For Our Children's Future:
A Performance Review of the Millcreek Township School District
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A Casey School District Performance Review Report
For Our Children's Future: |
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Dr. Verel R. Salmon
Substitute Superintendent
Millcreek Township School District
3740 West 67th Street
Erie, PA 16506
Dear Dr. Salmon:
I am pleased to present the results of For Our Children’s Future: A Performance Review of the Millcreek Township School District. This is the first-ever performance review of the district, and one of the first Casey School District Performance Reviews done in Pennsylvania.
Working families in the Commonwealth are struggling to make ends meet, and they expect public school districts to use resources as efficiently and effectively as possible. At the same time, parents and taxpayers want the maximum amount of their hard-earned tax dollars to reach the classroom for teaching and learning. For Our Children’s Future: A Performance Review of the Millcreek Township School District will help your district meet these expectations. This report identifies ways the district can reallocate funds to the classroom so students will learn more now and earn more in the 21st century.
Some recommendations in this performance review suggest ways to significantly improve district operations at no cost. Others call for some investment in much-needed improvements. In sum, full implementation of these recommendations could save the Millcreek Township School District more than $3.46 million over the next three years.
I am also pleased to report that the Department of the Auditor General review team singled out some district practices to commend. These "best practices" are identified in this report so that they may serve as examples to other school districts in Pennsylvania.
I am grateful for the willingness of the Millcreek Township School District to work with the Department of the Auditor General on this historic effort for our children and their future. I am hopeful that the recommendations outlined in this report will have a meaningful impact on the future of Millcreek Township’s schoolchildren.
| Sincerely, | |
| Robert P. Casey, Jr. | |
| Auditor General |
Working families in Pennsylvania are struggling to make ends meet. They want the maximum amount of their tax dollars to reach the classroom for teaching and learning so children will learn more now and earn more in the 21st century.
However, in many school districts across the nation, only a little over half of the total budget is actually spent in the classroom. School districts must provide a broad range of services beyond face-to-face teaching, including teacher and student support services, facility operation, transportation, and both building-level and districtwide leadership.
These noninstructional services are a vital part of creating and sustaining a successful educational environment. However, at a time when expectations are rising faster than revenues, it is critical that school districts focus their resources on their core mission: the teaching and learning of children.
The Casey School District Performance Reviews are designed to help districts in Pennsylvania respond to this challenge. Initiated by Auditor General Robert P. Casey, Jr., in September 1997, this groundbreaking program marks the first time in Pennsylvania that school districts have worked with the Department of the Auditor General to identify ways to improve efficiency and effectiveness. The savings identified by these reviews can then be reallocated to the classroom for teaching and learning.
The Casey School District Performance Review philosophy is based on three key premises:
Some recommendations in this report will cost nothing to implement, but will have an enormous impact on communication, morale, and the ability to monitor effectiveness and efficiency. Others will require some investment, but will have important future benefits. (See Appendix A for suggested strategies to supplement school district revenues.) All recommendations identify concrete opportunities to reallocate resources from noninstructional services into the classroom.
All 501 Pennsylvania school districts were invited by Auditor General Casey to participate in this first year of the Casey School District Performance Reviews. Fifty-three districts responded. These districts were asked to complete a profile questionnaire documenting their enrollment, budget, number of school buildings, and details about their accounting and data collection practices. To aid the selection process, this information was considered with additional details such as student demographics, percentage of rural population, incidence of poverty, and district location. From the 53 applicants, 12 school districts were selected to represent a cross section of Pennsylvania’s school districts for the 1997-98 Casey School District Performance Review cycle.
For Our Children’s Future: A Performance Review of the Millcreek Township School District presents specific recommendations on how the school district can improve its operations in support of its core mission.
The district encompasses 30 square miles in Erie County and serves a medium-sized, metropolitan community with about 55,000 residents. For the 1997-98 school year, the board of directors approved a budget of approximately $54.2 million to educate 7,561 students. Millcreek Township operates seven elementary schools serving grades kindergarten through 5, three middle schools serving grades 6 through 8, one high school serving grades 9 and 10, and one high school serving grades 11 and 12.
We commend the board and staff of the Millcreek Township School District and the community for their dedication to improving educational opportunities for the children of their district. We believe that the recommendations contained in this report not only have value for Millcreek Township, but also for other Pennsylvania school districts facing similar management and performance challenges. Accordingly, we encourage other stakeholders to review this report for innovations that can be similarly implemented in their operations.
Process Overview
The goal of the Casey School District Performance Reviews is to provide each participating district with a set of meaningful recommendations that will lead to improved district operations and increased resources for teaching and learning. These reviews are different from audits completed by the Department of the Auditor General’s Bureau of School Audits, which primarily determine (1) if a district received the state subsidies and reimbursements to which it was entitled; and (2) if the district complied with applicable laws and regulations. In addition, the forum used to develop the areas selected for review is unique to this initiative.
Scope design is a collaborative effort between the school district management team and the Department of the Auditor General review team. Each group meets separately to identify a short list of issues and concerns before meeting together to reach consensus on the scope of the performance review. Each team organizes its priorities into familiar school district process areas, such as transportation or facility management, because concerns are easily voiced along these lines. Typically, the scope consists of three or four major process areas targeted for in-depth analysis.
District Assessment
Assessment of school districts is a three-pronged approach comprising input from (1) school district management, (2) the Department of the Auditor General performance review team, and (3) the community.
