1 Background *

2 Scope *

3 Methodology *

4 Executive Summary *

5 Organization, Management, and Governance Practices *

6 Financial Development and Practices *

7 Use of Technology *

8 Personnel Practices (Human Resources) *

9 Community Involvement Practices *

10 Conclusions/Summary *

11 Appendices *

2. Background

During the 1990s an increasing number of the citizens of Santa Fe, New Mexico concluded that the Santa Fe Public School (SFPS) District was unable to provide information about its cost and management processes in a manner that was prompt, consistent, reliable and understandable. The New Mexico State Department of Education declared that the school district had not demonstrated the ability to properly manage their financial responsibilities and, therefore, assumed an oversight authority over the school district's financial affairs. Citizen observations indicate that the budget development process is weak and that budget controls do not appear to include a position control process. PricewaterhouseCoopers (PwC) was retained to conduct a management and organizational analysis of the school district, targeting the following components: organizational, management, and governance practices; financial development and operational practices; use of technology; personnel (HR) practices; and community involvement practices. The primary purpose of the Management and Operational Analysis was to assess the current operational practices in targeted areas and to recommend corrective action that, if implemented, would improve operational effectiveness and efficiency in the District.

3. Scope

The scope of this assessment included a high-level analysis of the district's "as-is" processes (that is, those currently in use) in the five targeted areas. On the basis of the as-is process analysis, recommendations for making substantial improvements were developed and are presented in this document. This effort defines process-reengineering recommendations, and includes sample tools, templates, and report formats, along with recommendations for structural and organizational changes. Additionally, PwC provided data sources and best practices/strategies to be used in setting priorities. As appropriate, each recommendation contains a suggested "Implementation Strategy/Timeline". The purpose of these sections are to provide a step by step action plan which outlines both a logical sequence for implementation as well as a general time frame when each step could be reasonably expected to be achieved. The District will be expected to adjust these suggested time schedules to best meet their plan for implementation.

4. Methodology

In order to identify changes that would improve and simplify delivery of the SFPS's administrative services, PwC first had to understand the current environment.

Once the District’s priorities were understood, PwC sought to learn the structure and processes already in place in the District. PwC focused on how to best improve the delivery of services from the central office. At the same time, PwC was mindful that this report also focuses on the needs of the customers of the services. As such, our information-gathering efforts went beyond identifying only the needs of the SFPS staff. PwC also received input from customers and stakeholders (teachers, school administrators, members of the Santa Fe community, Board of Education members, members of the New Mexico State Department of Education, etc.) to fully understand the needs for the need for change.

PwC used a variety of techniques to understand and develop recommendations for improving and simplifying the processes. In addition to the interviews mentioned above, we reviewed existing documents. We also conducted a high-level analysis of the core processes used by various central administrative departments. In doing the assessment, we used some limited and high-level benchmarking data to discover how other organizations approached similar process and organizational issues.

After gaining some understanding of the strategic level of SFPS’s management environment, we conducted a series of interviews with members of the SFPS organizations directly involved in management. PwC conducted the various types of interviews with distinctly different objectives. The first was conducted with senior leaders of the SFPS staff. PwC sought their views to determine what types of services and organization they believed would best meet the strategic needs of the district.

In broad terms we asked the leadership to:

• Define success as it applies to this project
• Identify changes for improving the quality of services
• Identify which processes are currently working well and should be retained
• Identify key customers and stakeholders and what is important to them
• Identify important processes.

After obtaining the strategic vision from senior leaders, we conducted additional interviews with managers of various departments and school administrators. Here we shifted from the strategic level to a focus on the operational level or specific activities for which the administration is responsible. We asked their help in identifying those activities most important in providing services and the roles and responsibilities of the personnel involved in the processes. In conducting these sessions we asked participants to identify some of the same items described above, especially which processes are working well and should be retained. Beyond that, we asked them to describe opportunities for improvement. With this information we began the task of identifying the key areas of the processes on which the SFPS should concentrate its reengineering efforts in order to have the most immediate impact on the delivery of services.

2. Executive Summary

A Management and Operational Analysis was conducted of the Santa Fe Public Schools to review the current operational practices in five target areas. These five areas consisted of:

• Organization, Management, and Governance Practices
• Financial Development and Operational Practices
• Use of Technology
• Personnel (Human Resources) Practices
• Community Involvement Practices

These targeted areas were selected for analysis to examine the core management and operational functions of the District. The analysis was to focus on those functions that have a direct impact on the effective and efficient performance of the District’s primary mission (i.e. the education of Santa Fe pupils). These basic functions included:

• District policy and administrative practices.
• Management and control of the District’s financial resources.
• Management of the District’s personnel resources.
• Management of the District’s management information by technology.
• Communication with the public and use of community resources.

These basic functions determine, to a great extent, how, what and how effectively education of Santa Fe pupils is conducted

Students tend not to perform to their best when:

• Appropriate teachers are not always available.
• Classroom supplies are inadequate.
• Best textbooks and learning materials are not always available.
• Classrooms are not properly equipped and maintained.
• Etc.

It was therefore concluded that the initial analysis of the District should focus upon these basic and core functions of the District.

This analysis was not an "audit" of the District’s finances. We were not asked, nor did we attempt to determine, how or why there was an alleged $2.6 million dollar short fall, or why reports that Special Education funds are not always reflected in classroom teacher/pupil ratios. This was a "targeted" analysis that only focused on the "processes" and "practices" that the District follows to manage and operate a $100,000,000 enterprise.

The PricewaterhouseCoopers analysis team received excellent cooperation and assistance from the Board of Education and the administrative staff of the Santa Fe Public Schools. Each and every request for materials, documents, and interviews was promptly and pleasantly provided. Over 60 individuals were interviewed, 125 documents were requested and reviewed, and three focus groups were conducted. This wide range of community and staff input could have only been achieved with the full cooperation of the Board of Education and the administrative personnel of the Santa Fe Public Schools. We are pleased to report that the basic management and operational problems plaguing the District, are not in most instances, caused by dishonest or malicious employees. We found that the problems of the District are basically weak and inadequate management and operational practices. Our recommendations identify what and how corrective action can be taken to correct these management weaknesses.

Input received from the scores of staff and citizen participants provided the PwC analysis team with invaluable information and insights. Everywhere we turned, in addition to answers to our questions, we received more questions from citizens and staff who wanted us to study additional issues. In many cases, these issues related to functions and practices beyond the targeted areas that we were engaged to examine. We apologize to the many individuals who expressed these concerns and hope that their comments will be thoughtfully and thoroughly pursued in the not too distant future.

Our many experiences with the citizens of Santa Fe indicated time and time again that they had a strong interest in creating the very best school system. Their "interest", was always equaled by an expression of commitment and willingness to actively participate for the benefit of all pupils.

A comprehensive final report was prepared that provides extensive information about each of the five targeted areas. Information is provided in the final report on a variety of details such as:

• Current practices
• Findings
• Recommendations
• Suggested implementation strategies and timelines
• Costs (fiscal impact)

1. Board of Education Goals

The Santa Fe Public Schools adopted the following seven Board of Education goals in 1998/99:

This executive summary has been designed to provide a quick and easy overview of the final report. The following three charts reference each of the 48 recommendations as follows:

• Overview Summary – a brief statement of our finding(s) for each recommendation, also relates each recommendation to a District adopted Education Goal.
• Summary of Potential Savings and Costs – provides the costs or savings estimate for each recommendation.
• Prioritization of Implementation Recommendations – assigns each recommendation to one of three-implementation priority levels.

