. . . .17.; ......I.Q vr‘vrun».. . l!— ABSTRACT AN ANALYSIS W CURRENT PRACTICES IN C$T AC OWNTING IN SCHOG. DISTRICTS By Helen Smith Cloyd Before any improvement in financial management can be initiated, it is essential to determine whether those who are directly concerned with school problems which relate, in part, to inadequate financial means, feel that there is any need for improvement in financial management procedures. This research study was. performed to determine the trim of mind of school administrators respecting their desires for‘the use of an additional financial tool-cost accounting, and whether it is possible to utilise cost studies in school district accounting. Questionnaires were sent to a random sampling of 233 school districts, stratified by counties, located in the states of California, Florida, Illinois, Minnesota, Mississippi, Nevada, New Jersey, South Dakota, Texas, and Wyoming. Replies were received from 7h.6$ of the districts. Answers disclosed that 92% of the respondents do not use cost studies but 521 of the group felt that cost information would be useful in discussions of school expenses with interested groups. A follow-up postcard survey increased the majority opinion to 571. Information was secured on per capita costs, enrollments, types of general accounting and cost accounting records used, types of mechanical equipment available, number of bookkeeping employees, methods used for averaging expenditures, and the disposition of school administrators in small, medium, and large school districts toward the use of cost methods Helen Smith Cloyd in expenditure control. Correlations of the items on the questionnaire were developed by the Michigan State University HISTIC Computer, and the corre- lations suggested that those who felt that cost reports were important alreacw made use of cost approximations on teaching and non-teaching expenditures. Interviews with ten officials of small, medium, and large school districts in Illinois, Michigan, and (1110 showed that the feelings of these school administrators toward cost studies were almost identical with those returning the questionnaires. A study of the manuals, accounting foms, regulations, and rules of the state departments of education in the 50 states showed that in at least 119 of the states the regulatory provisions permit school districts to develop cost studies to aid in the solutions to their financial problems. The criteria used was whether school districts prepare a budget, that account classifications contain information on revenues and disbursements, and that there is at least a one-level gradation of account classifications for expenditures. These findings also apply in the District of Columbia. Cost analyses using direct cost and indirect cost centers are developed for‘varying sizes of school districts based.on acceptable business practices as recommended in the Cost Accountants' Handbook, various pub- lications of the National Association of Accountants and the American Accounting Association, and on the reconmendations in Handbook II of the U. 8. Office of Education. Cost studies on consolidations and long-term variable budgets are two types of cost reports singularly useful for school district financial planning which is possible undering the prevailing general accounting structure in school districts. COPYRIGHT BY HELEN SMITH 01.011) 1961; AN.ANALISIS OF CURRENT PRACTICES IN COST ACCOUNTING IN SCHOOL DISTRICTS By Helen.Smith Clqyd A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY College of Education 1963 AWNNTS The writer is indebted to Dr. Hilli- H. Roe, thesis adviser, for the many helpful suggestions and constructive criticisms during the preparation of this paper, to Dr. Peter G. Raises, major professor, for his constant help and encouragement. to Dr. June n. Edwards for his influencing interest in the values of accountancy, and to Dr. Carl I. Cross for his share in inertia; an appreciation of educational values. Special thanks are due to the many school administrators who so willingly answered questions and to the staffs of the state departments of education without whose assistance this manuscript could not have been written. it TAIL! OF CONTENTS W: C O O O O O O O O O O O O C O O O O O O O O O O 0 LIST or mus . O O C O O O O O O O O O O O O O I O ..... 0 LIST OF Elms O I O O O O O O O O O O O O O O O O O O O O O O 0 LIST 0? ITEMS IN APPENDIIZS . . . . . . . . . . . . . . . . . . . Chapter I. II. III. mmm O O O O O O O O O O O O O O O O O O O O O O The Problem Need for the study Current practice in school district accounting and the need for cost accounting Limitation of the study Definitions of terms used The Methodology REVIEW OF LITERATURE . . . . . . . . . . . ...... . General Accounting Literature looks, pamphlets and handbooks Periodical literature Cost Accounting Literature Summary STAG! I - COLLECTING AID REPORTING DATA REGARDING THE OPINIONS OF SCHOOL ADMINISTRATIVE PERSONNEL ON THE DRSIRABILITY OP COST INFORMATION . . . . . . . . . . . The Randon.8anple Stratification by states Stratification by counties iii Page ii vi viii ix 3O Mm Chapter Page The Questionnaire Procedures for Statistical Analysis Coefficient of correlation Sampling errors Findings Interpretative considerations Summarisations Statistical analyses Analysis of variable 23 Analysis of variable 22 Analyses of variables 20 and 21 Analysis of variable 13 Analysis of variable lb Analyses of variables 15 and 16 Analysis of variable 17 Analysis of variable 18 Comment on statistical analyses Follow-up study Personal interviews Examination of the interrelations of the variables in this study as a source for answers to pertinent questions in the field of school district accounting Summary IV. STAG II - AIALYSIS 0! THE GENERAL ACCOUNTING FRAMEWORK 84 Relationship of General Accounting Records and Cost Accounting Records Accounting Recommendations by the Office of lducation Accounting Recommendations by State Departments of Education Summary V. sues III - osmorwnrr or com momma ANALYSES mussmmolsnlcrs............. 92 Cost Control Procedures Purpose of cost control Cost centers for control Value of cost control Indirect cost centers as a refinement of costing procedures iv Chpter Chapter Page Projection of Costs for School District Consolidation Limitations Procedures for consolidation Cost studies s-ary Long—Term Variable Budgets for School Districts Budget preparation Regulatory provisions Revenue sources Provisions for expenditures Long-term budgeting Salary of long—term variable budgeting Sundry VI. SMARTAIOCONCLUSIOIS................ 127 Problem and Procedures’ Purpose of the study Methodology and design Sumnary of Findings Conclusions Implications for Purtbor Study Sun-lary BBLImm O O O O O O O O O O O O O O O O O O O O O O O 0 O 136 O O O O O O O O O O O 0 O O O O O O C O C O O O O O O O O 163 c. oooooooooooooooooooooooooooo 175 Table 1. 10. 11. 12. l3. 14. 15. l6. 17. 18. LIST OF TABLES Total school district population of 50 states and outlying parts of the United States . . . . . . . . . Total population used in the survey . . . . . . . . . . Stratification of sample by states . . . . . . . . . . . Identification of variables used in the study . . . . . Predominance of affirmative and negative answers to interrogative variables . . . . . . . . . . . . . . . Various school district siaes sampled in the survey . . Comparison of averages computed by the RISTIC Computer and by the writer of selected items on the qu‘. t ion“ 1 r. O O O O O O O O O O l O O O O O C O O 0 Requests, replies, and per cent of replies returned . . Types of educational programs and number of schools and teachers in these classifications . . . . . . . . . . General accounting records used by reporting units . . . Cost accounting records used by reporting units . . . . Methods of averaging expenditures . . . . . . . . . . . Types of mechanical equipment used by reporting units . Coefficients of correlation of variable 23 with other V‘rt.ble. O O O O I O O O O O O O O O O O O O O C O O Coefficients of correlation of variable 22 with other V‘r 1‘ble. O O C O C O O O I O O O C O O C C O O O O O Coefficients of correlation of variables 20 and 21 with at hat v.t£.b1.. O O C O O C O O C O O O O O O O I O O Coefficients of correlation of variable 13 with other V‘rublo. O C O O O O O O O O O O O O O O O O C O O O Coefficients of correlation of variable 14 with other v.r1.b1.. O O I O O O O O O I I O O O O I O O I O 0 O ' vi Page 31 32 33 37 38 45 47 48 49 50 51 51 57 S9 61 62 63 Table 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 35. Page Coefficients of correlation of variables 15 and 16 with Other V‘riab1.. O O O O O O O O O O O O O O O O O O O 65 Coefficients of correlation of variable 17 with other V‘ri‘ble. O O O O O O O C O O O C O I O O O O O 0 C d 66 Coefficients of correlation of variable 18 with other V.r1.ble. O O O O O O O O O O O O O O O I O O O O O O 68 Requests, return and per cent of postcards returned . . 70 Answers to question #1 in the postcard survey . . . . . 70 Answers to question #2 in the postcard survey . . . . . 71 Answers to question #3 in the postcard survey . . . . . 71 City pOPUI‘tion Min” o o o o o o o o o o o o o o o 74 Number of cities in each population grouping, by states 75 City school systems selected for personal interviews . . 76 Opinions of interviewees regarding cost accounting record. 0 O O 0 O O C O O O O O O O O O O O O O O O O 7‘ Classification of control accounts recommended by the Office Of mu.ttm I O C O O O O O O O 0 O C O O O O 87 Account classifications coordinated‘with cost centers . 94 Allocation of unassigned account classifications to CO't center. I O O O O O O O O O O O C O O O O O O O 96 Allocation of indirect costs to direct cost centers . . 101 Comparison of districts' transportation costs with county average transportation costs . . . . . . . . . . . . 111 Guide for staff requirements . . . . . . . . . . . . . . 117 vii Figure l. 2. 3. 8. LIST OF FIGURIS Page “‘1... ‘lloc‘tion Of c°.c. O O O O O O O I O 0 O O O O O 2‘ Organization chart . . . . . . . . . . . . . . . . . . . ’ 94 Schedule for projection of costs for school district consolidation using classification of accounts recommended in Handbook 11 of the Office of Education 103 Long-term budget schedule showing pupil enrollments . . . 121 Long-term budget schedule showing teachers required for an elementary school . . . . . . . . . . . . . . . . . 122 Long-term budget schedule showing teachers required for a secondary school . . . . . . . . . . . . . . . . . . 123 Long-term budget schedule showing employees required for non-instructional work in elementary and secondary SChOOI. O O O O O O O O O O O O O O O O O O O O O O O 124 Long-term budget schedule showing salary expenses for instructional and non-instructional employees . . . . 125 ~ viii LIST OF lTlls I! APPRNDIXIS Appendix Page A Questionnaire . . . . . . . . . . . . . . . . . . . . . . 144 Covering letter . . . . . . . . . . . . . . . . . . . . . 146 Follow-up letter . . . . . . . . . . . . . . . . . . . . 147 Samples of state school districts . . . . . . . . . . . . 148 Follow-up postcard request . . . . . . . . . . . . . . . 160 Covering letter . . . . . . . . . . . . . . . . . . . . . 161 . 8 Personal interviews . . . . . . . . . . . . . . . . . . . 163 0-» State accounting provisions . . . . . . . . . . . . . . . 175 cm: I 1111303131101! School adninistrators in many school districts face the problem of handling expanded school enrollments with limited physical facilities and with limited teaching personnel. Both these limitations may be attributed in part to limited financial means. Specific problems, such as teacher shortage. needs for expanded or qualitative curriculum offerings, as wall as provisions for dealing with individual pupil differences. are directly or indirectly related to the primary problem of financial adequacy. As fiancee are basic to a consideration of educational problems. it follows that any iqrevemsnt in school financial manage-Int aids in the solution of financial problems. and “m beneficially to the school district and to tho tensity which it 0."... ‘l'ho solution to financial prebloms may be approached from two directions: an increase in revenues or strict control over costs and Witnres. neither solution can be reached without study and effort. If rlaing educational costs can be not with rising revenues. there may “ 11ttle desire to concentrate on cost studies. However. when increases 1' tCass are no longer approved by voters, it becomes necessary fer the “kl officials to analyse costs with the intention of determining the “1“. quality. and quantity of educational offerings. Therefore, it 1 2 is inc-bent you the school administrator to know and understand financial accounting so that he may use this tool to explain costs in his effort to win the cooperation of the unity. 0n the other hand, even the approving. cooperating taxpayer is entitled to know the costs of the various services offered by the educational system. Amolyaiu the costs of the various educational services is called cost accounting. Coot accounting is the unique tool through which quantitative financial figures can be converted into meaningful and significant unit costs . the Problem It was the purpose of this study to determine whether these '11. are directly concerned with the pro“. of financial accounting \ tool that there is any used for W. the extent of improvement which they may deem desirable, the ecological state in which iaprevaments “0 be lads, .d the developnt of suggested practices in cost “co-mung. ‘l'ha questions which formed the basis of the investigation for “I. Ray of the probl- are: I. Is there a felt need by school administrators for the use of flee-1,1" «at records as an aid to l-agorial efficiency? 3. Does the general acco‘ting fr-aworh, as set by state regulatory “its, bust the use of costing methods? c. Can cost accutiu records be developed independently of the Mal accountiq frnmvsrh, either on a limited or extensive basis. “heading on the type of educational program offered. the sire of the “heel dministrative unit, and the sins of the pupil enrollment? load for the gtglx Per capita expenditures for public school education vary widely, not only between state boundaries but also between local school districts in each state. It cannot be practical, nor educationally or culturally feasible, for each school to maintain the same eractitudes in educational standards. If some schools were not superior, there would be no models for comparison to create concern over inferior schools. Equalization of educational opportunities could result in self-defeat if it should bring about a qualitative deterioration of educational programs. For instance. if a school district such as Scarsdalc, law York could not offer a program which evokes the envious consents of lay leaders as well as school leaders, there might possibly be a slackening in the striving for local improvement in education. In Scarsdale, the average cost of education (including debt service and capital outlay) for the year 1961-62 was $1,187.67 per pupil while the maximum classroom teacher “llry was $12,000.1 The motives for improvements in education should be Saturated within each individual school district to improve its local “Nation in addition to a generalized attempt to raise national educational "Wards by exterior pressures. The improvement of education in each local school district provides the i~mcentive for further improvuant and revitalires the urge toward the \ 1Town of Scarsdale, law York. Agual Budget and School Tg Election ._._‘(° be held on Wednesday. In; 3. 1261 of the 031» kg. School District No. 1, s‘iu‘odala, law York: Board of lducation. 1961), pp. 11-12. 1»: Lo vanes!» ......... 31.4%.. 2a.- .. is ....... 2.....l ‘c‘ . ‘-‘ ‘4“. a. ‘ a conunity ideal. leading school districts reflect the ambitions of the tar-paying public ca-enaurate with the co-unity's level in living standards. the ability of a school district to attain its goal is dependent not only on its school leadership but also on its lay leadership. Bach type of leadership activates and reactivatos the other. Their combined efforts develop the ca-unity's sense of educational values and the willinpess of the tan-paying public to smart the schools. l'haro is a triad of responsibilityb-that of the educational ideal. that of the school. and that of the public-"which isposas the need for send finneisl manag-ont on the part of the school adminis- trator. It is the duty of the administrator to provide financial managerial efficiency despite inadinnts created by legal provisions, state bureaucracy and restraints. and the inability of the taxing base to support good schools. hhils school quality can be improved by active and intelligent administration. the effectiveness of financial support depends on the administrator's understanding of managerial control afforded by proper accounting records. A single study by the IRA Research Division in 1950 reported that city superintadants spent 15.1 per cent of their working time in'financial administration; rural superintendents reported 18.1 per cent} The balance of tho superintodent's u- was spent in personnel adninistratien, public relations, general planning for the school lactic-a1 Iducatioa Association. Public-School Finance 3 A Unit . Prepared for the Ca-ittos on for i125“.- and School Finance by t IIA Research Divioi- (Whingtea 6, D. C.: National lducatien Association. 1953), p. 3. \1 program, etc. While the portion of the superintendent's time spent in fimncial administration today is subject to conjecture. it may be assumed that the rate of turnover in school personnel and the rate of change in the school administrator's duties would not greatly affect the time allocations indicated by the “A study. If it can be assumed tht the portion of the superintendent's time spent in financial management consisted of executive and supervisory duties, than it is desirable that the executive employ this time effectively with a minimise of checking on clerical performance and on the accuracy of financial figures. To be able to do this, the executive needs to know what is essential for reporting purposes and to direct his employees to render the information accurately and with a minimum of effort. The school adninistrator must be able to record financial information not only in the prescribed legal manner but also in a way that will give him needed information to handle internal financial matters. It is in the area of internal problem that the value of cost accounting principles as an aid to managerial efficiency is being increasingly recognised. A study in the relationship of cost and quality in education is inortant for it provides the needed answers to internal financial prehlon. The investigation of the need and the desire of the school administrator for cost studies and how cost studies can be a managerial tool is the purpose of this research paper. Current ti 1 dist i t tin be r t ace i The school administrator in discharging his public office works within a fr-nworh of legal requirnants which is set by state and federal regulations in certain respects .d is eqplemaated locally by the board of education. Accounting for school district units is unique in its treatnent of the separate funds of the school district as independent financial entities in accordance with legal provisions which provide for their establishment. Accounting for separate funds stems free legal provisions which specify the onset purpose of each fund. All asset, liability, incua and expenditure accounts pertaining to a special activity are grouped within a self-balancing set of accounts pertaining to that particular fund; such finds being grouped periodically, usually annually, in fin-ciel reports. ‘ separation of the components of assets, liabilities, incena and expenditures into distinct fads in the prescribed legal manner ashes conparability of operations , either internally or externally, very difficult for the administrator: he is constantly dealing with financial sepauts rather than with an integrated whole. It is because of this diversity of the sources of financial infernatiea that cost infornatien is essential for proper control. ' The value of cost accounting lies in the analytical presentations of costs in various csiiuations which are out of content with the general Octet-ting records. Cost studies fly take the fern of reports, schedules, lodgers, or even graphic presentations. These records are prepared in “was. - u 5.1.... «I4 a... ...I~. . rs ...-.u...v ans—ah.‘ n til—.654 addition to the general accounting records, but draw upon the general accounting records for their asterial and are reconciled with those prinary records for purposes of control. Underlying cost records are used for the purpose of studying the relationships of costs to significant nits which represent the end results of the efforts of the econenic entity. In a school district these units night be-preoented as per pupil units (based on average daily attendance or average daily n-borship), weighted elementary classroom mits, or grade or course units. cost records sbuld be developed for purposes of cost control to chest actual costs with planned coats, for purposes of planning future costs, and for a continual ceqarisoa of costs with past results end with other school district costs. ‘l'he purpose of cost control is to analyse trends and to iduce changes in functions based on an under- standing of what is educationally desirable and what it will cost the school district. The use of cost accouting by school mag-ant officials will result in better infomed Idlinistrators who are able to act on reliable data in asking their decisions. In turn, these data can be used as a powerful tool in the educational and public relations pregr-s of the school district . W This study is linited to that cement of school financial nanagsnent which is capable of practical quantification without recourse to abstractions. This study is linitsd to the cost accounting records which adniaiotratoro of certain school districts naintain, or are required to maintain, .d certain suggested uses of cost accounting records. ”(inciting 2: tom ”g In order for the writer to convey to the reader a better under- standing of the terminology included in the contents of this study, the following definitions of the terns used are given. W. A method which considers all revenues as soon so they are earned, whether or not the nosey has been received; and all expenses as soon as they have been incurred, regardless of whether the money has been paid out. w. Itens owned by an entity. Examples include cash, PNPOrty, receivableo,‘etc. NW. The n- of tho day- Present of all pupils divided by the odor of days school woo “finally in session. W. This tern was used in this study ‘0 WI either average daily attendance or average daily nanbarnhfp. W. The on of the days present "‘4 “men: of all pupils divided by the we: of deys the school was “tully in session. M; A plan covering financial nanagement for a definite ”n“ in the future. W. a natbod which takes account only °£ ‘5‘“ transactions wherein many has been received or paid out. W. in account used for the purpose of tenporarily wining entries for later distribution to the proper accounts. W. 'l'hooe financial records, underlying or in conjunction with generel accounting records, which disclose vsrictions in expenditures with the intent of considering costs in different celabinntions that is not possible with the use of general accomting reeordm . W. These ore expenses incurred, whether paid or unpsid, depetriing on whether the books are being maintained on the cosh or accrual basis of accounting. W. This term refers to the exercise of discretion by the school edniniotretor in the handling of noney netters of the school district unit. W. A written report showing the results of financial transactions of an entity; generally, the report contains a balance sheet listing the assets, liabilities, and equity and a statement showing the revenue and expenditures. M. This tern refers to that a- of nosey, or other assets, ““5 Ire segregated to comply with the rules which govern its use necessitating caperete accounting end reporting. W. lasie books of account fron which finite“), reports are prepared, and generally consist of one or more JWIO and lodgers. 3W. Units of neasimenent which use a grade or “MC. for computing per unit expenses. 10 m. This term is synenynous with revenue which represents increases in assets without any increases in liabilities, nor recoveries in expenditures; and may result from debt cancellations without ceasing a decrease in assets nor an increase in liabilities. Lisbilitigg. Debts owed. hanles include payables, bond indebtedness, etc. W. Money or other assets which have been set aside for: making payments on debts at a future date. Standard accounting “”59. This tern refers to those accounting records which have been adopted on a wide scale within an industry or other: activity so that cowarability of financial figures between units in facilitated. W- A mm .: «mu-m which takes the average expense par classroon for elenentsry schools, multiplies it by a factor which represents the national average difference in per: classroom expense between elenentary and high schools to show the average classroom expense in weighted classroom units. The Methodology The study proceeded from a statement of the problsn as indicated earlier to the devising of a questio-aire to daternins the feelinpof ”‘00). district administrative personnel toward the problen of cost "lilies as a part of financial nanagsnent. The questionnaire which was “'01.” enplores the basic features of the aceouting structure through 11 questions which lead the respondent from.an initial consideration of the general accounting records to an expression of an opinion on the desirability of cost accounting information. The questionnaire and covering letter, and a followbup letter are shown in Appendix A. The next step involved an analysis of the general accounting framework for school districts as recommended nationally by the U. 8. Office of Education and statewide by the state departments of education of the 50 states (including the District of Columbia). The following criteria was used for this purpose: If a school district is required to have: a. A budget for predetermining costs; b. a set of general accounting records to show revenues and expenditures; and c. a sub-classification of the expenditure accounts at least on a one-level gradation; than it is possible for the school district to add further sub-classifications to compute unit costs on a basis determined to be desirable by its nanage- nent. Cost analyses and reports are developed next for school districts of varying size. These cost techniques are those accepted procedures used by accountants today, and are based on a consideration of recommendations from authoritative sources, such as the Cost Accountants' Handbook, various publications .2 the lational Association of Accomtants and the American Accounting Association, and the Handbook II publication of the U. 8. Office of Education. 08"!!! II KIVIIN OI’LIIIIAIUII The review of literature covers two fields in the area of school district accounting: (1) general accounting publications, and (2) cost accounting publications. General Accounting Literature The general accounting literature is available in the form of boobs, pamphlets, handbooha, and periodicals. W Recognising the need for standard practices in general accounting terminology, the united ltates Office of Education in 1957 issued a handbook for financial accounting for local and state school systeu.1 This handbook was the auteur of an earlier effort in 1953 by the Office of lducation to compile a basic list of educational 10. 8., Department of health, lducation, and Welfare, Office of lducation, l t or Lee t e l tens It lscei and i a, State ucational Records and Isports Series: Handbook 11, (lbshington, D. 6.: U. 8. Government Printing Office, 1957). 12 13 tar-inology and infornation to be used by state depart-ants of education.1 Succeeding this basic source, three booklets reco-ending proper accounting for school activities,2 property,3 and school insurance" were issued by the one office in 1959. These booklets impress upon school administrators the need for preper accounting for costs in the areas where larnoas in record-keeping has occurred. This emphasis on these areas is of particular significance to this study because these areas are eapecially suited to cost studies. Rfforts are being node for the adoption of these publications on a nationwide basis because it is hoped that standard accomting practices will provide a basis for report comparisons of one school district's operations uith that of another school district to disclose areas in which inrovenents in nanagerial efficiency nay be nada. These publicatie; of the Office of Rducation have been devised due to a felt need by school adninistrators for asoiotnce in the development of general accounting procedures and 10. 8., Department of He:lth, Education, and Welfare, Office of Education, tioa, State Rducational Records Reports Series, :andbook I, (Iashiagton, D. c. : U. 8. Govern-ant Printing Office, 1953). 20. 8., Departnent of Health, Education, and Welfare, Office of “outin- W. 8n“ fluttioul Records and Reports, (Washington, D. 6.: U. 3. Covet-men: Printing Office, 1959). 