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Chapter 4
Financial Management

This chapter reviews the financial management and purchasing functions of the Venus Independent School District (VISD) in the following sections:

  1. Organization and Management
  2. Planning and Budgeting
  3. Accounting and Payroll
  4. Tax Collections
  5. Purchasing Operations
  6. Contract Management
  7. Textbooks


A. ORGANIZATION AND MANAGEMENT

In February 2003, the district filled its newly created Business Office manager position. The new Business Office manager is a certified public accountant (CPA) and served as a school business manager in another state. The VISD Business Office handles accounting, financial reporting, auditing, accounts payable and receivable, bank reconciliations, investments, purchasing and fixed assets. The business manager supervises the bookkeeper and the accounts payable/purchasing clerk.

The business manager oversees all of the functions in the Business Office. The bookkeeper maintains the district’s accounting, grant reporting and fixed asset systems. The bookkeeper also maintains the student activity and school activity accounts and performs all bank reconciliations. The accounts payable/purchasing clerk processes all district payments, including student and school activity funds, and processes all deposits for the district. The clerk also processes purchase orders and sends received orders to schools or departments.

In March 2003, the board approved an updated organizational chart that will move the payroll and food service budgets under the business manager’s supervision. The district will implement the new organizational plan by the 2003-04 school year.

Exhibit 4-8 illustrates the Business Office’s organization.

Exhibit 4-8
VISD Business Office Organization
2002-03

Source: VISD, business manager.


FINDING

The payroll and benefit management functions receive less attention than they need. The superintendent’s secretary handles the payroll and employee benefits functions. Payroll and benefits require a dedicated position; the position of superintendent’s secretary has enough responsibilities without these duties.

Administration of payroll and employee benefits requires knowledge of board policy, state and federal laws, guidelines and individual insurance/benefit programs. The review team noted that the district was not following board policy in paying unused local leave. The district also does not consistently apply its process for the Family Medical Leave Act. District employees had difficulty locating employee benefit program records and documentation relating to compliance issues when the review team requested them.

Small districts often will consolidate the payroll and employee benefits duties to increase the efficiency and effectiveness of their business operations. In Lyford CISD, the payroll clerk has the following responsibilities:

  • prepare all payrolls including semimonthly, monthly and special payrolls;
  • prepare payroll checks for all employees and distribute to schools and departments;
  • balance payroll earnings and deductions;
  • make related transfers of funds and deposits;
  • receive and audit timesheets for all district employees;
  • prepare and submit payroll reports and forms including those required by the Internal Revenue Service, Texas Workforce Commission, Teacher Retirement System, Federal Insurance Contributors’ Act, Medicare, and Texas Workers’ Compensation Commission;
  • prepare and post all payroll changes including payroll deductions, salary changes, terminations and new employee information;
  • maintain physical and computerized files including payroll records, absent-from-duty reports and service records;
  • communicate with Human Resource Department, campus secretaries and employees to ensure accuracy of information reported; respond to requests from financial institutions regarding employment verification; and
  • maintain confidentiality.
  • complete all workers’ compensation reports; process cafeteria plan election and revocation forms and monitor Section 125 compliance of revocation forms;
  • provide notice to third-party administrator for Consolidated Omnibus Budget Reconciliation Act and Health Insurance Portability and Accountability Act events to ensure district compliance (these programs extend employee benefits to ex-employees for an established period);
  • process tax shelter annuity agreements and collect maximum exclusion allowance forms and hold-harmless agreements from companies; and
  • serve as liaison to employee benefit companies for employees.

Recommendation 19:

Create a payroll/employee benefit clerk position supervised by the business manager.

The duties of the payroll/employee benefit clerk position should include:

  • payroll administration including absence reporting and tracking;
  • all payroll reporting requirements including reports to the Teacher Retirement System, Internal Revenue Service and Texas Employment Commission;
  • employee benefit administration including group health, dental, life, section 125, Consolidated Omnibus Budget Reconciliation Act, Health Insurance Portability and Accountability Act and Workers’ Compensation claims and reporting.

Exhibit 4-9 shows the review team’s recommended VISD business office organization.

Exhibit 4-9
VISD Recommended Business Office Organization


Source: Texas Public School Consulting, Inc.


IMPLEMENTATION STRATEGIES AND TIMELINE

1. The superintendent and business manager develop a job description for the payroll/employee benefits clerk. September 2003
2. The superintendent presents a revised organizational chart including the new position to the board for approval. October 2003
3. The business manager advertises the position. October 2003
4. The business manager screens applications, conducts interviews and recommends an applicant to the superintendent. November 2003
5. The superintendent approves the hire and fills the position. November 2003
6. Payroll duties are transferred from the superintendent’s secretary to the payroll/employee benefits clerk. November 2003


FISCAL IMPACT

The creation of the payroll/employee benefits clerk will cost the district $23,890 for 2003-04 and $28,662 for 2004-05 through 2007-08. The review team based this estimate on the average annual salary for paraprofessionals at the district central office—$26,056. Benefits for the new position will cost another 10 percent of the salary ($2,606). Total annual salary for the clerk will be $28,662. Since VISD will not hire the clerk until November 2003, the review team prorated the cost of the position for 2003-04 ($28,662/12 = $2,389 x 10 months = $23,890).

Recommendation 2003-04 2004-05 2005-06 2006-07 2007-08
Create a payroll/employee benefit clerk position supervised by the business manager. ($23,890) ($28,662) ($28,662) ($28,662) ($28,662)