Site-based management for Savannah-Chatham public schools: designing the financial support...

Emphasizing accountability and using tools developed to support site-based management, the school district now tracks financial inputs to the performance of a specific school.

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The Savannah-Chatham County Public School District entered the 1990s faced with a significant philosophical and practical challenge: how to maintain positive momentum that leadership had earned with systemwide improvements and greater attention to public input, overcoming a legacy of distrust from the school district's desegregation struggles. Like public schools across the country, the system was faced with the fact that schools were not doing an effective job of preparing a global work force.

The latter half of the 1980s had seen the groundwork put in place. The electorate had supported the construction of the first bond-financed new schools since the height of the Vietnam War. Area business and industry actively campaigned for improved academic performance. New programs were developed to address the needs of the urban population, which is the attendance core of the 37,000-enrollment school system. Innovative, alternative desegregation measures such as magnet schools replaced cross-town busing and paired-grade schools in the struggle to overcome the area's racial segregation history. Flight to private schools and neighboring bedroom communities was slowed.

Accountability Through TQM

To consolidate those achievements and maintain that momentum, the school district's leadership in 1991 adopted a policy of total quality management (TQM). Acting on this philosophy, the Savannah-Chatham County Board of Education implemented a site-based management approach, giving each school greater decision-making authority and transforming the traditional central administrative role to one of support. The underlying belief is that those who work most closely with students know best what needs to be done on their behalf.

The school district's drive toward TQM, which emphasizes accountability, began several years before the Georgia Department of Education launched its own accountability movement. The state now issues reports on the performance of each individual public school in Georgia. By using tools developed to support site-based management, the Savannah-Chatham County Public School System is able to track financial inputs to the performance of a specific school. To the district's knowledge, it is the only one of Georgia's 180 school systems which is able to provide finance/performance information at the school, rather than the system, level.

TQM is a management philosophy that has its roots in the successful effort to rebuild Japan's industries after World War II. The same principals which guided that effort have been adapted effectively to serve business and industry in the United States and elsewhere. The Board of Education chose an innovative approach to bring TQM to education, and in so doing developed a site-based management model unique in the state of Georgia.

Site-based management called for a reengineering of policies and procedures throughout the school district. Among the necessary changes was the development of financial support systems that were tailored to support decentralized decision making, while still supporting the oversight and accountability that law and prudence required of the elected Board of Education.

The development of new financial policies and procedures to support site-based management was embedded in the entire implementation process. To understand how it was done, the entire process must be considered, not just the financial aspects alone.

Implementation

To implement site-based management, the school system needed first to develop two things: a means for schools to carry out their new, essentially self-managed role and, since TQM is ultimately an accountability-based approach, a means of measuring how well each school carried out its given responsibilities.

BLTs. The first need was fulfilled with the development of building leadership teams, which school personnel quickly shortened to BLTs. These teams brought together representatives from all staff areas at a school - not just teachers, administrators, and other certificated professionals but also the clerical, custodial, and other support staffs. Parent representatives round out these teams, which serve as the primary decisionmaking body of the school.

Intensive training and the cultivation of experience are both required to produce an effective BLT. The board provided outside professional leadership trained in teaching and implementing TQM to assist these teams, and also gave schools the leeway to allow the teams to adjust to their new roles and learn to handle them. It was not an overnight process: the district's 43 schools and numerous alternative/satellite sites implemented building leadership teams in stages, with successively larger groups of schools serving as pilot projects for the new management approach.

Standards of Excellence. Meeting the second key need, that of measuring accountability, was another great challenge. A district leadership team of 44 teachers and five administrators devoted two years to the development of the school district's standards of excellence. In effect, what these standards did was take the issue of school quality out of a nebulous, subjective realm and give schools benchmarks for measuring their performance. Seven research-supported correlates of effective schools were identified, ranging from a safe and orderly climate to the measurement of student performance, and measurement criteria were established. Under this process, schools use standardized performance indicators and are evaluated in relation to their own accomplishments in key areas over time - an important factor since schools serve widely differing populations. This process continues to be refined under an initiative known locally as the alignment-of-documents process.

Financing

Once schools had teams to handle their site-based management and a way to measure their performance, the need was to devise tools so they could carry out their missions. That meant turning over the power of the purse strings to levels which had previously had only input into their financial status - not control of it. At the same time, internal controls, financial reporting, and systemwide forecasting abilities had to be maintained, in accordance with state law, local policy, and the logistics of keeping a major urban school system running smoothly.

Financial control began with the shift to site-based budgeting, in which funding and staffing are allocated to each site based upon its projected enrollment. In turn, each site develops its goals and objectives for the budget year, and then allocates its available resources to accomplish those objectives. The finance division assists sites with budget formulation, monitoring of expenditures, provision of a centralized payroll, accounting, position control, and accounts payable functions, as well as the production of required reports. Budgets are consolidated by the finance division, reviewed by the superintendent's steering team, and then approved by the board of education. It is a public process throughout, and the final document is published and placed in school offices and public libraries.

The shift of budgeting initiative to sites has been accomplished without compromising financial integrity. Generally accepted accounting principles (GAAP) standards are maintained. In fact, since implementation of site-based management, the school district's financial division has received the GFOA Distinguished Budget Presentation and Excellence in Financial Reporting awards, as well as the Excellence in Financial Reporting Award from the Association of School Business Officials. Additionally, the development of an internal auditing department has taken the school system's auditing procedures beyond tracking the legality, accuracy, and appropriateness of expenditures and into evaluation of the effectiveness of those expenditures.

