leadership and collaboration Peer Review: Promoting Efficient School District Operations By Jason S. Hale, Ed.D., CPA In a 2008 study of the effects of performance manage- ment reviews on school district financial management in Delaware, I found that many of the state’s 19 school districts were operating under inaccurate or outdated assumpt ions because auditors and reviewers had insuffi- cient knowledge of the school business administrator position or of district operations to recommend improve- ments. Many audits simply reviewed those transactions being addressed by the auditors and failed to address in any way the effectiveness of internal controls. Since many state and external auditors have little if any operational experience, their feedback is of minimal value to the effectiveness and efficiency of school district fiscal operations. If our state or local governments desig- nate auditors as the oversight authority and the auditors are failing to provide the necessary oversight, who will help us improve? We Can Help Each Other Many professions recognize the benefits of peer reviews to assess processes and operations because peers can more easily identify one another’s inefficiencies and pro- vide some kind of intervention. Generally, the goal of the peer review process is to verify whether the work satis- fies the standards set by the industry. A number of states have begun to address the issue of financial peer reviews of school districts, recognizing that in many instances the current practitioners are the most qualified to determine whether the standard is being met. A s a school business official, how many times Many school business officials in Delaware who were have you participated in an exit conference interviewed during the 2008 study agreed that the exist- with a state or external auditor and won- ing oversight agencies do not have the necessary experi- dered how that auditor was deemed quali- ence to be effective. Many said that the only people who fied to attest to the effectiveness of your abilities? are qualified to effectively safeguard taxpayer resources How many school districts in the United States have against fraud or mismanagement are other school busi- run into financial ruin over the years despite the fact ness officials. Although extra time is already scarce for that audits and reviews cited few if any operational many school business officials, the commitment of a few deficiencies? hours each year to improving our profession and the The perception of school fiscal management has taken fiscal integrity of our districts is a small price to pay to a serious hit in the past several years, and we need to do regain public confidence. something to improve that perception if we, as a group, To test the effectiveness of a peer review model to hope to regain public confidence. assess district operations, a school district financial peer 12 JULY/AUGUST 2010 | SCHOOL BUSINESS AFFAIRS www.asbointl.org review team composed of three Delaware district school grounds of the review team members were beneficial in business managers conducted three one-day comprehen- making him feel more comfortable about the process. sive reviews of neighboring districts’ board policies and Although all the team members were business managers internal control manuals, current fiscal year budgets, in vocational school districts, he said, the backgrounds reports of account and fund balances, and monthly and of the collective group reached far beyond vocational annual financial reports. Unlike financial statement education and hit areas such as public accounting, audits that look specifically at validating the figures pre- municipal and city management, and Delaware Depart- sented in the statements, a peer review process focuses ment of Education experience. This expansive knowl- more oninternal controls. edge base gave heightened credibility to the process. The third business manager, who had extensive experi- A number of states have begun ence as a school business official, considered the proc ess to address the issue “helpful in reinforcing effective operations.” He believed that the purpose of the process was to reinforce what he of financial peer reviews of was doing correctly and raise questions about some things that could be improved. school districts. Education leadership author Margaret Ferguson states The review was performed as a confidential, nonpuni- that “the gate of change is locked on the inside.” As the tive process that culminated in an oral report of recom- economy tightens and school districts are expected to do mendations and suggestions for improvements. It was not more with less, business managers will be increasingly an audit. After gaining a comprehensive understanding accountable for their actions. As a profession, we cannot of the district’s operations and financial status, the review wait until a school district’s financial operations fail to team interviewed the school business manager to deter- begin making improvements. mine how the school district budgeted, monitored, ana- Jason S. Hale, Ed.D., CPA,is director of business for the lyzed, and reported its fiscal operational information. New Castle County Vocational Technical School District, The interview was more of a conversation, with the team Wilmington, Delaware. He is also vice chair of ASBO’s members and the school business official asking and Certification Commiss ion. Email: [email protected] answering questions about district operations. The results of the examination provided the school finance officer with targeted, constructive feedback about operational efficiencies in such areas as • Fiscal management • Budgeting • Resource allocation • Position control • Transportation • School nutrition services In the end, each of the three school districts that partici- pated in the study described the experience as an activity that proved valuable to improving operations and to advancing their own professional development. A Positive Process One business manager who participated in the study stated that the process was a “wonderful experience” and that he was continually challenged to think about things that he had not thought about previously. He said he was pleased that the proc ess was tailored to the wants and needs of the participating business manager. He appreci- ated the fact that the review “was not about right and wrong, but about the sharing of information.” He said it seemed as though the review team members gained as much through the process as the participating business manager. Another business manager—one who was relatively new to the position—indicated that the various back- www.asbointl.org SCHOOL BUSINESS AFFAIRS | JULY/AUGUST 2010 13