3o. 8., Department of Health, Education, and welfare, out“ of lducation, t f and 8 8c 8 t , State Rducationel Records Reports Oariea, handbook III, (Iashington, D. 6.: U. I. Ooveruont Printing Office, 1959). "u. s., Departunt of health, Rducation, and Welfare, Office of mum-s. Witness. unm- 1959. lo. 23, (Was ngton, D. .: U. 8. Governant Printing Office, 1959). 14 netbsds which will inprova financial n-agencnt. Two non-governmental groups concerned with educational accounting records have been working to provide help to school administrators with neaaingful literature. We of these groups is the Association of School Minoan Officials of the United States and Canada which issued, in 1961, 8- statement of accounting principles for school districts. This statement was eubsequently published in the April 1962 issue of W-‘ The principles basically follow the recon-ended accounting principles and procedures set forth by the Rational Connitteeon Governnental Accounting which were issued in Septenber 1951. under the sponsorship of the Municipal Finance Officera Association. current practices and thinking are incorporated into the newly issued statenent of accounting principles. The other interested group is the Canittee on Public School Accounting of the merican Institute of Certified Public Accountants (of which group the writer in a committee member) which has been andeavering since 1938 to develop a statement of accounting and reporting principles applicable to public schools. At its last meeting in Chicago on May 7, 1962, the couittee decided to proceed with a auggeation to issue a monograph on achool finance directed toward an understanding of school costs by the layman rather then to help the school adninistrator due to the help the adninistrator is already receiving because of the considerable literature in the area of school 1Official organ of the Association of School business Officials of the United States and Canada. 15 fisanc inl accounting. Literature by this co-cittee on accounting principles and their application wns deferred indefinitely. A publication of the ca-ittea entitled, "Public School Coats: An Accounting Primer for Taxpayers," was released for printing in March 1963. In 1960, S- Tidwell, a odor of the accounting staff at the lichignn College of Mining 5. Technology, published a book on public school run: accomting.1 In I nesting at Houghton, Michigan with the author in 1958, the writer was inforned that this book resulted fron an effort to apply generally accepted fund accounting principles to school accounting, an endeavor which had not been previously attempted. 1'50 mlication has been all received and it is anticipated that it will he adopted as a tsntbosk by merous schools. There is no other 190°k on the book narket dealing anclusively with this subject. A fiduto our course in public scbol accounting using this textbook 1' Offered by this Michigan college currently. The financial reporting aids which state depart-cuts of education and"? to school districts is covered in a later section of this work; hovever' it appears appropriate here to mention several school business m‘Mt handbooks issued by the State lducation Depart-ant of New York: 1San: B. Tidwell, Public School Fund AccotnitiggI Principles cg W, (New York: Harper 6 Brothers, 1960 . 211» University of the State of New York, The State lducation ”Wt-m. WW (Albany. R. 2.: The University of the sttte of 1m rot-k, l955-l956). 16 to aid ochool administrators. These handbooks are especially well- writtea and comprehensive in their subject matter. Handbook No. 3, 329825.: prescribes reconnended budgetary procedures, and gives illustrations of work sheets, accounting syste-m, and 252 forms budgets. Handbook No. 4, fiflting and Reporting, contains 144 pages of excellent material on school fund accounting. It shows the necessary formo for budgetary and encumbrance accounting, nachine accounting, and financial reporting. Handbook No. 6, figuration, contains recommended methods f0! recording coats and maintenance of school buses. Expense reports, yflrly records, and cost analysis records provide much needed information “I 5‘- operational costs. Handbook No. 1, W, is the title of this not"lorttry cost accounting booklet for the control of plant operational costa including a special treatment of work orders and job orders. handbook No. 8, mm provides standard forms for the N‘tiomu School Lunch Program and the Special Milk Program, purchasing “‘4 requisitioning procedures pertaining to the lunch room program, and fl" ‘0. of food inventory and accounting records. The remaining booklets deal with Roomsibility (No. 1), 13% (Na. 2). Purchgfl and Stgea (No. 5). m (No. 9), and W (No. 10). l7 Periodicgl literature Current periodical literature on general accounting for school districts appears in several publications listed in the bibliography to this nanuncript. Perusal of these articles and continual reference to these publications by the school administrator may prove to be very helpful to him. In the latiggg gghoolg, Carmichael1 recounts his experiences in converting from "pan-and-ink" to machine accounting for the eighteen public schools in.honcie, Indiana. he states that there are two ways to stay‘within the school budget: either to cut down on the quantity or quality of the educational service rendered or to operate every department with maxi-n- efficiency. cut, and no“2 in the W State that at Tarrytown, low York gross inefficiencies were eliminated through the use of the combination adding machine and typewriter-keyboard accounting machine. Procedures for machine installations, the designing and selection of forms for machine work, and many practical suggestions are given by the authors based on their experiences. At Wayne Township, New Jersey, the installation of an accounting nachine which cost about 8700 saved the cost of two salaries and was used 1Poa'rest V. Carmichael, "We Switched to Machine Accounting and are Honey Ahead," W, (larch 1956), pp. 108-112. 2Loo Ii. Casey and Ridgl I. Rogg, "Descriptive Accounting Iachine Operations for School Districts, ' American School Board, (Decoder 195‘), pp. 26-29. . 18 for payroll and budgetary control. nemareat1 describes the results of this experience in the lovember 1954 issue of The School §§ecutive. Srviti2 recommends that educators should support and comply with all recommendations dealing with the improvement of school accounting, bookkeeping and business practice, but they should resist suggestions by auditors which might curtail any part of the school program. Extracurricular funds accounting is the subject of a study conducted by Ivins and Anderson.3 From their national study, three patterns emerged: a. Individual schools or school boards may account for these funds in whatever manner they choose without interference or control from either state law or the regulatory policy of the department of education of the state concerned. b. Schools or school boards are required to conform to provisions of a state law that establishes procedures for accounting. c. Schools or school boards are required to adhere to provisions of regulatory policies determined by the state department of education. 1Neal Demurest, "How to Simplify Your Accounting," The School lgggutive, (lovember 1954), pp. 56-57. 2James Brviti, "State Audits Could Weaken Local Control," Ihe §ghool Eggggtige, (August 1953), p. 54. 3Wilson H. Ivina and Helen I. Anderson, "Extracurricular Funds Accounting in the vnrioua States, Preliminary Report," Rational Association of gggondggz gghool Priggipglg, (larch 1954), pp. 122-136. 19 A tabular et-eery (by states) of the procedures in accentiag for extracurricular funds was developed by the authors to show the trends prevailing in school districts. A survey by the Nations final on athletic funds points out that the national pattern of school athletic activities accounting is still nebulous. Good accounting practice dictates that the financial control of these funds rest with the board of education, and that the related record-keeping be a part of the school district's general accounting system. The‘descriptiva naterial on accounting procedures is especially well written. School cafeteria accounting is the subject of an article by merry! He describes the books pd the torus used in s secondary school cafeteria which had been developed tron their experience to nest their particular needs. Second-year bookkeeping students are given an opportunity to keep these books. Supervision is given by the bookkeeping instructor of the high school. Kilpatrick3 recs-ends independent annual audits and lists their advantages to the school district. 0a the other hand, 'f—v vfi—v 1Jury Survey, "Practice and Theory in Athletic funds Accounting," W, (Sept-her 1958), pp. 70-71. 20. T. Iouery, "School Cafeteria Accounting." W." (January 1952)s Po 307- 3l. w. Kilpatrick, "Advantages of an Independent Annual Audit of School Accounts," P sad at t Ei h t , (Evanston, Illinois: Association of oo Business flicials of ted States and Canada, 1952). pp. 80-85. 20 Nornenl points out present weahneees in school audits and nshcs recomdetions to correct these inadequacies by the adoption of a nsdel state school audit statute. as states that twelve states (Arisone, Illinois. Kansas, Iichigau, Kinnesote, liississippi, Hissouri, Nebraska, leveda, OhIAhona, South Carolina, and tones) have no state laws requiring the auditing of local school district financial accounts] three articles describe the use and advantages of the Office of lducation financial accounting handbook. An editorial in W 3 details the count of work that was spent by various groups in the drafting of the handbook. Hellliptt‘ gives a condensed but interpretative version of the handbook uhile asssssS explains the uses of the handbook through a very illuinative paper presented at the 1956 convention of the Association of School business Officials of United States and Canada. lesson6 continues his contribution to school accounting literature 1Lsysi v. were... "A uses: State School Audit Statute," W» (“Itch 1’50» 9- 71- 2A survey of the general accounting fr-ewerh in chapter IV showed that at the present tins four of these states have passed luvs requiring the auditing of local school district accents. Braces-lei. "rise-em Accounting dot the nation's Public Schools," W, (October 1’55). p. 7. ‘Jeseph Ilcllligstt, "n-dboot for School Accountants," Nation! gags, (Nova-her 1956), pp. 90-”. 5Paul 1.. Reason, "less Financial Accounting Handbook,” W 2W. (hm-tn. 1111mm ”mutt-n of School Business Offic s of United States and csaada, 1956), pp. 132- 136. 6l’aul 1.. Reason, "Clearing Accounts Preclude Deceptive School Costs," M, (August 1956), pp. ”-50. 21 by his authorship of two articles on the use of clearing accounts. In his first article, he shows how artificial ballooning of receipts ad expenditures can happen, and how it can be avoided through the use of clearing accounts. he itenisee transactions where duplication of receipts night occur and discusses the chances of error. His second article" shows the use of four additional clearing account operations: eaterials purchased for resale, purchases and sales of securities, abetuents, and interfund transfers . ‘l'idwcllz gives his opinion on the need for fundencntal school fund accounting training for the school executive. He decries the lack of properly trained personnel for school fund accounting and analyses the come offerings in this type of training in graduate schools of education. In his opinion, traditional accounting .courses are too narrowly business uhile govern-sntal accounting courses cover city, county, state, and federal levels. His recenendation is that the public school systnss can gain for thensalvea the sac accounting advntages that are presently enjoyed by other areas of public service through the develop-ant of fornal courses in schools of educational business administration. _ 1Paul L. Reason, "Costs May be Lower Than You Think," Natiggs £12m. (July 1958), pp. 50-51. 28- B. ridwoll, ”Fund-sntel School Fund Accounting," testis-n M. (May 1957), pp. 134-137. 22 ucLschisel advocates that each school systen should install an accounting systus to nest that particular school‘s needs and Spitser2 suggests an accounting systen that nests the seeds of a secondary school. Sabcocka writes about the problens in the accounting and reporting of public school funds in his naster's thesis subnitted to the Graduate School of the University of Oregon. he reports that "less than satisfactory" accounting is neat prevalent in the snaller school districts due to inadesuately trained personnel, large enployoa turnover, insufficient equip-out, and use of part-tins uarhors. no advocates centralised accounting records for these snsll school districts. Whitioct‘ states that as of June 1960 twenty-two of the fifty states were collecting in standard fore less than one-half of the itans in Handbook I of the Office of Iducation. lorty‘ of the forty-six states receiving Federal funds under Section 1009 of “title 1 of the National Defense Education Act were putting into use the standard classifications recs-ended in Handbook II but their efforts "ranged free a nara beginning to substantial aeconplisluasnt." This difficulty is caused, according to the author, by the failure of handbook II to provide for 1t. u. IIcLaehlan, "Designing Your Accounting systen ts Fit Your Reads," 1 s t P rt th 1 t on, (Evanston, Illinois: Association of School business Officials of United States and Canada, 1954). pp. 85-90. 1A. Spitsor, ”Suggested bookkeeping and Accounting Syston for Secondary Schools,” i Id tion , (Deco-her 1550), pp. 30-31. ’lonald I. Sabcoch, "Problens in the Accounting and Reporting of Public School rude," (.publishod naster's thesis, Graduate School, Uhivarsity of Oregon, lSSS). ‘Js-es w. Uhitlech, ”Financial Accounting," w. (June 1961), pp. “-21. ' 23 an adequate function-object coding systen. School districts using bookkeeping nachines and data-processing equipment find it necessary to change sub-account latter designations to decinsla, to devise nor account numbers, and to rearrange the sub-accounts. Lech of adequate staff to naintaia property records is the reason tint Handbook III is not adopted more widely by school districts according to Roberts.1 Only two state and three local school systans use completely the prOperty accounts that are defined and classified in the Handbook. Under title X of the National Defense Education Act, finds for the improvnent of records of local, state, and national school systems are provided. Reports from the states using these funds indicate that several states are planning.” use these accounts in the near future. The author states that the way to start on the adoption of property accounting methods is to: a. make a tonal decision to use the Handbook; b. develop a plan of orgmiration; c. deve10p a program of Operating activities; and d. develop an evaluative program. The personnel training problens which present themselves when a change to autonatic accounting equipmnt takes place is reviewed by 'Saathoff.2 He outlined the work necessary to convert to automation at 1>Char1as S. Roberts, "Shy Property Accounting?" School Life, (September 1061), pp. 21-25. 2Addison S. Seathoff, "Antenation in School Accounting," W. mm mm. n- 17-19. u. 24 Oakland Public Schools, Oakland, California uhere he is controller. This school systen has 65,000 pupils in average daily attendance and nploys approninataly 4,500 employees, including part-time and teqorary workers. To make the change, they had to prepare in excess of 60 separate progrus involving nore than 8,000 instructions to the computer. The transition took one and one-half years. In this systen, the accounting responsibility rests with the data-processing staff, not with the accounting depart-ant. Job cost infornation, special detailed cost lodgers, budget, personnel infernation, general ledger control, expenditure ledger, and warehouse inventory control are prepared with the nu data-processing nachincry. June I. Snith,1 clerk-treasurer of Willoughby-laatlake City School District, Uilloughby, Ohio urges school districts to investigate autonatien because of the benefits which these nachines offer. hloyoes are rah-ed fron clerical work to parforn nore inportant functions of education and detailed infatuation is -re readily available. as was not certain that the installation of autonstion equip-ant would reduce school costs. This school district's enthusiastic adoption of autoutic data processing nachinos is evident in that they developed a progran to train technicians in data processing. Uillian ll. Swisher,2 director of construction and naintenanca, 1"Workahle Ideas for School Businessnen," W, (February 1962). p. as. 111.14., p. as. 25 Phoenix Union high Schools and College District neintains that the saving in labor costs ohich is inherent in data processing installations will be absorbed by the labor needed to prepare the date for the counters in the area of construction and neintenance. A. r. 0'hesrn,‘ director of purchases, Chicago Public Bchools, clains that data processing procedures should be extended to the purchasing fraction. Cost Accounting Literature Coat accounting literature today is available only in periodical torn and in snall sepanted portions of the various general accounting publications considered earlier in this chapter. Therefore, this section will survey recent periodical literature in the field of school colt accounting. hang the authors who concern themselves with school cost accounting records, Gatje’ forges ahead with an advocation of a systen of cost accounts, and the allocation of indirect costs to product (direct) costs. his thesis is contained in the following chart: 11145., p. 92. 2George H. Gatje, "Let's Revise Our School Accounting Systen," Wire. (April 1955). v- 56. 26 INDIRECT COST ACCOUNTS A General Control 0 Buildings and Grounds Transportation T ngetgria S DIRECT COST ACCOUNTS Blonontary Education 0 Secondary Education T Adult Education mity Figure l. Gatje's allocation of costs. Hilll states, "Cost date is significant, not in relation to profit snaking, but only in establishing and improving comparative levels of local operating econony and efficiency." Criteria in; the selection of a specific type of equipment to neat a local situation is given by this author, and he provides nonparative studies of acquisition costs with rental coetc and cooperative coats of typewriter-adding-machines with cash register and punch-card nachinee. Malyring school cafeteria costs is the study conducted by 2:.ch u the Unified School District of San Jose, California. , anrative operating costs at thirty-one school cafeterias are arrived at through the use of lD-hey. printing calculators, an easy machine on which to train clerical enployeee. 1Frederick H. hill, "Machine Accounting, When and why," m M, (March 1952). p. 60. zloruu. Pratt, "Cost Analysis tor School Cafeteria," gm W. (hptenber-October 1959). ’9. 11-12. 27 Taylor1 advocates machine accounting utilization for appropriations, revenues, payrolls, and accounts payable records. She states tut not school districts of over 150 employees might well investigate possible economies through the mechanisation of payroll and budgetary accounting procedures. She feels this is particularly true if encunbrance accounting records are maintained. Conducting a study similar to that done by Taylor, as mentioned in the preceding paragraph, Iernath2 in his doctoral dissertation submitted to the University of Washington, states that beneficial uses can be secured from machine payroll operations only if at least 216 mloyeos are employed in school Operations. He presents \ recounendations relative to costs, methods, and results of present machine and manual bookkeeping practices. He notes that the work volume should indicate that the Inchine will be used a minise- of 201 of the time before initial installation of a machine is contemplated. Davies3 advocates that the computation of per-aquare- foot or per-cubic-foot costs of buildings should be supplemented with area/use analyses or time/use analyses for proper coat determination. I'Barbara Taylor, "Iachine Accounting in Small School Systems," WEI. (lurch use). PP- 47-48- 2Llewellyn Laurence Bernath, ”Payroll Purchasing and Budgetary Control Procedures in First Class School Districts in Washington," (unpublished Ed.D. dissertation, University of Washington, 1957).. 3mm- m». "Cost Analysis Should Consider Tine as won as Space,” We (October 1953). P. 56. 28 Snow The literature indicates that there is a great deal of interest in school accounting by various groups and authors. The survey shows that the probl-s in school accounting are well known; that numerous individual solutions are offered; and that recomendations for improvements are rsnpent with authors. The general accounting publications for school districts ingathered by the source of the literature appears as follows: a. Covert-ental publications by Federal and state units. b. Non-governmental publications by the Association of School Business Officials of United States and Canada and the American Institute of Certified Public Accountants. c. One textbook on public school fund accounting. d. Articles in varioua‘periodicals, such as mgigan School age. W. W. Shoal—bum “13-1". Wm. M. Wt Edna-to -- _e____.S hool and m. «c- Current interest in the aspects of general accounting problems is focused mainly on the following topics: a. Adoption of general accounting tsrninology standardisation. b. Data processing machine installations. c. Accounting for special funds. Cost accounting literature is available only in periodical fern and in sections of the various general accounting publications. In this 29 review of accounting literature, the general accounting‘uaterial exceeded the cost accounting natarial by five-fold which is indicative of the paucity of cost accounting literature. Interest in cost accounting centers on the following topics: a. Automatic equipment for cost information processes. b. Cost allocations. c. Cooperability of cost studies. The survey of the literature indicated that there is a great deal of interest in school accounting by vnrioua groups and authors at the present tine. Hovovor, less interest is evidenced by authors in cost accounting for school districts. The need tor a couprehensivc publication on cost accounting for school districts is apparent in this reviou of the literature. CHAPTER III STAGE I - COLLECTING AND REPORTING nAIA REGARDING THE OPINIONS 0P ICIDOL ADMINIITIAIIVB PERSOIIBL ON THE DBSIRABILITY 0? COST INFORMATION In order for a school district to feel the need for cost studies. the volume of financial transactions should be large enough to cause a feeling of inadequacy*vith the general accounting records due to their collective rather than analytical nature. If the amounts in the account classifications become large, or if the volume of financial transactions is constantly increasing, it becomes desirable to determine how and why these costs occur, to which objectives they are related, the reasonableness of these costs, the coat curves for certain educational products, the anticipatory costs of future educational aims. how costo compare with other school districts or with historical costs, the allocation of variable costs on an equitable basis. etc. The importance of cost studies such as these to school district financial management was the basis for investigation in this study. The first stage of this study involved a survey to determine if school administrators node use of cost records. and if there is a felt need for such records by school district officials in selected districts in the United States. The survey 30 31 involved a nail questionnaire based on a stratified sample of school districts in the United States. The Randon Sample Stratification of the sample according to states. and than counties, was decided in order to insure an unbiased sample. The following publications of the Office of Education were used to select the random sample: 8 atioti a of Cit 8c 8 t : Staf P i s d 1 Di - 8- - t as Cities. The Office of Education divides the number of school districts in the United States into four geographical areas. Table 1. Total school district population of 50 states and outlying parts of the United States. Region Total Population Northeast 7,248 North Central 42,418 South 6,670 What , 6,633 Outlying Parts of the united States 35 TOTAL ' 63,006 32 Schools not operating a school program and one-teacher schools are not included in the sampling of the total population. A school district should be of a sufficient sine in order to have the necessary veins of financial transactions which would lend themselves to costing procedures before there is a need to amplify the general accounting records. There would be no need for a one-teacher school to consider the addition of cost records to those records which they are already required to naintain to comply with the law. Accordingly. schools not operating a school progra- and one-teacher schools are alininated fro- the total population to arrive at the population used for sanpling in the survey. {fable 2. Total population used in the survey. W Total School District Schools One-Teacher total Population Pron Population of 50 Operating Schools Which Sampling Was States and Outlying No Drawn in the Survey Parts of the U. S. Progra- 63,004 7,351 43,787 11,866 The reader: saqle consisted of 21 (233 school districts) of.the total population of 11,866 school districts due to tins and cost linitations. The sample was stratified by states and by counties. t atific t b t Stratification by states equalled 207. of the total states, or 10 states, selected by counting every 5th state shown in the geographical 33 classifications on page 39 of Statistigg of State School Saga: ti Staf ils Pi - - which happens to fall as follous: Table 3. Stratification of sample by states. Total Schools Onc- State Papulation Iii-her of Operating Teacher Rom Which Sampling Regions and States School Us Schools was brown in Survey Districts Program lortheast . New Jersey 558 28 12 518 North Central: Illinois 2 .480 - 772 l . 708 Minnesota lo , 752 l .“S 2 , 831 453 ‘ South Dakota 3.383 929 2.775 (321) South: Florida 67 - ll9 ( 52) Mississippi 971 - * 1.088 (117) Texas 2,045 92 193 1,760 *No information available. West: California 1 , 973 36 410 l . 527 Nevada 176 ll 84 81 Wyoming 298 30 347 ( 79) TOTAL 16.703 2.594 8.631 5,478 Selection of 233 school districts (due to a limitation of 17 county-unit school system in Nevada) from the state stratification of 5,478 school districts equals 4.3% of the state population. As some Ichool districts operate more than one one-teacher school. the mother of one-teacher schools exceed the total umber of school districts in the states of Florida and Wyoming in the preceding table. 34 The selection of state stratification‘wos resolved due to the weight which should be accorded to state regulations governing types of schools. As state laws govern the type of school district accounting within their jurisdiction, it follows that if school district distribution in the United States were used without regard to state distribution whatever, the sample would be weighted in favor of certain types of state school districts as school districts are nore populous in some states than in others. Therefore, the sample is drawn proportionately from each state listed in Table 3. i. e., 24 school districts from each state (oncept Nevada),'which are selected on a random basis from the school districts listed in t D o - 19 8-1 59 - C tie gag Citing. at i t ti The selection of 24 school districts within each of 10 states is further stratified by counties. for example, Illinois lists 102 counties; therefore, every 4th county listed in the Edggation Directogy was selected. In each of these counties, one school district was selected by assigning numbers to the school districts within the county, and drawing these numbers at random. In Nevada, the county-unit system is in use and, consequently, the sample included the entire 17 counties in this state. ‘Iailod questionnairos'wore sent to a sample of 233 schools as shown in the listing in.Appendin Ad In sixteen school districts, two questionnaires had been.mniled; one to the superintendent in charge of the elementary schools and one to the superintendent in charge of the secondary schools, making a total of 249 nailed questionnaires. Second 35 and third requests were mailed in some instances making a total of 385 mailed letters. The first of these requests was mailed in October 1959 and the last reply was received in February 1960. The Questionnaire The questionnaire explores the basic features of the accounting structure through questions which lead the respondent from an initial consideration of the general accounting records to an expreseion of an opinion on the desirability of cost accounting information. The reaction of school administrators to a sequential development of the importance of cost accounting records was the determining factor in the placement of each question. The questionnaire was tested during the School Business Officiala' Workshop held at liichigan State University during July 1959. Each point on the blank was discussed with members of a problems discussion group. The group unaninusly approved the questionnaire. The questionnaire and covering letter, and a follow-up letter are shown in Appadix A. Procedureo for Statistical Analysis The answers to the questions on the returned questionnaires were tabulated on ID! cards by the Michigan State hiveraity Computer Laboratory for processing on the MISTIc Gmuter. The writer test- checked the tabulation of the information shown on the IBM cards to the questionnaires through a 107. randon check. No key punch errors were discovered. Based on this auditing procedure, it can be sssumed that the cards were correctly punched. 