School district management, headed by the superintendent, reviews a sample list of school district processes and identifies its top priority areas based on the district leadership’s firsthand experiences and knowledge of school district operations.
At the same time, the department’s performance review team tours the school district, makes general inquiries, and identifies possible process areas for review using In$iteTM — The Finance Analysis Model for EducationTM. The In$iteTM software is an analytical tool developed by Coopers & Lybrand L.L.P. especially for school districts. In$iteTM uses the district’s general ledger data to produce consistent and comparable expenditure reports organized by expenditure function, educational program, and individual building location.
Because Auditor General Casey values the input of taxpayers as well as district employees, the review team also incorporates community input when finalizing the scope design.
The people of the school district are invited to a community open house with Auditor General Casey and the department’s performance review staff to share suggestions, recommendations, concerns, and observations about the district’s operations. (See Appendix B for a list of community comments submitted in writing.)
Millcreek Township School District Scope Design Meeting
A scope design meeting was held to merge the process areas targeted by the Millcreek Township School District and the questions raised by the review team. Consensus was reached on the following scope for the Millcreek Township School District performance review:
The process areas identified in the Millcreek Township School District scope design served as a framework for the auditors’ fieldwork. The Department of the Auditor General’s review team spent approximately four weeks exploring the concerns and issues raised regarding each process area contained in the scope.
The review team interviewed 33 people to understand each process area from a number of different perspectives. Team members talked to board members, administrators, clerical staff, teachers, maintenance staff, custodial staff, students, and administrators at Intermediate Unit #5 and the Erie Metropolitan Transit Authority. (See Appendix C for a complete list of the individuals interviewed.)
In addition, review team members examined a number of documents and consulted data sources to verify information received during interviews and to conduct independent evaluations. Specifically, review team members:
As previously noted, the process areas identified in the scope design served as a framework for the auditors’ fieldwork. The review team then analyzed its data and developed recommendations for improvement. These recommendations are organized into distinct planning modules that identify how districts can plan for our children’s future by saving money and reallocating the savings to the classroom for teaching and learning.
Within each planning module, the review team estimated the savings and/or investment associated with each recommendation over a 3-year period. The assumptions on which these calculations are based are included in the explanation that follows each module table. In addition to the information provided by the district, the review team also had the opportunity to draw upon the expertise of senior managers in the Department of the Auditor General and industry experts coordinated by Coopers & Lybrand L.L.P.
These planning modules are found in the Observations and Recommendations section of this report.
In January 1998, Auditor General Casey presented this report to the district’s management and school board to communicate the department’s observations and proposed recommendations. These recommendations, including suggestions for investments and the savings that are expected, will help the Millcreek Township School District focus on enhancing its operations to provide additional resources for teaching and learning in the classroom.
At the conclusion of the Casey School District Performance Review, the school district management is expected to provide a written response to the Department of the Auditor General within 30 days. In its response, the district is expected to comment on each planning module, indicating its intentions with respect to implementing each recommendation.
Implementation of recommendations by the school district is voluntary. Parties interested in the status of a specific recommendation’s implementation should contact the school district directly.
Millcreek Township School District administrators, faculty, and staff collectively determine the needs of the district’s individual schools. This arrangement has resulted in a good relationship between district management and building-level decision makers. Building-level input results in an accurate assessment of district needs, the timely delivery of supplies, and fewer unnecessary purchases.
The district provides transportation to over 8,000 public and non-public school students using contracted transportation services. These services are managed by a transportation director who oversees a 3-tiered run system (high school, middle school, and elementary students are transported independently according to staggered bell times). The district uses equipment effectively and provides students with quality transportation in a timely manner.
The district’s schools and facilities are well-maintained, comfortable environments that are conducive to successful teaching and learning. Current building conditions reflect the district’s long-term commitment to an active and thorough maintenance program.
The district hired consultants to develop long-range facility planning and a comprehensive 10-year master plan. This plan provides the school board, administration, faculty, staff, and the community with a written assessment of the district’s facility needs. The plan also assists those individuals who are responsible for meeting the district’s capital funding needs by focusing on construction and renovation priorities.
The director of operations and facilities and the director of finance have developed a 5-year capital reserve projects plan to provide a systematic basis for evaluating and prioritizing renewal and replacement projects. As a result of this planning initiative, the district is able to track project costs and monitor changing priorities and needs.
The Millcreek Township School District issued bonds in 1997 to refund the outstanding general obligation bonds of 1992, to advance refund a portion of the general obligation bonds of 1991, and to pay off a portion of its 1993 bonds. This financing arrangement saved the district $514,553 - $426,890 at the time of closing and $87,663 over the life of the issue.
To build the new Tracy Elementary School, the district financed the construction with a long-term note instead of a bond, saving underwriting and reporting fees of approximately $250,000. In addition, this financing allowed the district to receive a more favorable interest rate compared to the rates obtained for recent bond issues.
This Casey School District Performance Review generated 11 recommendations to address concerns the auditors identified in the four process areas agreed to at the scope design meeting. These recommendations are organized into separate planning modules to help the district develop a strategic blueprint for getting more tax dollars into the classroom.