1. Overview Summary of Recommendations

PwC Ref #	Recommendation	Finding	SFPS Educ Goal #
5.4.1	Realign and Consolidate the Central Administrative Office Structure to Reduce Levels of Administration.	Reduce levels of administration	6
5.4.2	Consider Outsourcing SFPS’s Office of Public Information (P.I.).	Inadequate performance	6
5.4.3	Re-institute a Traditional Master Program Schedule at the Two Regular High Schools.	Inadequate performance	1, 6, & 7
5.4.4	Recreate the District’s Vision Statement to Establish a Common Understanding among School District Stakeholders (e.g., Community, Board Members, Staff and Administrators).	No common vision	1, 3, & 6
5.4.5	Fulfill the Administrative Responsibility to Provide Written Administrative Regulations and Guidelines to Implement Board Policies.	Inadequate preparation	1 & 6
5.4.6	Install a New Budget/Management Information Control System (i.e., ABC/M) That Combines Operational Objectives, Work Tasks/Processes, Resource Allocation and Performance Standards/Timelines.	Inadequate controls	1 & 6
5.4.7	Install an Expanded Board of Education Review Process to Enable Full, Objective and Timely Input to Be a Basis For All Board Actions and Decisions.	Inadequate review process	1 & 6
5.4.8	Improve the the Quality of the Board’s Reports by Adding Cost Implications, Funding Source, Staffing Implications, and Organizational Impact to the Report Contents.	Inadequate review process	1 & 6
6.4.1	Reengineered Budget Development Process Map.	Inadequate stakeholder input	1 & 6
6.4.2	Begin the Budget Development Process Earlier in the Fiscal Year.	Inadequate preparation	1 & 6
6.4.3	Increase Customer and Stakeholder Involvement in the Budget Development Process.	Inadequate stakeholder input	1 & 6
6.4.4	Create a Budget Advisory Committee (BAC) and Executive Budget Advisory Committee (EBAC).	Inadequate stakeholder input	1 & 6
6.4.5	Reduce the Level of Effort for Managers in Preparation of the Budget.	Reduce unnecessary work	1 & 6
6.4.6	Require an Expenditure Plan by Program and School.	Inadequate information	1 & 6
6.4.7	Require Monthly Reconciliation with Accounting Reports.	Inadequate controls	1 & 6
6.4.8	Improve Cash Management.	Inadequate controls	1 & 6
6.4.9	Evaluate Unused Sites to Potentially Generate Revenue.	Inadequate use of resources	6 & 7
6.4.10	Establish a Financial Management Budget and Transfer Policy.	Inadequate controls	1 & 6
6.4.11	Create a Department and Schools Supplement of the District’s Budget.	Inadequate information	1 & 6
6.4.12	Move to a Multi-Year Budget Planning Process.	Inadequate planning	1 & 6
6.4.13	Increase Budget-Coding Structure to Enhance Level of Detail.	Inadequate capability	1 & 6
6.4.14	Move to an Activity Based Costing/Management Cost Information System.	Inadequate capability	1 & 6
6.4.15	Design Monthly Executive-Level Budget Reports.	Inadequate information	1 & 6
6.4.16	Improve Communications of the Budget Internally and Externally.	Inadequate information	1 & 6
6.4.17	Conduct Monthly Meetings between the Finance Department and Their Internal Customers.	Inadequate information	1 & 6
7.4.1	Establish a Technology Advisory Council.	Inadequate vision	1, 3, & 6
7.4.2	Develop a Strategic Plan for the Use and Implementation of Technology.	Inadequate preparation	1 & 6
7.4.3	Upgrade Business Systems Application Software.	Inadequate capabilities	1 & 6
7.4.4	Provide Integrated Productivity Tools That Enable Schools to Accept Responsibility for Data Management.	Inadequate information	1 & 6
7.4.5	Develop an Education Data Warehouse.	Inadequate capabilities	1 & 6
7.4.6	Develop a Gateway to Education Data and Information.	Inadequate information	1 & 6
7.4.7	Consolidate Data Centers Utilizing a Common System Configuration.	Inadequate controls	1 & 6
7.4.8	Consolidate the Management of Data Collection and Reporting.	Inadequate controls	1 & 6
7.4.9	Develop an Infrastructure Support Approach That Reflects the Continual Increase in Technology Usage.	Inadequate vision	1 & 6
8.4.1	Consider Outsourcing SFPS’s Office of Personnel Services.	Inadequate performance	6
8.4.2	Restructure the Certified Teachers’ and Classified Salary Schedules.	Inequitable condition	6
8.4.3	Consider Granting an Across-The-Board Salary Increase to All Employees Excluding: Supervisors, Managers and Confidential Employees.	Inadequate use of resources	1, 3, 6, & 7
8.4.4	Establish a Board Policy That Requires the Superintendent to Develop a Systematic and Consistent Methodology to Forecast Human Resource Needs of the District.	Inadequate preparation	1, 3, & 6
8.4.5	Develop and Implement an Aggressive Recruitment Policy to Attract Teacher Applicants for School Year 2000-01.	Inadequate preparation	1, 3, & 6
8.4.6	Develop Functional Specifications for the Selection, Funding, and Implementation of an Integrated Human Resources Information System.	Inadequate capabilities	1 & 6
8.4.7	Update Job Descriptions to Fit Current Job Requirements and Standardize the Format.	Inadequate information	1 & 6
9.4.1	Develop a Communications Strategy That Is Aligned with the District’s Overall Strategic Plan.	Inadequate preparation	1 & 6
9.4.2	Reestablish Two Communication Mediums/Approaches That Lapsed After Superintendent Vargas Departed.	Inadequate stakeholder input	1 & 6
9.4.3	Conduct a Cost Benefit Analysis of Each Communication Medium/Approach to Determine Which Are the Most Effective for Resources Allocated. Once This Is Accomplished, the District Should Concentrate Resources on Those Mediums/Approaches That Are the Most Effective.	Inadequate use of resources	1 & 6
9.4.4	Place Additional Emphasis on Mediums/Approaches Designed to Affect/Interact with a Large Population.	Inadequate planning	1 & 6
9.4.5	Initiate New Mediums/Approaches for Communication with the Community.	Inadequate stakeholder input	1 & 6
9.4.6	Fund the Coordinator of Volunteer Programs and the Volunteer Program from Appropriated School Funds Versus Grants.	Inadequate performance	1 & 6
9.4.7	Conduct Community Focus Groups	Inadequate stakeholder input	1 & 6

2. Summary of Potential Savings and Costs

1. Prioritization of Implementation Recommendations

Each recommendation has been assigned one of the three implementation priority levels. Level 1 priorities should be implemented first, followed by level 2, and then level 3. Priority criteria follows:

Priority Level 1:

• Requires little or no additional funds
• Achievement is essential to effective management and operational practices

Priority Level 2:

• Requires substantial funding
• Achievement is essential to effective management and operational practices
• Planning requirements are complex

Priority Level 3:

• Requires substantial funding
• Achievement is essential to effective management and operational practices
• Planning requirements are complex
• Negotiations and/or statutory/legal implications are critical

1. Organization, Management, and Governance Practices
1. Overview

The structural design of any organization (i.e., Table of Organization [T.O.]) should be grounded in a clear concept of its intended mission and objectives. Knowing what is to be done, naturally, must precede knowing how to do it. In a complex operation like a school district that serves over 13,000 pupils in 28 school sites and is supported with an annual budget of approximately $100,000,000, it is expected that each operational task required to achieve the "intended mission and objectives" be identified in measurable and time-sensitive terms. These specialized tasks must in turn be clustered into compatible organizational units; provided with effective channels of communications between one another; and integrated into harmonious teams by common objectives and policies, each unit having access to unequivocal directives, control and information systems, and receiving central guidance and appropriate authority.

2. Current Situation

Exhibit A reflects the organizational structure that was in place in the district in September 1999 when the PricewaterhouseCoopers Management and Operational Analysis was initiated. The current Superintendent essentially "inherited" this organizational structure.

EXHIBIT A

A perception by some school district stakeholders expressed to the PricewaterhouseCoopers Analysis team was that "…the District is top-heavy…with administrators." Given this perception, the PwC team examined the administrative staffing patterns with great care within those targeted focus areas of the Management and Operations Analysis. It is important to remember that this Analysis focused on only five major operational areas. These primarily involved the following SFPS organizational units:

• Board of Education
• Office of the Superintendent
• Office of Legal Counsel
• Office of Financial Services
• Office of Human Resources
• Office of Technology

• Office of Public Information
• Various community involvement practices

While the above organizational units represent a major portion of the District’s leadership services and activities, they collectively only represent approximately 2.3% of all District costs. School districts serving 20,000 pupils or less, typically expend an average of 2.17% on non-school based leadership (see Appendix 11.5).

Our staffing analysis found no excessive administrative or support service personnel assigned to these organizational units. In each case, these central administrative offices were staffed at or below staffing levels found in similar school districts across the Nation. Specifically, staffing patterns were compared with the following school districts:

• Pasadena Unified School District, CA
• Scottsdale Unified School District, AZ
• Dysart Unified School District, AZ
• Passaic Public Schools, NJ

It is also important to understand that in a typical school district (serving 20,000 or less pupils), well over 60% of all expenses are dedicated to two major operational areas (i.e. Instruction and Instructional Support) (see Appendix 11.5). As referenced in section 6.3.4 of this report, "PwC has requested SFPS staff to provide information so that expenditure benchmark data can be developed for SFPS. PwC is currently developing this information which will be added as an addendum to this report."

