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How do school districts spend their money?

One report claims it’s too hard to tell.

Tracking the billions of dollars spent on public education each year is virtually impossible, with no real measures to determine if the education of 5 million students is efficient, suitable and adequate, according to a report released Tuesday by the Texas Education Accountability Project.

The nonpartisan nonprofit was formed by Dallas-based private equity investors who spent two years reviewing school district financial reports.

Its independent financial experts say they can’t determine whether Texas schools are wasting money or truly need more funding, despite public school districts churning out loads of data.

According to the report’s findings, state lawmakers lack measurable objectives to design an efficient and adequate system, and courts don’t have any metrics to gauge the system.

“We call this the uninformed being evaluated by the equally uninformed,” said Mark Hurley, who organized the project.

The report is available at www.texedap.com.

Hurley is chairman and CEO of Fiduciary Network, a private equity investment company. He became interested in tracking school district finances because of lawsuits claiming the state was not adequately funding public education.

“There is no financial accountability. No one outside the school district actually can understand where the money is going,” Hurley said. “This is not a fault of the school districts. This is a structural failure.”

The Texas Education Accountability Project website is the very definition of bare-bones – there is nothing but a link to the report and a “Contact Us” link. It would be nice if they at least had a little biographical information about the three authors, for instance. Be that as it may, the Statesman reported some criticism of the TEAP’s report.

School budget experts, however, dispute the contention that school districts do not know where the dollars are going.

Gwen Santiago, executive director of the Texas Association of School Business Officials, said information that Hurley’s group said is missing from the school districts’ financial reports is readily available.

“They didn’t do their research very well,” said Santiago, who reviewed the report at the request of the Statesman.

Hurley and his partners set out to apply their private-sector expertise to demystifying the complex web of public school finances. They found the data on school spending to be unnecessarily opaque and useless to anyone outside the school district.

“It’s almost the antithesis of transparency,” Hurley said.

Lori Taylor, a public policy professor at Texas A&M University, said both sides have a point.

“The school districts spend considerable resources reporting on their actual expenditures through (the state system) and their standard reports,” Taylor wrote in an email to the Statesman. “For policy wonks like me, that’s sufficient. I can slice and dice the data and extract lots of high quality information from the existing reporting structure. However, for the concerned citizen with less computing power, the flood of data is not very informative.”

I’m not an accountant, and I’m not familiar with the data in question, so I don’t have any insight as to the validity of what the TEAP says. Here are their recommendations from their report:

We would recommend that at a minimum:

(i) School district annual financial reports must be redesigned in six ways:

a. The line items included in the summary pages of the reports should be tied to specific types of expenditures and not simply their general purposes;

b. Each of these line items should be accompanied by a schedule with numerous sub-line items which detail precisely how the funds were used;

c. The annual report should include key output metrics including the numbers of students taught in different types of classes;

d. It should also include a detailed organizational chart for the district;

e. It should list any and all agreements with non-district employees and entities as well as the amounts paid and services and/or products received;

f. For those districts which share services with other school districts and government agencies, their annual report should have a separate set of detailed disclosures describing what was purchased and how the funds provided were used.

(ii) The coding in school district’s supporting documents (i.e., general ledgers and check registers) should likewise be changed so to create an easy audit trail that ties individual expenditures into the sub-line items of the supporting schedules in the district’s annual financial report. Only by doing this can an outsider easily determine not only to whom or to what money was paid but also for what exact purpose; and

(iii) School districts should be required to make their financial reports, major contracts and supporting documents easily accessible online through the individual district’s website.

We have included in this report a series of proposals to address these issues.

I always favor more transparency, and there’s nothing in these recommendations that strike me as being unreasonable. The whole report is about 30 pages, so read it and see for yourself.

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2 Comments

  1. Ross says:

    I would like to see more detail on the check register reports the districts publish. Now, you have to submit a request to get explanations for suspicious looking items, most of which turn out to be checks written on behalf of student organizations. For instance, HISD has written several checks to the Four Seasons downtown. This gets the conservative rabble stirred up until it’s pointed out, after an information request, that the checks were written for high school proms.

    Overall, I think most districts do a reasonable job of spending our tax money, but more transparency is always a good thing. Districts are less likely to waste money on useless items like vehicles for employees who don’t need them when the public has easy access to analytical data.

  2. Texas Parents says:

    We are sick and tired of the State of Texas wasting millions of dollars on standardized testing. Our children’s educations are not for sale! Our tax money should be spent on teacher’s salaries and classroom resources. No more money for the Pearson Testing Corporation.

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