The Mississippi Legislature PEER review committee reported its review of the finance and supply chain programs for 30 Mississippi school districts in FY 2022 which showed opportunities for districts to strengthen their programs and increase efficiency.
The group also conducted reviews in Human Resources, Information Technology, Nutrition, Operations and Transportation. (The full finance report is below and the other reports will follow in subsequent issues of the DD-T.)
Seven districts do not provide monthly financial status reports to district and department administrators and three districts lack a formal strategic plan. There was also wide variance in the performance of districts in key areas such as payroll processing costs, number of payroll errors, number of days to process invoices, and procurement costs per $100,000, suggesting that districts have room for improvement. Additionally, 12 districts had workers’ compensation spending higher than the state median and regional peer average. This review was inhibited by some districts being unable to provide the requested finance and supply chain data and some districts providing questionable data (i.e., data based on estimates).
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Two districts, Greenville Public School and Hollandale, in Washington County were selected for review.
The recommendations from the committee about those districts are:
Supply Chain: District Detailed Commendations, Observations, and Potential Opportunities
Greenville: The district currently has two 2 FTEs for handling accounts payable and one FTE for procurement functions. The average time to process an invoice (28 days) was higher than the state median and the regional peer average. Additionally, 7.5% of payments had to be voided, which is higher than the state median and the regional peer average. The district should track voided payments to determine the root cause and develop appropriate solutions to reduce or eliminate errors from occurring. However, accounts payable costs measured per $100,000 of revenue ($161.85) were below (i.e., better than) the state median and the regional peer average. The district did not track key data, such as the number of invoices processed and accounts payable payments past due.
The district provided minimal information regarding the procurement process. Procurement costs per $100,000 of revenue ($71.93) were below (i.e., better than) the state median and the regional peer average. However, the assessment team could not calculate costs per purchase order due to inaccuracy with the total number of purchase orders per fiscal year. Moreover, the district did not provide important metrics such as the total costs for goods and services. The district did not track annual purchasing through competitive procurement (i.e., invitations for bid, requests for proposals, and informal solicitations) nor annual savings from competitive procurement. The district does utilize P-cards.
The district is one of three districts that reported having a warehouse. The warehouse operating expense ratio was 349%, higher than the national peer range.
The district should focus on accurately tracking key accounts payable and procurement measures (e.g., the total number of accounts payable transactions, annual savings from competitive procurement) better to understand the overall effectiveness of supply chain activities.
The district could reduce the cost of purchased goods and services by 5 to 20% by standardizing, measuring, and increasing competitive bidding. However, due to the district’s limited experience with the formal bid/RFP process, there may be initial limitations on the extent of competitive bidding that can be implemented. Unfortunately, an estimate of potential savings through competitive procurement could not be calculated because the district could not provide the total amount spent on goods and services.
Hollandale: The district’s debt service costs to district revenue ratio is 19.2%, significantly higher than the state median and the second highest of all reviewed districts. This ratio reflects the proportion of revenue allocated to servicing debt obligations, such as loan or bond interest payments, relative to the overall revenue generated by the school system. A higher ratio suggests that a significant portion of the school system’s income covers debt payments, potentially limiting funds available for critical purposes like educational programs, facility maintenance, teacher salaries, and student resources. Conversely, a lower ratio may indicate missed opportunities for necessary investments in infrastructure improvements or initiatives that enhance the educational experience.
Additionally, the district’s Fund Balance Ratio was 45.6%. The median of state peers was 49.5%. The state median was significantly higher than regional and national peers. The high fund balances could be influenced by COVID-19 relief funding. Maintaining a reasonable fund balance is crucial for financial stability. An excessively high ratio can indicate issues with resource allocation, while a low ratio can lead to insufficient reserves and financial instability. It is essential for the district to review its fund balance to support the long-term success of its educational programs.
Three key indicators evaluate the efficacy of the budgeting process: expenditure efficiency - adopted budget as a percentage of actual (140.2%), expenditure efficiency - final budget as a percentage of actual (199.5%), and revenue efficiency - final budget as a percentage of actual (120.4%). The most efficient budgets demonstrate a close alignment between projected and actual performance, enabling superior control, foresight, and management capabilities for district leaders. Despite the added complexities introduced by COVID-19 relief funds, striving to maintain a range of 93% to 107% in planned figures in relation to actual is recommended. The district should thoroughly review its budgeting process to enhance the alignment between the initial budget plans and the outcomes.
The district employs electronic forms and workflow tools, and automated time and attendance management systems.
The district has one full-time staff member handling payroll processing for approximately 1,396 payouts annually. The district runs 12 payrolls annually, and 92.7% of paychecks are directly deposited. The district’s payroll costs per check ($37.32) are the second highest of all reviewed districts, and the cost per $100,000 of payroll ($1,915.12) is the highest of all reviewed districts. Additionally, the number of paychecks processed per full-time equivalent employee (116.3) is below the state median and the regional peer average. The district also had a higher number of paycheck errors compared to similar districts, totaling six. The district should review its processes for opportunities to improve efficiency and effectiveness. Aligning performance with peers could lead to annual savings ranging from $29,818 to $33,434.