It is not uncommon to find "top heavy administration" within these two operational areas. As stated above, however, this analysis did not focus on these two areas and therefore, we are unable to express an opinion regarding the appropriateness of administrative staffing patterns beyond that stated above.

The organizational structure of the District’s central office reflects a series of ad hoc adjustments driven more by individual personalities and perceived expertise than by a clear vision and management delivery strategy. For example, elementary school principals report to the Associate Superintendent for School Effectiveness and secondary principals report to Assistant Superintendent of Learning Support and Human Resources. It is the general belief among district employees that this organizational bifurcation was implemented primarily to eliminate any appearance of nepotism or conflict of interest.

Board Policy PB8180 states that:

Input from a wide variety of District employees and stakeholders indicates that they believe that the elimination of the " . . . appearance of nepotism or conflict of interest" has not been achieved through the bifurcation of reporting relationships between and among elementary and secondary principals.

Board policy 8180 clearly states that " . . . in circumstances where qualifications are unquestionable and they meet all requirements . . ." it is permissible to place a person under the "control" of a near relative and that ". . . the school board shall adopt and make part of the employment agreement with said employee a plan to insulate . . ."

The significance of this situation is that the District’s table of organization was reconfigured at a very high level to the detriment of operational efficiency (i.e., clear lines of authority and, more importantly, credibility among rank and file staff members).

Other organizational conditions include several one-person organizational offices that deal with similar responsibilities, e.g., testing and assessment, research, design and accountability.

The number of top-level administrative positions suggests "title inflation" and "position creep." The Superintendent is aware of this situation and is considering adjustments to reduce the numbers of positions entitled:

• Superintendent
• Executive Director
• Director

Corresponding adjustments would increase the number of administrative positions entitled:

• Coordinator
• Division Head
• Supervisor

The organizational structure of school sites generally reflects a traditional configuration (i.e., principals, support staff, and teaching personnel). Several schools have modest variations, such as a position of "business manager/grant writer," block program scheduling configuration, and school-within-a-school concepts (based on Ted Sizer’s Essential Schools concept.

1. Findings
1. Governance

The governance of the District is the responsibility of an elected five-member Board of Education that derives its authority from the educational statutes of the State of New Mexico (22-5-4 Local School Boards - Powers – Duties). The Board delegates administrative and supervisory responsibilities to the Superintendent to carry out the policy decisions of the Board. In this capacity the Superintendent is expected to advise the Board on three essentially interrelated resources: money, personnel, and time. The Superintendent carries out these responsibilities through the reporting and recommendation process to and with the board (i.e., board meetings).

Under the current process, the Board typically reviews, discusses and decides a multitude of diverse, complicated and significant issues during a six-day period. On the Thursday preceding a Board meeting, a packet of board reports (recommendations) is made available to Board members if they choose to attend a pre-scheduled Board Review Session. Unfortunately, Board members seldom attend these sessions. On the Friday, a complete Board Report packet is delivered to each Board member so that they can review the material prior to the Board meeting on the following Tuesday. Discussion on any agenda item can occur during the Tuesday Board meeting. This discussion occurs prior to voting "yeah" or "nay. Several Board members indicated that when asking staff questions regarding specific Board reports, there is " . . . seldom a correlation between what was asked and what staff responded."

Board reports do not contain the consistent and standard informational elements that Board members feel they need to make informed and thoughtful decisions. Some of the information not consistently found in Board Reports includes:

• Cost implications
• Funding sources
• Staffing implications
• Organizational impact

2. Management

There are generally three common explanations for the failures of a public school district. These are:

1. District managers and administrators do not perform in a businesslike manner. Generally, in a school district, "businesslike" means the control of costs. While this is essential, it is only one foundational aspect.

Achievement must be measured against specific, limited, clearly defined targets. When targets are defined, resources can be effectively allocated for their attainment; priorities and deadlines can be set; and personnel can be held accountable for results. The starting point for effective work is a definition of the purpose and mission of any institution.

The District has not established a strategic direction with accompanying functional management/action plans. There is evidence that efforts have been initiated to develop action plans for 1999-00, specifically, this effort was initiated in November of the current school year. The District’s informational content requires that action steps be delineated to achieve a specific Board of Education goal. The present action plan format, however, does not yield quantifiable standards upon which one can assess or evaluate performance. Thus, the value of these action plans to assess and improve performance is questionable.

1. Recommendations
1. Realign and Consolidate the Central Administrative Office Structure to Reduce Levels of Administration

The District’s table of organization could be structured to focus upon the four basic services of the SFPS. These are:

• Leadership and Accountability
• Instructional Support
• Business Support Services
• Financial Support services

This approach would result in a basic table of organization such as the one shown in Exhibit B:

EXHIBIT B

Exhibits C, D, E and F on the following pages illustrate in more detail the recommended organizational alignment and reporting relationships among the various operational units of the District.

EXHIBIT C

EXHIBIT D

EXHIBIT E

EXHIBIT F

1. Implementation Strategy/Timeline

1. Fiscal Impact

1. Consider Outsourcing SFPS’s Office of Public Information (P.I.)

Utilization of a professional public information services firm familiar with the Santa Fe community is strongly recommended.

SFPS needs the ability to communicate with the various stakeholder groups that comprise the greater Santa Fe community in an open, objective, informative, reliable, and responsive manner.

Board Policy 1100 states that "It will be the policy of the Board to maintain a continuing information program for compiling and distributing news of events, noteworthy facts, statistics, plans, and forecasts necessary to the creation of an interested and informed public."

No administrative guidelines have been promulgated to implement this Board policy, which was adopted on May 5, 1981. No strategic or management plan has been developed by the Public Information Office.

Strategic and management planning allows an organization to identify the steps necessary to achieve its mission and vision. Developing a plan that strategically positions an organization to achieve its mission and vision requires a coordinated effort at all levels of planning, implementation, and monitoring of performance.

A management plan drives all work activities conducted throughout an organization. In well-managed organizations, individual management plans are required of all operating units to ensure that their performance constructively contributes to the organization’s strategic mission and vision.

The current operational mode of the Public Information Office appears to lack a sense of independence and freedom. The free flow of valuable District information does not appear to be an operational prerogative.

Input received from community representatives and parent focus groups expressed strong dissatisfaction with the quality and reliability of public information activities of the district.

The public expects that the Office of Public Information will release information that is timely, accurate, objective, and balanced. Concerns expressed by district stakeholders were that the "Office" too frequently functioned as a public relations service for the central administration and not as it should, as a public information service to the community.

The distinction between the role of a public information office versus a public relations office is important for a publicly supported school district to understand and act upon.

Private companies and corporations generally use public relations strategies to create a specific "spin" among specific elements of the public in order to influence their points of view and actions regarding specific issues, products, and/or services pertinent to the private organization.

Public entities, on the other hand, tend to restrict their communication activities to providing timely, objective, and relevant information that has no specific "spin."

While "spin" is found to some extent in any communications effort, its effect and use are generally secondary to a forthright public information effort.

A sound public information program must be a two-way street if the organization’s objective is to develop reciprocal understanding.

This means that in today’s society, the school district must be fully responsive to the environment in which it functions if it is to manage and serve in meaningful and effective terms.

An attuned public information office that facilitates a two-way communication with the organization’s public can serve to advise management of trends and conditions that could have significance for and to the school district.

SFPS could outsource its Public Information Office services to a privately operated communications firm.

The Santa Fe community has substantial resources that have the professional capabilities and expertise to provide open, objective, informative, reliable, and responsive information.

The fact that the public information services would be provided by an independent professional service firm would add considerable credibility to any information the district released.

Extensive research indicates that the two most effective public information sources of any school district are the students and teaching personnel.

Students visibly represent their schools every day. The public tends to look upon the District’s students as personifying the characteristics of the school and school itself. The SFPS has over 13,000 students to represent the schools and school district. A well-managed school district would utilize this invaluable resource to provide positive and constructive public information. Whenever parents and friends witness a demonstration, read a student publication, or watch a skilled performance by pupils, they generally express appreciation for the fine work and guidance that the students receive from their teachers and school. These opportunities exist everyday when the child goes home to his/her parents/guardians and tells them what they did in school that day. Teachers should be encouraged to make sure that each day each pupil is reminded of what they accomplished that day. Teachers can use part of each days lesson to solicit input from their students (both elementary and secondary) how they parents/guardians respond to the pupils accomplishments. Additionally, opportunities connected with such routine events as commencement, plays, musicals, athletic contests, and service projects, can all contribute substantially to a constructive public perception of what the schools and teachers are doing.