Each module consists of one or more components. These components highlight specific recommendation groupings. This structure presents the recommendations and the resulting savings and/or investments in understandable sections so the district may respond by:
Throughout the report, savings are expressed in parentheses.
| Component 1.1 Purchases of supplies | ||||
| Recommendations | Impact on Teaching and Learning | (Savings) | Investment | Net (Savings) Investment |
| 1. Obtain price quotations from the Northwest Tri-County Intermediate Unit for school supplies and utilize the intermediate unit to purchase school supplies when appropriate. | Assures the district that supplies will be obtained in the most economical fashion. | ($87,990) | $0 | ($87,990) |
| Total Module 1 | ($87,990) | $0 | ($87,990) | |
The table below presents a breakdown of the 3-year net (savings) investment for Planning Module 1.
| Planning Module 1 | Net (Savings) Investment | |||
| Year 1 | Year 2 | Year 3 | Total | |
| Component 1.1 Purchases of Supplies | ($29,330) | ($29,330) | ($29,330) | ($87,990) |
| Total Module 1 | ($29,330) | ($29,330) | ($29,330) | ($87,990) |
Component 1.1 Purchase of Supplies
Review Observation
The district currently awards the entire bid for all school supplies to one vendor. During the 1996-97 school year, the district purchased all school supplies from a single vendor who offered an 8 percent discount on the total purchase. This contract included 1,724 items and totaled $112,808.
The review team compared the prices of 56 items which were offered by the Northwest Tri-County Intermediate Unit to similar items purchased by the district. The district paid more for 45 of those items (80 percent of the items tested) and could have saved $4,954 if the 45 items had been purchased through the intermediate unit. Utilizing an average cost savings for these items, the district could have saved approximately $29,330 on the purchase of the total supplies order from the 1996-97 school year.
Recommendation
According to the results of the review team’s comparison, there is an opportunity for the district to obtain lower prices on needed supplies and materials from the Northwest Tri-County Intermediate Unit.
| Fiscal Impact: | Year | Savings | Investment |
| 1 | ($29,330) | $0 | |
| 2 | ($29,330) | $0 | |
| 3 | ($29,330) | $0 | |
| Total | ($87,990) | $0 |
Note: These savings were projected using the results of the review team’s comparison.
| Component 2.1 Transportation Service Policies | ||||
| Recommendations | Impact on Teaching and Learning | (Savings) | Investment | Net (Savings) Investment |
| 1. Request that the Department of Transportation declare certain bus routes hazardous. | Provides for an efficient and economical pupil transportation system. | ($107,073) | $0 | ($107,073) |
| 2. Utilize public transportation to transport high school students. | Same as above.
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$0 | $0 | $0 |
| Total Component 2.1 | ($107,073) | $0 | ($107,073) | |
| Component 2.2 Contract Terms | ||||
| Recommendations | Impact on Teaching and Learning | (Savings) | Investment | Net (Savings) Investment |
| 1. Solicit competitive bids for transportation services when the current contract expires. | Provides management with the information needed to ensure that transportation services are efficient and effective. | $0 | $0 | $0 |
| Total Component 2.2 | $0 | $0 | $0 | |
| Total Module 2 | ($107,073) | $0 | ($107,073) | |
The table below presents a breakdown of the 3-year net (savings) investment for Planning Module 2.
| Planning Module 2 | Net (Savings) Investment | |||
| Year 1 | Year 2 | Year 3 | Total | |
| Component 2.1 Transportation Service Policies | ($35,691) | ($35,691) | ($35,691) | ($107,073) |
| Component 2.2 Contract Terms | $0 | $0 | $0 | $0 |
| Total Module 2 | ($35,691) | ($35,691) | ($35,691) | ($107,073) |
Component 2.1 Transportation Service Policies
Review Observations
The district provides transportation services to students who live less than the state’s allowable walking distance to school (one and one-half miles for elementary students and two miles for secondary students) due to hazardous conditions along these routes. Hazards consist of heavy traffic and inadequate walkways for students. Because the district has not submitted these routes to the state for review and recognition, the district has not been provided with an exception to the walking distance requirement, and has not been reimbursed for the cost of transporting these students.
State law requires that the district provide the same transportation services for non-public school students as they do for students attending Millcreek Township School District public schools. For both public and non-public school students (approximately 7,500 and 1,500 students, respectively), expenditures exceed the state’s maximum allowable cost calculation and have not been reimbursed.
Recommendations
By requesting that the Department of Transportation review and designate as hazardous the routes which are within the state’s allowable walking distance to school, the district will be able to receive state reimbursement for the cost of transporting students along those routes.
| Fiscal Impact: | Year | Savings | Investment |
| 1 | ($35,691) | $0 | |
| 2 | ($35,691) | $0 | |
| 3 | ($35,691) | $0 | |
| Total | ($107,073) | $0 |
Note: If the Department of Transportation declares all bus routes which are currently within walking distance as hazardous, the approved transportation costs could be increased by $35,691 per year.
By using public transportation instead of contracted transportation to provide service to its high school students, the district could reduce its transportation costs. The review team contacted local public transportation providers to determine the average costs to transport the high school students who are currently serviced by six contracted bus runs. A comparison of those costs (less an estimated state reimbursement) with the net costs (contracted costs less state reimbursement) revealed the district could save approximately $70,500 per year.
However, the district negotiated a 5-year amendment to its transportation contract in 1997. Therefore, this recommendation cannot be implemented and these savings cannot be realized until this contract expires in 2002.
| Fiscal Impact: | The district will be unable to realize savings from this recommendation until the current contract amendment expires in 2002. |
Review Observation
The district has contracted with Ryder Transportation Services since 1989. For the 1995-96 school year, the district paid this vendor $2,086,942. The maximum allowable cost according to the state’s reimbursement formula was $1,737,380. Therefore, the district automatically incurred an excess cost of $349,562 which was not reimbursable from the state.
