Greater Baltimore Committee - Presidents' Roundtable

Review Team of the Baltimore City Public School System's
Fiscal Management Practices and Budget Process

III. METHODOLOGY

The Greater Baltimore Committee, the Presidents' Roundtable and 21 volunteers from throughout the region conducted an evaluation of the processes that produce the BCPSS budget and the culture in which that process takes place. Because of the nature of the study, the volunteers were drawn not only from the business community but also from the finance and budget departments of non-profits and from regional school systems with similar numbers of students. The volunteers worked as a committee of the whole, with the budget officers of the two school systems providing the expertise to analyze school budget documents. Click here for a complete list of the volunteers on the review team.

At the conclusion of the scheduled meetings of the committee of the whole, a smaller sub-group assumed the task of analyzing specific budget documents such as the fiscal operating budgets for the years 2000, 2001, 2002 and 2003; the monthly variance report for the period ending August 2002; the school/office financial status report for the period ending August 31, 2002; and the combined statement of revenues, expenditures and changes in fund balance for the twelve months ending on June 30, 2002. The point of this examination was to get a more in-depth sense of the budget process and the types of reports the BCPSS routinely issued in order to track its revenues and expenditures. Click here for a complete list of all documents made available to the committee.

The review team heard presentations and then questioned at length the following individuals:

• the chief operating officer of the Baltimore City Public School System
  
• the former budget director of the Baltimore City Public School System
  
• a former chief financial officer for the Baltimore City Public School System
  
• the former interim Chief Operating Officer of the Baltimore City Public School System.
  

During the meeting process, financial officers of the system communicated with Greater Baltimore Committee President Donald Fry and with Presidents' Roundtable Vice President Kenneth R. Banks to help with the analysis of data and to clarify any questions raised by the committee members. In addition the budget directors of the Baltimore County School System and the Harford County School System gave extensive input to the deliberations in terms of providing models for comparison and in explaining budget documents to the group.

The review team also solicited and examined the following documents from BCPSS:

1. FY00, FY01 and FY02 MSDE Current Expense Fund Summary by State Reporting Category and by Object Code with budgeted and actual figures

2. FY00, FY02, FY02 and FY03 Budget Book (including sub-objects and activities)

3. Executive Summary of the budget (Operating and Capital)

4. Memoranda outlining and providing an overview of all internal control policies of BCPSS

5. Recent audit reports

6. Copies of annual financial statements for the last three years

7. FY01, FY02 and FY03 enrollment figures

8. Chart of per pupil allocations for FY01, FY02 and FY03

9. Sample of monthly expenditure reports and/or school reports

10. Sample of quarterly spending reports with year-end projections provided by the School Board

11. FY02 year-end audit report

12. Budget Submission Request materials

13. Memorandum outlining the current procedures, policies, internal materials or documents that provide guidance to determine the threshold for items that are included in the operating budget vs. the capital budget

14. Memorandum outlining the contracting and expenditure thresholds and requisite administrative and executive approvals of said activities

15. Automated report on existing expenditure encumbrances that have not been expended including the date of the encumbrance, the purposes of the encumbrance, and the current status of the intended purchases/acquisition/etc.

The findings of the review team are divided into three areas:

• Accountability and leadership issues
  
• Budget processes
  
• Role of the School Board.
  

Following the initial findings of the review team, a smaller group met with Chief Operating Officer Mark Smolarz, Chief Executive Officer Carmen Russo and Finance Committee Chair William Struever. Within each of the three areas and their respective subdivisions, specific findings and observations are listed along with recommendations where appropriate. Each area would benefit from a more detailed study.

It should be noted that this report would not have been possible without the full cooperation of Chief Operating Officer Mark Smolarz of the Baltimore City Public School System who promptly and candidly shared information and experiences to illustrate challenges.