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School Board Members Play an Essential Role in Ensuring the Financial Integrity of the School District

the staff of the Ridgewood blog

Ridgewood NJ, according to the NJ School Board Association , School Board members play an essential role in ensuring the financial integrity of the school district or charter school. Your vigilance on financial matters can translate into student achievement when public funds are spent prudently and effectively. Good policies can play an important role in ensuring financial integrity, and keep your schools running smoothly.

There are eight policy topics that directly affect a school district’s financial integrity. They are:

Approving expenditures and payroll
Understanding the annual audit
Finance and goal setting
Preparing the budget
Limiting wasteful or excessive spending
The role of the Finance Committee
Transfers of funds
Code of Ethics

At each board meeting, there is likely to be an item on the agenda that reads “approve the report of the board secretary/business administrator” or something similar. Board members will want to examine the board secretary’s report in detail. If the board also employs a “Treasurer of School Moneys” pursuant to N.J.S.A. 18A:17-31 to 36, there will also be a Treasurer’s Report. The board will want to be sure the reports agree and have been independently arrived at. In addition, the board should make sure that no major funding line has been over-expended and that there are sufficient funds projected for operations until the end of the fiscal year.

N.J.S.A. 18A:23-1 et seq. is the state law on school audits and auditors. A properly licensed auditor must be employed by the school board to conduct the required annual audit for a fee established by the board. The audit shall be completed within five months (prior to 2010, the limit was four months) after the end of the school fiscal year. The audit will include a verification of all cash and bank balances, including money derived from athletic events.

District goals and long-range plans should be discussed periodically. Strategic planning and finance are intertwined.  One big problem is that focusing on financial details consumes all available time, to the exclusion of discussing the big picture. The overall goal is to optimize district spending in order to increase student achievement.

In developing a school budget, the chief school administrator and the board of education must reconcile many conflicting opinions, wishes and expectations. The budget which the board adopts will need to be reasonable in cost, yet educationally sound and sufficient.

The board members, as representatives of their community, should encourage public input throughout their budget discussions. The board looks at the costs involved, the amount of money which will have to be raised through taxes, and the effect of the budget on the citizens’ pocketbooks. It then reconciles, in its best judgment, the educational needs of the district’s students with the ability of the community to support those needs. The district will need to financially support the educational goals set by the board and the superintendent. For example, if a specific smaller class size is desired in some grades, then enough staff will be needed to assure those class sizes.

As board members, you are required to avoid financial conflicts of interest. School boards may not hire relatives of board members (“nepotism”). Board members must be vigilant to avoid any conflicts of interest. For example, no board member shall hold any form of paid employment with the district while he or she is serving, nor for six months after leaving office. Also, no board member shall have an interest directly or indirectly in any contract with or claim against the board. When in doubt, consult your board attorney or ask for an advisory opinion from the School Ethics Commission.

Wasteful spending must be avoided. Policy 3327 on “relations with vendors” is one NJSBA policy that is focused on avoiding wasteful expenditures.

The state Legislature has placed special emphasis on avoiding excessive spending on professional services, including attorneys’ fees. Yes, timely advice from a competent school board attorney can be very valuable. Even so, boards must be prudent in their use of legal services.

All contracts for legal services must comply with the payment requirements and restrictions set forth in N.J.S.A. 18A:19-1. To ensure the prudent and cost-effective use of legal services, the district will…

Limit and designate the persons with the authority to request services or advice from contracted legal counsel.
Legal counsel will not be used unnecessarily to make management decisions
Legal counsel will not be used unnecessarily to obtain readily available information such as district policies
Requests for legal advice shall be made in writing.
Contact logs and records shall be kept
Records shall be reviewed to determine that the requests for legal advice are necessary.
Advance payments for legal services are prohibited.
Services shall be described in detail
Invoices for payment shall be itemized.
Payment shall only be for services actually provided

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