36 The IIITIB Digital Mater cequted the product moment correlation, the variance-covariances, means and standard deviations for each variable shown in Table 4 on the succeeding page, as prograsned on Library Ioutine fill-IN) dated July 20, 1961. The tape produced by the cquter was processed through a printing machine which showed the correlation matrix (triangular) in the first calm, the covariance natrin (triangular) in the second column, than the means and the standard deviations printed in two parallel colunms. The triangular matrix produced by the printer showed the coefficient of correlation of variable 1 to l; l to 2, 2 to 2; l to 3, 2 to 3, 3 to 3; etc. There woo no attempt nods to check the computational accuracy of the KIBTIO. It is presued that the technical staff at the Laboratory assumes this reqponsibility. lo analysis of the standard deviations, variances, or co-variances of the sample is contemplated. These statistical tools are not used in this study, except for their use in the computation of the coefficient of correlation, because it is felt by the writer that the tine which would be spent on the expansive task of analysing these measures of variability for the 23 variables included in the questionnaire is not warranted for the results which might be obtained. The coding of the material on the questionnaire in 79 columns of 80 available colunms on the II! card assigned the following positions to the variables. These positions will be used to identify each variable in the study. 37 Table 4. Identification of varieblea used in the study. Description of Variable Position Blenentary schools - Nuflaer of schools Elementary schols - hinder of teachers Secondary schools - Huber of schools Secondary schools - Huber of teachers Cos-mity colleges- Nunber of schools Co-nmity colleges- umber of teachers Blenantary and secondary - lube: of schools Elementary and secondary - Hunter of teachers Elementary, secondary, and comnity college - Nunber of schools Elenentery, secondary, and cmity college - Number of teachers Secondary and coanunity college - labor of schools Secondary and community college - Hider of teachers Average daily enrollnent Annual per capita costs Nunber of general accounting records in use Number of cost accounting records in use Types‘ of mechanical equipment available lhnlber of employees assigned to duties of a bookkeeping nature ‘l'ypes of nethods used for averaging expenditures Questions: 1. Do you have cost approximations on the teaching of ccrtein fundamental subjects (such as spelling, handwriting, physics, etc.) to each student in your systen? 2. Do you have cost approninstions on the costs of non-teaching items (such as study hell supervision, library services, guidance, etc.) to each student in your systen? 3. Do you have your employees (adninistretive, instructional, clerical, custodial, etc.) keep time reports on g; tine worked by then? 4. Have you ever felt that information of the above type would be useful in discussions of school expenses with P. ’l‘. A., faculty, or citisens' groups? DONOUItFuNO-d 20 21 22 23 38 Due to the linitation of 80 colunns on the Ill.card, a "yes" answer was indicated by the nunber "l"; a "no" answer was indicated by the nunber "2“ on each of the last four questions. Thus, the cenputer showed the coefficient of correlation of all of the variables in the survoy‘with the predendnating answer to the last four questions. Those predominating answers are inportant in the discussions on the significance of the coefficients of correlation between the variables which is presented in the section on findings. 'fhe predeninaace of either answer to the interrogative variables is shown in the following table. Thble 5. Iredominsnce of affirmative and negative answers to interrogative variables. Aglgggg gag rercgggages variable Io Predondnating Total Yes He losponse Answer 20 180 5 171 4 Re 100.01 2.81 95.01 2.21 21 180 15 161 4 No 100.01 8.3% 89.52 2.21 22 180 27 147 6 No 100.0% 15.0% 81.7! 3.31 23 180 94 74 12 Yes 100.01 52.21. 41.12 6.71 39 Efficient og ggrrelgtig "Correlation.nay be defined as the sonnet of relationship between paired facts or of the tendency of two or more variables, or attributes, to cenconitant variation."1 If the correlation is positive, then if one of the variables increases, so does the other; if the correlation is negative, than if one of the variables increases, the other variable decreases. If they increase together, the measure is shown as +1.00 for perfect positive relationship through .00 for none or pure chance; if one variable increases as the other decreases, this can be shown as -l.00 for perfect negative relationship. The .191»: fern for showing the coefficient of correlation “:2 r 'I .72; I when r neans coefficient of correlation I nsans the sun of (Greek symbol) x means the deviations of x variable from its naan y nasns the deviations of yyariable from its mean a; means standard deviation of at variable a, means standard deviation of y variable 1c. V. 04.11. od :1 c tie s atisti s, (New York: Prentice-Hall, Inc., 19 , p. 104. 1214., p. 107. 40 The synbol r is sometime called "coefficient of linear correlation"1 or fearson r after its author, Karl Pearson. The Michigan State University Ooaputer Laboratory describes the following ferrule in its instructional material for the library routine which was used in this study:2 I (x - 'i) (Y - 'i) ”we " 11? (x - ‘1’): m - '1?>1’_'_7‘*T2 when rxy nosns the product monent correlation coefficient 3 means the one of (Greek synbol) 1: means a gross score or measure of a variable Y means a gross score or measure of a variable imam theneanof a suple T eases the mean of a sample l/2 moans square root In machine work for computational convenience, the formula is changed to show gross scores instead of the deviations because there is no need to heap the Ila-bars smell and rounding errors in division and square root are performed as late as possible in the process, thus, the IISTIC Cmputer used the following formula: 1lolen M. Walker and Joseph Lev, Stasggigsl Inference, (New York: Henry Holt and Conpsny, 1953), p. 233. 21bid., p. 233. 41 em - m 'xy ' ( [3:11 - (mg [m2 - (mzj )“2 when rxy means the product moment correlation coefficient a means the sample size 3 means the sum of (Greek symbol) X means gross score or measure of a variable Y moans gross score or measure of a variable 112 means square root 8 1 errors Generally, it can be asst-ed that the distribution of random errors has a negligible effect if the sample is large (that is, the positive and negative errors tend to balance each other). A large sample occurs when the number of cases in a sample is 30 or more.1 As the nuber of cases in this survey is 180, the following formula may be used to find the standard error:2 1 d: - (N‘1)1/2 when d means standard error r means coefficient of correlation l/2 N means square root means number of cases in a sample -——_ _; llbid., p. 251. 21b;§.. p. 252. 42 thus, 1 (iso-i)1/2 1 (179)1/2 13.6 .- .0746 If the true standard error in the population is .00, then the standard error in this study due to random errors is .0746, indicating that the stated values of the coefficients of correlation obtained in this study are within .0746 of their true value. For exmnple, dividing . the coefficient of correlation of Variable 23 to Variable 22, which is positive .1989 (according to the findings), by .0746 gives 2.67, the value of the coefficient in terms of its standard error. Reference to a table of normal curvel shoving heights, areas, and corresponding ratios of areas of a normal distribution corresponding to standard deviation or error units indicates that the chances are about 263 to 1 that a value of positive .1989 or more vould not be obtained. laden. 22, cit” p. 259. 43 The Findings The results of the survey are presented as: (l) interpretative considerations, (2) su-arisstiens, and (3) statistical analyses. lupplanentary material includes a follow-up study, a report of personal interviews, and an examination of the interrelations of the variables in this study as a source for answers to pertinent questions in the field of school district accounting. W In order for the reader to view the findings in their true perspective, it is necessary to show: (1) the weight of the various school district sizes sampled in the survey, and (2) the effect of the computation of the noses on the resulting computation of the coefficients \ of correlation by the M18110 Computer. e of t vs io c d trict sizes s led in the surve . The questionnaires which were returned by the 174 school districts were su-arisod by city population groupings to indicate which population group has the greatest determinate weight in the results of the survey. Table 6 on the succeeding page shows that approximately 552 of the . school districts (exclusive of county-units) which cooperated in the survey represent population groups of less than 5,000 inhabitants; 'Pprouinstely 75! represent city populations of less than 10,000 inhabitants. (.4 Table 6. Various school district sires angled in the survey. 0W legions Lose 2,500 5,000 10,000 25,000 100,000 and Total than to to to to or States 2,500 4,999 9,999 24,999 99,999 Over Northeast - New Jersey 14 - 7 4 3 - - lerth central: Illinois 20 3 4 8 2 2 1 Minnesota 23 2 8 6 5 2 - South Dakota 15 9 3 - 2 1 South: Florida (16 county-units not included) Mississippi 13 7 4 - - , 2 - Texas 18 2 5 7 3 - l itst: . ‘Californis 19 3 6 2 5 2 1 Nevada (14 county-units not included) flyoning 22 5 ll 1 4 l - TOIAL 144 31 48 28 24 10 3 PER CENT OF TOTAL 100.001 21.532 33.331 19.442 16.671 6.947. 2.091 Note: 30 questionnaires from county-units are not included. Effect of the cautatig 3; 52 m g the regultgg cmutatigg o the so i i of corre at b t HISTIC ute . The means (sverages) cowutod by the IIS‘I’IC Computer are lower in all cases because the computer used the total number of returned quedtionnairos (180) as the divisor without taking into account these cases where no response was indicated. Technically,‘with standard program-dug there is no other Isthod available to the researcher for computing moans with the use of the electronic nechine . 45 The averages shown by the M18210 cuputer and the averages developed by the writer appear in Table 7. Based on the evidence, it may be seemed that all the coefficients of correlation reported in this study are lower than actual. Table 7. Marion of averages computed by the 1118110 Computer and by the writer of selected items on the questionnaire. do at! t b: Numberof Item Questionnaires MISTIC Writer Bearing No Response Average daily enrollment 4,165 4,322 7 Annual per capita costs $345.60 $358.91 12 Huber of general accounting records maintained by reporting units 8 9 3" Haber of cost accounting records maintained by reporting units 2 3 34 Types of mechanical equipment available 2 2 l labor of employees assigned to duties of a bookkeeping astute - 3 4 7 46 W Sun-arias of the answers to the questions by respondents participating in the survey appear in Tables 8 through 13. The itons emarieed include masher of replies returned, types of educational programs offered by the angle, general accouting records used by reporting school districts, cost accounting records in use by reporting school districts, methods of averaging expenditures, and types of mechanical equipment used by the respondents. Tabulation of the affirmative and negative answers to the last four questions on the questionnaire is shown in Table 5. denote placed on the questionaires are classified affirmatively and negatively with respect to the desirability of cost information and are identified by states only. Some errors and inaccuracies by the responduts in completing the quastiouaire bee-e obvious to the writer during the compilation of the smmaary figures. Some of the errors probably arose from inadequate knowledge by the respondnts relative to accounting terminology and accounting racords. The questionnaires were partially completed in some cases. It is felt by the writer that portions were left incomplete because the respondents did not have the figures available or they were not able to develop them. Gross errors were conpletely thrown out and not used in any way. Instances of gross errors occurred in such cases as the reporting of the annual per capita costs at $6099 in a California school district, 85.00 in an Illinois school district, and 82.79 in a l'lorida district. 47 There was cooperativoness and interest shown on the part of the respondents in the returning of the questionnaires and in the completing of the detailed questions. Ihny of the respondents noted that they were looking with interest toward the final results of the survey. In all cases, the questionnaires had been sent to the superintendent of school in the school districts and to the county superintendent of schools where the cotmty-unit system was in use. however, answers were received from individuals with a wide range of title descriptions, vis., clerk, director of research, county super- intendent, director of business affairs, secretary to superintendent, business nmager, general supervisor, superintendent, bookkeeper, ‘district secretary, etc. The requests, replies, and per cent of replies returned are shown in Table 8. \ Table 8. Requests, replies, and per cent of replies returned. W lumber umber of Per cent of Regions and States of Replies Replies Requests Returned Returned Northeast - New Jersey 24 14 58.3% North Central: Illinois 24 20 83.3 Iinnesota 24 23 95.8 South Dakota 24 15 62.5 South: Florida 24 16 66.7 Mississippi 24 13 54 . 2 Texas ' 24 , 18 75.0 West: California 24 19 79.2 Nevada - l7 14 82.4 Wyoming 24 22 91.7 m 233 174 74 . 62 — 48 Tabulation of the 180 questionnaires from the printed IBM listing of the information received from the 174 participating school districts disclosed that these districts offer the educational programs shown in Table 9. The information is given in the order shown on the questionnaire . Table 9. Types of educational programs and number of schools and teachers in these classifications. Number of Father Number Type of Educational Progren Classifi- of of ations Schools Teachers Elementary only* 49 23.31 523 28.17. 4,487 14.12 Secondary only 29 13.4 64 3.4 2,271 7.1 Continuity college only 1 .5 2 .1 29 .1 Elementary and secondary 119 56.4 989 53.3 18,342 57.6 Bluentary, secondary and connity collega'h 11 5.4 274 14.8 6,459 20.2 Secondary and comity col lege 2 l . 0 6 . 3 265 . 9 TOTAL 211 100.0% 1,858 100.02. 31,853 100.07. r' * he school district is listed in the amber of schools but no figure was given for the number of teachers. The daily average enrollment (either average daily attendance or average daily membership) for 173 returns showed a total of 747,705 pupils or an average of 4,322 pupils per reporting unit. Seven of the question- nairos failed to show this information. 49 Annual per capita costs for 158 reporting units shoved a total of $56,707.52 or an average of $358.91 for the school districts reporting this figure. Twelve qnostionnaires did not show this information. Per capita costs ranged from a low of $45 for a "separate" school district in lissisaippi to a high of $693.19 in a Rev Jersey teanship school district. The general accounting records used by reporting schools are shoon in Table 10. The average nunher of records nointained by each unit is approxinately 9. Notations on six of the returns indicated that seven of the school records were kept in the county offices for the school district. \ Table 10. General accounting records used by reporting units. Type of ieoord lumber Per cent voucher registers or disbursement ledgers 169 11.2% Cash receipts journals 163 10.8 School lunch records ' 161 10.7 Payroll journals 150 10.0 Student activities records 145 9.6 Individual earnings records 142 9.5 Petty cash records 126 8.3 Revenue ledgers 102 6.7 Bond registers 98 6.5 Appropriation or encumbrance and expense ledgere 91 6.0 Insurance registers 83 5.5 Property lodgers 53 3.5 Note registers 17 1.1 Other (general 1edger, vendor control ledger, etc.) 10 .6 TOIAL 1,510 100.0% 50 cost accounting records in use by 146 reporting units total only 421 records as sheen by Table 11. The average number of cost accounting records used by each unit is approximately 3. Table 11. Cost accounting records used by reporting units. Type of Record Nunber Per cent Transportation cost analyses 129 30.7% Payroll allocation schedules 116 27.6 Cafeteria costs analyses 94 22.3 Expense allocation schedules 55 13.1 ' Jab cost ledgers 24 5.7 other (instruction, cost per school, attendance) 3 .6 TOTAL 421 100.0% School employees in the 173 reporting units totaled 625 persons, which indicates approximately 4 employees for each unit. These employees kept a total of 1,931 bookkeeping records. Maintenance of certain bookkeeping records involves more tine than is spent on other bookkeeping records, so there is no basic for any statement involving the number of records kept by each employee. The methods of averaging expenditures in use by 163 reporting school units is shown in Table 12. Seventeen units, or 9.4%, did not respond to this question. 51 Table 12. Methods of averaging expenditures. Method Head Hunter of Per cent Respondents Per pupil units 143 79.51 weighted ale-entary classroom units 6 3.3 Grade or course units 4 2.2 Other 10 5.6 TOTAL IIILIIO 163 90.61 No response 17 9.4 TOTAL QUISTIONIAIIIS 180 100.02 A total of 383 types of mechanical equipnent was reported by 179 r‘espondents as shown by Table 13. The tabulation discloses that an average of 2 types or nechenical equip-ant was available to the school districts. Table 13. Types of mechanical equip-ant used by reporting units. Type of Hachine “or of Per cent Respondents Adding nechines 176 46.0% Calculating nachinee 122 31.9 Bookkeeping,nachinea 63 16.4 Data processing equipment 10 2.6 Other (Verifax, Thar-afar, Addresaograph, etc.) 12 3.1 TOTAL 383 100 . 07. L 52 lo request was made to indicate the m of each type of equipment available to each reporting unit. Only those machines which could be utilised in accounting work were listed in the questionnaire. No attempt was made to request information on other types of office equipment, such as typewriters, mineographs, spirit duplicators, etc. Districts which reported the availability of data processing equipment were: San Diego, California Corpus Christi, Texas Clark County, Invade Fort Iyers , florids Ileynesboro, lississippi Santa Ana, California Austin, Iinnesota Killbura Township, law Jersey Drowerd County, Florida lission, south Dakota - Meaty-seven respondents placed consents on the questionnaires indicating affirmatively or negatively their reaction to the desirability of cost studies. These cements are identified by states only. Affirmagin gonent . The affirmative co-ents were as follows: This information would be useful to the superintendent and board of education in future p1ams.--Illinois. We prepare special subject area reports from time to time for the purpose of re-evaluating our sarvices.--Texas. Probably, if understood.--california. Occasionally.--0a1ifornia. We are gradually going to more breakdowns.--lllinois. We are new involved in changing our accounting practices with the idea of incorporating cost accounting records. I will be interested in the results of your survey.--lllinois. Sufficient account classifications have been established to develop coat approaimstimis in general areas of instruction, such as science, library, lnglish, ete.--californis. 53 Whenever information is needed, our records make it possible to obtain cost analyses.--Illinois. we do estimates for discussion purposes from time to time in these areas.--lllinois. I have often felt the need for a more detailed accounting so that breakdown costs could be more easily determined.-- Minnesota. W. The negative co-ents were as follows: Public cannot profit by such detailed information in comparison with the cost.--!lorida. Some things are not practical because of school volume limitations .--llissisaippi . Inadequate clerical force prevents cost studies except in general classifications: administrative, instructional, high school, and elementary.--liissisaippi. We have too few people to do as much cost accounting as we would like and actually need to do.--Texas. Limited bookkeeping and clerical help necessitates elimination of many desirable types of information. Trained personnel unavailable.--Tenas. The time factor eliminates much of the above data. We encder against budget appropriations for each department in each school, a total of 1,000 different categories.“ california. Ivan though the information would be helpful at certain times, I don't think it would justify the expense of obtaining it.--llevada. Would be quite time consuing and too expensive for our analysis .--levada . (Answer to last question.) But not worth expense of compilation.--llyoming. The self-contained classroom, variances in class size, differences in salary schedules, etc., would make such information of little value in its practical application.-- Illinois. 54 Our schools are organised upon too small an enrollment basis (population sparse and topographically hilly) so that personnel and efficient accounting procedures (and machines) are difficult to procure.--Illinois. I do not believe that the data proposed would be accurate enough to justify the time and cost.--}iinnesota. Too difficult to keep. Personnel would object to keeping this record.--lew Jersey. Above analyses (are) based on some business practices which cannot be correlated to school performances or job distributions.-~New Jersey. This blank does not fit a prairie state or rural community of the kind 1 supervise.—-South Dakota. Every report of a cost analysis nature is started to fit the needs of the moment. So many relevant factors occur in each cost analysis that to do an honest job of reporting is pretty nearly impossible. Mostly they are just time conv suming .--Iiinneaota . Our growth has been as rapid (during) the past few years (that) we do well to keep up with routine; the above would be valuable to have but we haven't (the) tune (nor) money to get it.o-¢alifornia. The cenments are revealing as to the problems which confront school adndnistrators. Their enlightening comments show that they are giving thought to the various aspects of financial management. The last sum-urination concerns the number of days in the school session in the selected school districts. The number of days in session use requested from the respondents to ascertain whether a normal school period was in force in these school districts. It was determined that the number of days varied from a low of 170 to a high Of 190, both of these extremes being in South Dakota. 55 In conclusion, these sw-arisations present a composite picture of the types and characteristics of the school districts included in the sample. The opinions of personnel in school districts of varying sine and educational program types regarding the value of cost records are statistically analysed in the next section. Stat igtigal glue; The statistical analysis of the information on the question- nairea moves from the not important information received from the respondents to subordinate information. As mentioned in the section on statistical procedures. each item on the questionnaire is considered a variable and the coefficient of correlation for each variable was comuted by the HISTIG Mister at Michigan State University Computer Laboratory. The four most significant relationships in this study are those of Variables 23. 22, 21. and 20. respectively (as defined in Table 4), to the other variables. These relationships will be considered at the beginning of our statistical analysis. It is to the reader's advantage to use Table 4 as a reference in reading this section. Also. the reader should keep in mind that the purpose of this statistical analysis is to determine the opinions of school personnel toward cost studies and to find the environmental state for the expression of the affirmative and negative opinions. As the succeeding material is based on the significance of the coefficients of correlation between variables, it is necessary for the reader to understand that these correlations suggest relationships but do not show causations. 56 It should be mentioned that there are errors in the gross scores of these variables due to several incomplete (no response) answers to the questions by the respondents. Consequently, the values shown may be lower than the actual or true values. (See Table 7). i f riabl - esti : e er felt that information W of the above type would be useful in discussions of school expenses with I. T. A“ faulty, or citizens gouge? The correlations suggest that school districts which already require proper time records from their employees and have deveIOped cost analyses on teaching and non-teaching items are inclined to feel that cost records are important. As the number of general accounting records and types of mechanical equipment used increases, the favorable- ness of the respondents toward costing procedures increases. As the average daily enrollment and annual per capita costs increases, the favorableness of the respondents towards costing methods decreases. This is due to the unfavorable disposition toward costing procedures of those school districts which operate secondary schools only, and from a lesser number of school districts which operate the three levels of elementary, secondary, and community colleges. The amount of work involved in obtaining,coat studies in these types of schools is much greater than that to be done in elementary schools. 0n the other hand, respondents from.school districts operating elementary school only, community colleges only, and elementary and secondary schools, and secondary and community colleges were favorably disposed toward the use of cost accounting data. 57 As the number of cost accounting records in use, and the number of bookkeeping employees increases, the favorableneas of the respondents towards costing methods decreases. This suggests a resistance by the respondents to the addition of bookkeeping employees for the purpose of cost studies. The positive and negative correlations affecting Variable 23 are given in Table 14. Table 14. Coefficients of correlation of variable 23 with other variables. Variable Coefficient of Correlation Description POSITIVE l .0103 Number of elementary schools 5 .0000 Number of community colleges only 7 .0066 Number of elementary and secondary schools 8 .0484 Number of teachers in elementary and secondary schools ll .0600 Number of secondary and community colleges 12 .0545 Nuber of teachers in secondary and commity colleges 15 .0291 Number of general accounting records in use 17 .0214 Types of mechanical equipment available 19 .0078 Methods used for averaging expenditures 20 .1856 Have cost approximations on fundamental subjects 21 .1860 Have cost approximations on non-teaching items 22 .1989 Employees keep time records on all time worked NIGAIIVB 2 .0241 Number of teachers in elementary schools 3 .0320 Number of secondary schools 4 .0427 Number of teachers in secondary schools 6 .0430 Number of teachers in community colleges 9 .0468 Number of elementary, secondary schools and community colleges 10 .0486 Number of teachers in elementary, secondary schools and community colleges. 13 .0276 Average daily enrollment 14 .0133 Annual per capita costs 16 .0001 “or of cost acceuting records 18 .0321 Number of bookkeeping employees 58 L10 1. m _ "u.t1.n3 " L‘L '1“ "at ‘ "13M gvmi is ati - i. t .rtgonal erica gt..i. . _ thme r s a time r b t 7 . . . Negative answers (81.7%) by the respondents predominate in answer to this question. The respondents also strongly indicated that they did not use cost approximations. This fact is confirmed by the strong positive correlations of variables 20 and 21, which inquire about the use of cost information, with Variable 23. Community colleges and the multiple units of elementary and secondary schools show positive correlations indicating the unfavorable attitude of these units toward the use of time reports. Also, as the annual per capita costs increase, the use of time reports by school districts in this sample decreases. Time reports are favored by districts having elementary schools only, secondary schools only, the multiple units of elementary, secondary, and community colleges, and secondary and community colleges. The more advantageous record-keeping positions of those school districts which have increasing availability of bookkeeping personnel, mechanical equipment, and accounting records, as well as larger average daily enrollments, show a favorable attitude toward the use of time reports. The positive and negative correlations affecting veriable 22 are given in Table 15. 