ESSA Lessons from Around the Nation
Wednesday, August 8, 2018
Posted by: Jori Figueroa
by Rosalyn Curato, Chief Customer Officer, Allouve
The Every Student Succeeds Act (“ESSA”) has been a divisive issue in the education finance world. Politicians, researchers, and other proponents of equitable funding have celebrated its passage. They expect that increased transparency on school-level actual spending will lead to greater demand for equitable funding and provide new opportunities to use research to inform policy. District finance leaders have largely expressed concern about the new requirements because budgets and actual spending have not been widely recorded at the school site.
Why the strong feelings?
As the current school year comes to a close, New York State school districts are eagerly awaiting official guidance from NYSED around treatment of expenses that have traditionally been recorded in central office expenditure accounts. Some of these costs are complex in nature and require thoughtfulness when they are pushed down to schools, e.g., BOCES expenses, transportation, and certain utilities. In addition, New York State’s added requirement of school-level budgets in addition to expenditures, coupled with releasing guidance after the conclusion of “budget season”, means NYASBO members must now prepare for an “allocation season” rather than having prepared one budget that meets the new requirements.
What are other states doing?
Serving as the bridge between federal policy and district implementation, state departments of education have taken on varying degrees of involvement in their support to school districts preparing for ESSA’s reporting requirements. Some states, such as Colorado, Rhode Island, and Florida, are positioned to communicate per pupil spending on their FY2017-18 report cards, a year ahead of schedule. Most states are waiting until FY2018-19 report cards to fulfill this requirement.
Below we will highlight how Tennessee and Arizona are working toward meeting the new requirements. Both of these states:
Have found most districts recorded a significant portion of their expenditures in accounts at the central office or with an undefined location, even if the resources were primarily for schools
Prepared for the new ESSA financial data reporting requirements prior to the bill becoming a law, assuming it would be passed and communicating this message to their districts early
Have a dedicated department or organization providing direct support to school districts.
Tennessee: Pilot Year and District Support Team
As a member of a Financial Transparency Working Group (FTWG), co-operated by CCSSO and Edunomics, Tennessee has learned from top researchers and peer state and district representatives from around the country how to best prepare for ESSA.
The Tennessee State Department of Education’s (TDOE’s) finance division has an Office of Local Finance, a team in which each member oversees a cluster of districts providing dedicated support to each of them. This includes on-site visits to districts, assistance with reporting, and answering the myriad of questions that come up during budget season.
Every year, the Office of Local Finance hosts regional workshops during the spring to provide tactical information about year-end reporting and upcoming changes for the next fiscal year. For the last three years, the Office of Local Finance has educated its business officials on site-level financial reporting required by ESSA and surveyed them to better understand which expenses would require the most time and effort to push down to schools.
Year 0, FY2018 - pilot with 13 districts to identify challenges districts would face
Year 1, FY2019 - TDOE will calculate per pupil rates for each district and each school based on the following reporting parameters:
Revenue reporting to be done on Federal, State, and Local sources of funding
Expense reporting at schools to be based on salaries of staff assigned to a school for 50%+ of their time, employer share of school personnel’s benefits, instructional supplies and materials, utilities, and school nutrition
Costs not directly attributable to schools will be classified as system-level expenditures and will be used to calculate a “System-wide per pupil rate”. Examples of such expenses include: Central Office staff, Finance, HR, Transportation, School Board, and Maintenance and Operations
Arizona: Phase-In and Reporting Template
In addition to the state’s Department of Education, Arizona’s Auditor General performs school district audits and provides ongoing support and guidance around financial reporting. They have increased their support in anticipation of ESSA reporting requirements through:
Surveys to understand the needs and concerns surrounding ESSA reporting
Webinars throughout the year to educate members on reporting requirements
Inclusion of charter schools in outreach, given the large number of charter schools in the state
Specific guidance on reporting formatting, including a template that every district must submit
Year 1, FY2019 - personnel vs. non-personnel expenditures broken down between federal, state, and local sources of funding
Year 2, FY2020 - teacher pay and benefits, classroom supplies, student support, classroom site fund monies allocated to the school level
For expenses that are not traditionally associated with individual schools, such as Transportation and General Administration, the Department of Education may allocate these expenses to schools based on average daily membership to distribute the cost evenly across schools. These costs will be denoted as “Allocated Costs” because they may not be present across all districts and charter schools. The Arizona AG office has created a standard template for reporting that districts can use that clearly lays out which expenses should be pushed down to schools and which should be held centrally.
Allovue is working with a local organization, A for AZ, to facilitate ESSA workshops and assist with the allocation of centralized dollars to schools.
What does all of this mean?
While budgets for the next school year are approved and being uploaded to Enterprise Resource Planning systems as we speak, and uncertainty remains around expectations for school-level reporting, there are some steps that districts in New York can take today to feel better prepared:
Make sure every school is assigned a location code in your chart of accounts. If you don’t have location codes setup for each of your schools, get those set up now (pro tip: any entity with its own BEDS code is considered a separate school). Depending on your ERP system, you might also have to create full account strings for those expense categories that you plan to push down to schools.
Identify expenses that are recorded in central office accounts, but are primarily used as resources at school sites. These are the expenditures you should consider recording at school sites in the future. If they are difficult to budget and record in your system at the school level, begin to identify what allocation rules are most appropriate to meet the distribution of those resources. For example, new curriculum materials may be allocated based on student enrollment, but heating fuel costs may be better allocated by building square footage. Be sure to document this methodology, even if it’s as simple as adding an extra tab to your Excel workbook that lists out each expense category and the methodology you used.
Once the allocation work is complete, the next area to focus your time on is communication. Our follow-up article will cover tips to prepare your district’s communication strategy once this data is available to the public.
Note: The content of this article specifically pertains to ESSA’s financial reporting requirements, and does not reflect state’s adherence to, and readiness for, other ESSA requirements.