distribution of interest for individuals involved; and 2) the extra time on task for payroll coordinators to accomplish what can very easily be done by the employee in their own bank each pay with savings accounts.

The perspective of practitioners in the field such a School Business Officials and Payroll Coordinators vs. legislators should carry far more weight and understanding of the need to abolish, not mandate this practice.  This practice has created perhaps the most challenge and disruption to the payroll process throughout the year even though payments are dispersed in the summer.  This intensifies during the audit.  Like many district's our participation was around 12% of the total employees eligible.  Based on ROI, not worth the waste of manpower.  Consider those left with the work are also dealing with five tiers of Pension reform and change and let's not get into Health Care Reform or the contribution schedules.  Bad idea!  1/16/2014 Introduced, Referred to Assembly Labor Committee

Second, S125/S1674 - Requiring any student who does not attend the local public school system to participate in extra curricula activities such as athletics and or clubs.  This bill is also opposed by NJASBO for a number of reasons.  Let's consider the obvious cost implications; however, what about the fact that these students and or parents have made the decision to opt out of the public education system for what they perceive or believe lacks the rigor, quality or opportunity in the area of academics.  This is obviously not the case as public schools today face continued pressure to perform and prepare our students for a 21st Century Global Education!

Yet, they recognize the additional benefits of the public education system, such as facilities and programs for extra curricula and clubs.  The fact is they are simply a part of what makes public education work and work well.  These offerings and commitment to our students are simply part of an overall global educational program that remains available to our students.
It should not be used to augment or supplement the short comings of a Charter/Private school experience.

As a strong advocate for Public Education since before working in schools, I have espoused the concept of inclusion and involvement in working towards progress and achievement in our schools. Their is always room for improvement and we should never become complacent.  Rather than looking to replace or provide alternative school choices, we should work to address and improve our Public Schools by supporting them!  That is what led me to become a School Board Member in 1997 in my own community.  That is what drives me to lead in 2015 as upcoming President of the New Jersey Association of School Business Officials.

Saturday, May 9, 2015

Budget and Transparency - An 'Open' Conversation

With each passing year another budget cycle culminates in a public hearing on the annual budget and the necessary funding approval to authorize spending for our most valuable resources: our students! 
NJSBA Webcast on Budget
Laws and Regulations in 2009

Although the process is governed by budgetary laws and regulations requiring dissemination of budget materials, public advertisement, postings of the district's 'User Friendly Budget' and regulated by the election calendar published by the State of New Jersey; often individuals or groups espouse lack of transparency as a cry for more detailed information.  In truth, district's operate in a climate of heightened openness and awareness of the need to produce budgetary information that is reliable and easy to understand by community residents. 

Pictured here from left to right are participants Louis J. Pepe, business administrator for Summit Public Schools; Michael Kaelber, director of Legal and Policy Services for NJSBA; and Neil K. Cramer, Sussex County Executive County School Business Administrator and state coordinator, Executive County School Business Administrators.

Groups such as New Jersey School Boards Association continue to promote workshops, webcasts and blog information to assist board members in their role of budgetary oversight.

While it is important to engage the community and provide effective dialog on the budget process from development to content and ultimately the tax impact, the responsibility rests with the Board of Education to review and approve the final budget based on the needs of the students and ensure that the budget conforms to the goals of the district.  When comments anchored to 'transparency' are made, they linger against a backdrop of assumed community partnership and question the expectation of, 'working together'.

Each time a challenge to that authority is espoused by individual or as a group it calls into question the trust and confidence of the Board and Administration and serves to weaken or diminish the positive relationship that each group strives to build.  Perhaps the most astonishing fact is the economic climate compared to the fiscal performance of many districts over the past five years which does not warrant such scrutiny.

For decades, New Jersey voters in most districts voted on their school district’s proposed budget and on school board candidates each April.However, legislation enacted in early 2012 eliminated – for districts that moved board member elections to November – the requirement that a school board submit its proposed budget to a public vote as long as the budget remained at or below the state’s 2 percent tax levy cap. The overwhelming majority of boards have chosen this option, and so few districts now submit their budget to a public vote. However it is still important to adequately explain the school board’s and the superintendent’s rationale for choices made in the school budget. The required public budget hearing is an ideal time to do this. Boards which still have an April vote on their budget also hold spring budget hearings.  source - NJSBA School Leader, January/February 2013 - Volume 43.4