59 Table 15. Coefficients of correlation of variable 22 with other variables. Veriable Coefficient of Correlation Description POSITIVE 5 .0000 lumber of community colleges 6 .0333 Number of teachers in community colleges 7 .0669 Number of elementary and secondary schools 8 .0881 Number of teachers in elementary and secondary schools 14 .0744, Annual per capita costs 19 .0528 Methods used for averaging expenditures 20 .4347 Have cost approximations on fundamental subjects 21 .3188 have cost approximations on non-teaching items NEGATIVE 1 .1002 Number of elementary schools 2 .1008 Number of teachers in elementary schools 3 .1419 Number of secondary schools 4 .1269 Number of teachers in secondary schools 9 .1565 Number of elementary, secondary, and community colleges 10 .1534 Number of teachers in elementary, secondary, and community colleges 11 .0833 Number of secondary and community colleges 12 .0609 Number of teachers in secondary and community colleges 13 .1091 Average daily enrollment 15 .0195 Number of general accounting records in use 16 .1685 Number of cost accounting records in use 17 .0383 Types of mechanical equipment available 18 .1551 Number of employees assigned to duties of a bookkeeping nature 60 approximations on the teaching of certain fundamental subjects such as s ellin hendwrit h sics,_etc.) to each student negative responses to these two questions (95.01 and 89.52, respectively) predominate the answers to these questions. a strong positive correlation.of .7105, as shown in Table 16, between these two questions enforces the reliability of the coefficients of correlation of these two similar measures to the other variables. A comparison of the correlations shows that positive and negative coefficients appear for the same variables in relation to these two questions with the exception of the variable of average daily enrollment. Negative correlations appear between cost approximations used by these school districts and the two variables inquiring about the number of cost accounting records in use and the types of mechanical equipment available. This use expected due to the predominance of "no" answers to these two questions which, conversely, indicates a positive correlation‘with the "yes" answers; that is, a favorable correlation exists between the use of cost approximations and the use of cost accounting records and mechanical equipment. 8choo1 districts having multiple units of elementary and secondary schools, and elementary, secondary, and community colleges are favorably disposed toward the use of cost information for both fundamental and non-teaching items. The correlations affecting Viriables 20 and 21 are given in Table 16. Table 16. 61 Coefficients of correlation of variables 20 and 21 with other variables. W Coefficient Variable of correlation - Description Juneau. 20 21 NSITIVE 1 .0548 .0546 number of elementary schools 2 .0277 .0135 Number of teachers in elementary schools 3 .0109 .0306 Number of secondary schools 4 .0059 .0174 Nunber of teachers in secondary schools 5 .0000 .0000 lumber of community colleges 6 .0171 .0242 Number of teachers in comunity colleges 11 V02“ .0399 Number of secondary and calm-unity colleges 12 .0303 .0430 Harbor of teachers in secondary and comunity colleges l3 - .0026 Average daily enrollment 14 .0440 .0666 Annual per capita costs 15 .0198 .0544 Ember of general accounting records in use 18 .0336 .0496 labor of employees assigned to duties of. a bookkeeping nature 19 .0998 .0583 lethsds used for averaging expenditures 20 1.0000 .7105 Have cost approximations on fundamental subjects mm 7 .0914 .0593 Number of elementary and secondary schools 8 .0456 .0136 Nutter of teachers in elementary and secondary schools 9 .0440 .0194 Number of elementary, secondary, and co-unity colleges 10 .0373 .0167 Huber of teachers in elenentary, secondary, and community colleges 13 .0351 . Average daily enrollment 16 .0531 .0541 Huber of cost accounting records in use 17 .0400 .0478 Types of nechanical equipment available included in the gtgdy. 62 e a ai 01 t t to The correlations shoved all positive relationships which is a natural consequence. As'may be expected, the largest enrollments are in school units having elementary, secondary, and community colleges. Table 17 indicates the areas of high and low average daily enrollments in the public schools. Table 17. Coefficients of correlation of variable 13 with other variable. W variable coefficient of Correlation Description POSITIVE l .1590 Number of elementary schools ' 2 .3382 Number of teachers in elementary schools 3 .3072 Number of secondary schools 4 .3521 Number of teachers in secondary schools‘ 5 .0000 Number of community colleges 6 .0682 Number of teachers in community colleges 7 .4059 Number of elementary amd secondary schools 8 .4788 Number of teachers in elementary and secondary schools 9 .7238 Number of elementary, secondary, and community colleges 10 .7363 Number of teachers in elementary, secondary, and - community colleges ' 11 .0379 Number of secondary and community colleges 12 .0375 Number of teachers in secondary and community colleges 63 v able -- its The correlations shown in Table 18 indicate that annual per: capita costs decrease most rapidly with the addition of elsnentary schools and decrease least rapidly with the addition of secondary schools. This finding coincides with the general assumption that per capita costs are apt to be lower in elmsentary schools than in secondary schools. Also, there is the indication that annual per capita costs decrease with increases in average daily enrollment which shows that costs are apt to be less in school districts with multiple units of elementary, secondary, and community colleges where the enrollments are the largest. In this analysis, Variable 5, the number of enmity colleges, was the only variable to shoe a positive relationship. This correlation appeared as .0000 indicating pure chance. Table 18. 0oefficients of correlation of variable 14 with other variables. M Variable Coefficient Description of Correlation noun: 1 .0517 lit-her of elementary schools 2 .0009 Huber of teachers in elementary schools 3 .0148 “or of secondary schools 4 .0157 Number of teachers in secondary schools 6 .0117 lit-her of teachers in co-Inity colleges 7 .0420 Huber of ole-entary and secondary schools 8 .0323 “er of teachers in elementary and secondary schools 9 .0220 Nuber of elementary, secondary, and community colleges 10 .0084 later of teachers in elenentary, secondary, and col-unity colleges 11 .0457 Nder of secondary and comsunity colleges 12 .0346 111-her of teachers in secondary and «unity colleges 13 .0285 Average daily enrollment 64 o veria e 15 16—-N e of enera on in rd c i oco d i use Due to the similarity of these two variables, their correlations with the other variables will be presented at the sane tine. A strong positive correlation of .0477 between Variable 15 and 16 is a natural consequence resulting from the interdependence of general and cost accounting records. Therefore, this finding points out the reliability of. the coefficients of correlation of these two similar variables to the other variables in the study. The positive correlation of Variable 15, the amber of general accounting records in use, with the other variables is stronger than that of Variable lo, the mflgor of cost accomting records in use, in every case except in school districts with mltiple units of elementary, secondary, and cos-entity colleges. Evidently, school districts with these multiple units employ cost accounting recorde to a larger extent than the use of general accounting records. The umber of accounting records in use decreases so the nubor of elementary schools increases indicating the unfavorable disposition of these ochool districts towards the use of both types of accounting records. An average daily enrollment increases, the use of all types of accounting records increasee which is a consequence of larger enrollments. Also, annual per capita coets decrease as the umber of accomting records increase which may be an indication of the managerial efficiency present in a school district which makes considerable use of accounting records. As a conclusion, the correlations show the wider use of general 65 accounting records as compared with the use of cost accounting records. The positive and negative correlations affecting variables 15 and 16 are given in Table 19. Table 19. Coefficients of correlation of variables 15 and 16 ‘with other variables. Coefficient Variable of Correlation ~ Description varigbles 15 16 POSITIVE 2 .1100 .0230 Number of teachers in elementary schools 3 .1009 .0432 Number of secondary schools 4 .1357 .0210 Number of teachers in secondary schools 5 .0000 .0000 number of community colleges 7 .1932 .1041 Number of elementary and secondary schools 8 .1937 .0987 Number of teachers in secondary and elementary schools 9 .1676 .1887 lunber of elmntary, secondary, and coununity colleges 10 .1562 .1882 Number of teachers in elementary, secondary and community colleges 11 .0819 .0574 Number of secondary and community colleges 12 .0894 .0392 Number of teachers in secondary and community colleges 13 .2869 .2335 Average daily enrollment 15 1.0000 .4477 Number of general accounting records in use IBGAIIVE 1 .2295 .0955 Number of elementary schools 6 .0103 .1084 Number of teachers in community colleges 14 .0837 .0071 Annual per capita costs 66 Agglygis of vgriable‘1;;-Iypeg cg mechanicgl eguipment available Table 20 shows that strong positive correlations appear between increases in the average daily enrollment and the number of general and cost accounting records in use, and the increase in the types of mechanical squipnnt available. These correlations are to be expected for these _ ‘4'. factors are concomitant. The school districts having the larger average daily enrollments (viz., the multiple units of elementary and secondary schools, and elementary, secondary, and co-manity colleges) show strong correlations with increases in the types of mechanical equipment available. This tendency can be expected due to the need for more equipment as enrollment increases. Negative correlations appear in comparisons with Variable l, the number of elementary schools, and Variab1s14, annual per capita costs, as .0550 and .0398, respectively. This shows that elementary schools have less need for mechanical equipment and that schools with smaller annual per capita costs make greater use of mechanical equipment. Table 20. Coefficients of correlation of variable 17 with other variables. W Variable Coefficient . Description of Correlation POSITIVE 2 .1891 Number of teachers in elementary schools 3 .1598 Number of secondary schools 4 .1979 Number of teachers in secondary schools 5 .0000 Number of community colleges 6 .1553 .Number of teachers in community colleges 7 .2664 Number of elementary and secondary schools 8 .2552 Number of teachers in elementary and secondary schools 9 .2488 Number of elementary, secondary, and community colleges 10 .2309 Number of teachers in elementary, secondary and community colleges 67 ran. 29. W posum, sunrise 11 .1441 Number of secondary and community colleges 12 .1331 Number of teachers in secondary and community colleges 13 .4066 Average daily enrollment 15 .3876 Number of general accounting records in use 16 .2875 Number of cost accounting records in use Anslgis of variable 18--Number of employees assigned to duties of a hoohh_a_o_ping nsterg Strong positive correlations appear between Variable 18 and average daily enrollment and the number of teachers in these school districts indicating that as enrollments and the number of teachers increase, the number of bookkeeping employees also increases. Positive correlations with Variables 15, nunber of general accounting records in use, and 17, types of mechanical equipment available, suggest the possibility that the larger use of general accounting records and mechanical equipment creates more jobs for these employees. It also appears that less of these employees are engaged in cost accounting work than in general accounting work. A negative correlation of .0122 for Variable 6, number of teachers in cenamnity colleges, may indicate that community colleges employ less bookkeeping employees than other types of schools. The positive correlations affecting Variable 18 are shown in Table 21. A neptive correlation of .0021 for Variable 16, annual per capita coats, shows that as per capita costs decrease, the number of bookkeeping employees increases. This may be due to increased managerial efficiency. Table 21. 68 Coefficients of correlation of variable 18 with other variables. variable Coefficient of Correlation Description POSITIVE 1 .3943 Number of elementary schools 2 .6647 Number of teachers in elementary schools 3 .6831 Number of secondary schools 4 .7375 Bomber of teachers in secondary schools 5 .0000 Number of community colleges 7 .1271 Number of elementary and secondary schools 8 .1860 Nmber of teachers in elementary and secondary schools 9 .4631 Number of elementary, secondary, and community colleges 10 .4841 Number of teachers in elementary, secondary and community colleges 11 .0109 Number of secondary and community colleges 12 .0065 Number of teachers in secondary and community colleges 13 .7763 Average daily enrollment 15 .2593 Number of general accounting records in use 16 .1431 Number of cost accounting records in use 17 .2971 Types of mechanical equipment available ati ical es The conclusions which are derived from the statistical analyses of the foregoing data are treated in a special study which examines the interrelations of the variables as a source for anowers to pertinent questions in the field of school district accounting. The examination is an outcome of this statistical analysis but because of its importance to the entire findings, it is treated in a topical section at the conclusion of the findings. 7? .. . , .|>.N .,_.. 0» nil. »uEru 69 W memorization of the results of the mailed queotionnaire survey was sent to the 180 respondents from the participating school districts on August 15, 1962. This su-ariaatioe encompassed the material shown in Table 5 and in Tables 9 through 13. To test any changes in the opinions of these respondents, a postcard request was sent inquiring whether the respondent agreed or disagreed with the expression of the majority opinion to question #4 (see Table 5) as disclosed by the questionnaire survey, if he had or had not changed from his former opinion, and if the results of the survey were or were not beneficial to him in his work. The postcard request and the covering letter are shown in Appendix A. Fifty-nine postcards were returned representing answers from 32.82 of the respondents. The last postcard was returned‘on October 26, 1962. (lily one request for reply was mailed to these respondents. The returns from each state are shown in Table 22. 70 Table 22. Requests, returns, and per cent of postcards returned. Number Number of Per cent of Regions and States of Postcards Psstcarda Requests Returned Returned Northeaet - New Jersey 14 6 42.9% North Central: Illinois 23 7 30.4 Iinneseta 23 11 47.8 South Dakota 15 4 26.7 South: Florida 15 3 20.0 Nississippi 13 4 30.8 Texas 18 8 44.4 West: California 22 3 13.6 Nevada 14 S 35.7 Nyoming 23 8 34.8 TOTAL 180 59 32.8% Fi i of a card surve . Forty-too (71.21) of the respondents agreed with the majority opinion to question #4 as disclosed in the questionnaire survey. The aneuers to question #1 on the postcard appear in Table 23. Table 23. Aneuers to question #1 in the postcard survey. Question Agree Disagree No Response 1 (agree/disagree) with the expression of the majority opinion to question #4 as disclosed in the survey. 42 10 7 71 Twenty-three of the respondents to the postcard request were not the persons who had participated in the questionnaire survey. This change in respondents is evident in the number of no responses received to the second question on the postcard which is shown in Table 24. Table 24. Answers to question #2 in the postcard survey. Question Have have Not No Response I (have/have not) changed from.my former opinion. 9 26 24 Nine respondents changed their former opinions to agree with the majority opinion to question 04 as disclosed in the questionnaire survey. Of the 26 respondents who have not changed their former opinions, 5 disagreed and 21 agreed with the majority opinion to question #4. The reaction of the respondents to the receipt of the survey results was sought. Their responses to an inquiry regarding the beneficial use to than of the survey material are shown in Table 25. Table 25. Answers to question #3 in the postcard survey. Question la Is Not No response This material (is/is not) beneficial to me in my work. 33 9 17 72 The following co-ents appeared on the postcards received fron respondmts who indicated that knowledge of the results of the survey we.” of benefit to than. These consents are identified by states only. Lack of clerical personnel is a problem with us.--Texas. Only slightly.--llinnesota. Meterisl would be of benefit to instructional personnel in selling progran.--!lorida. Sorry that I shall not be able to enjoy it nsre but this office will close forever - January 1, 1963.--Hyoning. In a linited way applicable to our district. Salary schedules progru, pupil-teacher ratio, etc., neke dangerous conparison with other districts in any but a very general way.» Illinois . Respondents who did not feel that the sunny report benefited then, gave the following cements: The tins and cost of deternining detailed cost breakdowns cannot be justified. lie have to teach children. Also, ertrenely conplicated.--lew Jersey. Our districtua county independent district-win so unique that thst which applies to other districts varies greatly fron procedures we not use.--8outh Dakota. Figures are interesting, but not of much use to me. The circunstances vary so greatly for each school involved.--Illinois. We have no 1’. T. A. for our high school; only parent-teacher conferences twice a year.--Illinois. I was not eqloyed by the school district at the time the original questionnaire was sent out so I do not appreciate the report as such as I would had I answered the questions myself.-- Minnesota. 73 Respondents who were noncomitel on the value of the report to then. gave the following cements: Your report was very detailed. I doubt if ley groups would understand fully the details; yet we administrators like it very rumble-Minnesota. The statistics given are most interesting and I think I can see that finances are a great factor in nest schools having interest in this infornatiou.--liississippi. We are moving into more and core fields of breakdowns. such as these and find it valuable.--Tenas. I appreciate this report. Cost procedures analysis is important or should be to any school administrator.—-Terae. In emery, the postcard requests roaffirned the prevailing opinion of school administrators that cost infornation is useful to then. Nine respondents were influenced to agree with the majority Opinion sfter receiving the results of the survey. Pgrsongl interviews Purposively. to acquire depth and meaning to the answers to the questionnaire used in the survey. the writer interviewed ten key personnel in school districts, either superintendents or those responsible for the accounting records. The school districts were selected by random sampling of districts in the states of Illinois, Michigan and Ohio. Selection of interviewees was linitod to these three states due to the necessity of being within a reasonable traveling distance from the writer's residence. Selection of the cities was based on the city school systems listed in Statigtics of City figml gnta: Staff. P332112: and 74 FinancesI 1923.34.1 These city papulation groupings are shown in Table 26. Table 26. City population groupings. Number of Groupingn City School Systems 100,000 or more 100 25,000 to 99,999 387 10,000 to 24,999 626 5,000 to 9,999 1,061 2,500 to 4,999 1,401 TOTAL 3,775 In this publication} city school systems are described as "those public-school systems in cities of 2,500 population or more which are adndnistered by a superintendent under the board of education as a school district operating coordinate with, or under, a municipal government."2 As these city systems are also listed in state school systems even though they are subject to the additional nunicipal authority, it was felt by the writer that a better knowledge of the accounting setup may be obtained through personal interviews in at least ten of these city systems, independent of those cities which may have been selected under the mailed 10. 3., Department of Health, Education, and welfare, Office of Educathma, gsatigsigg of City Schgg; Syggggg: Staff. PupilsI and ‘gigggggg_;_l11§:2§, (HUshington, D. 0.: 0. 8. Government Printing Office, 1936). z;§id., p. 2. 75 questionnaire random a-pling selection. The school districts in the three states mentioned were considered as the total population for the five population groupings used by the Office of Education. The number of cities in each papulation grouping, by states, is shown in Table 27. Table 27. Number of cities in each papulation grouping, by states. Population Grouping Total Number Number of Cities in of Cities Illinois Michigan Ohio 100,000 or more 13 2 3 8 25,000 to 99,999 ' 67 24 18 25 10,000 to 24,999 74 31 13 25 5,000 to 9,999 88 42 18 28 2,500 to 4,999 110 48 26 36 TOTAL 352 147 83 122 Random selections of the cities in these states were made by numbering the cities in each of the groupings and drawing two numbers from each group. The cities selected represent approximately 3% of the population groupings listed in these states, or approximately .31 of the total city school systems in the United States. The cities selected are shown in Table 28. The data sheet which had been used for the mailed questionnaires served as the basis for interviewing. The interviews are reported in Appendix B. Letters requesting interviews were sent preceding the date of interview appointment. 76 Table 28. City school systems selected for personal interviews. Papulation Grouping Selection 100,000 or more Akron, Ohio Columbus, Ohio 25,000 to 99,999 Bay City, Michigan Port Huron, Michigan 10,000 to 24,999 Chicago Heights, Illinois Ht. Vernon, Ohio 5,000 to 9,999 Bellevue, Ohio laumee, Ohio 2,500 to 4,999 Marengo, Illinois Stickney, Illinois W- The tuterviev- with Ichool officials lasted approximately an hour in each case. The interest in cost accounting records by interviewEes is shown in Table 29. Table 29. Opinions of interviewees regarding cost accounting records. City School System one Positive Negative Akron, Ohio Not interested Bay City, Michigan Very interested Dellevue, Ohio ‘ Very interested Chicago Heights, Illinois Peel unnecessary Columbus, Ohio ‘Already using Marengo, Illinois Very interested Maumee, Ohio Feel unnecessary Pit . Vernon, Ohio Very interested Port Enron,‘lichigan Very interested Stickney, Illinois Insufficient staff 77 The ratio of the number of school officials who are favorably inclined toward the use of cost records is almost in the ease proportion as was disclosed by the mailed questionnaires. It appeared to the writer that the personnel involved bed preconceived ideas about the uses of cost accounting records before there wss an opportunity to discuss the uses of cost studies in a school systen. The staff position of the interviewee did not appear to hove a bearing on his opinion. Rather, it might be conjectured, that the background, training, and experience of the interviewee influenced his attitude toward cost accounting records more than his present position. The number of clerical employees under the direction of the school official wss not a decisive factor in the direction of his response, viz., the large school districts of Akron and Chicago Heights were negatively inclined toward the use of cost studies whereas Columbus and Bay City were affirmstively inclined. It is the Opinion of the*writer that the enthusiasm which the interviewees had for tho.uso of cost accounting records or their lock of interest had been developed previous to the interview. Generally, the interview did not last over an hour. This was a period of time too short to change the interviewse's attitude but sufficiently long to determine the school official'a basic conception of the role of cost accounting. It appears to the writer that further study in the direction of ascertaining the basis of the attitude held by school officials could.he undertaten. 78 Bigginstion of the interrelations o; the variable! in this gtudy g; a soggcg fog answers so pertinggg Questions in the field of aghgg; district accounting Answers to certain questions which are inherent and pertinent to this study are suggested by the relationships of the coefficients of correlation of the various variables. The answers suggested are based upon statistical analyses and related findings presented earlier, of which this presentation is an integral part.1 To ghgt extent does school type igfluence the use of supplementary cost accountigg records? The statistical findings suggest that the multiple school district units of elementary and secondary schools, and elementary, secondary, and community colleges are users of supplementary accounting records to a larger extent than school districts encompassing individual units of elementary schools, secondary schools, and community colleges. To what extent does c I enroll nt size influ nce the use of guppleggntary accountigg records? The correlation between the variables inquiring about the use of cost approximations for fundamental subjects and the average daily enrollment suggests that as the average daily enrollment decreases, the use of cost records decreases. Conversely, it suggests that the use of cost approximations for fundamental subjects increases as the average daily enrollment size increases. 1Due to the limitation of 80 columns on an IBM card, a "yes" answer to Variables 20, 21, 22, and 23 was indicated by the number "1"; a "no" answer was indicated by the number "2" in the computational work. Therefore, the correlations to those four questions are based on the predomdnaat "no" answers to variables 20, 21, and 22, and the predominant "yes" answer to Variable 23. (See Tables 4 and 5). 79 The correlation between the variables relative to the use of cost approximations for non-teaching items and average daily enrollment suggests that as the average daily enrollment increases, the use of cost records decreases. This may be due to the determinate weight of the opinions of the many districts with elementary schools whose answers are included in the survey (see Table 9). As this question made specific reference to study hall supervision, library and guidance services, etc., the elementary school districts would not be able to answer this question affirmatively as these services are available primarily in secondary schools. What influence does annual r a its cost of current a itures g; a gghggl digtrigs ggegs g! the dggire to determine the cgsts of gertain ggggstionsl enpggggg? Correlations between the question relative to the use of cost approximations and the question relative to annual per capita costs suggests that as the per capita costs increase the use of cost studies decreases. This finding suggests that the less prosperous school districts are more intent on the use of cost studies or that possibly per capita costs are decreased through the use of cost records. Egg ggsgngggely are cost ggcoggting records utilized in school digtriggg at the prggggg time? Twenty affirmative answers and 332 negative answers to the two questions relative to the use of cost approthatious on the questionnaire shows that approximately 922 of the respondents do not use cost studies. 80 d r i cc rsenne inf e the l ication countin r co s? Tabulation of the replies indicated that the average school district had four bookkeeping employees and two types of mechanical equipment. Correlations between the types of mechanical equipment available and the use of cost approximations suggests that any decrease in types of mechanical equipment creates a decrease in cost studies. Conversely, any increase in mechanical equipment available will increase the use of cost studies. .A‘L‘A .e—re-ae -..-s Correlations between the number of employees assigned to duties of a bookkeeping nature and the use of cost approximations suggests that as these employees increase in number, the use of cost studies decreases. This unusual phenomenon leads to two other questions: Are additional employees hired to work on general accounting records? If so, are school officials unfavorably disposed toward the use of I employee time for cost studies? ‘ ,A positive correlation of .2593 of variable 18, the number of bookkeeping employees, to Variable 15, number of general accounting records in use, as compared with a positive correlation of .1431 of variable lB‘with variable 16, number of cost accounting records in use, suggests an affirmative answer to the first question (see Table 21). Thus, the effect of hiring employees for general account record-keeping produces the negative effect on hiring additional employees to produce cost records. The material in this study does not provide an answer to the second question. 