Teachers are still considered by the public as the most reliable and relevant source of information about the day-to-day activities and achievements of schools and the school district. Again, a well-managed school district could use utilize this resource to provide positive and constructive public information.

Beyond these two pervasive public information forces, the central Public Information office should, at a minimum:

• Establish a two-way communication system between the school system and the community, and between the school system and state and national groups
• Interpret policy of the Board of Education and the programs of the school system to the public
• Plan, develop, and produce internal and external publications
• Prepare feature material for newspaper, radio, and television
• Assume the role of liaison with all news media
• Assist school personnel and Board personnel in planning public participation events
• Provide school-community relations consulting services to Board of Education members, central office administrators, and school principals
• Help assess public attitudes and keep appropriate school personnel informed
• Serve as a source of information to individuals from the community regarding school matters and from the community to the school district
• Serve as a consultant in the preparation of informational materials prepared by school personnel
• Assimilate and disseminate informative materials
• Evaluate informative materials produced by the school system in terms of their internal and external communicative value
• Provide effective leadership in implementing the school district’s commitment to full compliance with civil rights legislation, rules, and regulations.

These P.I. areas can be used to develop performance expectations in quantifiable and time-sensitive terms appropriate for inclusion in a contractual agreement to outsource these services.

1. Implementation Strategy/Timeline

1.	The Superintendent, consulting with appropriate staff, decides whether to recommend to the Board of Education to outsource public information service functions.	March 2000
2.	Develop bid (RFP) specifications to clearly delimit the roles and responsibilities of the successful contractor.	April 2000
3.	Budget director identifies current level of expenditures utilized to support the Office of Public Information, e.g., FTEs employee benefits, supplies, travel, etc. (estimated at $110,000). [A portion of this amount can be used to fund the cost to outsource this service.]	April 2000
4.	RFP is finalized.	May 2000
5.	The Superintendent obtains approval from Board of Education to issue the request for proposals (RFP). Section criteria and weights are defined.	May 2000
6.	The superintendent presents an analysis of the various proposals submitted and an employee transition plan (reassignment of current personnel office employees) to the Board.	June 2000
7.	The Board selects the best public information management firm employee transition plan.	July 2000
8.	Contract is signed with the selected public information management firm.	July 2000
9.	Contract services are initiated with approved employee transition plan.	August 2000

2. Fiscal Impact

Cost to outsource these services could be limited to the current costs associated with the operation of the Public Information Office, which is estimated to be $110,000 not including the cost for office space and utilities. The development of performance specifications, the issuance of a Request for Proposals (RFP), and the analysis of the responses will help the District determine if the funds available will be sufficient to obtain the quantity and quality of P.I. services desired.

Two years ago, a "4x4" block schedule was instituted at both high schools. The intent of instituting a 4x4 block schedule to replace the traditional six-period-day class schedule was to increase the number of instructional minutes by converting "passing time" to instructional time. This would be accomplished by establishing four 90-minute instructional classes to replace the six periods generally found in a traditional high school class schedule.

Substantial research indicates that by increasing "time-on-task," students can achieve greater learning gains over time.

Increased "time alone" will not necessarily result in greater learning gains unless preceded with staff training in the delivery of sound instruction over a 90-minute period compared to the typical 50-55-minute lessons that are required in a traditional class schedule.

The following analysis is intended to provide an example of the impact upon the District (both fiscally and programmatically) when initiatives and/or programs are implemented without adequate administrative planning and preparation.

Other types of preparation that must occur beyond pedagogy (i.e., training) include:

• curriculum (course content/sequence) redesign
• course credit
• community understanding
• collective bargaining (see Article 6D of NEA agreement).

Input from teachers, school administrators, parents, and community representatives consistently expressed that:

• no teacher training was provided
• curriculum was not redesigned
• the issue of course credit was not addressed
• the community had and has little understanding of the 4x4-block schedule.

The following analysis is provided to highlight in quantifiable terms both the differences and the impact of the 4x4 block versus the traditional master class schedule.

1. Impact Analysis

Assumptions:

• Teachers are all full-time equivalents (FTEs).
• The total number of FTEs used in this analysis is based on the actual teaching faculty at a Santa Fe high school.

Calculations are made both with and without adjusting for "passing times."

-Master Class Schedule-

Duration 20 week term 20 week semester

Periods per day 4 6

Number of teaching periods per FTE 3 5

Total number of instructional minutes

per day per FTE 270 300

Total number of preparatory periods

per FTE 1 1

Total number of preparatory minutes

per FTE 90 60

Total number of work minutes per day

per FTE 360 360

Comparative Impact: 4x4 Block Traditional

Total number of instructional minutes 360 360

Total number of instructional minutes 348 336

less passing times (12) (24)

Difference: Students gain 3.4% more instructional time with 4x4 class schedule.

Teachers (assuming 112 Teacher FTEs)

Optimal number of classes per day 336 560

Total instructional hours per day (a)504 (b)560

Total preparatory hours per day (c)168 (d)112

a(336x90¸ 60); b(560x60¸ 60); c(112x90¸ 60); d(112x60¸ 60)

Difference: 1) Teachers in a 4x4-block schedule reduce instructional hours by 56, which represent a reduction of 11% in direct student contact time. 2) Teachers in a 4x4-block schedule increase preparatory hours by 56, which represent an increase of 33% in student-free time.

The combined impact of reducing direct instructional time and increasing non-instructional preparatory time creates a demand for additional teaching positions to be assigned to each high school to maintain appropriate student-teacher ratios in the classrooms.

At a minimum, this combined reduction in direct instructional time with a corresponding increase in teacher preparatory time generates a need for 9.33 teacher FTEs (i.e., 56 hours/day ¸ 6 periods). The average teacher’s salary in Santa Fe, as reported to the State Department of Education Training and Experience Report, is $31,013. Therefore, 9.33 FTEs would cost the District a minimum of $289,351 per year per high school.

Given the inadequacy of preparation to implement the 4x4 block master schedule in the critical areas of:

• teacher training,
• curriculum design,
• course credit,
• community understanding, and
• collective bargaining,

plus the added associated expenses, it is recommended that the District re-institute a traditional master program schedule at the two regular high schools.

1. Implementation Strategy/Timeline

2. Fiscal Impact

A vision statement for an organizational entity provides a focus from which a specific mission and specific organizational goals and objectives can be developed. Translating goals and objectives into individual work/management plans for each operational unit is the basic mechanism for transforming goals and objectives into work/performance processes designed to achieve the mission and vision of the organization.

Therefore a comprehensive management plan would consist of the following interrelated elements:

• A vision statement (sometimes referred to as philosophy or a mission statement)
• Statement of organizational goals
• An organizational structure and strategic plan that describes the organization’s approach for making or guiding decisions, priorities, resource allocations, and school-wide management activities

• Individual operational unit management plans that detail the work processes, resources, achievement standards/expectations, and performance timelines

The Board of Education adopted a "philosophy" statement on November 3, 1981 that states:

Philosophy of the Santa Fe Public Schools

The statement is contained in the District’s policy manual as Board Policy 6000. Also included in Board Policy 6000 are the following organizational goals:

1. Programs and related experiences which will result in economically competent citizens.
2. Skill in problem-solving through observing, listening, speaking, writing, investigating, analyzing, and evaluating.
3. An understanding of the responsibilities of good citizenship joined with loyalty and respect for the ideals of our democratic society.
4. Competence to understand and function effectively in a rapidly changing world.
5. Understanding and appreciation of persons belonging to all social, cultural, and ethnic groups.
6. A positive self-image through the development of self-respect, self-discipline, self-analysis, and self-improvement.
7. Good health habits and an understanding of environmental conditions necessary for the maintenance of mental, physical, and emotional well-being.
8. An awareness of the need for conservation of human and natural resources.
9. A positive attitude toward the learning process and the realization that education is a lifetime activity.
10. Constructive use of leisure time to broaden one’s interests and to develop creative talents.
11. Appreciation of the family as a basic unit of society through which our cultural heritage may be transmitted and moral standards may be established.

It is important to note that no administrative regulation was promulgated to implement this important policy.

In 1998-99 a new set of "Board of Education Goals" was included in the SFPS Board Policies Manual. Again, no implementing administrative regulations were found regarding the following goals:

1. Develop a culture of self-respect and respect for each other utilizing the diversity of the Santa Fe Public Schools community.
2. Ensure that each student demonstrates mastery of academic and technological literacy and exhibits effective social skills.
3. Make Santa Fe Public Schools the center of our community through increased support for youth and families.
4. Provide our students safe, disciplined, and nurturing learning environments.
5. Reduce the student dropout rate.
6. Improve processes and procedures associated with financial and asset management.
7. Broaden the funding base and increase resources for the Santa Fe Public Schools.