When negotiating a new contract, the district should be cognizant of the state’s maximum allowable cost formula. Three hundred and ninety-eight, or almost 80 percent, of the school districts in Pennsylvania contract out for their transportation services. Approximately 25 percent of all school districts that contract out pay only the state formula or less. An additional 28 percent of all districts that contract out pay less than 10 percent over the state formula.
Therefore, the district could save approximately $349,000 per year if it would negotiate a contract for transportation services for an amount equal to the state’s maximum allowable reimbursable cost for transportation. (This amount of savings does not consider the district’s implementation of Recommendation # 2 in Component 2.1) However, the district negotiated a 5-year amendment to its contract for transportation services in 1997. Therefore, this recommendation cannot be implemented and these savings cannot be realized until this contract expires in 2002.
| Fiscal Impact: | The district will be unable to realize savings from this recommendation until the current contract amendment expires in 2002. |
| Component 3.1 Excess Real Estate | ||||
| Recommendations | Impact on Teaching and Learning | (Savings) | Investment | Net (Savings) Investment |
| 1. Establish a policy with respect to real estate holdings. | Provides for an effective and efficient use of district resources. | $0 | $0 | $0 |
| 2. Sell the old Tracy Elementary School site, the Brown’s Farm site, and the Lakewood Elementary School site as separate parcels on a competitive bid basis. | Provides additional resources for the classroom.
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($1,799,000) | $16,230 | ($1,782,770) |
| Total Component 3.1 | ($1,799,000) | $16,230 | ($1,782,770) | |
| Component 3.2 Facility Operations and Management | ||||
| Recommendations | Impact on Teaching and Learning | (Savings) | Investment | Net (Savings) Investment |
| 1. Negotiate an improved rate structure with the electric utility company. | Ensures that a positive learning environment is provided for all district students. | ($720,000) | $0 | ($720,000) |
| 2. Solicit bids from qualified providers to implement a guaranteed energy savings contract. | Same as above. | ($630,000) | $0 | ($630,000) |
| 3. Evaluate the ongoing need for contracted maintenance and custodial management services. | Same as above.
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$0 | $0 | $0 |
| Total Component 3.2 | ($1,350,000) | $0 | ($1,350,000) | |
| Total Module 3 | ($3,149,000) | $16,230 | ($3,132,770) | |
The table below presents a breakdown of the 3-year net (savings) investment for Planning Module 3.
| Planning Module 3 | Net (Savings) Investment | |||
| Year 1 | Year 2 | Year 3 | Total | |
| Component 3.1 Excess Real Estate | ($1,606,770) | ($88,000) | ($88,000) | ($1,782,770) |
| Component 3.2 Facility Operations and Management | ($450,000) | ($450,000) | ($450,000) | ($1,350,000) |
| Total Module 3 | ($2,056,770) | ($538,000) | ($538,000) | ($3,132,770) |
Component 3.1 Excess Real Estate
Review Observations
The existing Tracy Elementary site, which will be vacated in 1998 when the new Tracy Elementary School opens, is an extremely valuable site for commercial development. Recent appraisal of the property estimates a market value of $1.17 million.
This property, a 36.6-acre tract, was originally obtained to accommodate future enrollment growth and the need for additional district facilities. However, the site is adjacent to the newly constructed Walnut Creek Middle School, which occupies a 56-acre site large enough for a new elementary school, if needed.
This 2.88-acre property is the former site of a neighborhood elementary school. The land is currently being used by the local community as a playground and recreational site. While the township has agreed to perform the routine mowing and upkeep, and the ongoing cost to the school district is minimal, the Millcreek Township School District does not need to own this asset.
Recommendations
Because the district’s real estate holdings exceed the district’s current and projected needs, the school board should consider establishing a policy to periodically review the continued ownership of district property that is no longer being used for educational purposes. This policy would prevent the delay of any benefit to be realized from the sale of idle real estate.
| Fiscal Impact: | Neutral |
The Millcreek Township School District’s long-range facilities plan, which projects the district’s needs through 2006, does not indicate that the district needs its excess real estate holdings. Therefore, the district should sell these three properties. These sales will not reduce the district’s future operating expenses, however, the transfer of the properties to the private sector will add revenue to the district’s property tax base and result in additional revenue from potential residential and commercial development.
| Fiscal Impact: | Year | Savings | Investment |
| 1 | ($1,623,000) | $16,230 | |
| 2 | ($88,000) | $0 | |
| 3 | ($88,000) | $0 | |
| Total | ($1,799,000) | $16,230 |
Note: The calculated savings in year 1 is based on the combined estimated market value of the three properties detailed below.
| Property | Market Value | |
| Tracy Elementary School site | $1,170,000 | |
| Brown’s Farm site | $293,000 | |
| Lakewood Elementary School site | $160,000 |
The savings in years 2 and 3 are estimated property tax revenues which could be generated.
Investments are based on estimated closing costs (1 percent real estate transfer tax) which might be incurred upon the sale of the properties. Years 2 and 3 reflect the potential real estate tax collected. The tax was calculated by taking the estimated market value multiplied by 40 percent (assessed value basis) multiplied by millage rate. The product was then divided by 1,000 to arrive at the estimated real estate tax to be received.