81 1‘ there a {on egg by gchool Enigtgagors for the use of undgglzing cogt record: a! an aid to managerial efficiency? Approximately 521 of the respondents felt that cost information.would be useful to them in discussions of school expenses‘with interested groups. The follow-up study showed that at a later date the majority Opinion.was shared by approximately 571 of the respondents. Those school districts which already had some cost studies showed a strong inclination toward cost information gathering as a managerial sid. Also, as a school district increases the types of mechanical equipment in use and the types of general accounting records in use. 3 the correlations suggest that the school district has a propensity to increase its cost studies. Pertinent correlations suggest that the less prosperous school districts feel the need for cost studies more acutely, that school districts with cost accounting records already in use feel a greater need for further cost studies, and that multiple school units were more favorably inclined toward the use of cost studies than school districts encompassing individual units of elementary achools. secondary schools. and community colleges. Summary Based on the foregoing findings, it appears that a slight majority of the respondents felt that cost information would be useful in discussions of school eXpsnses with interested groups. Those respondents uho participated in the first questionnaire survey indicated 82 by approximately 521 that they were favorably disposed toward the development of cost studies. The school districts which already had some cost methods in use showed a strong affirmative vimoint. The questionnaire survey indicated that as a school district increases the types of mechanical equipment in use and the types of general accounting records in use. it shows a propensity to increase its cost studies. The follow-up postcard questionnaire showed a prevailing affirmative majority opinion as had been indicated in the earlier survey. line respondents were influenced to agree with the majority Opinion after receiving the results of the survey, thus increasing the affirmative ujority to approximately 57%. Interviews with personnel in ten cities disclosed that six of the interviewees were favorably disposed toward the development of cost information in their school districts. This ratio of affirmative opinion by the interviewees is almost in the same proportion as was disclosed by the questionnaires. It is the opinion of the writer that the personnel involved in this research study had preconceived ideas about the uses and desirability of cost accounting records based on an attitude nurtured by the background , training. and experience of each individual. The postcard questionnaire follow-up study showed that these attitudes may possibly be changed by dissemination of information on this tapic. Further study in the direction of analyzing the attitudes held by school officials could be undertaken to determine the effect of -m. - . '1'! 83 of training and knowledge of accounting on a school administrator's viewpoint with respect to the importance of cost accounting. CHAPTER IV STAGE II - ANALYSIS OF THE GENERAL ACCOUNTING FRAMEWORK A school district works within a body of regulations imposed upon it by regulatory bodies. If the school district is to proceed with its desire to develop cost control methods, it is necessary to ascertain whether these regulatory provisions hamper the use of costing methods. Analysis of the general accounting framework, as recommended nationally by the Office of Education and statewide by the state departments of education, will be made on the following pages with respect to expenditure accounts to determine whether cost accounting records can be easily added to the general accounting framework. Relationship of General Accounting Records and Cost Accounting Records Accounting records and reports are the tools by which the school executive secures effective control over the funds and assets entrusted to his care by the school board and taxpayers. The accounting system is based on a suitable classification of accounts in.which the detailed data from the books of original entry are sorted out and analyzed. The importance of a good classification of accounts from which reports may be developed in the easiest and quickest manner is apparent. 85 The classification of accounts should proceed from the general to the specific, that is, general groupings of items should be subdivided to an extent found necessary for the particular school unit. As an example, the amount of total payroll is important for cash purposes but if the payment is for different types of services (or expenses), such . —-—,1. as instructional, custodial, etc., provision should be made in the classification of accounts for these specific subdivisions. If further subdivisions are desirable for cost control purposes, accounts for specific school buildings, departments, courses or units of study, etc., may be provided. It should be borne in mind, that the classifi- cation of accounts must be devised in such a way that information for both internal and external purposes can be secured with the least possible work. The Committee on Cost Concepts and Standards of the American Accounting Association describes cost classifications as:1 Cost is classified normally in terms of a managerial objective. Its presentation normally requires sub- classification. Such sub-classification may be according to functional lines, areas of responsibility, the nature of the cost elements, or some other useful breakdown. The appropriate sub-classification depends upon the uses to be made of the cost report. It seems apprOpriate to point out the significance of the last quoted sentence. Each school unit needs to devise such sub-classifications that it will desire for its own purposes. The purposes of these cost 1ianerican Accounting Association, "Tentative Statement of Cost Concepts Underlying Reports for Management Purposes," The Accounting m. (April 1956), p. 184. 86 records are determined by those in charge-othe school administrators. Therefore, all individuals directly concerned with cost information should fully understand the results which are desired and the methods which will be used. Summarily, a school district needs general accounting records to record the assets, liabilities, receipts, expenditures, and equities of the entity. These accounting records consist of one or more journals, which record the daily transactions, and one or more lodgers, in which transactions are sorted. Control over expenditures is exercised by the use of a budget, which is a financial plan for a definite period of time for the school district. Comparison of the budgeted figures with the accounting records determines whether the district is operating according to plans. Cost control exists when there is a breakdown of the cost elements to such an extent that management can easily and economically determine where favorable or unfavorable conditions exist, where improvements can be made, in what areas changes should or should not be made based on an evaluation of the existing conditions. Accounting Recommendations by the Office of Education Much attention has been focused on the recommendations for classifications of school district accounts by the Office of Education as described in their booklet, Financial Accounting for Local and Stgte School Sygt§g§.1 As this paper is concerned primarily with costs, only 1U. S., Department of Health, Education, and Welfare, Office of Education, giggagial Accgggting fgr Local and State gsggg; Szgtems, WW. State Educational Record- and Reports Series: Handbook 11, (Washington, D. C.: U. 8. Government Printing Office, 1957), p. xix. 87 the expenditure accounts rocoamended by this handbook will be noted. Control accounts using the following series of numbers for use for both small and large school districts and for any fund, general special, are recommended: Table 30. Classification of control accounts recosnended by the Office of Education. " 4 "'h ”11 Series Account Name 100 Administration ‘ ZOO Instruction 300-400 Attendance and Health Services : 500 Pupil Transportation Services 600 Operation of Plant 700 Maintenance of Plant 800 Fixed Charges 900-1000 Food Services and Student-Body Activities 1100 Co-unity Services 1200 Capital Outlay 1300 Debt Service from Current Funds 1400 Outgoing Transfer Accounts The Office of Education recommends further subdivisions of these accounts in each of the‘categories listed if the activities of the school district warrants the additional accounts. There are 234 sub-classifications suggested in the Handbook. As an illustration, Account No. 100, Adminis- tration is subdivided into Salaries, Contracted Services, and Other Expenses; Salaries is further divided into Salaries, Board of Education, etc. The Handbook recommends that the accounts he further divided into categories into which different program area expenses may be accumulated, such as Elementary Day Schools, Secondary Day Schools, Summer Schools, Adult lducation, etc. Distribution to these categories may be accomplished by using separate accounts or by setting up distribution columns for accounts which show accumulated totals. The Office of Education advocates the use of average daily membership as the unit of measure for computing per-pupil expenditures. Two chapters (13 pages) are devoted to the determination and proration of costs. The Handbook states that it is concerned with three prorating problems: (1) as between functions, (2) as between organisation.units g‘ "1.....- ‘...rm—.~ nun-r--. m 05 - or program areas, and (3) as to community services. There is no recommendation for analyzing the costs of the functions nor the program areas, such as elementary, secondary, adult, etc., into basic cost units. The Handbook further recommends that expenses be prorated on several bases, either time, time-floor area, average daily membership or average daily attendance, hour-consumption, number of pupils, mileage, or quantity consumed. Although the Handbook does not elaborate on costing techniques. a genesis for cost accounting studies is established. The recommendations of the Office of Education are conducive to the development of cost analyses and studies. The recommendations made by the Handbook are compatible with the following description of cost control made by Jesse G. Kline, Chief Cost Accountant of The Atlantic Refining Company of Philadelphia, Pennsylvania at the regional conference of the lational Association 89 of Cost Accountants.l Cost control is the result of executive decision, which can be provided only when.managemeat is supplied with the tools for intelligent analysis. The latter can best be rendered by the accounting department, which systematically assembles the necessary cost data. In order that the data desired may be compiled expeditiously, it is best to set up appropriate classifications of expenses . . . . Our task thus is to set the machinery in motion to assemble these data in the most economical manner possible. This will involve machine and mennual effort in proportions best suited to individual conditions. The Office of Education hopefully states in its preface to the Handbook that its use will help to "establish a sound basis for luau-P .‘sy—u-—~0~ we cost accounting." It remains for the individual school district to take the tools which are provided by the Handbook and to use it in establishing cost controls. Accounting Recommendations by State Departments of Education An analysis of the manuals, accounting forms, and regulations of the 50 state departments of education was made to determine whether the‘Ichool district is hampered or encouraged by state regulations in the development of cost accounting records. The accounting record _ information received by the writer from the departments of education from each state is analyzed in Appendix C to investigate whether it is possible to add cost accounting records to the general accounting' records already prescribed by state regulations. The following 1National Association of Cost Accountants, A Return to Cost Control, (New York: J. J. Little & Ives Company, 1946), p. 18. 90 criteria was used for this purpose: If a school district is required to have a. a budget for predetermining costs; b. a set of general accounting records to show revenues and expenditures; and c. a sub-classification of the expenditure accounts at least on a one-level gradation; then it is possible for the school district to add further sub- classifications to compute unit costs on a basis determined to be desirable by its management. Summary Analysis of the general accounting framework as prescribed by the 50 state regulatory bodies indicates that with respect to the conditions of the criteria: a. Each state requires that the school unit operate within the framework of a budget. b. Each state, with the exception of Georgia, where complete infonmation on accounting is lacking by the‘writer, requires general accounting records showing receipts and disbursements. c. Each state, with the exception of Georgia, where complete information on accounting is lacking by the writer, requires that expenditures be divided into at least one-level gradation of account classification.- (These findings also apply in the District of Columbia.) With the recommendation of at least a one-level grouping of expenditures in 49 of the states, a beginning has been made for the use of additional breahdowns of expenses. 3? 'r !' '»‘{".1a A D ' ‘7' ~ :2; gnu—1.9: v 91 The analysis of state regulations disclosed that some states permit a single-entry system of accounts where the bookkeeper records all cash receipts and disbursements in a distribution ledger. Other states advocate utilizing a double-entry set of books which provides a more complicated but highly effective system of accounting. With this system each financial transaction is analysed in relation to its a effect on the assets, liabilities, and equity of the school unit. Cash, accrual, or a composite accounting basis is used in the various states. -7—. -..... ‘I-‘H..- s- “1.. 7a.. s Rigid control over school accounting is exercised in a majority of the states by the imposition of strict rules governing budget, I_ ”we..- I I auditing, and reporting procedures. Annual reports are required in all states, but this is the only control device applied in a few of the states. Legislation governing education has been passed in all the states, and is being carefully followed by the school units. The use of cost studies is recommended in a.msjority of the states' accounting manuals. The types of cost analyses usable in school districts is discussed in the next section. CHAPTER V STAGE III - DIVILOPIIIT 0? COST ACCOUNTING ANALYIIS FOR US! I! SCHDOL DISTRICTS There is a widespread belief among accountants that cost accounting is a valuable management tool. This belief can be substantiated by the wide use of cost accounting by business enterprises, the large number of persons employed in cost accounting work, and the large amount of interest in cost accounting courses by students. The need for cost accounting records becomes apparent when the uses of these records are considered. Although financial management decisions are based on statements developed from general accounting records, a large proportion of these decisions also require analytical studies. The techniques for developing cost studies depends, first of all, on the purposes for which the analyses ‘will be used. Then the 3a.: accountant analyzes the costs to supply the needed information. Therefore, the cost accountant must secure the necessary figures from the general accounting records, separate costs into new classifications, and accumulate figures in a form appropriate and significant to the solution of the financial problem. Some of these cost reports may be developed continually, while other cost reports are developed for special purposes. 92 ’4- h , "‘”““"7’_'~" _....s A u - s— o ‘ 93 Cost Control Procedures 0 c rol In school accounting, cost records should be developed to check actual costs with planned costs, and to plan future costs. The purpose of school cost accounting is to maximise services to the cs-Init-y. The means for accomplishing the maximization of mervices is discussed on the following pages. (M5 Qatar's {or control According to the Cost Accountants' Handbook, a publication containing the essence of modern cost accounting methods and knowledge, npccific unit costs may be accuulated in pertinent cost centers.1 Such centers are selected to group similar activities. In a school district, these cost centers may be segregated according to the lines of responsibility shown on an organisation chart. As an example, accumulation of costs for a school district with the following or8‘ll:l.alsational chart may proceed with an analysis of costs for each department.‘ This chart shows a unit system of administrative mVllnzlmation with the superintendent as the chief executive from whom authority extends to each department. In the development of cost ”Ines, it is important to determine costs without antagonizing u“ Personnel who have the responsibility for controlling expenses within their service areas. N The 1Theodore Lang (ed.), Cogt Accmtgtg' Handbggk, (New York: I‘D-am Press company, 1947), p. 132. 94 W figperigtendent 2f £2532]! I *7 Assistant Superintendent Assistant Superintendent W 7% e of n e I I / I Bldg. Chief Purch. Cafe. Prigfiipals Supeizigors Suit. ‘Agggggggggl Agent Supvr. / Special Custo- I I / ______r...h... reel-en em glee sens __.___vomr- Figure 2. Organisation chart. Cost centers in this organizational example are for-Md in the following order to correspond with the coordinate classification of accounts as provided in Handbook II of the Office of Education (see Table 30). Table 31. Account classifications coordinated with cost centers. W Cost Center Account Classification Based on Organization Chart Provided in Handbook II Inltructional - by schools Instruction (direct costs) Salaries Principals Principals Teachers Teachers Supervisors Consultants or Supervisors Special Teachers Other Instructional Staff Secretarial and Clerical Textbooks School Libraries Teaching Supplies Other Expenses _. -_ ""1 95 ubi- 31- W Ion-instructional - Finance (indirect~costs) Building Superintendent Operation of Plant Custodians Maintenance of Plant Chief Accountant Office of Business Administration Clerks 9 Purchasing Agent Purchasing Office E Clerks 1 Cafeteria Supervisor Food Services workers It is incumbent on each school district to form its own cost centers based :i. upon its organizational chart and to coordinate the account classifications to the centers. Proration of the unassigned account classification eXpenditures to the cost centers must be performed on some reasonable basis. The necessary distribution must be carefully planned after a thorough study of the characteristics of each element of cost. The plan of allocation may be based on the methods cited in the Office of Education Handbook II. In the example cited, the method of allocation to cost centers of the unassigned account classification may be as shown in Table 32. School districts, regardless of size, can use these methods of allocation to cost centers with a minimum amount of work. The result of such allocation will be evidence of the actual costs in each area of school activity. The purpose of a cost study of this type is not necessarily to reduce costs but to compare the quality of the educational product with the money being spent to obtain it. 96 Table 32. Allocation of nnassipad account classification to COCK centers. Account classification lieth of Allocation .Attendsnce and Health Services Tune; number of pupils Pupil Transportation Services Mdleage; number of pupils Fixed charges: Insurance Tine- floor-area Pension Payments Huber of employees Interest on loans ‘Thne-floor-area Rental Time-floor-area Co-mity Services umber of pupils Capital Outlay Tine-fleor-area Debt Service Tine-flosr-area Expenditures to Outgoing Transfer Accounts Tuition labor of pupils Transportation Mileage; number of pupils Value o t on rol The value to nsnagosnnt of reports which show costs is stated to be:1 a. Being able to observe the changing events. b. Being able to understand their meanings. c. Action only when the conpany-vide effects of the events become known. lSpencer A. Tucker, "A Systen of Nanagerial Control Using 'Live‘ Ratios and Control Charts," ti t t Bull t n, Section 1. (New York: National Association of Accountants, 1962). P. 7. 97 The value of cost control in a school district is to be able to suggest changes in functions based on an understanding of what is educationally desirable and economically sound. A school building with the lowest unit cost may not be economical in terms of the type of education which may be desirable due to the lack of space, inadequate facilities, and underpaid teachers. On the other hand, high unit costs do not always i imply quality education. The administrator arrives at his answers i to school problems basing his judgment on information as complete as t possible under the circumstances of time, staff assistance, and cost reports. Efficient management is the sum total of understanding the many small things which are constantly presenting themselves as problems. The administrator improves his position.when he is able to explain trends in costs to taxpayers who are not always aware of rising school costs as well as of the quality of the educational product. Cost facts which are valuable to the administrator in his relations with the public include: ‘ The.costs of educating per pupil and comparisons with previous years (and possibly*with other school districts). Differences in per capita costs between elementary and secondary education. individual school buildings, or types of educational programs, 1. e., college preparatory, general, and business programs. Costs of extra-curricular activities. Costs of graduate follow-up. Costs of transportation, Costs of adult education. 98 Costs of new facilities, new buildings, and operation and maintenance of old buildings. Costs of community services. Costs of special services. such as guidance, health, library, and school lunches. Figures on the following items, which relate to internal problems, may be developed continually. These costs relate mainly to educational e ,. __-_ "A? quality and staff efficiency. Costs of specific grades. courses, or subject matter. i. e., English, arithmetic, geography. typewriting, etc. Costs of failures and savings in the acceleration of pupils. Costs of special programs. 1. e., core curriculum, cooperative work training, field trips, etc. Costs of in-service training. Costs of clerical work performed by teachers. Costs of study halls. Cost accumulation for one of the items shown above is considered on the following pages. Sggject mattgr coat . Accumulation of costs for specific subject matter may be obtained through the use of "scape and sequence" charts which show the amount of time spent in subject areas in each grade or course. For example, each teacher in the elementary grades who teaches handwriting indicates the amount of time spent on this subject in his classroom as a percentage of the total time available during the school year. Costs are computed by multiplying the percentage shown for each teacher by the total cost of his classroom. The cost of the classroom Al's-'4. 99 should include direct costs, such as salaries, supplies, etc. as described earlier, and possibly include indirect costs as described in the next section. The individual classroom costs for this subject are added together to obtain the cost of this subject in the school system, continual comparisons of these costs (if possible, with other elementary schools) over a period of time could lead the administrator to investigate the differences in costs as s.neans to determine the most effective period of time fbr the teaching of this subject in his 4 A In? f—r rah _.. .-: ‘-.n'K ‘- an“ particular school district. The answer could lie in changing the I”! textbooks which are being used, or in changing the time of day for instruction, or in the introduction of teaching aids. An interesting corollary to this study could be the discovery whether teachers who are higher on the salary schedule due to tenure, and consequently, have higher classroom.unit costs, teach more effectively because of their experience. Of course, the answer lies partly in the learning potentials of the students, but over an extended period of time, teacher effectiveness may become apparent. Procedures for analyzing costs of other internal cost items may be deveIOped in a similar manner as was shown for the handwriting course. In the field of cost control, the administrator is limited only by his lack of time, curiosity, or finances. Each school district needs to develop its own cost studies based on its own needs and problems. lo two districts could have equal interest in the same problems for they do not have equal administrators, students, teachers, or citizenry. The ingenuity of the school administrator dictates the extent of cost studies in his school district. 100 13412ng gag; center; 2 a refinement of W Cost control is preferably based on the control of costs for which each administrator in the school district knows that he is directly responsible. These responsibilities are fixed in the organization chart . However, school districts of medium and large size with the available personnel can develop additional cost procedures to allocate the cents of indirect burden (cost) centers to direct cost centers. Allocation of these indirect costs is purely an administrative device to show total costs of the educational product and does not allmtc responsibility for these costs to the direct cost centers. The coat Accountants' Handbook advocates indirect cost centers for use 1“ Productive operations, and this method may be applied to school district cost accounting.1 In a school district, the indirect cost centers are the deflrtnents not engaged in teaching procedures or in activities connected . with teaching. A method of allocating indirect costs, based on the mrifiniitsttion chart cited earlier, is given in Table 33. Using distribution of indirect costs results in assigning all costs to the departments which ”° '«ponsible for the educational product. This cost analysis should “ “G4 by those school districts which are interested in a maximum amount °£ °”t information. Each school district will need to deve10p its own at“. of distribution. The resultant figures indicate the actual per unit costs for educating students. The use of this method emphasizes \ 1Lang, 22. 51c” p. 134. F‘-" x - ‘i.w .4-.‘. ~) [#31 A 3'? 1i 0 I: ...al...|. s‘il . . ... . .i.’ ~t4 .. t horaflbl 1"; _ 101 the interdependence of depertnents within the school district and .5... the need for cooperation by all school workers. Table 33. Allocation of indirect costs to direct cost centers. ” Indirect Cost center Method of Allocation to Direct Cost Centers 5.. I l Finance Allocate costs of building operation Building Superintendent based on tine-floor-area method. Custodians Allocate costs of building maintenance directly if possible; otherwise, tine-floor-srea method. Chief Accountant Allocate costs of business adninis- Clerks tration based on nunber of pupils or employees. Purchasing Agent Allocate costs of purchasing office Clerks based on number of purchase orders processed; allocate costs of store- roon directly to departnents using services. Cafeteria Supervisor Costs should be recovered from those Workers using services; allocate profits or losses based on nunber of pupils. In addition to the foregoing section on cost accounting procedures, m t°P1cs of special interest, which were developed in detail by the “'1“? to show the development of cost studies in special areas, are “”‘l on the following pages. Projection of Costs for School District Consolidation There are several ways of conparing costs when a school district Accid‘. to consolidate. A study can be node which conpares the costs of 102 consolidated schools with the costs of non-consolidated schools offering the some type of educational program. A study can be made, through statistical nethods, of what costs can be expected from a proposed consolidation. Or, the costs of a proposed consolidated school district can be conpared with the costs of the individual school units before they are consolidated. While the cost figures used may be and... .71, practicably quantifiable, the changes in the quality of the educational progrnn: are nore difficult to neasure, or to change into dollar equivalents. An expectation of inprovenent in course offerings is ,3 3” i. 3. L inplicit in any reorganisation progru, and in nest prograns the educational content has been better, or at least different, in the consolidated school from the units from which it was formed. finalising the indefensibleness of qualitative neasurenents, thisundy does not endeavor to assign any value to improved curriculum “firim. but will attempt to deternine: (1) what effect consolidation 5“ on current costs where the sane grade or course offerings are “dd-Pita, and pupil-teacher ratios rennin the sons, (2) what effect consolidation will have N. current costs where pupil-teacher ratios fins. thereby causing a contraction in grade or course offerings, and ‘3) '5“ effect consolidation has on current costs for variable expenses, ’ in" .0 trnmortation, fuel, janitorial services, clerical personnel, .