In response to the question, "Do you feel that the Board of Education and top administrators share the same vision for the education process at SFPS," focus group participants answered as follows:

Response Percentage

Same Vision 0%

Different Vision 48%

*"What Vision?" 52%

*Note: participants added this category

When focus group participants were asked, "Do you feel that school site administrators share the same vision for the education process at SFPS as the current Superintendent," a similar response was given.

Response Percentage

Same Vision 17%

Different Vision 35%

*"What Vision?" 48%

Well-managed educational organizations have clear vision, mission and/or philosophical statements that are understood and accepted by a majority of the stakeholder groups.

The responses cited above and prevalent throughout the interviews indicated no common understanding and therefore no common acceptance of what the District was trying to achieve.

The strong consensus among interviewees and focus group participants is that the District has a strong record of announcing new initiatives, directives, and plans, but " . . . never or seldom follows through with any of them . . . "

It is therefore recommended that the District recreate a vision, mission and/or philosophical statement to establish among school district stakeholders a shared and understandable direction. The community should have substantial participation in the articulation of this statement and in the creation of the process used to accomplish it.

1. Implementation Strategy/Timeline

1.	The Superintendent, consulting with appropriate staff, decides whether to recommend the recreation of the District’s vision statement to the Board of Education.	March 2000
2.	The Superintendent develops a strategy to identify, refine, and develop a vision statement.	April 2000
3.	The Superintendent presents a plan of action to the Board of Education for approval.	April 2000
4.	Superintendent’s action plan is implemented.	May - June 2000
5.	Finalized vision statement is presented to the Board of Education for adoption and inclusion in the Santa Fe Public Schools Board Policies Manual.	July 2000
6.	The Superintendent, consulting with appropriate staff and community representatives, promulgates District Administrative Regulations that articulate the organizational goals of the District.	July 2000
7.	The Superintendent causes the distribution of the re- created vision statement and the accompanying organizational goals to all the appropriate stakeholder groups of the District.	August 2000

2. Fiscal Impact

1. Fulfill the Administrative Responsibility to Provide Written Administrative Regulations and Guidelines to Implement Board Policies

The District has a manual entitled "Santa Fe Public School Board Policies and Administrative Regulations," revised October 1999.

This publication is designed to serve two purposes:

Specifically, Board Policy 1000 states that,

1. It is through the development and adoption of written policies that the Board will exercise its leadership in the operation of the school system: it is through study and evaluation of the reports concerning the execution of its written policies that the Board will exercise its control over school operations.

To carry out the stated intent of the Board, 195 policies have been adopted that address the following areas of district operations:

• Community
• Administration
• Business
• Personnel
• Students
• Instruction
• Capital outlay projects
• Board of Education
• By-laws of the Board

Specifically, Administrative Regulation 1000 states that:

As stated above, "it is the intent of the Administration to develop administrative procedures, so that they may serve as guidelines for the successful and efficient functioning of the public schools."

This manual only contains nine administrative regulations. This represents less than a 5% response by Administration to the development of "guidelines."

School districts that are well managed have extensive administrative regulations that staff can follow to perform the thousands of responsibilities required in today’s complex school systems.

The lack of adequate guidelines results in staff continually rediscovering what, when, and how the work of the District needs to be done.

This lack of management leadership results in excess cost to constantly "reinvent" work processes, procedures, and practices. Inherent in this style of leadership is the high probability of costly errors and inefficiencies in the conduct of District work.

A public-tax-supported organization has an ethical and professional duty to create a management system that can be understood, transferred, and performed by new and different individuals over time. The work of the District should be documented and not solely be held in the minds of a few individuals.

The development and use of an Administrative manual is one of the most essential elements of an administrative team committed to: (Board of Education 1998-99 Goal Number 6) "improve process and procedures associated with financial and asset management."

2. Implementation Strategy/Timeline

1.	The Superintendent, consulting with appropriate staff, decides whether to develop written administrative regulations and guidelines to implement Board policies.	March 2000
2.	The Superintendent develops an action plan to identify policies that require administrative regulations, identify District administrative regulations not included in the SFPS Policies Manual, and solicit sample administrative regulations from other school districts in New Mexico or other states.	April 2000
3.	The Superintendent, based upon the results of #2 above, scopes the needed work to be performed and assigns the development tasks to specific staff teams.	May - June 2000
4.	The Superintendent assigns specific due dates to each staff team assignment.	July 2000
5.	The Superintendent establishes an editorial review team of 3-5 members to ensure that each administrative regulation is complete, properly formulated, and incorporated into the Districts’ Policies Manual.	August - December 2000
6.	The Superintendent directs the distribution of all administrative regulations to appropriate staff.	January 2001
7.	The Superintendent delegates specific responsibilities to appropriate executive-level administrators to monitor and identify the need to develop or revise administrative regulations.	January 2001

3. Fiscal Impact

2. Install a New Budget/Management Information Control System ( i.e., ABC/M) That Combines Operational Objectives, Work Tasks/Processes, Resource Allocation, and Performance Standards/Timelines

Currently, the District does not have any systematic process to comprehensively monitor and manage the diverse activities that are performed throughout the District at all levels of the organization.

Each of these diverse but interrelated activities consumes resources (i.e., time and money) and achieves various levels of productivity and impact.

An effectively managed organization requires a management capability that provides information about how the District’s resources (i.e., people, materials, and time) are utilized to provide a service or product to the clients (students, staff, and stakeholders) of the District.

During the past few decades, Board members and superintendents have been asking tough management questions such as:

How resources are used in an organization to perform its "work" determines its level of productivity.

During the past few decades, American public schools have been in the throes of reform. Poor student performance on basic skills and general knowledge tests, low levels of achievement for U.S. students compared to their international counterparts, and low rates of adult literacy have caused the general public, as well as professional educators, to call for substantial improvements in the productivity of our educational delivery system.

Several tools have been used by school districts to assess their productivity levels, including:

• pupil achievement scores on state and nationally normed reference tests as well as district-level criterion reference tests;
• surveys of parent, student, and employee satisfaction;
• high school graduation rates;
• college placement rates;
• attendance rates; and
• dropout rates.

All are being used to assess the productivity of school districts.

Traditional school district budgeting usually involves taking the previous period’s budget as a starting point and making incremental changes to it. Expenditures are classified by line item (e.g., salaries, wages, and travel) and increments are added to reflect anticipated growth and/or inflation. In times of belt-tightening, budgets can be reduced, typically starting with the prior period’s budget and reducing the various line items. Unit heads become adept at game-playing: having "fat" in one’s budget means larger increases and less pain during cutbacks.

The structure of the SFPS school district budgets has been substantially determined by Handbook II (revised), which is a product of the National Center for Educational Statistics (entitled Financial Account for Local and State School Systems). The objective of Handbook II was to standardize district budgets to promote comparability. Each state mandates modifications to this basic chart of accounts to reflect the special and unique needs of their state and to be able to identify specific costs such as transportation, capital outlay, and textbooks, again for comparability and reporting requirements of authorizing legislation.

Typical school district line item budgets (fund, program, object, and location) have yielded the type of statistical data that legislative mandates have required. But, unlike the private sector, school district budgets have not provided a tool that permits education managers (e.g., superintendents, principals, and teachers) to make strategic process improvements that maximize service value to their customers (students, staff, and taxpayers).

Exhibit G reflects a typical line-item budget, while Exhibit H reflects an Activity-Based Costing budget. Compare these two exhibits to determine which better provides information that can be used to optimize, coordinate, and manage productivity.

EXHIBIT H

Unit Cost	Labor Cost	Computer	Telecom-munications	Supplies	Facilities
$5.82	$303,333	$35,000	$17,500	$14,000	$37,333
1.53	227,500	52,500	10,500	10,500	21,000
670.67	30,333	0	0	0	3,200
2,762.22	5,547	0	0	2,100	640
47.78	6,825	0	0	6,075	0
7,510.00	104,000	2,000	1,440	720	12,000
	65,000	2,000	1,440	720	7,200
	$742,538	$91,500	$30,880	$34,115	$81,373

Use the following chart to see which budget format provides the better management/ performance information. Simply place a yes or no response to the following questions while using the above exhibits:

The vast majority of respondents will easily conclude that ABC/M could provide managers, administrators, and staff members with performance data and cost information that can enable them to make "informed" decisions and to optimize the performance of each operational unit within the District.