Component 3.2 Facility Operations and Management
Observations
As deregulation takes effect, utility price competition will be offered and savings in electric rates can be expected. According to the National Center For Policy Analysis, five major U.S. industries have been deregulated since 1977 -- trucking, railroads, natural gas, long-distance phone service, and airlines. In each of these industries, deregulated prices have dropped 25 to 50 percent.
Millcreek Township’s cost per kilowatt hour of 9.4 cents historically has been higher than the 7.5 cents per kilowatt hour in other regions of the state and the national average of 7 cents per kilowatt hour. Therefore, the district may be able to benefit from negotiated rate reductions.
The district completed an energy conservation program about 10 years ago and performed a preliminary study in 1991 for additional measures. No action was taken by the district in 1991 because the energy consultants’ projected savings did not meet the desired goal (10 percent of current costs). Since that time, additional technological advances and innovations have occurred. Legislation enacted by the Commonwealth in 1996 enables school districts to enter into guaranteed energy saving contracts with qualified providers. These contracts guarantee savings at least equal to the cost of the conservation measures over a 10-year period.
The review team also noted that the district’s energy costs increased 80 percent over the last seven years (from $725,000 in 1989-90 to $1.3 million in 1996-97). This increase is a result of elevated energy prices and the addition of approximately 300,000 square feet of space which must be maintained.
The Millcreek Township School District contracted with ServiceMaster 13 years ago to improve the management of the district’s maintenance and custodial employees, and enhance the services being provided to its facilities. This contract has not been rebid since its inception in 1984. Based on our tour of the facilities and discussions with faculty, principals, and administrators, the maintenance and custodial staff keep district facilities well-maintained. Therefore, there may no longer be a need for ServiceMaster to manage the district’s maintenance and custodial employees.
The review team noted that the district agreed to a 7-year extension of the ServiceMaster contract in 1997. The extension includes agreements for the district to pay annual increases of 3 percent per year. Although the vendor agreed to provide several modest additional services in the extension, the contract does not include any incentives for ServiceMaster to provide cost savings to the Millcreek Township School District. The review team also noted that ServiceMaster invoices do not itemize the actual costs incurred to provide service to the district. Therefore, the district is unable to assess the costs of the services provided by the vendor with the benefits it receives.
Recommendations
By negotiating for better electric utility rates, the Millcreek Township School District could achieve a reduction in electricity costs.
| Fiscal Impact: | Year | Savings | Investment |
| 1 | ($240,000) | $0 | |
| 2 | ($240,000) | $0 | |
| 3 | ($240,000) | $13,000 | |
| Total | ($720,000) | $0 |
Note: A comparison between the kilowatt hour cost of the district of 9.4 cents and the national average of 7 cents, applied to the approximately 10 million kilowatt hours used by the district, determined the annual savings of $240,000 which could be obtained by the Millcreek Township School District.
A guaranteed energy savings contract would assure the district savings at least equal to the costs of the energy conservation measures.
| Fiscal Impact: | Year | Savings | Investment |
| 1 | ($240,000) | $0 | |
| 2 | ($210,000) | $0 | |
| 3 | ($210,000) | $13,000 | |
| Total | ($630,000) | $0 |
Note: Based on the review team’s analysis of the district’s energy consumption reports, discussions with management, and a review of the 1991 energy study conducted by experts in the field, annual savings of approximately $210,000 may be realized by an energy conservation program. This estimate is based on an estimate of inflation (3 percent per year) and the costs to maintain the additional 300,000 square feet of space which has been added over the past several years.
Based on the high performance of district maintenance and custodial staff, the contracted services and the presence of ServiceMaster management could be revised to increase the utilization of the district’s employees and technology.
The review team estimated that a savings of $140,000 could be realized by eliminating the portion of the ServiceMaster contract which covers training, management control software, technology support and pest management. (The cost to retain supervisory personnel to the district by ServiceMaster was not included in this analysis.)
However, since the district negotiated a 7-year extension to this contract in 1997, the district will be unable to take advantage of this recommendation until 2004.
| Fiscal Impact: | The district will be unable to realize savings from this recommendation until the current contract extension expires in 2004. |
| Component 4.1 Financial Management | ||||
| Recommendations | Impact on Teaching and Learning | (Savings) | Investment | Net (Savings) Investment |
| 1. Solicit competitive bids for banking services. | Provides that the maximum resources are generated with the lowest level of risk to the district. | ($135,000) | $0 | ($135,000) |
| Total Component 4.2 | ($0) | $0 | ($0) | |
| Component 4.2 Financial Reporting | ||||
| Recommendations | Impact on Teaching and Learning | (Savings) | Investment | Net (Savings) Investment |
| 1. Redesign financial reporting practices to ensure accuracy. | Improves decision-making processes.
|
$0 | $0 | $0 |
| Total Component 4.2 | ($0) | $0 | ($0) | |
| Total Module 4 | ($135,000) | $0 | ($135,000) | |
The table below presents a breakdown of the 3-year net (savings) investment for Planning Module 4.
| Planning Module 4 | Net (Savings) Investment | |||
| Year 1 | Year 2 | Year 3 | Total | |
| Component 4.1 Financial Management | ($45,000) | ($45,000) | ($45,000) | ($135,000) | Component 4.2 Financial Reporting | ($0) | ($0) | ($0) | ($0) |
| Total Module 4 | ($45,000) | ($45,000) | ($45,000) | ($135,000) |
Component 4.1 Financial Management
Review Observations
Existing district policy requires that bank accounts be rotated annually among four local banks. This policy was developed so that each of the local banks would have the opportunity to benefit from the school district’s business. A comparison of the four local banks showed little variation in the services provided. However, the comparison revealed a range of interest rates available to the district. For example, the district received a 5.14 percent rate of return during the 1996-97 school year from the local bank used during that year, but receives only a 2.2 percent rate of return from the bank selected for the current fiscal year.
