THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, November 26, 1995 TAG: 9511250050
SECTION: VIRGINIA BEACH BEACON PAGE: 06 EDITION: FINAL
TYPE: Editorial
LENGTH: Long : 230 lines
The debate between the School Board and City Council concerning consolidation of some financial services continues. Following are a letter to City Council from School Board member Joe Taylor; excerpts from a ``concept paper'' the city had provided school staff as a beginning point for more detailed discussion; and the resolution the School Board passed after having received that concept paper Nov. 17 from City Manager Jim Spore.1Nov. 17, 1995
All City Council members:
Dear council members:
Your chosen approach at the last council meeting of rejecting the reconciliation agreement and unanimously passing the take-it-or-leave-it resolution was an attempt at political punishment that I did not appreciate.
The School Board has publicly taken ownership of the budget deficit on numerous occasions. It happened on our watch and certainly the buck stops with us. We have recognized the duty to repay the funds through the reconciliation agreement. However, if we change one word in the repayment plan, it is rejected as being ``diluted.'' The true basis of the agreement had not been changed at all. Our 3 percent deficit will most likely be paid back well before the year 2000, according to the plan.
Secondly, your resolution demanding approval of consolidation of financers by our Tuesday (Nov. 21) meeting is ridiculous. As you know, I have been your ally through all of this. I have defended council repeatedly and have been an outspoken proponent of some form of consolidated finances. I have asked individual council members and asked publicly during board meetings for some explanation of how the proposed consolidation would be organized. What will the organizational structure and arrangement of function and duties look like? To date the board has received nothing. Remember, the School Board passed a motion on Sept. 5 agreeing to consider seriously consolidation of finances. Where is the conciliatory, collaborative teamwork that the citizens expect from our two elected bodies? I was honestly confident of passage of consolidation until your arm-twisting threat last Tuesday, unanimously voting to go to the General Assembly unless we agree. Thanks to your political grandstanding on this issue, the future relationship between City Council and School Board will be damaged for some time.
I urge City Council to rethink its position. Consolidation and reconciliation can happen, but not with the threat of holding back the $12.1 million. Our citizens are counting on us working together. Let's make our great city proud.
Yours very truly,
Joseph D. Taylor
School Board member, at-large
cc: All School Board members
Mr. James K. Spore, city manager
Dr. James L. Pughsley, interim superintendent
Sen. Kenneth W. Stolle
Del. Robert Tata
Del. Robert F. McDonnell
Del. Leo C. Wardrup Jr.
2 CONCEPT PAPER PROPOSED ``CONSOLIDATION'' OF CITY AND SCHOOLS FINANCE FUNCTIONS
Following are excerpts from a concept paper city staff presented to school administrators in mid-October and City Manager Jim Spore sent to City Council, School Board and school administrators on Nov. 17.
. . . One way in which to ``do more with less'' is by seeking opportunities to combine services to eliminate duplication and improve service. Both the School Board and City Council have stated their interest in the possibility of consolidating the financial functions performed by the city's Finance Department, creating a consolidated finance department to perform the following functions:
Accounting and accounts payable/preaudit
Purchasing
Payroll
Risk management (recommend review and consultation on an ongoing basis only)
This concept paper addresses only the Finance Department functions listed above and does not address budgeting functions.
I. Conceptual overview.
The proposed ``consolidation'' could be better viewed as a service agreement, whereby the city Finance Department would provide, through a Memorandum of Understanding (MOU), the appropriate level of services to the schools. The MOU would address the following:
A commitment from the City Council, the School Board, the city manager and the superintendent of schools to open communication and cooperation, and support for the consolidated service-delivery system.
The consolidation could be effective July 1, 1996. However, the detailed planning process would need to begin immediately to ascertain a firmer date or to develop a coordinated plan of action.
The responsibility for taking corrective action and developing policies would remain with the school division and School Board. The associate superintendent for administrative services would be responsible for review of the financial statements and for taking management action as necessary.
The city Finance Department would be responsible for:
*Administering the acc-ount-ing/accounts payable, purchasing, pay-roll and risk-management func-tions:
- Invoices paid after approval by appropriate school personnel.
- Budget adjustments and other transactions posted after school approval.
- Goods procured in accordance with school policies.
- Salaries paid after school approval.
- Risk-management program periodically reviewed.
* Improving the system of internal control.
* Initiating process im-prove-ments.
* Preparing meaningful financial reports; such reports would be developed over time, working with the School Board and school staff to continuously improve the quality of information they receive.
* Working with the school staffs to understand their needs regarding accounting, procurement, payroll, etc.
- Superintendent
- Administrators
- Directors
- Principals
Current staffs would be consolidated, with no loss of jobs. Vacancies would be eliminated based on an evaluation of current staffing.
Space needs would be evaluated and a location would be determined that would recognize the importance of consolidating locations while maintaining accessibility.