“' ‘ Dehodule for use in the project of costs is shown as Figure 3. W This study on consolidations will be confined to current expenses ‘Ltvn‘ thard to fixed expenditures for bond indebtedness and debt service 103 My; 15;... I 1.31.... ul.|1hll~1.14 -11....- .no«ununna mo ouuuuo on» we HH xoonnnsu nu nonoossouon ounsoouo . mo nonuouuwwoosnu undo: no«usnauonnoo uuuauowo Hoodoo you ouoou mo dowuoononn you carnage» .n enough A.nno«uouumuons~u unsound noose none 33380 2. 3 3 3:38 .35 nonconnu assoc oouannsw ununossu oouusnnda goons» nxoonunoa nonunaow assoc . usuunsnu one “nauseouoom mason ascenquuuonH noduo ousnunoa ouoauonsnow no ounsuuooaoo nasnuunuum nounsaaa ooquunnuonu .289 nonooeuu henna souwbnom nonusnusoo Iliad: . noun-33393 a rig 3.8 cause .38 our: “.3393 3233 \ .3825 33 "Show a! 338 338 . 353325. .3326 -353: ~38. Asa-5 Ace-2V 104 as these items cannot be considered as exerting an influence on consolidation. Even if a consolidation occurs between units where one or the other is heavily indebted and cannot nest its debt obligations, the new unit will still have to look toward savings in its current expenses to meet these bills, or increases in its tax structure, rather than to expect any relief fron the consolidation of long-terndabts. Neither will refinancing of long-tern debt he considered as this nutter depends on the peculiarities of the laws of the several states. Consideration of a new building erection or acquisition may be covered in a separate study after the projection of current costs for consolidation, or it may be considered as the stimulation for the consolidation which notes it the basis of comparison.with the costs of the separate units before the consolidation. It, also, follows that if school districts with varying rates of taxation are consolidated, and the sane ascent of taxes are to be collected, sons persons will pay higher school taxes and some will pay lower than they did before the consolidation. While equating of tax rates sonetines proves a stunbling block for consolidation, this study'will not attenpt to deternino what effect consolidation'will have on current tax rates. nggedures f2; goggglidation Attempts at reorganization stem from local initiative which recognizes that a larger school system is in a better position to provide educational opportunities and special services, or from stinulations from the states in the form of penalties, aids in grant, or mandatory legislation which reduces the number of school districts within a state. There is fi— _-... i _— A l.“ A- I. ~‘ 105 constant pressure exerted by the states for the merger of school districts. An investigation by the Huchigan Public Education Study Csmmdssion showed that there should be no more than 253 school districts in all of Michigan at a period when there were 4,736 school districts.1 Operating against this pressure is the lethargy of the rural people in certain districts, together with their insistence on the home-rule ! principle. The best instrument for combating indecisiveness about consolidation, -ua-D.F-d)'. ,.- which needs to be accomplished by the vote of the districts' constituents, :‘?u ..~ is accurate cost analyses which emphasize savings. In many cases, such savings can later be used as a basis for an expanded qualitative program, Structural reorganisation proceeds from these beginnings to a study undertaken by representatives of the state or county government, or other competent persons, which attempts to provide recommendations for the consolidation of certain coterminous school districts based on the needs of the community area, the number of school children, and the underlying tax base. It is these independent studies which provide the foundation for a successful school consolidation from*whish the projection of costs should be computed. t t I Studies of projected costs in a consolidation should consider the effect of pupil enrolhment, the changes in pupil-teacher ratios and lutty 'rablsnan, pm :3; mg: ngp in uremia, Bureau of Government, Institute of Public Instruction, (Ann Arbor: University of Iichigen Press, 1951), p. 12. ‘ 106 its effect on instructional costs, anyincreases or decreases in transportation costs, and any savings in non-instructional costs. these matters are discussed in their respective orders. lggpil_ggggllggngg. Statistics by the Office of Education show that, on the national average, the number of pupils in average daily e #— attendance per teacher in 1953-54 was 24.8, a mean reflected from approximately 63,000 school districts of which two-thirds were still one-teacher schools.1 As instructional costs are variable with the _...r—-x«..-r “.2 .fi. .:- -< ‘A :5— pupil-teacher ratio, the first determinant in the cost study should be the number of pupils to be enrolled in the proposed school district, both in the elementary school and in the high school, based on the number of children between the compulsory school ages. A.breakdown of school census figures into grade school placements will deter-due the number of teachers required for the elementary grades using the same average pupil-teacher ratio as the consolidating school districts have been experiencing. In those instances, where enrollments do not provide for a full classroom, split sections have been used for expediency. Having determined the number of instructional employees required, this information then serves as a basis for instructional costs which is compared with the instructional costs of the elementary schools of the consolidating school districts. It is generally in this area that savings can he noted, for the equating of classroom size produces economies through maximum staff utilization. 1U. 3., Department of Health, Education, and welfare, Office of Education, Statistics of Statg School Sygtems: Organizatiog, Staff, rugilg. and Finances, l95§:§§, (Hashington, D. 0.: U. 3. Government Printing Office, 1956), p. 11. 107 On the high school level, in addition to determining the anticipated number of students, it is necessary to ascertain the number of class periods during the day, the type and quantity of courses to be offered, the number of classrooms available, and the number of teachers necessary to staff the program. The simplest way is to start with the number of periods, classrooms, and teachers already in the individual consolidating systems, and to note any savings due to enlarged classes. Many variables crop into the projection at this point. In a majority of the consolidations, it has been found that small school districts with only an elementary program merge into a larger school district where there is already a high school to which they have been sending their students and have been paying tuition charges for them. In these cases, the receiving district not only receives tuition, but may also receive state aid based on the number of tuition pupils. Payment of this stimulant for a high school education has varied between mahing~payments to receiving districts in some cases and to sending districts in other cases depending on the exact legislative provision. However, a careful consideration of all the facts in each case should disclose reliable figures to account for the differences in high school costs before and after consolidation. It will be noted that the basis for these comparisons has been the actual figures in each particular case. There may be instances, however, in which actual figures may not be available or the circumstances affecting actual figures exert such strong influences as to make these figures unreliable. In thesecnses, estimates may be used in place of pupil-teacher ratio experience. a.determination of the pupil-teacher 108 ratio in larger schools in an area, such as a county, township, or state, which offer similar courses, or in which the educational quality is similar, provides the base for making instructional cost comparisons. These ratios can be related to the class size in the consolidating school districts, thereby arriving at the approximated instructional costs. Any savings in instructional costs are due mainly to the greater ease in blocking out grade enrollments when total pupil enrollment is large, the advantage of having sufficient classrooms in the larger school districts, a factor which simplifies teaching procedures and enables the handling of larger classes, and there may even result an improvement in teaching quality when the instructor is able to concentrate on the special learning problems of one age group rather than dividing his attention along pupils of varying ages. A few words of caution should be considered. A saturation point may be reached with the pupil-teacher ratio beyond which the increase in the size of the school will not increase the number of pupils per teacher. This is the cmlative effect of the classroom sise, teacher efficiency, and teacher cooperation. Little, in 1934, stated this as 29 pupils per teacher for elementary schools and 22 pupils per teacher for high schools.1 These figures appear low at the present time when congested clusroosmcharscterise the schools. current studies being undertaken on methods of teaching by TV monitoring systems, utilisation of teacher apprentices, teaching machines, and similar experiments may reveal new 1Harry A. Little, Potential Economies in the Regganization gg Local School Attendance Unit , (New York: Teachers College, Columbia University, 19405, p. 20. ‘- may“ M7. .4 r 109 figures on classroom size. On the other hand, minimum figures may be set by legislative action. In‘Hichigsn, no equalization grant is given to school districts with less than 10 children.1 Thus, it may be stated that instructional costs are variable with the pupil-teacher ratio, but become fixed at certain minimum and maximum levels. ngggpgrtation costs. The evidence points toward the greatest anticipated savings in transportation expense as bus routes can be modified to accommodate maximum pupil numbers on each route. By handling larger numbers of pupils, costs of transportation Operations per pupil udll decrease. It is only in rare instances of population sparsity that transportation costs may increase with consolidation due to an extension of transportation facilities to areas where the service had not been available. National averages indicate that approximately one-third of the public school pupils were transported during the year 1953-54 at an average cost per pupil of $36.55; the range in state costs varies from $17 to $87.2 The difference in these costs may be attributed to the effects of papulation sparsity, road conditions, types of equipment, and price level variations in the several states. To project transportation costs, it is necessary to take the survey studies of approved plans of consolidation, which were mentioned earlier, to determdne the number of pupils who would be transported under a consolidation program. Charting the actual bus routes, the number of bus stops, the number of pupils who live on each route will determine the number of buses to be required. 1Betty Tablemsn, 22. cit., p. 9. 2Office of Education, 22. cit., p. 20. slur 4-’ llO Economies in route service can be effected by the use of the double or dual trip plan in cases where the bus routes are not necessarily long. The double trip plan provides for each bus to cover two or more different routes morning and afternoon, and is suited to districts of relatively dense papulation. The dual trip plan uses the same bus for ’7‘] two or more morning trips and two or more afternoon trips over the same route. In these instances, high school pupils are brouglt to school before the elementary children. Under either of these plans, fewer drivers will put in more hours on the job which facilitates their recruitment, and produces less idle time for the transportation equipment. __ A comsrison of the transportation costs for the present school district and for the proposed district reveals any savings, which may be expressed as a percentage. Districts which may have encountered difficulty in buying and maintaining their buses may find that with modified routing, there is idle equipment which may be sold or traded in, and the monies received may be spent for the improvement of the entire transportation system which, in turn, results in lessened maintenance costs. In place of actual ooh projections, any savings in transportation costs may be measured statistically by first determining the average cost per pupil for transportation for the county or the state. In the use of county or state figures, any peculiar factors which now affect local transportation costs, and which may or may not exist after a consolidation is effected, are eliminated. For 'ax-ple, four districts contemplating consolidation may have current costs for transportation for varying 111 numbers of pupils transported as is shown in Table 34.. In this case, with the use of a county average cost as a base for comparison, an anticipated savings of 41 may result. Vhile this method is subject to the inaccuracies inherent in the use of average figures, it can be very useful in arriving at estimated costs. ' W! i Table 34. Comparison of districts' transportation costs with county average transportation costs. . Per Pupil Costs District Transportation Number of Using County Percentage Costs Pupils Average - $36.50 of . of Each District Transported for Each District Savings ’ 1.i‘._._--_-T-_y.u-a4. .‘OI ‘ n A $ 57,000 1,500 $ 54,750 1.02 B 25,000 600 21,900 1.5% 0 48,000 1,200 43,800 2.0% D 72,000 2,000 73,000 ( .51) TOTAL $202,000 5,300 $193,450 4.0% s 0thgr ggg-iggtructigngl cogts. Estimates of administrative costs are predicated on the number of employees, and the number of board members required after consolidation. The number of reports required of small school districts equal those required of large school districts so it is axiomatic that savings will ensue in this expense area. Also, specialisation of work procedures which is possible in larger school districts results in greater efficiency. It is more economical to provide teaching supplies and textbooks for one large school than for a number of small schools. Centralized purchasing insures closer study of prices, taking advantage of discounts, and checking of merchandise quality. 112 Plant Operation and maintenance are also affected by centralized purchasing Operations. Costs of. fuel, electricity, water, and other utilities are affected by quantity purchases which favor large consumers. Insurance costs also vary with the number of vehicles covered, the amber of buildings insured, and the age and state of repair of the fixed assets. It follows that the large school district with a large umber of better equipment and buildings will have proportionately smaller insurance costs than the small school district. Other costs peculiar to the consolidating districts, such as food services, library services, or commity services will need to be surveyed in each ‘consolidation program to discover whatever potential economies are present in these areas. "aimed elmgg clggm units. A method of estimating current costs in a preposed consolidation where the same grade or course offerings are anticipated, and pupil-teacher ratios remain the same is the weighted elementary classroom units (called WECU) device for comparing total expenses of consolidated and unconsolidated school districts. This method presupposes that there will be savings due to more economical purchasing of supplies, lowered administrative costs, and increased transportation efficiencies, but does not attempt to measure these specific savings. It is especially useful in predicting expenses in consolidations where a new high school unit is anticipated where there has been no previous high school cost experience, or where elementary school districts merge with a larger high school unit. The mu method takes the average expense per classroom for elementary schools, multiplies it 113 by a factor which represents the national average difference in per classroom.expense between elementary and high schools to show average classroom expense in weighted elementary classroom units. Thus, suppose that in 1954, the Office of Education estimated that nationally per pupil expenditures for high schools were 1.602 times the per pupil expenditures in elementary schools. If, in a school district undertaking consolidation with elementary school districts, there were 30 elementary teachers and 24 high school teachers, computation would give 68 "ICU; that is, 30 plus 24 teachers times 1.602. If current costs totaled $350,000 for this district, there would he an approxhnate cost of $5,147 per mu. Determining how many classrooms are anticipated in the proposed consolidation with the elementary school districts will give an approximate total cost for the new school district. It is assumed that the economies inherent in the larger school district will he carried over to the new school district. The advantage of this method lies in its circumvention of an extended analysis of proposed operations which may be extremely difficult to project in some instances. Its disadvantage lies in using average figures which‘nsy he a poor indicator of actual conditions, and may cast doubt on the reliability of the statistical results. m In summary, projection of costs for school district consolidation can proceed either on an actual cost basis or on an estimated cost basis depending on the circumstances in each case. While actual costs may prove to he more accurate, they entail greater amounts of planning, computation, 114 and cooperation among the consolidating units. lstimeted costs based on statistical computations are subject to error proportionate to the degree of dissimilarity of the specific school district to the average school district. In all events, cost studies should produce a clearer picture of organisational procedures before and after consolidation, thus becoming an important factor in the influencing of school mergers. n n A”; Long-Term Variable Budgets for School Districts Forecasting costs for school districts entails the preparation IF‘ _'- 41- ' .nFm-x JIrDI". C'v - ’l‘ u.l~ I. of a budget for the ensuing year in which there is embodied the plan for financial management. A properly prepared budget should show the sources of revenue or borrowings as well as a summary of expenditures with supporting schedules to reveal past years' figures and methods of arriving at the estimates. Longrterm variable budgets are a device for forecasting revenues and expenditures for an extended period of time into the future and contain a plan for the future educational program of the school district. ‘ B e re 10 Differences in the sequence of the items presented in the budget stem from.the underlying philosophies of particular school systems. Some school districts show the revenue to be expected for the new school year, then allocate those revenues to cover the school expenses. Other units show the cost of the educational progren‘which is desired, then follow with a statement of the revenue needed to pay for that level of educational activities. 115 In presenting the budget, the report may be shown in three parts. One section may consist of a message from the budget-making authority uith a emery of the proposed revenues and expenditures, another section may show the schedules supporting the summary, and the last section may detail any drafts of borrowing measures necessary to put the budget into effect. The budget may be distributed to all the taxpayers of the «unity as a method of engendering interest in the . educational program. If it is to function as a public relations document, attempts to create public interest are made by the use of human interest photographs, pictographs, art work, and clever captions in connection i with the educational story fella-ed by the costs of supporting the projected educational objectives. W The drafting of the budget might be affected by three authorities. Federal regulations concern budget items, such as school lunches, vocational education, etc., and both current expenses and building construction in federally controlled or affected areas. State provisions and regulations may limit the rate of tax levy, the state aid support, establish mini-:- teachers' salaries, or prescribe certain types of special education progrus. Local regulations, such as city charters, may provide for school revenues as well as for expenditure controls . 116 W Local school revenues are created in the main by assessments on property uhose situs is within the boundaries of the taxing authority. School districts which are not controlled by city charters levy school taxes through the state subdivisional taxing authority, and these taxes, for the most part, are levied on real property. In addition to this revenue, school districts receive aid from the state. Most states _ attempt to usrk on the principle of equal educational opportunities I for all children, and by this maxim allocate state aid on the basis 5 of need by the school districts. A large portion of the monies allocated by states to the school districts comprises general purpose funds which may be used for any current expense purpose at the discretion of the local district. A smaller portion are of the special purpose type, such as for trans- portation, for the education of exceptional children, and for special types of programs. In an effort to assure that the minimum educational requirements are being met, the states impose certain minimum standards or requirements for participation in these state funds. or it es It was stated in 1957 that the 'expenditures for current operation of schools are likely to exceed $100,000 a year even in a small district having as few as 500 pupils. In a district with 5,000 pupils, expenditures may exceed $1,000,000 a year."1 The means by which this money is spent 1Lee 0. Gerber (ed.), La and the 82m; Mam" flanaggr, (Danville, Illinois: Interstate Printers and Publishers, 1957), p. 93. 117 may make the difference between an economical or an uneconomical Operation and an adequate or an inadequate educational program. In constructing the figurea for the budget, due emphasis should be given to the cost experience of the past year. An analysis of anticipated expenditures by classrooms, by department; by buildings, and by elementary, junior and senior high divisions should be made in ?r_ order to bring into clearer focus the trend in the spending for the E various programs. In setting the total program, anticipated student enrollments are forecast from the school census and any unusual increases ? or decreases from these figures can be determined in advance from current 3 circumstances. In determining the estimate for staff requirements, the following general guide has been suggested.1 Table 35. Guide for staff requirements. Staff Position ’ Staff Requirements Principals and other administrative officers 1 to 12 teachers Classroom teachers 1 teacher to 25 pupils Counselors 1 to‘200 high school pupils Librarians l to 500 pupils Clerk ' 1 to 50 papils (No school of 12 teachers or more should be without a full-time clerk. A clerk can divide her time between two or more schools.) Nurse 1 to 1,500 elementary pupils l to 2,000 high school pupils Custodian 1 full-time custodian for approxi- mately 16,000 sq.ft. of floor space lbsrican Association of School Administrators, School Boards in W, (Washington, D. 0.: National Education Association, 19465, p. 122. 118 rm b tin Thus far the material has outlined what is required for budgeting purposes. With this background of general conditions, it is suggested that variable budgets be developed by the school district showing anticipated trends in pupil enrollment to determine long-term forecasting for buildings, instructional staff requirements, and modifications of the school program to include new and desirable changes. In the use of this method, the annual budget becomes a part of a projected plan which may extend to five or ten years in scope, and reflect the variable elements of the educational program. There are several reasons why projecting variable costs in long-term planning is especially useful: a. Publicity regarding needed building buprovements may be started in time so that there is sufficient opportunity for public discussion and agreement on issues. b. Trends in higher pupil enrollments can be watched with respect to staff replacements or recruitments before the needs become critical. c. Increased costs due to rising price fluctuations may be anticipated and provided for. d. The need for consolidations may be visualized if the receipts, expenditures, tax rates, and taxable property are considered over a long-term period of time. The continuous long-span method of budgeting for schools entails the techniques of adjusting the forecasts annually or periodically, and «of budgeting constantly in the light of new developments, and always A ~_ -x-J..ag.} 119 working several years in advance of the current annual budget. While long-term planning may not be feasible from the legal (state-aid) standpoint, the use of this expedient together with variable budgets considered in the light of mini-m: and maximal pupil enrollment figures is to be recommended as a helpful technique for financial steering. ocedur or 1 t rm bud ti . Projected pupil enrollments F“ .. can be secured from the school census and adjusted for dropouts based on the experience records of the school system. For this purpose, it is necessary to utilize past historical records. The use of an enrollment chart coverings period at least conperable to that of the forecast shoving grade enrollments through the years is a useful method of ascertaining very closely the dropout rate. The resulting anticipated pupil enrollment figures showing minim and maximum enrollments, while possessing high reliability, should be adjusted each year to reflect current trends in the innovations of the educational programs and changes in economic conditions, thus necessitating the constant review and adjust- ment of the budgetary figures. Once the enrollment study has been finalised, the projection of the costs of the educational program proceeds. The pupil-teacher ratios of the several grades can be extended into the enrollment study to determine staff requirements for the term of the budgets not only on the basis of the anticipated ranges in enrollment but also on the basis of the varying educational programs . As the enrollment figures vary within some predictable range due to the approximations inherent in them, the variable budgets are developed to show the resultant ranges in expenses. 120 Per pupil unit costs on instructional supplies, library books, audio-visual materials, transportation expense, and other expenses directly related to pupil costs can be analyzed with respect to their adequacy. Salaries of custodians, clerical workers, counselors, and administrative and instructional staff members are based on salary schedules which are subject to periodic revisions and contain annual -_‘ -‘..’~F increment provisions. a.reslisation that such salaries will increase or decrease to reflect economic cyclical fluctuations makes for sensible long-term,planning. Especially important is anticipatory planning in the field of public borrowing. Budgetary planning which encompasses the effects of alternative borrowing programs and procedures, various types of building programs to group grade divisions, and the resulting changes in expenditures due to these factors makes fer a realistic viewing of the long-range monetary needs. The "going-concern" concept is as valid for school districts as it is for business concerns. W. The following charts are presented for use in variable budgeting (see Figures 4 through 8). In connection *with their use, it is desirable to retain in mind the aforementioned perspectives on budgetary procedures. The group covers personnel salaries only; however, extension of the materials shown can be developed for other revenue and expense classifications. 121 Year (1262-22) PUPIL ENROLLMENTS YEAR {1962-196}! Ila. lax. Avg. 5.. E. :3 vvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvv ELEMENTARY Kindergarten.. “5,... —T"] ens—w . A a i :u- ‘ t . ~--‘ .-_4 1 . ”I“ | NOTE: worksheet to be extended for entire 10- year period. POST GRADUATE... (Figures should includetransferring rural students.) Figure 4. Long-term budget schedule showing pupil enrollments. 122 Year {1262-12} INSTRUCTIONAL STAFF REQUIREMENTS Elementary . Build ing_m (To be used in conjunction with PUPIL BNROLLMENTS) _jLJLALJL_ {1992.12532 (126;:1264) ) Nine Max. Avg. Mine lax. Avg. ) ) Kindergarten.. ) ) IOOOOOOOOOOOO. ) ) 2.0.0.00000000 ) ) 300.00.000.00. ) ) 4............. ) NOTE: florksheet ) to be extended 5............. ) for entire 10. ) year period. 6ooeoeoooeoooo ) ) stmOOOOOOO ) ) MAOOOOOCOO. ). (Scheduling of half-day sessions‘bhould be taken into account.) Figure 5. Long-term budget schedule showing teachers required for an elementary school. 123 tear (lggg-zgz INSTRUCTIONAL STAFF REQDIMNTS Secondary (To be used in conjunction with PUPIL BWN‘TS) Y B A R §;2§2-6§1 {L962-l9631 ) Kin. Max. Avg. Min. Max. Avg. ) JUNIOR HIGH 7th Grade Subjects.. 8th Grade Subjects” NOTE: worksheet to be extended for entire 10- year period. SEN 103 HIGH 9th Grade Subjects.. (This listing is to be continued through 12th grade subjects.) SPECIAL. ram. VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV Hm" 6‘ Long-term budget schedule showing teachers required for a lecondary school. .,.