It used to be that the rules of public school management were to:

• accomplish missions as well as or just a bit better than the year before;
• avoid scandal;
• stay within the budget;
• follow procedures; and
• don’t spring any surprises on your Board of Education.

Administrators who did these things looked forward to good long careers. Life as a school administrator was predictable and secure--certainly in comparison to similar positions in the private sector.

Times have changed. Budgets are tighter, expectations are higher, clear-cut solutions are not apparent.

Almost every major educational initiative in the last decade of the twentieth century was directed to achieve a higher level of productivity in a more cost-effective manner.

At the core of this movement are two very important Federal Acts:

• The Chief Financial Officers Act of 1992, and
• The Government Performance and Results Act of 1993.

These acts require better cost management and include providing managers with better cost information.

These acts require the implementation of two new strategies that are having tremendous results in transforming organizations into learning and self-improving institutions. These strategies are known as ABC and ABM. ABC is Activity Based Costing (this will be addressed in more detail in Section 6.4.14) and ABM is Activity-Based Management

The ABC/M format can facilitate business management in which the process owners (i.e., the superintendents, principals, teachers, directors of maintenance, purchasing, MIS, personnel, payroll, etc.) have the opportunity to control and improve the activities/ processes that are the "work" of their respective areas of responsibility. The Federal Accounting Standards Advisory Board reports that activity-based costing has gained broad acceptance by manufacturing and service industries in the private sector by providing an effective managerial tool.

The practice in education has been to allocate resources where we think they are needed. That is, improve reading scores by adding reading specialist positions, improve attendance through automated attendance reporting procedures, reduce drug abuse by establishing a drug abuse position that disseminates information about drugs and the effects drugs have on our bodies.

Sometimes these strategies achieve their objectives. All too frequently however, the results are below expectation and only temporary.

Business leaders have long known the value of the alignment between (a) what they want to provide and produce (i.e., their mission, goals, and objectives), (b) what methods and processes they use, and (c) what quality control standards they apply to ensure the collection of specific data helpful for the refinement and optimization of their operational processes.

One major factor that has limited school district’s ability to change from a static bureaucracy to a dynamic, improvement-driven organization is the structure and the use of its budgetary information.

Activity budgets (ABC/M) are based on the dynamics of the processes of a school district and provide several perspectives on proposed actions. This makes ABC/M a real tool for change in a school district instead of the static document reports on expenditures that are currently used by the average school district.

This type of information (coupled with customer satisfaction data, student performance data, etc.) enables school district executives to take charge through a better understanding of how an organization operates and consumes its resources.

It is important for school district executives to understand that ABC/M is applicable to not only the business operations of a school district but is usually pertinent to their core mission of providing the best and most effective instruction delivery services.

The following example provides a sample illustration.

Example: Curriculum, Instructional, and Professional Development

(right six columns of chart continued immediately following this chart)

Example: Curriculum, Instructional and Professional Development

(continued from previous page)

Unit Cost	Labor Cost	Computer	Telecom-munications	Supplies	Facilities
$15,167	$90,000	$1,000	$0	$0	$0
7,533	$45,000	0	50	150	0
2,510	15,000	0	0	60	0
61	70,000	1,500	150	120	0
30,010	180,000	0	0	60	0
15,050	90,000	0	0	300	0
93	15,000	0	0	1,200	0
1,578	270,000	1,500	50	500	0
	$795,000	$4,000	$250	$1,895	$0

It is therefore recommended that the District install a new budget/management information control system (i.e., ABC/M) that combines operational objectives, work tasks/processes, resource allocation, and performance standards/timelines.

Examples of major public sector users of ABC/M include:

• City of Indianapolis
• Internal Revenue Service
• City of Phoenix
• U.S. Navy Shipyards
• U.S. Postal Service

2. Implementation Strategy/Timeline

1. Fiscal Impact

1. Install an Expanded Board of Education Review Process to Enable Full, Objective and Timely Input to Be a Basis for All Board Actions and Decisions

As mentioned in Section 5.3 above, the Board review process is typically a six-day cycle. On Thursday preceding a Board meeting, a packet of board reports (recommendations) is made available to Board members if they choose to attend a prescheduled Board Review Session. Unfortunately, Board members seldom attend these sessions. On Friday a complete Board Report packet is delivered to each Board member so that they can review the material prior to the Board meeting on the following Tuesday. Discussion on any agenda item can occur during the Tuesday Board meeting. This discussion occurs prior to voting "yeah" or "nay.

Interviews were conducted with four of the five Board members (due to numerous schedule conflicts, Mr. Martinez was unavailable). Several themes emerged from these interviews.

• Board members believe that their most important function is to represent various constituencies and to develop policies as guidelines for the functioning of the Santa Fe public schools.
• Board members strongly believe that new members should receive training in areas such as:

• how to read and understand budgets
• the programmatic scope of the District
• established policies of the District
• the decision-making process of the Board
• the legal provisions of the State regarding K-12 education, i.e., the Open Committees Act
• funding sources and options
• management information standards and reports
• identification of key issues, e.g. appropriate questioning
• role and responsibilities of the Superintendent

• Board members support the exploration of and the testing for use of standing subcommittees to better examine and analyze recommendations dealing with the use and control of the District’s $100,000,000 budget.

• To substantially strengthen the Board’s review process the Board supports the following:

• Expand the time sequence to enable Board members to review and consider board reports through the establishment of standing committees;
• Provide Board members access to expert specialists in areas such as finance, purchasing, personnel, transportation, performance assessment, technology, facilities, food service, etc.; and
• Utilize standard report formats that require consistent information critical to good decision-making. (See recommendation 5.4.8.).

Note: Based upon input from Board members, review of documents and board reports, benchmarking the review process with other school districts such as:

• Charlotte-Mecklenburg, NC
• Pasadena U.S.D., CA
• Chicago Public Schools, IL
• Scottsdale U.S.D., AZ

Board Rule 8195 states that " . . . there shall be no standing committees . . . [but that] . . . temporary advisory committees may be formed for study and fact finding. . . "

It is therefore recommended that the District take those steps necessary to obtain a "waiver" from the State to establish standing subcommittees of the Board.

The Board operates under and within the jurisdiction of several important policies and State statutes. The following citations will help the reader to understand the context in which elected citizens serve as members of the Santa Fe Board of Education.

1. Opening Activities

1. Presentation of Reports

1. repair and maintain all property belonging to the school district;

Within the above-cited constraints and duties, the Board reviews, discusses and decides a multitude of diverse, complicated and significant issues typically over a six-day period to better " . . . study and fact find. . . " policy issues regarding District practices and proposals affecting:

• finance
• business operations
• personnel
• facilities
• instruction and student achievement.

Until such time as a waiver is obtained from the State, the Board can establish "temporary advisory committees" to implement and pilot test this recommendation.

Three "standing" subcommittees of the Board may be established around the areas mentioned above as follows:

• Financial and Facilities: review strategies for best use of District fiscal resources and facilities.
• Business Operations and Personnel: review matters of personnel and business operations including purchasing, contracting, food services, and transportation.
• Instruction and Student Achievement: review curriculum, assess various program delivery systems, and monitor student achievement.

The President of the Board of Education shall appoint a Chair and one other Board member to constitute a two-member subcommittee. Membership on each subcommittee will be on a one-year basis or until the President of the Board determines that a membership change would be in the best interest of the Board and/or an individual Board member.

• recruitment
• selection
• assignment
• assessment
• salary and benefits
• orientation and training
• collective bargaining
• job specifications
• desk audits
• grievance process
• etc.

1. Implementation Strategy/Timeline

2. Fiscal Impact

1. Improve the Quality of Board Reports by Adding Cost Implications, Funding Sources, Staffing Implications, and Organizational Impact to the Report Contents

Most SFPS Board reports have the following information:

• date of issuance;
• date action recommended for Board consideration;
• name of SFPS office and administrator responsible for the report;
• a brief statement summarizing the subject;
• a narrative providing background, legal references, and justification for Board approval;
• a statement on whether legal advice is required; and
• the Superintendent’s recommendation.

Information that should be added to Board reports will provide an element of consistency and will improve Board members’ ability to assess the implications of each recommendation.