A plan would be developed to acquire a new financial-accounting system and improve or replace the schools' human-resource/payroll system.
The savings from the consolidation will be credited against the schools' loan from the city. . . .
II. Implementation tasks:
The following is an outline of the recommended steps needed to implement the consolidation (this outline has not been reviewed by school staff):
1. Review and consolidate budgets.
- City Department of Finance
- School Office of Financial Services
2. Clarify roles and re-spon-si-bil-i-ties.
3. Develop organization chart.
4. Make salary adjustments, trans-fers.
5. Inventory hardware, software, telecommunications needs.
6. Locate office space as ap-pro-pri-ate.
7. Determine customer needs.
8. Review processes and internal controls.
9. Identify process improvements. Areas to consider:
- Reduce volume of school (purchase orders) issued
- Increase access to automated purchasing system (APS).
- Reduce volume of vendor's invoices keyed centrally.
- Implement summary billing for high-volume vendors.
- Implement high-volume fax capabilities for bids/quotes.
- Implement procurement cards.
- Consider payroll input from individual school sites.
III. Payroll services
The school division uses several automated and manual systems to process employee records. The automated school payroll system is over 15 years old and is maintained separately from the automated school personnel system. The city's system, implemented in 1989, integrates payroll, personnel and position-control processing.
The improvement of the school payroll system will require a long lead time, but has tremendous potential. . . .
The proposed consolidation of payroll operations offers an opportunity to explore alternative approaches to payroll. One possibility is that the current payroll staff would become payroll auditors and reviewers, in place of payroll preparers. In the short term, each school would be evaluated for potential electronic access to the mainframe payroll sys-tem.
The overall goal is to eliminate non-value-added steps and focus on control and reporting. A fully integrated human-resources system, including position control and payroll, would enable this transition to occur.
IV. Purchasing services
While currently there are some cooperative purchases between city and school purchasing functions (vehicle fuel), there may be other possible benefits to be obtained from consolidation:
1. Evaluation of the approach to procurement. A shift from numerous, small-value purchase orders to an approach that focuses on higher-value procurement. . . .
2. Training to maximize the use of the automated procurement system to prevent un-nec-es-sary postage and paper, and reduce processing time. For example, the city has established some automated (Fax) vendor lists where bids are automatically faxed through the workstation without human intervention.
3. Evaluate whether RFPs (requests for proposals) are being used for services to the extent they should be or could be. This area can potentially produce large savings.
4. Evaluate the use of joint price agreement contracts that can potentially reduce costs.
5. Seriously examine other opportunities where joint procurement can produce savings.
6. Meet with administrators and principals to determine their needs. This may involve using automated processes that allow them to enter requisitions electronically.
7. Evaluate the A&E (architecture and engineering) and construction contract processes for schools (coordinated through Purchasing in city).
8. Evaluate the potential for combining hardware and software to enhance procurement services.
9. Evaluate the potential for improving contract administration through assignment for responsibility and accountability.
Accounting and accounts payable:
At the current time, the city and school division maintain separating accounting and accounts-payable staffs. The city currently mails the checks for the schools, but does not see the documentation that supports the payments or review availability of funds. Under a consolidated system, the payments to vendors would be reviewed and funding certified by the applicable department director, before being processed by the consolidated city Finance Department.
A significant advantage to this consolidation would be the coordination of the process to acquire, install and implement an integrated financial management system.
Such a system would offer many improvements over the 20-year-old system that is currently used by the city and the school system. Among these are:
Improved accuracy and timeliness of financial information for decision support and fiscal control.
Improved control over expenditures and encumbrances through various levels of account classifications and funds availability ver-i-fi-ca-tion. . . .
Improved management of capital proj-ects . . .
Improved query, reporting, and decision-support tools.
The ultimate beneficiaries of this project are the citizens and taxpayers. The improved budget control and financial management that a new system would ultimately offer will ensure tax dollars are being prudently man-aged.
The accounting function would be separated from the financial-control function, which would remain with the School Division. An individual who is proficient in interpreting data, coordinating requirements of the School Board and understanding the adopted budget is critical and should not be in the consolidated services, but remain with the school division. The accounts payable function should be evaluated to strengthen internal control and appropriately place accountability and responsibility for appropriations.
3. School Board meeting
Nov. 21, 1995
A statement read by School Board Chairwoman June Kernutt regarding ``the concept paper entitled ``Proposed ``Consolidation' of City and Schools Finance Functions:
``We view this as a constructive first step, recognizing that at this stage it is a concept not a plan. The board will ask the school administration to analyze the points and principles in the concept paper. We would also like to schedule a workshop so that the board members can give directions to the administration and express concerns regarding cost, personnel matters, organizational plan and other related matters. With that input, the interm supterintendent could then meet with the city manager to develop a detailed plan for the board to consider.'' by CNB