—_- "-1? ,o,.. i. v ‘1“ 124 Year {l262—L97g} RON- INSTRUCTIONAI. STAFF REQUIRDENTS (To be used in conjunction with PUPIL ENROLLMENT” LE A R (1262-3291 (1263-1264) ) __ Min. Mu. Avg. Min. Max. Avg. ) 5, Emu-mar 5 Building A Pull-time Custodians.. Part-time Custodians. . Clerical.............. Other Building 8 Full-time Custodians.. Part-time Custodians. . Clerical.............. Other ................. JUNIOR HIGH Full-time Custodians. . Part-time Custodians. . Clerical. ..... Other NOTE: Whrksheet to be extended for entire 10- SENIOR HIGH year period . Full-time Custodians. . Part-time Custodians. . Clerica1.. ...... Other................. Hemline ..... . ........ nurses... ............... counsrLons... ...... vvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvv F . 13““ 7 ' Long-term budget schedule showing employees required for non-instructional work in elementary and secondary schools. Year {1962- 72) SALARY EXPENSES INSTRUCTIOEAL AND NON- INSTRUCTIWAL STAFFS (To be used in conjunction with FRECEDING SCHEDULES) YEAR 1959- 1960— 1961- $1962- 1963) ) 1960 1961 1962 MO! TEACHER: Elementary BuildingA Kg... ‘ 1.... 2.... 3.... 4.... 5.... 6.... Add'l.. Elementary Building B 13g... 1.... 2.... 3.... 4.... 5.... 6.... Add'l.. Junior High (This 13cm; is to be continued through 12th grade subjects.) Min. Max. Avg. ) SALARY, 11261.9 ING ANNUAL W138 PRIOR YEARS “"“" “ “ 3““1r NOTE: worksheet to be extended for entire 10- year period. Fig.2. 8- long-term budget schedule showing salary expenses for instructional and non-instructional employees. 126 on e h etin Long-tern variable budgeting is an aspect of school financial edninistration which hes not yet received the attention of school administrators. The advantages of budgeting over an extended period of tins heconos self-evident as the revenues and expenditures of school districts are affected by population trends end econonic conditions. Messrs educational plans are dependent on current infornstion regarding cents and the projection of. these costs for financial steering. The been for sound future plans is cost control through cost studies and information. Su-ery 'l'he dovelopnent of cost analyses for school districts proceeds from s study of costs affecting departnents directly involved in teaching. Indirect cost functions are allocated to instructional departments as e further refinement of costing techniques. Projection of costs in consolidation and in variable budgeting are two extensions of costing functions in school district accounting. CHAPTER VI W! m W810” Proble- and Procedures This research study was perforned to deter-ins the franc of aired of school adninistrators respecting their desires for the use of an additional financial took-cost accounting. and whether it is possible to utilise coet studies in school district accounting. The survey of the literature preceding the initiation of this research study indicated that there is a great deal of interest in school accounting by various echool groups and authors. However, less interest is evident in the application of cost accounting. This study investigated the application of cost accounting to school financial nanagenent. of t This study was conducted to deter-inc whether school administrators utilized coet records as on essential tool in financial nanagenent. and whether there was a felt need for such records by school district officials. Then to test the feasibility of cost record utilisation, analyses were ““0 0f the manuals. accounting for-s, regulations and rules of the state “Nu-OI":- of education in the 30 states as well as a study Of W50“- U 'f "I. U. 3. Office of Education. Based on the desires of school adminis- trators Qued the pornissive nature of regulatory provisions inposed by the 127 128 states. selected cost accounting studies were developed. Each of the steps in this study resulted in an affirmative finding. lethodolon and dosie The conduct of this study required three types of research techniques . l. procedures was tested by a nailed questionnaire to 233 school districts A follow-up postcard request was sent to The feelings of school adninistrators toward cost accounting selected by random sampling. 180 participating respondents to test any changes in attitude after they had received the results of the survey. 2. Personal interviews with school administrators in ten city echool districts was conducted to provide depth and meaning to the more to the questionnaire need in the survey. 3. Analytical study of the general accounting framework imposed by governmental bodies was conducted to determine the types of cost accounting reports which nay be for-glared for use by school districts of varying sine. To explore the theory that school adninistrators are desirous to initiate inprovensnts, that they are not hampered by regulatory bodies to Prepare suitable cost reports, and that cost accounting procedures can b‘ ‘PPltod to school district accounting, the answers to three questions Vere sou‘hg; ‘° 1‘ there a felt need by school adninistrators for the use of underlying cost records as an aid to nsnagerial efficiency? 5' 39.. the general accounting fr-eworlt, as set by state “301““? “a.” Mr the use of costing nethods? 129 c. Can cost accounting records be developed independently of the general accounting framework, either on a lunited or extensive basis, depending on the type of educational progran offered, the size of the school administrative unit, and the size of the pupil enrollment? W. The analysis of the infornation obtained fronxthe respondento' answers to the mail questionnaire was summarized by the writer and tabulated,and statistically analyzed by the MISTIC computer at the Michigan State university Computer Laboratory. Sunnary of Findings This study revealed extensive interest by school administrators in the subject of cost accounting studies which is indicated by the 74.6% return of the mailed questionnaires. Interest by state departments of education is equally high as the writer was able to secure replies from these agencies to a request for accounting manuals, regulations, and forms in an abundance which far exceeded expectations. The findings from.this study are presented ae'anawers to the three questions posed earlier. ‘ggglgigghggg: Is there a felt need by school administrators for the use of underlying cost records as an aid to‘managerial efficiency? This question received an affirmative answer by a slight margin. A follow-up postcard request survey created the implication that an unfavorable attitude of a school administrator toward cost accounting procedures may possibly be changed through dissemination of literature favoring cost accounting. lei... u. I» La. VI.- .t MIL... . pm Frivwli v n m V “ 130 Respondents who participated in the questionnaire survey indicated by approximately 522 that they were favorably disposed toward the use of cost studies. The school districts which already had some cost methods in use showed a strong affirmative viewpoint. The survey showed that as a school district increases the types of mechanical equipment in use and the types of general accounting records in use, it possibly shows a propensity to increase its cost studies. Question two: Does the general accounting framework, as set by state regulatory bodies, hamper the use of costing methods? The answer to this question is that the general accounting franework does not hasper the use of costing methods. The criteria used for determining the possibility of cost studies was that a school district was required to have: (1) a budget for predetermining costs; (2) a set of general accounting records to show revenues and expenditures; and (3) a sub-classification of the expenditure accounts at least on a one-level gradation. Analyses of the manuals. accounting forms, regulations and rules of the state departments of education in the 50 states as well as a study of the recs-sendations in Handbook 11 of the U. 5. Office of Education showed that at least 49 of the states require that school districts prepare a budget, that account classifications contain information on receipts and disbursenents, and that there is at least a one-level gradation of the chart of accounts which permits school districts to develop cost studies to aid in the solutions to their financial problems. (These findings also apply in the District of Columbia.) 131 e on e: Can cost accounting records be developed independently of the general accounting framework, either on a limited or extensive basis, depending on the type of educational program offered, the sire of the school administrative unit, and the sire of the pupil enrollment? The answer to this question is apparent in the cost analyses using direct cost and indirect cost centers which were developed for varying size of school districts and were based on acceptable business practices. Adaptation of cost analyses from business practices to school district use proceeded from a consideration of recon-endations for cost accounting methods from authoritative sources, such as the Cost Accountants' Handbook, various publications of the National Association of Accountants , the American Accounting Association, and Handbook 11 of the U. S. Office of Education. Also, the writer's experience as a certified public accountant since 19108 contributed to the development of these cost analyses. cost studies on consolidations and long-term variable budgets are presented as two types of cost reports singularly nieful for school district financial planning which is possible under the prevailing general accounting structure at the present time. Conclusions The findings in this study indicate that school adninistrators are not fully acquainted with cost accounting procedures although they show an interest in this area of financial management. The potentials of cost studies are not realised by many school officials due to their unfamiliarity with the subject. This may be the result of a paucity 132 of literature on cost accounting for school districts or to the lack of training by school administrators in this subject. The adaption of the recs-endations in Handbook 11 of the U. 3. Office of lducation by a majority of the states is focusing attention on accounting records in use by school districts. This is a trend in the direction of improved reporting methods. It is felt by the writer that further improvements can be accomplished in financial reporting by the dissemination of information on cost accounting uses in school districts. The types of cost studies needed by each school district varies with the size of the school district, the donand for cost information by the tax-paying public, and the urgency for the use of cost information by the school administrator. That school districts are making cost studies spas-dically on the d-and of the particular occasion is well known. Also, many school administrators have statistics on the costs of the various services offered by the system. however, individual thought and effort on the part of each administrator is required to develop figures on the costs of specific cost units. There is a need for a textbook on cost accounting procedures wherein the theory and techniques of analysing costs of typical school expenditures is explained, illustrated, and carefully integrated with school business administration. As stated earlier, quality education is not necessarily expensive car do high expenditures signify quality in education. It is only when a school district receives full measure for the e‘xpenditurs of funds that the “editions for public trust in the adninistration of the school are satisfied. 11,. school administrator checks on the measure of value received through 0,: I'CPOrts. Thus, cost reports can be utilised to interpret,and even a . 133 direct, the philosophy of the school system. The interpretation of school philosophy occurs when the cost of each school service is conpared with the prior year's cost and with the cost of every other service which the school offers. The administrator can check on the direction of school apenditures to determine whether the philosophy of the school is being followed. Becurring expenditures for certain classes of services can direct the school system toward a philosophy of education which the costs of the various services indicate. The findings disclosed that school districts with multiple units of cluentary, secondary, and «unity college exhibited the greatest interest in cost “counting procedures and, therefore, are the most favorable users of this managerial device. hall school districts complain of a lack of trained personnel to develop cost information. Thus, a concentration of cost analyses to suit the mltiplo unit school system may be the most prepitious method to introduce continuing cost analyses to school administrators. Those school districts which nploy data processing equipment have an unusual opportunity to amplify their financial information by fact-finding reports on costs. school districts using manual and mechanical methods can iqreve their financial reporting by periodical reports on unit costs at a time when school is not in session and the demands on the clerical staff have subsided. Based on the material in this study, the conclusions are: a. The receptivenesa of school officials to cost studies can be increased by publicizing the merits of cost-finding techniques. b. The adoption of cost accounting as a managerial tool by school Pfil'tomnel can be increased by implementing school fund accounting courses '1“! material on cost accounting. 134 c. Cost reports may be utilised to interpret the philosophy of the school syst- to the annuity. d. In order to introduce continuing cost studies to school admin- istratorm, the needs of the multiple school units of elementary, secondary, and co—unity college should be considered first as these school units evidencod the greatest interest in further cost studies. 0. The trend toward automated equipment in school district accounting providom the means for valuable cost reports without necessitating the addition of office personnel for the preparation of these reports. 1. school districts of small size can prepare cost reports during those periods of time when there is an abatement of school activities. Implications for Further study The material in this study has led to the following recomendations for further study: m. It appeared to the writer during the personal interviews with school officials that they had preconceived opinions on the value of cost accounting which may be based, in part, on their experience and training. 1° what “test the answers to the mailed questionnaires were influenced by “’1’ futor cannot be determined. A study in the area of the background of school administrators can be very useful in the consideration of further research mtudies of this tn.- 5 - The types of cost reports already used by school administrators ““14 “9': be determined from this study. A search in this area could i “1““ the direction of further development in this subject. c . The use of long-term variable budgets appears as a new type of long-rm” planning for school units and a study in the area of long-term soft 'nI -_-Iv .un 135 planning could initiate a transfer of this effective nauagerial device from business usage into the educational field. d. A study in the area of training prograns for school personnel could reveal the present trend for school adninistrative worh preparation on the executive level. An increase in accounting training for school administrators on a quality rather than a quantity basis any increase the managerial efficiency of those to when school business meagenent is entrusted. e. A study at a later date similar to the current study may reveal ‘ changing attitudes of school adninistrators toward cost accounting procedures. 1 It is the opinion of the writer that greater interest in this area will be manifest at a later date due to the enargence of this subject in the area of school adninistration. my The function of schools is to educate. The means for accqlishing this function are constantly changing, both educationally and ehiuistrativoly. In the administrative field, cost accounting is a tool which has not been put into use as fully as its potentials wnrrnt. l'ha findings of the study indicate that school administrators are, as a nsjority. interested in cost procedures, that regulatory provisions permit cost studies, and that adaptations of business coat analyses can be node for school district use. The conclusions indicate that the introduction of cost accounting as an aid to school financial nanagenent can proceed along several well-narhed avenues which relate to the training of the school eduinistrator, and the type of school and‘ facilities with which he worhs. Further studies to impluent this research thesis are iqlied in the eforeuentioned findings and conclusions, and are itenised for convenience. BIBLIOGRAPHY Books, handbooks, and Pamphlets hsrican Association of dchool Adninistrators, srd in tion, (Washington, D. 6.: Iatianal lducstion Association, 1946;. Dickey. lob-rt. ldttor. We. (law York: the Ronald Press Caspany, 1960). .a- $131 1 use HAff-Ww a.. Garter. he 0-. “it“. We. (Bumme- Illinois: Interstate Printers and Publishers, 1957). Lang, Theodore, Iditor, W, (law York: The Ronald Press Conpany, 1947 . Little, Barry A., Potential Mes in the Reormigtion of Local W, (law Yor : Teachers College, Columbia University, 19 . lationel lducation Association of the United States, Guides-Jo the non of State 8 Pinon a Pro , Washington, D. 0.: Cunnittee on Ten lducation and School Finance, Iational Education Association, 1958). .u a"; Rational Iducation Association of the United States, Public-School . Unit of , Prepared for the Col-ittee on Tax Education and School Finance by the BIA Research Division, (Washington, D. 6.: Ietional lducation Association, 1953). Odell, C. 11., Introd ti to no isti , (New York: Prentice-hall, Inc., 1 ). Town of Scarsdale, law York, guns}. Eggt gth Gogol 'l'an Election to be held on V e da 0 on ce Soho gap-155 lo. 1, Scaradale, law York: 11Board of Education, 1961) Table-u. nutty. W. (m Arbor: Iureau of Governent, Institute of Public Adninistration, University of Iichigau Press, 1951). 1'14"“. 8a- 1.. We» (law York: Harper 6- Brothers, 1960 . 136 137 Walker, Helen IL, and Lev, Joseph, Stgtiltggl gfgrence, (New York: hanry Holt and coupany, 1953). Articles Anaricsn Accounting Association, "Tentative State-ant of Cost Concepts Underlying Reports for hasgement Purposes," W m. (April 1956). p0 184s Caruichsel, Forrest V., "Us Switched to Inchine Accounting and Are Honey Ahead," Nation; EM“: (March 1954), pp. 108-112. Casey, Leo H. and Bogg, Ridgley 11., "Descriptive Accounting Hschine Operations for School Districts," Egon School Board, (Deco-bar 1954), pp. 26-29. Davies, William, "Cost Analysis Should Consider Time as Well as Space," IE gm; grecutive, (October 1953), p. 56. Nearest, lleel, "flow to Simplify Your Accounting," The Sghoo; ggecutiye, (November 1954), pp. 56-57. Erviti, Jones, "State Audits Gould Weaken Local Control," Ea School nudge, (August 1953), p. 54. "Financial Accomting for the letion's Public Schools," Editorial, BcMI Life, (October 1955), p. 7. Gatje, George 8., "Let's levise Our School Accounting System,"_1h_g gm; mange, (April 1955). p. 56. Hill, Roderick It, "Ilachine Accounting, When and Why," arisen School Board, (March 1952). p. 40. Ivins, Wilson a. and Anderson Helen 1., "Extracurricular Funds Accounting in the Various States, Preliminary Report," latigggl gsociatiog of Secondary School lrigialg, (March 1954), pp. 122-136. Jury Survey, "Practice and Theory in Athletic Funds Accounting," ations m, (September 1956). PP. 70-71. Kilpstrick, I. 11., "Advantages of an Independent Annual Audit of School Accounts," Proceeding of the Qirtnlighth Annual gogven§ion, (lvanstou, Illinois: Association of School Business Officials of United States and Canada, 1952), pp. 80-85. llczlligott, Joseph, "Handbook for School Accountants," Ngtions Scmols, (love-bar 1956), pp. 90-92. a.“ Angina-x0. ‘. .._!_ w- n. _ *‘W_ 138 lchachlan, B. 11., "Designing Your Accounting Systen to Pit Your leads," Proceedings of the Portieth Anngl Convention, (Evanston, Illinois: Association of School Business Officials of United States and Canada, 1954), pp. 85-90. flowery, D. T., "School Cafeteria Accounting," The Balance Sheet, (January 1952), p. 207. Dior-man, Loyal, 9., "A Nodal State School Audit Statute," The School kgutm, (larch 1954), p. 71. Pratt, lorman 0., "Cost Analysis for School Cafeteria," sttgg for ldgcatorg, (September-October 1959), pp. 11-12. ». :‘Ttt' . Reason, Paul I... "Clearing Accounts Preclude Deceptive School Costs," Iatiogg goals, (August 1956), pp. 49-50. g "Costs lay Be Lower Than You Think," assign; ghools, (July 3 1958), pp. 50-51 . "law Financial Accounting Handbook," {Eoceedinfl of the Port: Sgond Annual Mention, (Ivanston, Illinois: Association of School Business Officials of United States and Canada, 1956), pp. 132-136. Roberts, Charles B., "why Property Accounting?" School Life, (September 1961), pp. 21-25. 8«that» ff, Addison B., "Automation in School Accounting," American Selig; Board, (larch 1961), pp. 17-19, 48. spit xer, A., "Suggested Bookkeeping and Accounting System for Secondary Schools," United Bainess Bducatigg Porun, (December 1950), pp. 30-31. “3102‘. Barbara, "Inchine Accounting in Small School Systems," _A_ne_;;ican School Board, (larch 1954), pp. 47-48. Tidwell . San B., "Fundamental School Pund Accounting," American School Board, (Hay 1957), pp. 134-137. "Mu-Och, Jesus 16., "Financial Accounting," 9333} 1,1. £0... (June 1951)- pp. 18-21. I thbl. Ideas for School Businessnen," lesion; Schools, (February 1962), p. 86. 139 Public Dooments Arizona State Department of Public Instruction, Arizona Accounting and 99g Handbook, (Phoenix, Arizona: State Department of Public Instruction, 1955). California State Department of lducation, galifggia School Accountigg Manual, (Sacramento: State Department of Iducation, 1951). Sggplement to California School Accounting Ianual, (Sacramento: State Department of Education, 1954). ? School Digtrict Prgpertx and Bgulgnt Accggting, (Sacramento: 1 State Department of Education, 1957). K Adminiggrggion 0; gm: School Food swig; groggam, (Sacramento: State Department of Education, 1957). Accmting Procedgges for Student eggeniragiona, (Sacramento: State Department of Education, 1957 . Colorado State Departmnt of Education, Colorado {entitive Manual of Instructions - Boo in Acc unti oc are for Snell Colorado 8cm“, (Denver: Department of Education, 1957). Florida State Department of lducation, Florida huggl of Instructiggg - Unifom Piggial scountlng gor County Bogd of Publlg Instggggion of Florida, (Tallahassee: State Department of Education, 1952). 13‘1““) State Department of Iducation, 1 c tin at (Boise: State Department of Education, 1957 . Illinois Department of Public Instruction, lllinois ggide for flaggi- gication of ch221 égcgggts, (Springfield: Superintendent of Public Instruction, 1949). Indiana State Board of Accounts, Elan Handbook gt gtructiggg for Uniggrm Agoogting Sntem for School Cities, Ehool T335. and Cg_ngglldated Sc¥l Units, (Indianapolis: State Board of Accounts of Indiana, 1951 . Iowa 3apartment of Public Instruction, Iowa orn ial in gor Iowa Schggl Digtricts, (Des lioines: Department of Public Instruction, 1954 . 140 Kentucky Department of Education, 53:33; alga 952$]. financial My, (Prankfort: Department of Education, 1958). Iaryland State Department of Education, I‘M-gland gghool Bullgtig - A Sugggsted zrgedure gor the Eecording of Cash Receipts and D sburs n s f r Ind d 1 Schools, (Baltimore: State Dopartment of Education, 1951). llichigan Department of Public Instruction, W nichigan lghool Digtrlggs, (Plint l: The Biegle Press, 1962). lissoari State Department of Education, 52an gglforn Pinanclal S tam, (Jefferson City: State Department of Education, 1954). law Jersey Board of Education, Leg lgrsez Public gghool Financial Acgounting Sntem, (Trenton: State Board of Education, 1924). law Monica Department of Pinemce and Administration, low gelgico Assomtigg g 3&5;ng Bande, (Santa Pa: Public School Pinsmce Division, Department of Finance and Administration, 1958). Earth Carolina State Board of Education, Wm WM, (Baleigh: State Board of Education, 1958). Tr ti t etus I o rol, (Raleigh: State Board of Education, 1958 . Ohio Bureau of Inspection and Supervision of Public Offices, Classification of gggeipts and Approgriatlgn ggcounts for gghool Disgrigts, (Columbus: Bureau of Inspection and Supervision of Public Offices, 1954). \ WWW. (Colunbus: Bureau of Inspection and Supervision of Public Offices, 1949). Mahoma State Board of Education, Pinan e Tr rtation Laws lud the State of Ed ation Re lations for migtratlgg and Handbook on BEggtigg and Businesg Managemens, (Oklahoma City: State Board of Education, 1959). South Canolina State Department of Education, Handbook of Busiggs MW. @01me State Department of Education, 1955). Uniform Accmting for School 9551mm! Ms, (Colmbia: State Department of Education, 1956). 141 The Education Survey Subconitteo of the Tennessee Legislative Council, Propgsed lgcounting gyltem for the gallic gghggl Szgtggg in Tennesseg, (Hashville: The Education Survey Subcommittee of the Tennessee Legislative Council, 1958). Unifom lgcountlgg Pr_o§edureg for lggnlgggee'g Schools, (lashville: Tennessee School Boards Association, 1958). Texas Education Agency, nggs Stage Board of Educatlgn :ollgieg on St rds d Be a ions for it boo etin unt n , and Auditing, (Austin: Tense Education Agency, 1958). U. 8., Department of Health, Education, and Belfare, Office of Education, (Hashington, D. C.: U. S. Government Printing Office.) Plgggclal Accounting for Local and ggggo £99221 lxsgggg, Stgggggd Receipt and Egpeggigure lggggggg, lgggg Edggational Records and Beggrtg Serlgs: Eggggggk II, 1957. n e of to e Ed t 1 St a Educational Becgrds egg lgpgrts SerlesI Handbggk I, 1953. P 1 ti f Sc iviti t e Ed at Record; and lgpgggs, 1959. e t co tin fo at t ate ati d and i Hand k I 1, 1959. Schoo : i , 1959. S a ist of State ° i t n St f, W - 1953-54. 195 . Ed a lo Dir ct - 95 - ca, 1958. Statisti f emu: s and Pinance - 19 , 1956. U. 3., Secretary of the Treasury, Director, Bureau of the Budget, Comptroller General of the United States, 8th Annual Proggess rt t oi P in in the ngeral Qggernmegt, (Heahington, D. C.: U. S. Government Printing Office, 1957). The University of the State of law York, The State Education.Department, WW. (Albany: The University of the State of How York, 1955-56). **—-"*‘fi 7* “ *7 '. 142 Utah State Department of Public Instruction, W We. (salt Lake City: State Depart-ant of Public Instruction, 195S . Virginia State Board of Education, -.-.-__- 1". 1 . ._ o _~_ '12. _ a L- in: ° ._ r. in“ -1-.~ m , ic .. - - : State Board of Education, 1954 . Unpublished Eaterial Bahcock, Ronald B., 'Trohlena in the Accounting and Reporting of Public School undo," (unpublished Naster'a theais, Graduate School, University of Oregon, 1958). Bernath, Llewellyn Laurence, "Payroll, Purchasing, and Budgetary Control Procedures in First Class School Districts in laahington," (unpublished Ed. D. dissertation, University of flashingten, 1957). with ‘ ‘ APPENDIX A 144 QUESTIONNAIEE Date City or School Dietrict State Report prepared by (la-e3 (fit 13) l. UBATTTPE OP EDUCATIOIAI. PWEOYOU OPPEE: Ember of Ember of (Check One) Schools Teachers Elementary only . . . . . Secondary only . . . . . (lo-unity college only . Elementary and secondary . . . . . Elementary, secondary, and amenity college Secondary and con-unity college only . . . . 2. AMMILYWIT no. OFIAYIIISI“ § lllll 3. ANNUAL cm WINE! PER PUPIL Ill mum: DAILY rmum (PER mm 6081) 4. PIEASE m THOSE ACCOUNTIIG EECOEDS UBICB AEE IE USE: gr“ acmtlng recordg: Cash receipt journals . Individual earnings records Insurance registers Student activitiee records Note registers Revenue lodgers Bond registers Property lodgers Petty cash records Payroll journals School lunch records Appropriation or encumbrance Voucher registers or and expense lodgers disbursement lodgers Other t ace ti o s: Tranoportation cost analyses Job cost lodgers Payroll allocation schedules Expense allocation schedules Cafeteria costs analyses Other .4 4w} .4_~'—— -._.H’ ”-4 S. S. 7. 9. 10. 11. 12. 145 m m WHICH. EQUIP“ AVAILABLE: Adding nachinea Bookkeeping machines Calculating machinee Other Data processing equipment MWWMIWNDUTIESOPAWHGMTM "3101! OF m WC WI DO YOU use FOR AVERAGING EXPENDITURES: (Please check one) Per pupil Weighted cluentery Grade or units claaeroom units course unite Other DO YOU MUS COST APPEGIIATIOES ON THE TEACllIlG O! W W SUBJECTS (SM AS SPELLIEG, ”HITTING, PHYSICS, ETC.) TO EACH STDENT Ill YOUR SYSTI? Yes DOYOUHPICOSIWMIOISWMCOSIEOP Mil-TEACHING 1m: (3068 A3 SMY HALL SUPERVISION, 1.le “171638, GUM muons, ETC.) TO EACH mum II YWI norm Yea DO YOU “VI YOUR mums (maximum. WIONAL, MIN, CUSTODIAL, are.) KEEP rm mamgrm "MRI“? Yes am: you am m'r ran IIFOEIATIOII or ma new we mun BE USEFUL Ill numerous or m mute-um: r. r. A., FACULTY, on crrlms' ems: . Yea No No NO mmummwmmraorrmsmvrr —.‘l: r: I‘ (no. .‘..I ,a . at. .u A..