Investment practices are inconsistent because of the existing bank rotation policy. During the fiscal year 1996-97, the Millcreek Township School District maintained a general fund checking account and a sweep account which had a rate of return of 5.14 percent. The bank the district used for the 1997-98 fiscal year does not offer a sweep account or any other investment vehicle attached to the checking account. Therefore, to gain a higher rate of return, the district had to purchase short term certificates of deposit and transfer funds to the payroll account.
Recommendation
The school district should solicit bids to enhance their services and/or rate of return. In addition, in order to gain a more consistent investment strategy, the district should consider changing its practice of rotating banks annually.
| Fiscal Impact: | Year | Savings | Investment |
| 1 | ($45,000) | $0 | |
| 2 | ($45,000) | $0 | |
| 3 | ($45,000) | $0 | |
| Total | ($135,000) | $0 |
Note: The review team estimated that the district has an average daily balance of $1,500,000. The interest rate paid by the bank currently used by the district is 2.2 percent. This rate would generate $33,000 in interest income. Other banks offer an interest rate of 5.2 percent which would earn the district $78,000. Therefore, the district could earn $45,000 more per year, if it had its money in a different bank.
Component 4.2 Financial Reporting
Review Observation
The review team noted the following inaccuracies in monthly budget reports of revenues and expenditures:
In addition, some of the revenue reports were not part of the financial data presented to the board.
Accurate financial reports are necessary so that prudent and sound business decisions can be made by the school board and administration. The district should perform an in-house review of record-keeping and reporting functions to assess system deficiencies.
Fiscal Impact: Neutral
According to the Millcreek Township School District, the district’s mission is "to provide rich and relevant learning experiences for all of our students in an environment that fosters continuous improvement, collaborative efforts, equal access to resources, and instills a desire for life-long learning to prepare students to be competent, responsible citizens who contribute to the local and global community."
The Casey School District Performance Review focuses on the reallocation of existing resources and the generation of new non-tax revenue to augment the teaching and learning of schoolchildren in Pennsylvania. For Our Children’s Future: A Performance Review of the Millcreek Township School District presents specific recommendations on how the school district can improve its operations in support of its core mission.
The cumulative 3-year breakdown of anticipated savings resulting from our review (net of investment) is estimated at $3,462,833 and is summarized by planning module in the table below.
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Summary of Savings and Investments (Savings are expressed in parentheses.) |
|
| Planning Module 1 – Revise Current Procurement Policy to Take Advantage of All Savings Opportunities | ($87,990) |
| Component 1.1 – Purchase of Supplies | ($87,990) |
| Planning Module 2 – Redesign Pupil Transportation to Improve Cost-Effectiveness of Service | ($107,073) |
| Component 2.1 – Transportation Service Policies | ($107,073) |
| Component 2.2 – Contract Terms | 0 |
| Planning Module 3 – Streamline the District’s Real Estate Holdings and Facility Management Policies | ($3,132,770) |
| Component 3.1– Excess Real Estate | ($1,782,770) |
| Component 3.2 – Facility Operations and Management | ($1,350,000) |
| Planning Module 4 – Revise Financial Management and Reporting Practices to Maximize Earnings and Improve Accountability | ($135,000) |
| Component 4.1 – Financial Management | ($135,000) |
| Component 4.2 – Financial Reporting | 0 |
| Total 3-Year (Savings) Investment | ($3,462,833) |
At a time when expectations are rising faster than revenues, it is critical that school districts focus their resources on their core mission: the teaching and learning of children. The dollars identified in this report should be reallocated to the classrooms of the Millcreek Township School District.
The cumulative 3-year estimate assumes the full implementation of recommendations as presented in the report. Actual savings realized, however, will fluctuate based upon recommendations accepted, implementation methodology, timing of implementation, and other unidentified cost savings or investment not anticipated in the planning module analysis.
The Millcreek Township School District recognizes the need to continually review programs and update technology to prepare the district’s students for the future. The implementation of the recommendations presented in For Our Children’s Future: A Performance Review of the Millcreek Township School District, will assist the district’s efforts to review, develop and implement programs to help students learn more now and earn more in the 21st century.
The Casey School District Performance Reviews generate a unique set of recommendations for each district. Some recommendations will yield savings available for reallocation to other district priorities, some are fiscally neutral, and others require an investment of additional resources.
School districts may find that they need to supplement their existing revenue stream in order to expand or improve programs and services. There are a number of options available without relying on additional taxpayer support, and district officials should carefully consider the benefits of exploring one or more of the strategies suggested below. However, districts should also be aware that these revenue sources are not guaranteed, and there may be costs associated with application and reporting requirements.
This appendix suggests some of the possible strategies for supplementing school district revenue, but it should not be considered exhaustive. Information was compiled by the Department of the Auditor General in October 1997.
Lists of discretionary grants which are available to school districts are updated regularly on the Penn*Link bulletin board. Penn*Link is the electronic communications service sponsored by the Pennsylvania Department of Education. This listing systematically provides information about grants from federal, state and private sources.