2. Implementation Strategy/Timeline

1.	The Superintendent issues an administrative directive to initiate the new Board report format.		March 2000
2.	Process begins.		April 2000

3. Fiscal Impact

1. Financial Development and Practices
1. Overview

Financial executives know that change is required to compete in the marketplace, to meet increased demands for cost control, and to provide greater value to customers and stakeholders. Finance is at times characterized as overburdened by complex processes and controls. The Santa Fe New Mexico School District’s Financial Development and Operational Practices study indicates that there is a lack of planning and foresight and that drastic measures must be taken to improve the financial conditions of the district. It is obvious that personnel turnover and the following have led to this dysfunctional financial management environment:

• lack of overall district strategic planning and vision
• lack of the use of evaluation and accountability instruments
• lack of training for staff, parents, and community
• lack of technology use and business systems applications

The organization chart for the Business Services Department is depicted below as it was structured in October 1999 at the start of the management and organizational analysis:

1. Current Situation

1. Findings
1. General

During the course of interviews conducted with 61 individuals including Board members, senior management staff, parents, principals, teachers, and community members, the following expressions of need were the most prevalent:

• The need for training for parents and community on how the budget system works.
• The need to involve those responsible for execution of the budget in the decision-making process.
• The need for development of user-friendly reports that portray the data in a format that is useful for making decisions.
• The need for clear policies on budget reductions is needed to avoid the perception that some schools are excluded from reductions due to "who they know."
• The need for budget evaluation instruments to determine what is working and what is not working to support the establishment of program budget priorities.
• The need for descriptions of functions and resources budgeted for central offices that provide clarity for the functions and goals of each unit.
• The need for accurate payroll data as it relates to employee benefits. (e.g., sick leave accumulation).
• The need to eliminate promises of services or program resources made in isolation, promises that are not part of an overall strategic plan and that are broken year after year.

• The need to eliminate the secrecy of budget decisions, secrecy that restricts input regarding program budget decisions from stakeholders.
• The need to build confidence in central offices staff from the stakeholders (i.e., school personnel and community members) regarding budget information.
• The need to eliminate resources being committed to selected collective bargaining groups; this is inconsistent with the overall bargaining process plan.
• The need to have adequate rationale for and provide for reconciliation to the total budget when adjustments are made.
• The need to automate the financial management process.
• The need to eliminate frequent cash transfers with no requirement to explain the cash transfers.

• The need for better, open, communication among finance, information technology, and personnel staff.

1. Best Practices

As financial organizations transform their responsibilities from that of chief scorekeeper to that of value-added business partner, the need for proactive, consistent, and readily accessible information becomes linked to overall success of the business. This is, after all, a process of raising the bar for competitive success. Any organization adapting best practices undertakes to elevate its financial data to the level required for enhanced competitiveness. This is also applicable for organizations such as school districts. A best practice is defined as those practices used to achieve world-class performance in a given business function, process, or application. During the research phase of the engagement, 13 best practices from industry were identified as applicable to SFPS regarding budgeting, financial operations, and general management:

• Activity Based Management (ABM) and/or Activity Based Costing (ABC)
• Strategic planning drives all planning processes, especially operational and financial (capital and operating budgets)
• Balanced Scorecard Approach for performance measurement
• Performance indicators are aligned with business objectives, key result areas, and incentive plans
• Rigorous process (budget), with documented procedures/schedule
• Direct accountability assigned to specific managers for specific budget items
• Key assumptions in budget process are well documented and circulated
• Reports include trends, narrative, and plan/prior year comparisons
• Electronic distribution of reports with on-line access
• Relational repository of detailed data with read-only accessibility by multiple levels of management
• Regular customer surveys to ensure usefulness
• On-line feedback from users of the financial system
• Capability in the general ledger to highlight variances from budget over/under five percent.

2. Benchmarking

Benchmarking is defined as the process for internally measuring an organization’s method, process, procedure, product, and service performance levels and comparing the results against those organizations that consistently distinguish themselves in that same category of performance. External benchmarking provides for best-practice examples and information that will lead to superior performance in specific processes and functions. Many areas are available for benchmarking analysis. Below are a few pertinent areas that are related to the budget only and another section related to financial and general management. These benchmarks are "best in class" measures versus "average in class" or "worst in class" for industry.

Performance Benchmarks	Benchmark	SFPS
Budget-Related
Total cost of budgeting/$1,000 of revenue (excluding capital budget/revenue)	$0.18
Number of FTEs/$100 million revenue for budgeting (excluding capital budget/revenue)	1.6
Percent of time spent by the budgeting staff reviewing/adjusting annual budget	3%
Cycle time to prepare annual budget	30-60 days
Percentage of actual spending that matches budget	84%
Percentage of time spent reviewing/adjusting financial forecasts	10%
Programmatic budgets planned or forecast	<100
Percentage of time spent on reviews and presentations	<10%
Number of financial targets provided to units	4-6
Percentage of time spent per month on reconciliation	<1 hour
Percentage of time per month spent on corrections	<2%
Cycle time for senior management to get reports	3.0 days
Percentage of time spent reviewing/analyzing budget	65%
Financial and Management-Related
Cycle time to perform strategic planning	30 days
Average cost per student (Fall 1997) (excluding capital budget)	$5,815
Average fully loaded labor cost per Finance FTE	$55,300
Percentage fully loaded labor cost per Finance FTE	60%
Cost of finance function as a percentage of operating budget	.57%
Average teacher-to-student ratio (Fall 1997)	1:17.8
Percentage of invoices paid on time	98%
Percentage of payments that are first-time error-free	99%
Number of days to pay vendors	40-60
Total cost of repair and maintenance/$1000 gross value of fixed assets	$10.00

3. Budget/Allotment Development Formulas and Comparative Expenditure Patterns

School districts develop their budgets based on a diverse set of formulas and allotments. Some school districts, such as San Diego, California, have specific allotments for each material category, while other school districts, such as Fairfax County, Virginia, tend to consolidate funds into a few accounts, providing them more flexibility. Appendix 11.4 details the formulas we gathered from other school districts that could assist SFPS.

PricewaterhouseCoopers (PwC) has developed a report that provides SFPS with expenditure benchmark data in all major categories and subcategories of a typical school district budget. The charts in the report depict data for a three-year period (i.e., Year 1 - 1994/95, Year 2 - 1995/96, Year 3 – 1996/97). These reports are located in Appendix 11.5.

PwC has requested SFPS staff to provide information so that expenditure benchmark data can be developed for SFPS. PwC is currently developing this information which will be added as an addendum to this report.

4. "As-Is" Budget Process

While no formal budget process exists, the as-is (current) budget process was mapped after conducting interviews with members of the District staff and school personnel. The process is approximately 10 months in duration, depending on the date state and federal allotments are received. The following map depicts the process by functional area across the 10-month time period. The area of the process map, months that are in yellow, represents the subsequent fiscal year of the process. A listing of each activity in the process follows the process map.

1. Budget committee is established.
2. Budget committee begins biweekly meetings with:
1. Budget office
2. Department Directors
3. School site staff.
3. Budget office
1. Develops and distributes budget request forms to administrators
2. Meets with administrators on budget plans/procedures/training
3. Provides District administrators with monetary guidelines and staffing allocations
4. Adjusts projections as necessary based on current fiscal year mid-year report.
4. Department directors develop budgets.
5. Unions contracts negotiated.
6. Budget office reviews state legislative session results.
7. Board of Education establishes priorities.
8. Senior staff reviews completed budget requests.
9. State Department of Education (SDE) conducts its spring budget workshop.
10. Budget office
1. Reviews/adjusts budgets based on SDE spring workshop
2. Reviews budgets with administrators
3. Creates new salary schedules.
11. Budget office
1. Finalizes district’s budget and sends to Board of Education
2. Upon approval by board
1. Notifies sites and departments of tentative budgets
2. Submits District budget to SDE.
12. Board of Education approves/amends District’s budget.
13. Department directors, schools, and SDE receive District’s budget.
14. Board-approved budget is input into computer system.
15. Any changes in budget are communicated to all concerned.
16. Change requests to tentative budget are submitted to SDE prior to August 1^st.
17. SDE provides district with allocation.
18. Budget office adjusts budgets based on final state allocation and submits to Board of Education for approval.
19. Board of Education approves/amends budget.
20. Board’s approved budget is provided to senior staff, Department Directors, and schools.

1. Recommendations

Many of the recommendations in this section will require leadership on the part of the Chief Financial Officer and her staff. It is critical therefore that assessments of the existing financial personnel be made immediately to determine the skill sets that exists and the training that is needed to manage the aggressive changes contained in these recommendations.

1. Reengineered Budget Development Process Map

The process will be approximately 16 months in duration due primarily to the date state and federal allotments are received and due to obtaining prior year execution data starting in July. The following map depicts the reengineered process by functional area across the 16-month time period. The area of the process map, months that are in yellow, represents the next fiscal year of the process. A narrative of each activity in the process follows the process map. The map depicts the activities within the budget process, and following the map is a list of the activities and subactivities. However, not every activity or subactivity that may be accomplished is listed; only essential activities and subactivities are listed. Activities in the as-is process are shown in blue and new activities are in red.