Workers’ compensation costs were higher than the state median and the regional peer average when measured per $100,000 of payroll spending ($771.18). When measured per employee ($196.09) the costs were below the state median and the regional peer average.
Finance: District Detailed Commendations, Observations, and Potential Opportunities
Greenville: The district did not report its debt service costs, resulting in the assessment team’s inability to calculate the debt service costs to district revenue ratio. This ratio reflects the proportion of revenue allocated to servicing debt obligations, such as loan or bond interest payments, relative to the overall revenue generated by the school system. A higher ratio suggests that a significant portion of the school system’s income covers debt payments, potentially limiting funds available for critical purposes like educational programs, facility maintenance, teacher salaries, and student resources. Conversely, a lower ratio may indicate missed opportunities for necessary investments in infrastructure improvements or initiatives that enhance the educational experience. The district should track debt service costs and plan appropriately each year.
Additionally, the district’s Fund Balance Ratio is 34.0%. The median of state peers was 49.5%. The state median was significantly higher than regional and national peers. The high fund balances could be influenced by COVID-19 relief funding. Maintaining a reasonable fund balance is crucial for financial stability. An excessively high ratio can indicate issues with resource allocation, while a low ratio can lead to insufficient reserves and financial instability. It is essential for the district to review its fund balance to support the long-term success of its educational programs.
Three key indicators evaluate the efficacy of the budgeting process: expenditure efficiency - adopted budget as a percentage of actual (150.7%), expenditure efficiency - final budget as a percentage of actual (127.6%), and revenue efficiency - final budget as a percentage of actual (123.2%). The most efficient budgets demonstrate a close alignment between projected and actual performance, enabling superior control, foresight, and management capabilities for district leaders. Despite the added complexities introduced by COVID-19 relief funds, striving to maintain a range of 93% to 107% in planned figures in relation to actual is recommended. The district should thoroughly review its budgeting process to enhance the alignment between the initial budget plans and the final outcomes.
The district employs electronic forms, workflow tools, and automated time and attendance management systems.
The district has two full-time staff members handling payroll processing for approximately 8,689 payouts annually. The district runs 13 annual payrolls, and paychecks are all directly deposited. The district’s payroll costs measured per check ($12.42) and per $100,000 in payroll spending ($426.61) were below the state median. Additionally, the number of paychecks processed per full-time equivalent employee (362.0) was above the state median. The district had 15 paycheck errors calculated out to be paycheck errors per 10,000 paychecks processed ratio of 17.3. This was higher than the state median and below the regional peer average. While these performance measures indicate that the district’s payroll function performs efficiently, it is recommended that the district focus on reducing the number of paycheck errors.
Workers’ compensation costs, as measured by costs per $100,000 of payroll spending ($376.99) and costs per employee ($143.15), were both lower than the respective state medians and the regional peer averages.
The district reported dedicated staff members for handling accounts payable (2.0 FTE) and procurement (2.0 FTE) functions.
With the accounts payable function, the average time taken to process an invoice (30 days) was higher than the state median and the regional peer average. The district processed fewer invoices per FTE per month (129.9) than the state median and the regional peer average. Additionally, 13.5% of payments had to be voided, which is higher than the regional peer average and the highest percentage of all reviewed districts. The district should track voided payments to determine the root cause and develop appropriate solutions to reduce or eliminate errors from occurring. Accounts payable costs measured per $100,000 of revenue ($280.70) were higher than the state median and the regional peer average while costs per invoice ($11.98) were higher than the state median.
The district was one of six districts utilizing a P-card. Approximately 2.4% of total purchasing dollars came from P-cards. This was the second highest rate of all reviewed districts. Since the district did not provide metrics such as annual procurement department costs and annual purchasing through competitive procurement (i.e., invitations for bid, requests for proposal, and informal solicitations), several key performance indicators could not be calculated.
The district does not have a warehouse. Among the 30 districts reviewed, only three had warehouses.
It is recommended that the district consistently track key procurement data (e.g., annual procurement department costs, annual purchasing through competitive procurement, and the number of formal bids or requests for proposals sent out annually). By standardizing, measuring, and increasing competitive bidding, the district could potentially reduce the cost of purchased goods and services by 5 to 20%. If the district has limited experience with the formal bid/RFP process, there may be initial limitations on the extent of competitive bidding that can be implemented. When the procurement process is fully optimized the district could save between $2,628 and $57,229 annually on purchased goods and services.
About PEER:
The Mississippi Legislature created the Joint Legislative Committee on Performance Evaluation and Expenditure Review (PEER Committee) by statute in 1973. A joint
committee, the PEER Committee is composed of seven members of the House of Representatives appointed by the Speaker of the House and seven members of the Senate appointed by the Lieutenant Governor.
Appointments are made for four-year terms, with one Senator and one Representative appointed from each of the U.S. Congressional Districts and three at-large members appointed from each house. Committee officers are elected by the membership, with officers alternating annually between the two houses. All Committee actions by statute require a majority.