When we contacted the bulletin board in October 1997, there were 66 grants available to school districts. Since these grants are deemed "discretionary," school districts must take a proactive approach to utilize this information and compete for these awards. A representative from the Department of Education noted that each grant on the electronic bulletin board currently receives an average of only 45 "hits" — less than 10 percent of the number of school districts in Pennsylvania.
To identify grant-funding opportunities, school districts may also review the listings provided in education-related industry print publications. Suggested sources include:
Private development consultants are available to assist with fund-raising on a contract basis. Although the arrangements vary by individual or firm, private consultants are generally fund-raising experts with grant-writing experience and knowledge of a wide variety of grant-making sources.
Private development consultants typically advertise their services in local publications or directories and maintain an Internet presence. Local and regional philanthropic organizations may also be familiar with experienced consultants.
School districts may be able to attract corporate sponsorships and private donations by establishing a private foundation. A private foundation is a nonprofit corporation or trust dedicated to religious, charitable, scientific, literary, or educational purposes. Generally, the funds contributed to the foundation are held as an endowment. Income from the endowment is used to pay the foundation’s expenses and to make contributions to eligible organizations and institutions. Typically, the school district’s foundation designates the school district as the sole recipient of grants awarded by the foundation.
Contributions to foundations are deductible from federal and state income tax within certain limits established by law. These tax advantages are an important consideration for corporations and individuals and make supporting the educational goals of the district and community an economically attractive decision.
An attorney or accountant should be consulted in structuring and operating a foundation. While there are a number of legal steps required to establish the foundation properly, the time and expense may be worthwhile. An official at a school district in York County noted that while it took a year to establish their foundation, it has generated almost $150,000 for the district over the last two years.
Both of the following organizations provide opportunities for school districts to obtain free merchandise:
To solicit feedback and listen to the views of taxpayers, parents and other community members, Auditor General Casey and the performance review team conducted a community open house on October 2, 1997 from 2:00 p.m. to 8:00 p.m. Individuals who attended were requested to express their concerns and provide suggestions for improvements to the management of the resources of the Millcreek School District. The table below presents a summary of their responses, and our resolution of their comments.
| Issue or Concern of Community Member | Community Member’s Suggestion(s) for Change | Impact of Change According to Community Member | Disposition by Performance Review Team |
| Upkeep of Facilities & Grounds | |||
| School utility costs | Implement geothermal system. | The change would bring about cost savings to the district. | We have addressed this issue in Module 3 of our report. |
| Integrated pest management | Implement a system of integrated pest management. | The change would bring about cost savings to the district. | Because this concern was not included in the scope of our review, we brought it to the attention of the administration. |
| Older buildings are not maintained. | (Not addressed by respondent) | (Not addressed by respondent) | We have addressed this issue in Module 3 of our report. |
| The district should have a housekeeping program.program. | Implement a housekeeping program. | This program would reduce hazards, and concentrate on the efficient use of space. | We have addressed this issue in Module 3 of our report. |
| The district should have a space reclamation program. | Implement a space reclamation program. | The program would help convert inefficiently used space into new usable space. | Because this concern was not included in the scope of our review, we brought it to the attention of the administration. |
| Spending | |||
| Athletic budgets | Advertising revenue should offset costs. | The change would bring about cost savings to the district. | Because this concern was not included in the scope of our review, we brought it to the attention of the administration. |
| The district spent $1.2 million for a reassessment. | An audit should be performed of this expenditure. | (Not addressed by respondent) | We learned the district expects that additional future tax revenue generated from this effort will cover the initial expenditure. |
| Cost savings measures should be stressed at the district. | The district should implement a cost savings program. | A focus on reducing waste, duplication, & obsolete items would be satisfying. | We have addressed this issue in Modules 1,2,3, & 4 in our report. |
| Best Practices | |||
| Budget process | Not applicable | The present process involves parents, the administration, the staff, and the general public. | Team efforts by the teachers and administrators help facilitate positive learning experiences. |
| Governance and communication are good at Millcreek Township SD | Not applicable | (Not addressed by respondent) | We have communicated this comment to the administration. |
| Transportation | |||
| Transportation routes | Routes should be consolidated. | The change would bring about cost savings to the district. | We have addressed this issue in Module 2 of our report. |
| Money spent on travel outside the school district | (Not addressed by respondent) | (Not addressed by respondent) | Because this concern was not included in the scope of our review, we brought it to the attention of the administration. |
| Nonpublic students are provided inferior transportation services. | More efficient scheduling is needed. | Changes would result in less traveling time for students, more instructional time, and cost savings to the district. | We have addressed this issue in Module 2 of our report. |
| Purchasing | |||
| Contracts are selected by favoritism, not bidding. | (Not addressed by respondent) | (Not addressed by respondent) | We have addressed this issue in Module 1 of our report. |
| Large volume buying of supplies by area school districts | (Not addressed by respondent) | (Not addressed by respondent) | We have addressed this issue in Module 1 of our report. |