7) Local TV and newspaper coverage

b. Input any changes required.

e. Discusses other issues of importance to resources.

a. Board of Education reviews the budget.

12. District receives approved/amended Superintendent’s budget from the Board.

b. Budget department reviews budget for consistency with assumptions.

14. SDE provides District with allocation of funds by September 1^st.

15. Budget department receives SDE allocation of funds.

1. Budget department reviews allocations based upon budget assumptions and the goals and objectives of the strategic plan.

b. Approves or amends BAC’s recommendations.

1. Superintendent and members of District staff present recommendations to Board.
2. Board conducts public hearings on Superintendent’s recommendations and any changes sponsored by the Board or by customers and stakeholders.

7) Local TV and newspaper coverage.

The Superintendent should implement this recommendation in the next year of the budget development process. There are no financial implications for this recommendation in that no additional resources are required.

1. Begin the Budget Development Process Earlier in the Fiscal Year

The current budget process began seven months prior to the fiscal year. We recommend that it formally begin each fiscal year in August to assure adequate time and resources. This will allow greater customer and stakeholder involvement in the budget development process.

The Superintendent should implement this recommendation for the FY2001-2002 budget development process. There are no financial implications for this recommendation in that no additional resources are required.

2. Increase Customer and Stakeholder Involvement in the Budget Development Process

Customer and stakeholder involvement must be a part of the process and must be vigorous and inclusive. In the reengineered budget process, we recommend that many more stakeholders and customers become involved. Examples of these types of groups include: Chambers of Commerce, citizen groups, parent and teacher associations, professional educator associations, etc. This can be accomplished by briefing these groups on the District’s strategic plan and how the budget meets it. Other ways to involve customers and stakeholders include budget briefings by the Superintendent via cable television and through town hall meetings. The reengineered budget process dramatically increases customer and stakeholder involvement, which is important to any organization that wants to maximize satisfaction in its product. If this is achieved, customers will have a higher degree of loyalty and both customers and stakeholders will be less volatile in dealings with the organization. This increased interaction between the organization and its customers and stakeholders results in a more efficient and effective organization concerning its products and services.

The Superintendent should implement this recommendation for the FY2001-2002 budget development process. There are no financial implications for this recommendation in that no additional resources are required.

3. Create a Budget Advisory Committee (BAC) and Executive Budget Advisory Committee (EBAC)

The BAC should be composed of the Assistant Superintendents, Department Directors, teachers, principals, and community representatives. This group would provide the recommendations for prioritization of funding, decrements, etc. The Director of Budget and Finance would facilitate the BAC. The BAC would forward their recommendations to the EBAC. This group should be composed of the District superintendent, Chief of Business Services (proposed title) and the Associate Superintendents. The Chief Financial Officer (CFO) would facilitate the EBAC. The EBAC discusses the BAC’s recommendations and makes the final decisions for recommendations to the Board. By establishing the BAC and EBAC, the District involves its senior management in the critical decision process necessary to develop a team mentality. This mentality is needed to be responsible for and successfully manage the budget process and to be effective as an organization.

The Superintendent should implement this recommendation immediately. There are no financial implications for this recommendation in that no additional resources are required.

4. Reduce the Level of Effort for Managers in Preparation of the Budget

Under the current process, it is unclear whether managers must prepare wish lists for all unresourced requirements (URRs) or for only a selected few. Under the new process it is recommended that Associate Superintendents and Department Directors create a list for all URRs but only forward their highest priority URRs for consideration; each URR should include a statement about how it addresses the district’s strategic plan. The departments would still maintain a complete listing of all URRs, but would only forward 10 for district prioritization. The departmental URRs would be prioritized by the BAC and approved or amended by the EBAC. The URRs from all departments could be prioritized into a district-level URR list from 1 to "n" or into a list of the top 10 or 20.

The Superintendent should implement this recommendation for the FY2001-2002 budget development process. There are no financial implications for this recommendation in that no additional resources are required.

5. Require an Expenditure Plan by Program and School

An expenditure plan should be required for each program and subprogram of funds. This will require the planning of fund expenditures on a monthly basis. Expenditure plans will decrease the propensity to wait until the last minute to spend funds and will reduce the amount of time spent in determining the amount of excess funds. Program managers should explain variances from their expenditure plan during quarterly performance reviews. A sample template of an expenditure plan is located in Appendix 11.6.

The Superintendent should implement this recommendation for the FY2001-2002 budget development process. There are no financial implications for this recommendation in that no additional resources are required.

6. Require Monthly Reconciliation with Accounting Reports

Currently there is no formal requirement for financial staff or account holders to reconcile their accounts/programs on a monthly basis with the accounting system. The purpose of conducting the reconciliation is to eliminate errors from the accounting system to ensure that funds are properly accounted for. If no reconciliation is performed, account/program managers will have reduced flexibility in executing their programs. This is due to fewer funds being available or more funds being available than there should be. Each department and all schools must be included in this monthly reconciliation. A formal record of the reconciliation should be kept for two years for historical and research purposes.

During the review of the district’s current budget and last fiscal year’s expenditures, it became apparent that approximately 134 accounts out of a total of 225 accounts in the operational budget had variances exceeding 25% or $10,000. The District has provided information in an attempt to explain the variances. PwC does not feel that many of the explanations provide the appropriate rationale for the variances. Therefore, the District should have a thorough discussion concerning the variances in an effort to reduce some of the variances in order to generate funds for other, higher priority, programs.

The Superintendent should implement these recommendations in the next fiscal year. There are no financial implications for these recommendations in that no additional resources are required.

7. Improve Cash Management
1. Use Best Practices for Cash Management

Cash management deserves great attention, not only because of its importance in managing risk, but also because of its ability to increase revenue. This is accomplished by accurately controlling cash balances to maximize return on resources. Also, cash management must be emphasized in light of SFPS’s cash management problems, including but not limited to their inability to reconcile SFPS bank accounts for over a year.

2. Best Practices

The following best practices pertain to cash management and provide a frame of reference where SFPS must focus their attention.

• Minimize number of primary banks (limit to 1 or 2)
• Utilize sweep accounts and/or trust fund combinations, which automatically invest excess cash
• Establish and maintain ZBA (zero balance accounts) to facilitate segregation of payments, e.g., payroll from general disbursement
• Utilize lock boxes and minimize the number - consider geographic placement relative to customer base and Federal Reserve banks/districts
• Analyze fees versus compensating balances
• Determine short-term cash needs by using reliable operating forecast
• Integrate with Payable and Receivable and Procurement systems to determine weekly cash requirements
• Use commitment registers and dates of expected receipts to predict cash flow
• Manage disbursement through EDI and Controlled Disbursement accounts
• Utilize EDI data exchange with bank for automatic reconciliation
• Use on-line access to bank account information, including transactional ability (stop payments, transfers, etc.)

1. Key Areas to Examine

Key areas for examination within cash management are:

• Amount of idle cash as a percentage earning minimum interest - too much cash on hand
• Account structure
• Number of banks
• Number of banks with global operations
• EDI relationship with banks
• Investment and trust management services offered by bank
• Bank-required compensating balances and fee structure
• Systems integration within Finance
• Availability and accuracy of cash requirement forecasts

1. Performance Measurement Criteria

Criteria to measure the performance of cash management operations include:

• Average interest rate earned
• Degree of automation for payments, receipts, and reconciliation
• Versatility (subjective) of cash management system
• Dollar amount of compensating balances
• Monitoring and evaluation of bank services and costs

1. Expected Results

Results of well-managed cash operations include:

• Increase in available cash for investment
• Increase in average interest earned
• Decrease in service fee expense
• Decrease in reconciliation cycle time
• Higher degree of cooperation and involvement with banking institution
• On-line access to bank account information

1. Cash Management Summary

The Superintendent should implement these recommendations immediately. Many of the cash management recommendations can be started immediately and the balance next fiscal year. The financial implications are minimal.

1. Evaluate Unused Sites to Potentially Generate Revenue

The district currently has 17 unused school sites (Appendix 11.7). These unused sites should be evaluated in relation to projected student enrollment and the facilities master plan for possible generation of revenues that could be used for capital projects.

This review should also include state funding for facilities and be reviewed by the District’s person in charge of facilities in order to ensure the coordination and proper expenditure of these funds.

The Superintendent should implement this recommendation immediately. This review may generate revenues that may be used for district capital projects.

2. Establish a Financial Management Budget and Transfer Policy