Purchasing. The decentralization of purchasing was another element involved in rerouting control to the school level. Under new policies, purchase orders of up to $5,000 are entered and approved at each site. This amounts to more than 97 percent of the more than 24,000 purchase orders issued annually by the district. Purchase orders that exceed $5,000 are entered at the site and approved centrally before they are generated. While accounting for less than 3 percent of the total volume of purchase orders issued, this equates to more than 75 percent of the total dollar value of purchases made. To make this procedure possible, the school system made extensive investments in new financial software and related training.

The challenge with decentralization of purchasing was to return decision making to schools without burdening them excessively. It was at this point that the finance division proved its value and adaptability to its new support role. An Annual Bid Contract Book, which quickly became "the ABC" in school parlance, was developed. Through the system outlined in this book, the school system still enjoys economy of scale in purchasing and meets the accountability and policy requirements of sealed bids, while furnishing schools with options in how they spend their budgets. The ABC book provides information on various annual contracts from which schools can choose instructional materials, office supplies, musical instruments, audiovisual equipment, and all the other items and services which go into operation of a modern school.

A key element of that ABC book appears among the first few pages: the vendor performance evaluation form. Teachers and other school personnel can use this form to report problems or exemplary service to the finance division. When the finance division receives a complaint via this form, it assumes the support role for the dissatisfied customer and works to resolve the problem. The school district demonstrates accountability to its customers under TQM, and expects that same accountability when it is a customer. Vendors who do not provide a school with satisfactory service can lose opportunities with all of the system's schools. This system drives home to vendors the fact that it is the school - the end user of its products - which must be satisfied, not a central office figure far removed from that product.

Fixed-asset Management. In addition to purchasing, the fixed-asset management has been decentralized. Fixed assets are received directly at the site that places the order, and accountability for them is a site responsibility. Site administrators are charged with maintaining accountability on furnishings and equipment valued in [TABULAR DATA FOR EXHIBIT 1 OMITTED] excess of $66 million. As in the new purchasing process, accountability at the lowest level has become the watchword.

Personnel and Information Systems. The largest single ongoing expense of a school system is the time of the professionals who serve it. To effectively track this expenditure, finance and human resources systems had to be devised to work together under new software systems; this was accomplished with the aid of consultants and the installation of a special governmental human resources system (GHRS) and local educational agency financial system (LEAFS) software running on a mainframe via an extensive wide-area network. Managing personnel functions was decentralized - with time and attendance, overtime, and substitute usage approved at each site. The generation of payrolls for the system's 5,000 employees, however, remains a centralized service for practical reasons. A position control function was also added, creating needed internal controls and management reporting while providing the sites with a degree of flexibility to adjust staffing within available dollars. For example, a school could choose to add a teaching position by eliminating two paraprofessional positions.

Over a five-year implementation range, the school system devoted $8.6 million to one-time hardware and software costs. The initial staff development costs, including the establishment of an office of quality training and the hiring of temporary training expertise, were covered in part by a $250,000 grant from the Georgia Department of Education's innovation-oriented "Next Generation Schools Program." Staff development expenses are ongoing and will remain an essential part of the school district's budget in keeping with the continuous training requirements which are part of TQM. Not only must new employees be trained in TQM, but TQM teaches that quality is a process, not an end, and practitioners move to the next level rather than regard quality as attained.

Bringing It All Together

In exchange for its substantial dollar investment, the school system has bought the ability to relate inputs to outputs by school site, providing an opportunity to maximize the impact of each tax dollar. Expenditures, staffing levels, workload, and key performance indicators are summarized and communicated to stakeholders on a school-by-school basis as a part of the annual budget document (Exhibit 1). Staff members are empowered to maximize performance, encourage innovation, and promote change as decisions are made at the level most familiar with their impact. At the same time these sweeping decentralized moves have been made, accountability has increased, financial reporting and analysis has become more timely and accurate, and the human resources and financial management information systems interface seamlessly.

A key element in the success of TQM in a public-school setting has been the continuity in commitment despite changes in leadership. The Savannah-Chatham Board of Education, which adopted this policy eight years ago, is an elected board serving rotating terms. Although no incumbent board member has lost an election over that time period, attrition has altered the makeup of the board at least every two years. The superintendent's position, which functions as the CEO of the school system, has also turned over in that time. Despite changes in the individuals who comprise the school system's leadership, however, the board and its administration have retained a commitment to TQM and site-based management. This sustained commitment is essential because TQM is very training-dependent and requires lengthy implementation periods; it is not a readily disposable or quick-fix approach.

Chatham County's taxpayers have supported the reengineering of the school system with the passage of a second school construction bond issue in 1994, which gave the school system the resources needed to play catch-up on capital needs left unaddressed for some 20 years. But the challenge of winning and keeping public trust is an ongoing one. For example, new legislation has opened the avenue of local option sales taxes as a capital funding resource, but that vote must be won in the political arena, where financial accountability is a key factor. The school-specific resource/outcome information generated under the new structure should prove an effective tool in that effort.

Site-based management requires a paradigm shift in the way school systems are managed. Nothing about Savannah-Chatham County Public Schools makes them unique candidates for this approach; it can be adopted by any school system which can provide continuity of purpose over an extended period of time. Once leadership has committed to site-based management, the finance department involved will face challenges associated with maintaining financial integrity in a decentralized system, along with the paradigm shift of becoming a support function for individual schools.

JACK WARDLAW III, Chief Financial Officer, Savannah-Chatham County Public Schools, served as the school system's first Director of Internal Audits. A CPA who has worked for a big eight accounting firm and as a senior auditor for a private firm, Wardlaw holds a bachelors degree in business administration from Armstrong State College/Armstrong Atlantic State University. DAVID FIELDS, Budget and Manpower Manager, Savannah-Chatham County Public Schools, is a graduate of the Army's Command and General Staff College at Fort Leavenworth, Kansas, served 13 years as an Army officer, and holds a masters degree in business administration from Syracuse University.