| Participating vendors have not competed in a bidding process. | (Not addressed by respondent) | (Not addressed by respondent) | We have addressed this issue in Module 1 of our report. |
| There is a steady stream of change orders for purchases not anticipated during project plans. | An audit of change orders on building projects should be completed. | (Not addressed by respondent) | Because this concern was not included in the scope of our review, we brought it to the attention of the administration. |
| Staffing | |||
| Increases in class size | Allocate more money to provide adequate student to teacher ratios. | An increased number of staff will provide the means to meet student needs. |
The district could consider using a portion of the savings we have identified to provide additional staff. |
| Class size is not a concern of the board. | The district should hire more teachers and librarians, and renovate the buildings. | Achievement scores would improve. | |
| Nepotism is frequent and blatant. | (Not addressed by respondent) | (Not addressed by respondent) | We learned the administration has implemented a process to appoint search committee members from the building where prospective employees will work. |
| Hiring methods are out of control. | A better system needs to be implemented to justify the need for staff. | (Not addressed by respondent) | |
| Millcreek Township SD has too many noninstructional staff members. | (Not addressed by respondent) | (Not addressed by respondent) |
Because these concerns were outside the scope of our review, we brought them to the attention of the school board during our discussions and meetings. |
| The administration hires consultants. | The responsibilities and qualifications of the administration should be re-evaluated. | (Not addressed by respondent) | |
| Prerequisites are added to positions without board approval. | An audit of hiring practices should be completed. | The district pays for overqualified personnel. | |
| Approximately $70,000 is spent on employee recognition dinners. | An audit of catering expenses should be completed. | Money could be reallocated back to the classroom. | |
| Programs | |||
| Students are taught the same curriculum in kindergarten, in first grade, and in second grade. | A highly motivated teacher should be assigned to gifted students. | Gifted children would be content and have higher test scores. |
These curriculum issues were beyond the scope of our review. However, we discussed them with administrative personnel at the district. |
| Gifted students are not being challenged. | Restructure classes so that there is not such a wide range of levels in gifted classes. | The community will benefit from students who are more motivated and challenged. | |
| Gifted students are not being challenged. | Allocate more funds to the district for gifted education. | Students looking for the finest education will move to the Millcreek community. | |
| General Comments | |||
| Administrators of the district may have too much power. | (Not addressed by respondent) | (Not addressed by respondent) | This concern was brought to the attention of the school board. |
| Consolidation of school districts. | (Not addressed by respondent) | The change would bring about cost savings to the district. |
These concerns, including special education, were beyond the scope of this review. However, they were brought to the attention of the administration and the state legislature. |
| Limited resources should be considered when appropriating large amounts of taxpayer dollars to special education. | Laws should be changed, parents should organize, and the state should fight the courts & special interest groups. | These changes would result in more money for regular education, smaller class sizes, and a more realistic education for special needs students. | |
| There is too much paperwork involved for special education students. | Special education paperwork should be eliminated. | Appropriate education would be administered earlier. | |
| Tax issues take precedence over children. | (Not addressed by respondent) | (Not addressed by respondent) | |
| Inclusion poses a problem for teachers and students in regular classes. | Adjust regulations. | Adjustments would result in increased morale of the teachers, parents, and children. | |
| Other | |||
| Data about the Millcreek Foundation is unavailable. | (Not addressed by respondent) | (Not addressed by respondent) | The foundation is a separate legal entity from the school district. Therefore, these concerns should be forwarded to the board of the foundation. |
| Scholarships from the Millcreek Foundation appear to be awarded to relatives of teachers and staff. | (Not addressed by respondent) | (Not addressed by respondent) | |
| There is widespread corruption at every level. | (Not addressed by respondent) | (Not addressed by respondent) | This concern was forwarded to our Department’s Bureau of Special Investigations. |
| 1. | Dr. Alan Lindquist | Superintendent |
| 2. | Kathryn Umpleby | Board Secretary/Secretary to Superintendent |
| 3. | Diana Kwiatkowski | Accounts Payable Specialist |
| 4. | Bill Roberge | Director of Finance, Northwest Tri-County Intermediate Unit #5 |
| 5. | Flora Manino | Purchasing Supervisor, Northwest Tri-County Intermediate Unit #5 |
| 6. | Thomas Mudger | Director of Finance |
| 7. | Dan Kerr | Director of Transportation |
| 8. | Paul Dehner | Maintenance Supervisor |
| 9. | Dr. Verel Salmon | Assistant Superintendent |
| 10. | Dr. Frederick Garnon | Director of Operations and Facilities |
| 11. | Don Harmon | General Manager, Erie Metropolitan Transportation Authority |
| 12. | Dr. Mary Ann Anderson | Director of Special Education |
| 13. | Patrick Connelly | Supervisor of Plant Operations |
| 14. | Bradley Dunn | Supervisor of Maintenance |
| 15. | Carol Blake | School Board Director |
| 16. | Dennis Iaquinta | School Board Director |
| 17. | Kathleen Kuntz | School Board Director |
| 18. | Alice Niebauer | School Board Director |
| 19. | Richard Millhouse | School Board Direct |
| 20. | Lewis Penna | School Board Director |
| 21. | Pat Robertson | School Board Director |
| 22. | John Shimenk | School Board Director |
| 23. | Gordon Starr | School Board Director |
| 24. | Carol Biletnikoff | Faculty Member |
| 25. | Elaine Bootes | Faculty Member |
| 26. | Nancy Chiappazzi | Faculty Member |
| 27. | Sherri Costello | Faculty Member |
| 28. | Patricia Jennings | Faculty Member |
| 29. | William Korrell | Faculty Member |
| 30. | Valarie Krahe | Faculty Member |
| 31. | Mary Mackey | Faculty Member |
| 32. | Christine Merz | Faculty Member |
| 33. | Candyce Sandusky | Faculty Member |
Purchasing
Transportation
Facilities Management:
Cash Management