Mehlville school board moving to hire new chief financial officer

Accounting firm recommends CFO report directly to board

By BURKE WASSON

As the Mehlville Board of Education moves toward hiring a new chief financial officer, members recently learned that their 2008-2009 budget projections are “very logical” and heard various recommendations on preparing future budgets.

The board heard budget reports and recommendations at its July 31 meeting from Daniel Jones & Associates accountant Jamie Bahr and St. Louis University professor William T. Rebore.

The school board voted in May to authorize a $3,480 contract with Daniel Jones & Associates to review the district’s procedures for budget development and to solicit the services of Rebore to review the district’s budget projections at no cost.

Rebore concluded that while the district’s budget projections are in line, he is concerned about projected declines in the district’s operating-fund balance.

Rebore estimates that the year-end balances in the operating fund are projected to drop from 11.38 percent at the end of the 2007-2008 school year to 4.35 percent on June 30, 2011.

“With a declining balance, the district will have to monitor closely those economic issues related to the specific revenues and expenditures …,” Rebore wrote in his report. “Declining balances will not allow the district to fund shortfalls in revenue or unexpected increases in expenses from existing balances.”

Additionally, Bahr’s review of the district’s budget procedures resulted in three recommendations to the board:

• An executive summary outlining year-to-year percent changes in revenues and expenditures should be included in future district budgets.

• The CFO should directly report financial matters to the Board of Education.

• The district should form a finance committee comprised of two board members, a community member, the CFO and other district educators.

While Mehlville officials already had planned to establish a finance committee this fall, Bahr’s recommendation for the CFO to report directly to the board sparked several questions among board members as the CFO now reports directly to the superintendent.

“It’s just to help alleviate any strains that might be on the CFO should there be any differences that they also report directly to the board,” Bahr said.

Board member Karl Frank Jr., who in 2006 made an unsuccessful motion to have the CFO report directly to the board, reiterated that position on July 31.

“When we were in limbo right before (former Superintendent) Dr. (Tim) Ricker was leaving and right before (former interim Superintendent) Dr. (Jerry) Chambers was going to take over, there was a motion on the table for this to take place, to have the CFO report directly to the board as an extra level of financial accountability,” Frank said. “… In Ohio, I believe, the whole state is required to have the CFO report to the board … Illinois does it, too …

“I think it’s something that future boards should definitely consider. (Superintendent) Terry (Noble) has already taken responsibility for any numbers that have been presented to us anyway. So I think it would be something we should do. Obviously, the board can do whatever they want … I would prefer that if we were going to implement these recommendations that the next time we’re in a transition period with the CFO, that’s something that a future board do.”

“And quite frankly, I think we do have that relationship now because I’m not op-posed at all to our CFO reporting regularly to you and fielding questions from you,” Noble said. “We do that now. So, in a sense, we’re doing that. I think what Karl is referring to is an actual job description that says that I don’t supervise the CFO and the board does.”

“From speaking with Al Kirchhofer of Daniel Jones & Associates, I think that’s what he means by this recommendation …,” Frank said.

Bahr said she would recommend that the CFO report directly to the board in order to eliminate any possibility of pressure from a superintendent to persuade the CFO to “make a decision that they don’t think is actually correct.”

” If there was another person for the CFO to report to, that’s going to help mitigate any other motives that maybe a superintendent or the CFO’s other supervisor might have as far as pressuring a CFO to make a decision that they don’t think is actually correct,” Bahr said. “It’s just like a risk-assessment step that they’re taking.”

“From the standpoint of day-to-day operations, though, how do the superintendent and the CFO work on that basis when you have the CFO reporting directly to the board?” Board President Tom Diehl asked.

“I would say the CFO could still report to the superintendent as well,” Bahr said. “But the board is the primary person that they are responsible to report to. They’ll still be in contact with the superintendent so the superintendent knows what’s going on financially day to day. But the CFO would consider the board their boss, and that’s who they should directly report to for any issues that come up.”

Mehlville officials are optimistic that the district will offer employment to fill its vacant CFO position within the next month.

In the meantime, the Board of Education has retained the services of Access Management President Charles Farris to perform CFO duties as needed.

The district has been without that position since former CFO Brent Bell was demoted in March to his former position of director of finance. Bell eventually resigned and left the district in July.

Bell was demoted in March to his former position as director of finance after Board of Education members learned they had been given faulty financial projections last year when the board approved the district’s 2007-2008 budget.

In March, updated financial projections indicated the Mehlville School District’s operating-fund balance would dip below the state-required 3-percent minimum by the end of the 2009-2010 school year. At the time, Noble said he was “taken aback” by that projection for the 2009-2010 school year as it differed significantly from a previous projection delivered by Bell to the board that the district would have an operating-fund balance of 5.75 percent on June 30, 2010.

But in approving the district’s 2008-2009 budget, board members noted that through a series of cuts, a 9.62-percent operating-fund balance is projected at the end of the 2008-2009 school year largely due to a salary freeze agreed to by teachers.

To keep the district’s operating-fund balance healthy, district voters will be asked this November to approve a transfer of 31 cents per $100 of assessed valuation from the district’s debt-service fund to its operating fund.