__-’. _ A- 4- 146 COVERING LITTER HELEN M. SMITH Certified Public Accountant 1051 Lakeshore Drive - US 25 Carsonville , Michigan 0 I O O O O O O O O O C O O O O O O O O O O O O O O O O O O O I The enclosed questionnaire pertains to a study of accounting procedures prevalent in school districts in the United States. Your district is included in a sampling drawn from 50 states to determine the practicability of using cost accounting methods. Will you please coeplete the questionnaire by checking in the appropriate blanks, and return it in the enclosed stamped envelope. I know that your time and your enployees' thee is valuable, but a small favor in this respect will be appreciated. Sincerely, Belen'fl. Snith Enclosures: Questionnaire Return envelope You.will be informed of the results of the survey. 147 POLLOfl-UP LITTIR HELEN‘It SMITH Certified Public Accountant 1051 Lakeshore Drive - US 25 Carsonville, Michigan Ybum assistance is needed for the purpose of completing a study on school district accounting which investigates cost procedures helpful to school administrators. While I realize that the demands upon your tine make it impossible for you to consider every request sent to you, I do hapo that you will complete the enclosed questionnaire and return it in the stamped envelope. This material is identical to that sent to you previously. This enall favor will be most appreciated. Sincerely, Helen Ii. filth - Enclosures: Questionnaire Return enveIOpe You will be informed of the results of the survey. 1 1......“ mus 0! m sum DISTRICTS 148 and Reply States County city Population Received lortheast lav Atlantic largate city 4,715 Yes Jersey Bergen Iidland Park 5,164 No (antics) Burlington Psdmrton 7,107 Yes Cadet: Clsaenton 3,191 Yes Cape lay lorth Hildwood 3,158 No Culberland Iridgaton 18 , 378 No less: Gsldvell 6 , 270 Yes Iillhurn 13,775 Yes Gloucester Williustovn 2,632 Yes Hudson Kearny 39,952 No Banter-don L‘srtville 4,477 No Mercer Laurence Np. . 4,433 Yes Riddle”: South Plainfield 8,008 Yes mutt: last Keansburg 2,596 No llorris Lincoln Park 3,376 No brris hp. 3,852 Yes Ocean ‘l‘as River 2,517 Yes Iassaic Vanaque l»,222 lo Bale- Saleln City 9,050 Yes Somerset lorth Plainfield 12,766 No . M....a_~_..l_s-l ‘H— . .n...'._ a I mm or sun 3cm. DICTIIC‘H - W 149 Regions and Reply States County City repulation Received New Jersey - W Sussex Franklin 3,864 Yes Union hillside Twp. 21,007 Yea Barren lacksttstovn 3.894 In fhillipsburg 18.919 Yes North Central Illinois Boone Belvidsre 9,422 Yes (102 Carroll Savanna 5,058 Yes counties) Clark Centralia 13,863 Yes Cook Basswood 5 . 887 Yes Dewitt Clinton 5,945 Yes Iduards ‘ Alb ion 1 . 855 Yes Franklin ChristOpher 3,545 Yes Grundy* Norris 6,926 Yes Henderson Oquawka 912 Yes Jasper Newton 2,780 Yes Johnson Vienna 1,173 Yes Knox shingdon 3,300 Yes Lee - Dixon 11.523 in lcflenry Crystal Lake b.832 Yes Madison Collinsville 11,862 Yes 150 was or sun some). armors - M Regions and Reply States County City Population Received Illinois - gaging—ed lassac Ietropolis s .093 Yes Mont gallery Litchfield 7 , 208 Yes Peoria Peoria 111 . 856 Yes Pope Golconda l , 301 No Richland Olney 8 , 61 2 No Sanganon Springfield 81 , 628 Yes Stark 'l‘oulon l . 230 No Vermilion Danville 37,864 Yes Wayne Pair fie 1d 5 , 576 Yes Minnesota Becker Detroit Lakes 5,787 Yes - (84 Blue Berth Iankato 18.809 Yes counties) Carver Cheeks 1,927 Yes Clay lborhead 14 . 870 Yes Cottonwood Hindus 3.1“ Yes Douglas Alexandria 6,319 Yes heehorn Albert Lea 13,545 Yes Hubbard fart Rapids 3,027 Yes Jackson Jackson 3 , 313 Yes Koochichina International Falls 6,269 Yes Lake of Baudette 1,017 Yes the Woods -‘a';-r. e. - ms or sun scram. BIITRICTI - m 151 Regions and Reply States County City Population Received Rinnesota - Continued cheod Cleneoe 2,801 Yes lartin Peiraont 8,193 Yes lover Austin 23.100 Yes Nobles flbrthington 7,923 Bo Pennington Thief River Belle 6,926 Yes Polk last Grand Forks 5,049 Yes Redwood Redwood Falls 3,813 Yes Rock Luverne 3,650 Yes Sherhurae Ct. Cloud 28.410 Yes Steele Ouatonna 10.191 Yes Todd Staples 2,782 Yes Haseca Uhaeca 6,927 Yes Hinona Uinona 25,031 Yes South Dakota Aurora Plankinton 694 Be (67 Beadle Baron 12.788 Yes counties) Bennett Iartin 1,013 Yes Broun Aberdeen 21.051 Yes Butte Belle Pourche 3,540 No Clark Clark 1,291 Yes Corson chntosh 626 No 152 mmormnmsmm-w Regions and Reply ltates County City Pepulation Received South Dakota - mm Bay Huhster 2,503 Yes Douglas Aruou 1,013 Yes Paulk Paulkton 747 Yes Raakon Philip 833 No Reason Alexandria 746 Yes Hutchinson Olivet - No Jerauld Ressington Springs 1,352 Yes Lake ladison 5.153 No Lanna Kennebec - No lcPherson Leola 795 Yes liner Reward 1,191 Yes Pennington Rapid City 25,310 Yes Roberts Iisseton 2,871 Yes lpink Redfield 2,655 Yes Todd lission - Yes Union llk Point 1,483 No Yankton Yankton 7,709 No South 1 Florida Alachua Gainesville (County-unit school Yes systens - see (67 Bay _ Panama City explanation under Yes counties state column.) SAIPLIS or sun sensor nlsrnxcrs - W Regions and States County 153 City Reply Pepulation Received Florida - Continued In this state. the schools in the cities are adnin- ietered as a part of the county in‘uhich the city is located; therefore, requests were sent to county superin- tendents .) Broward Citrus Columbia Dixie Plagler Gilchrist Banilton Hernando Holman Jefferson Lee Liberty Marion Pasco Putnan Cents Rosa Gunter Union Port Lauderdsle Ivernaaa Lake City Cross City Mu Trenton Jasper Brooksville Bonifay Monticello Fort Byers Briston Ccsla Fernandina Orlando Dede City Palatka Hilton Bushnell Lake Butler Yes Yes Yes E Yes No Yes . Yes Yes Yes Yes Yes Yes Yes Yes No 154 CAI'LIS 0F CIAII ICIOCL DISTRICTS - Eastinued Regions and Reply States County City Papulation Received Plorida o‘ggggigggg Halton De Punish springs No Washington Chipley Yes Hississippi Anita Liberty 665 No (82 Calhoun Pittshoro - No counties) Choctaw Ackernan 1,528 Yes Coahona Clarksdale 16,539 No DeSoto Hernando 1,072 No Greene Leakesvilla 834 Yes Harrison Bilori 37,425 Yes Isasquena Mayeraville - Yes Jasper Bay Springs 1,228 Yes Kasper DeKslb 866 Yes Lauderdale Meridian 41,893 Yes Leflore Greenwood 18,061 No Madison Canton 7,048 No Montgonery Winona 3,441 Yes Hoxubee Recon 2 , 261 No Perry New Augusta . - Yes Prentiss Bonneville 3,295 Yes Sharkey Rolling Fork 1,320 No 155 SAIPLRR or sun scum DICTRICTB - W Regions and Reply Ctates County City Population Received Mississippi . W Stone Higgins l , 141 Yes Tippah Ripley 2,011 Ho Union Rev Albany 3,680 Yes Hayne Haynesboro 3,442 Yes Hinston Louisville 5 , 282 Ho Yszoo Yssoo City 9,746 Ho Texas Benders Bandera - lo (254 Brazos Bryan 18 , 102 Yes counties) C-eron Brownsvil 1e 36 , 066 Ho Cole-an Coleman 6,530 Yes Crane Crane 1,420 Ho Dickens Dickens 465 Ho Palls Harlin 7,099 Yes Galveston Texas City 16,620 Yes Guadalupe 8eguin 9 , 733 Yes Hays Can Iarcoe 9 ,980 Yes Hudspeth Sierra Blanca 725 He Johnson Cleburne 12,905 Yes Kinney Brackettville 2,653 Yes Linastone lexia 6 , 627 Yes .4...:.... u. } 3. _ _ 156 mus or mu m mentors - 9231:9222 Regions and Reply States County City Population Received rm- - muse Haeon Mason 1,535 Yes Ritchell Colorado City 6,774 Yes Hueces Corpus Christi 108,287 Yes Preeidio Iarfa 3,603 Yes Rockxull Rockwell 1,318 Yes Shelby Center 4 , 323 Yes Tarrant Port Worth 278,778 No Upton llcCaney 3 , l 21 Yes Wharton R1 Csnpo 6,237 Yes Young 01ney 3 , 765 Yes West California Alpine Fredericksburg ‘3,854 No (58 Calaveras San Andreas 1,082 Ho counties) Contra Costa Pittsburg 12,873 Yes Preano Reedley 4 , 1 35 Yes Huboldt Rureka 23,058 Yes Kern Taft City 3,707 Yes Lake Lakeport - Yes Radars Radars 10 , 49 7 Yes Iariposa Heripoea - Yes 157 mus or run some]. usmcrs - 93.39.9229 Regions and ‘9917 States County City Population Received California - Continued Mbdoc Alturas 2,819 Yes Honterey Pacific Grove 9,623 No Orange Santa Ana 45,533 Yes Plumes Quincy - No San Benito Hollister 4,903 Yes San Diego San Diego 334,387 Yes San Luis San Luis . Cbispo Cbispo 14,180 Yes Santa Barbara Santa Barbara 44,913 Yes 8hasta Redding 10,256 Yes Riskiyou Weed 2,739 Yes Stanislaus Turlock _ 6,235 Yes Tehana coming 2,537 Ho Tuolumne Sonora 2,257 Yes Yelo Davis 3,554 Yes Yuba Msrysville 7,826 Yes Hevada Churchill Phllon (County-unit school Ho systens - see (17 Clark Las Vegas explanation under Yes counties state cola-n.) Douglas Cardnarville Yes leo Blko Yes ms or sun SCHOOL rumors - W 158 Regions and Reply States County City Population Received "'9“ ‘ W In this R-eralda Goldfield Ho state, the schools in Rureka Rureka Yes the cities are adnin- Hfloldt Winneucca Yes istered as a part of Lender Battle louatain Yes the county in which Lincoln Panaca Yes the city is located; Lyon Yerington Yes therefore, requests Mineral Hawthorne Yes were sent to county Nye Tonopah Yes superin- tedents.) Orneby Carson City Yes Pershing Lovelock Yes Storey Virginia City Yes Washes Reno Yes White Pine Rast Ely Ho Wyoming Albany Laranie 15,581 Yes (23 Big Horn Lovell 2,508 Yes counties) Csnpbell Gillette 2,177 Ho Carbon Rawlins 7,415 Yes Converse Douglas 2 , 544 Yes Crook Sundance . Ho Fremont Lander 3,349 Yes 159 mus or sun scsoox. sums-rs - W W Regions and Reply States County City Population Received "youths-W Goshen Torrington 3, 247 Yes Hot Springs Theraopolis 2,870 Yes Johnson Buffalo 2,674 Yes Laramie Cheyenne 31 , 935 Yes Lincoln Mar 2,026 Yes Hatrona Casper 23,673 Yes Riobrara Lusk 1 , 814 Yes Park Powell 3,804 Yes Platte Wheat land 2, 110 Yes Cheridan 8heridan 11 .500 Yes Sublette Pinedale 647 Yes Sweetwater Green River 3,187 Yes Rock Cprings 10, 857 Yes Teton Jackson 1 , 046 Yes Uints Rvanston 3,863 Yes Washakie Harlan! 4 , 202 Yes Weston Newcastle 3,395 Yes 4 '——v:.7 I.-\.»‘_- L-aeraau 3... ~44 .- . 4 ‘4‘ . O 160 MVP roam» RIQUIST Date PLRASR CROSS OUT on: 1. I (agree/disagree) with the expression of the majority opinion to question 64 as disclosed by the survey. 2. I (have/have not) changed fron ny forner opinion. 3. This naterial (is/is not) beneficial to no in ny work. . cans-rs: lane Title School District State "T“‘H‘T‘f I Dr oust-fl.“ " v’uj I 161 COVERING LITTER HRLRH I. “1TH CLCYD Certified Public Accountant Snelosed is the questionnaire investigating cost procedures prevalent in school districts in the United States. 1051 Lakeshore Drive - US 25 Carsonville, lichigan sr-ariaation of the replies to the Replies were received free 174 school districts located in the states of California, Plorida, Illinois, Hinnesota, lieeiesippi, Nevada, New Jersey, South Dakota, Texas, and Wyouing, a return of 74.61 of the nailed questionnaires. Your cooperation in this study is sincerely appreciated. Your none will be kept on the nailing list to receive free international material in the future. \ Sincerely, (Hrs.) Relen hith Cloyd Snclosure - postcard request . it'd-q ‘ '1' - n 1 04V a-A‘euq.P- 11A: M. . . c 4.11? lilh. . u 3. . '....PL 13)“ i a I‘ u APPENDIX B unseen. manna Cases The superintedent and the auditor had intended to meet with the writer but the superintendent was called away for a school consolidation meeting. Consequently, the auditor furnished the writer with the following information. The schools in this district are unusually well equipped with five data processing machines, which were originally leased and later purchased. it the tine of the interview, a small IR! 604 coquter had been ordered. The machines handle all payroll, registration, and reporting records as well as the accounting records, including the general ledger. The machines are used, also, to determine the effectiveness of the teacher by correlating students' achievements on grade material with their intelligence quotients. The nachines already in use saved the work of three ‘enployess and doubled the output of records. He employee was laid off due to the installation of these machines, but there were no addition to the accounting staff for the past three years despite the increase in statistical records. The school system develops cost infomtion on their clerical and custodial employees but not on their instructional employees. They are hopeful of developing comparative costs on the three junior high schools and two senior high schools operated by the school system. The writer was shown the machine installations in the basenent of the board of education building. Three employees were assigned to the 163 Axe‘airm *- un—u.-a V —aw- .-.f . D . V' ' ‘ ‘ ‘ | D s .I l' 164 data processing department to handle the work of the school system which comprises 11,600 pupils and 700 teachers. The school system did not encourage any outlying districts to use their data processing equipment because this action may mean the addition of employees to their staff. They do not feel that the charges that they can make for machine operations ‘would.cover the additional costs of new employees. As more districts consolidate with them, it is anticipated that the machines will be better utilized. The auditor stated that he had formerly taught courses in cost accounting at a business school, thus, he was very interested in the deveIOpment of cost studies. This school system is well equipped to deveIOp cost information for managerial purposes. men The results of the mailed questionnaires were discussed with the superintendent, who was very interested in the number of public school officials who indicated that they were desirous of deveIOping cost estimates on expenditures. He stated that his school system comprised 36 schools, 950 teachflts,‘and 14,000 pupils making it the eleventh largest school system in the state. A data processing equipment installation aids the superintendent's office to develop cost studies. The superintendent indicated that he was particularly interested in developing costs in specific subject areas. He stated that he knows what the cost of failures were in his school system. He computed these costs in terms of classrooms occupied by the failed students, the number of teachers required for these classrooms, and the operating and maintenance a“? ”15"): ._' -_‘ {57"“4-2? 165 costs of the classrooms. In a discussion on "scope and sequence" charts, the superintendent became interested in the charts as a means of identifying the optima level for teaching certain subjects. The development of costs pertaining to students' early entrance and consequent failure of beginning elementary students was another item which interested him. He doubted whether the correlation of students' intelligence quotients and achievements unnamed. In! .. in certain classrooms could measure the effectiveness of the teacher due to extraneous conditions. however, he agreed that over a periodof time, this device could be used as a part of a general measure of teaching 'If- N- Lem-m1 ._‘”).-- ,. competence. He stated that his greatest concern with the development of cost figures on the electronic machines was whether the operator would be sufficiently trained to recognise the many variables which affect the material obtained from the machines. Case 0 The superintendent stated that his school district comprises 8 elementary schools, one high school, and a «unity college. The school system operates with a $2,000,000 budget and .ploys 331 teachers. The annual per capita costs a.verage $580 for the high school and comunity college level, and $350 for the elementary school level. The superintendent said that his business department keeps many records and can develop cost figures whenever there is a need for it. They know the cost of non-teaching items, such as the costs of library services, guidance services, and study hall supervision. however, they have not developed costs on the teaching of find-ental courses in the school system. costs are continuously kept for industrial arts, art, 166 music, vocal, and instruental music courses. Tins reports are kept by a majority, but not by all employees. The superintendent stated that he knew that certain it“ cost more than others. As an illustration, he said that a course in graphic arts had been added to the curriculum despite the possibility of high costs and low enrollment in such a course. This, in his opinion, indicated that there was a desire for quality education in his school system. The superintendent said that in a recent vote to determine what i types of courses and curricula were popular, the voters in the school I} cyst-n voted against adult education and varsity activities. however, ! he stated, that both these activities were shortly back in the curricqu . on a limited basis and that the students sold tickets to finance their varsity activities . Case D The superintendent was very interested and enthusiastic about developing cost informtien. In felt that information of this type would be needed more and are in the future. In stated that he had recently made a study of custodial services in his school systen. As a result, the administrative offices are in a renovated old m1 building that had been built in 1075. la stated that the use of the building as a school was abandoned because its maintenance costs were 02.36 per cost unit as coamared with 61.50 per seat uit for over-all building costs. he explained that his new business n-ager had retired from operating his on hardware business before he tech his present job and, therefore, he knees good deal about maintenance costs, a hncwledge which had been very helpful in the study of custodial costs. ‘0 167 The superintendent was interested in developing truck costs because of the varying maintenance costs of trucks, regardless of their age. When the writer told him about the use of "scope and sequence" charts to determine the extent of instruction in certain-fundamental areas, the superintendent said that he was desirous of developing costs for English and language arts. A Burroughs bookkeeping machine had been installed in the accounting offices of the school district. Payroll and transportation expenses were being analyzed presently; other accounting procedures will be converted from manual to machine operation in the near future. The superintendent filled out the information requested on the questionnaire giving the following statistics: The school district operates ll schools on the elementary and secondary level with a staff of 104 teachers. Average daily enrollment is estimated at 4,350 pupils with a per capita cost of $335 for each pupil. There are eight general accounting and two cost accomting records in use. There are two employees assigned to bookkeeping duties and three types of mechanical equipment are used by than. Per pupil units are used for averaging expenditures. While the superintendent did not have cost approximations on either the teaching of subjects or non-teaching costs, he felt very strongly that information of this type is useful. lie stated that the state auditors offered no help in developing cost approximations; their only function was to check on the general accounting records. 168 Case! The superintendent of schools was not available to meet with the writer, but the principal of the high school was prepared to answer questions. This officer indicated imediately that he thought cost information was n.‘ useful and desirable in school district accounting. he had cost information on driver education but not on the costs of course units. This school district includes five elementary schools and one high school with a total of 81 teachers. The per capita costs are approximately $300, which the principal stated was $8 or $9 above the average for the state. The school district has the use of thirteen general accounting and four cost accounting records. [our employees were assigned to bookkeeping work and they had three different types of mechanical equipment available to them. Per pupil units are used for averaging expenditures. Time reports are kept by all clerical and custodial employees but not by the administrative or instructional mnployess. The principal was very coOperative and interested in the survey. The superintendent sent a letter regretting that he had not been available for the interview. case 1' The superintendent was unavoidably occupied with class scheduling during the time of the interview appointment on August 28. he indicated that he did not feel that detailed cost information was useful to his school district. In his opinion, per pupil expenditures were useful in - 169 discussions with the faculty or with other interested groups. The writer did not have an opportunity to discuss with the superintendent the uses to which cost records could he applied. The superintendent stated that his business departnent did have records on non-teaching costs but not on the teaching of specific courses. Tine reports were not kept by all .ployess in the school district. The superintendent said that he know personally the expenses of the school _— “ ‘o 'th ‘3' :‘T'iz‘.-_“j district and that he did not feel that detailed cost records would be of value in financial mag-set. F *f‘i jar-«r . .t'- CaseG The superintendent stated that his school district was so small that he was aware of detailed school costs without the use of cost analyses. He indicated that recently he had analyzed transportation costs for his district and the figure cane to 31¢ a nile, which was less than my of the surrounding districts. he was very particular about expenses in connection with school buses. trading-in the vehicles at the and of three to eight years depending on the use to which the vehicle had been put. ‘ This school systm has the fourth lowest per pupil costs in the state. the superintendent said. The seal]. high school has approxinately 430 students. A coqlete study of athletic costs had been cenpleted recently, and other expense its-s. he felt. would be analysed when it hecane necessary to do so within two or three year periods. The superin- tendent was very conscious of costs hutdid not feel that detailed cost studies were necessary in a snall school district. 170 Case R The superintendent, who was new in his poaition. requested the business manager to meet with the writer. The business manager was also new in his position and he felt unsure that he was capable of answering many questions with regard to the business department. Mover. he had been a superintendent at another school district and he was familiar -' 'n’fl‘ _‘;‘1.’—qn\1 with school accomts in general. The school district is located in an area where there had been a rapid deve10pment from three schools in 1949 to sight schools at the ;.n:A--:~—_.—V-.-‘.TrTi; _V._n .‘ ‘ 4 present time. Consequently, the district found that it was difficult to keep up with the necessary paper work in connection with the enlarged enrollments. There were six clerical employees in the business department, and. while the business manager stated that the development of cost records would be very helpful, he did not think that these records could be deve10ped in the near future due to inadequate help and the heavy clerical work with which they were faced. He was very interested in the methods of developing cost information, however, and indicated that after he became familiar with his position. he would have an opportunity to consider this aspect of accounting more carefully. Case I i . The assistant superintendent in charge of finance told the writer that he was not interested in cutting costs. He stated that the costs in this public school system were always high, but they were able to explain their costs. He was of the opinion that high costs and quality 171 education were synonymous. The superintendent's office, he declared, emphasised the positive features of their educational program whenever they are questioned about their high costs. The assistant superintendent stated that his office would like to develop cost figures but they had no intention of disclosing it to the public. lie claimed that the superintendent of schools' office was ,___...._ very politically minded and a strong public relations program was in force. L- He felt that disclosure of cost figures might interfere with their public relations program. The interviewee felt that maintenance costs in their schools were I?“- high but 'thay wanted to keep up the buildings which had been entrusted to them." The writer was told that the school system had to keep salaries high or neighboring cities would lure away their master teachers. The assistant superintendent stated that in order to cut their costs they were considering using larger classrooms in high income areas where the intelligence quotients of the studuts was surmised to be high. Also. they utilized auditorius for chemistry classes and small laboratories for working purposes. The school district's instructional expenses were approximately 09,000,000 during the 1953-54 school year. As the accounting work for such large expenditures would be voluminous, the writer queried whether this school system used data processing machines in their accounting department. The assistant superintendent replied that they had considered the use of these machines but there was no need for hurry in this direction. a. thought that if. through the use of these machines, cost information 172 were deveIOped regularly, the public might expect to look at it and compare it with costs of other school districts. He stated that he did not approve of disclosing cost information to P. T. A. and other interested groups because, in his Opinion, these groups did not know what financial information meant. His office did not have a systemiaed method of providing cost analyses; and such internal information as is needed is developed when the superintendent of schools asks for it. Case.) .17:- ‘TTFTV'T-"” , The interview disclosed that the superintendent of schools was very alert to controlling school costs. Some of the methods which this school system uses to control costs are: (l) homogeneous groupings of students to reduce failures (which cause additional instructional expense); (2) low teacher salary schedule due to the proximity of a state university whence beginning teachers are recruited; (3) low maintenance costs of buildings, a majority of which are new, and (4) no provision being made for instruction by special teachers. Control over supplies is enercised by the use of a centralised storehouse. The superintendent's office was attempting to revise the accounting system in order to cut down clerical costs. The school district is con- sidering the installation of data processing equipment because they are encountering large clerical costs in issuing 6,000 payroll checks monthly, and additional difficulty in processing year-end withholding forms with manual and bookkeeping machine methods. Individual schools are asked periodically to develop per pupil costs which are then compared with the other schools in the system. The 173 schools use the TV channels for the teaching of languages. These courses are taught by "master" teachers and this method was instituted in order to reduce costs. The interviewee stated that the school district did not have any difficulty asking the public for additional money due to their good public relations program. Statistically, this school system operates 95 elementary schools, 2 elementary-junior high schools, 15 junior high schools, 3 junior-senior high schools, 5 senior high schools, and 3 special schools, making a total of 123 buildings. The total day school enrollment in 1960 was 83,031 pupils, and Operating cost per pupil was $299.29. During the school year 1960-61, the system employed 2,986 instructional and 904 nonpinstructionsl employees. mmnc mu Wilt: musics: Alabane a uniform accounting systen is prescribed for local schools in Alabama. A single entry systen is in use in this state. The main control for the accounts of the school district is provided by a General Gash Ledger into which are entered in colt-Ins the cash receipts and payments transactions from receipt books and checkbooks. ledgetary breakdown into the following accounts is provided in the General Cash Ledger: lion Budgetary total Budgetary Instruction Teachers ' Salaries Ila-eatery High Suppl ias Library Operation Wages of Jmitor Janitors ' Supplies Iaiatcnanee - lopair, Replacement and Upkeep Auxiliary Agencies Transporter ion Other lined Charges Insurance lent Other 175 176 Capital Outlay lee Grounds and Building lav Iquipnent Alterations Debt Service The ”ledger" is neintsined on a cumulative basis for the year, nonthly totals tron this record constitute ”monthly Financial Reports to the luperintendent"; the last nonth of the year totals constitute ”Annual Financial Report to the Iuperintendent." The use of subsidiary ledger accents for receivables and payables is taco-ended; credits being node directly to the vendors' ledger accents on the approval of invoices, debits being node the tins of the recording of the cash paynents in the General Oash Ledger. The miforn systen provides for a nodified cash basis of accouuing for accounts receivables; and for recording accents payable on an accrual basis in the subsidiary ledger only. The analysis of the school lunch progran provides for the itenising of incone and expenditures fully and completely for each day of the nonth. This analysis is consistent with proper cost accounting methods. This procedure is necessary to coqu eith the requirenents of the lational lchool Lunch Progran. Despite the shortconings of this single entry system, cost «coating analyses could be node of the various budgetary expenses shoeing breakdowns into areas of responsibility or functional lines. Alabana's recs-ended accounting systen for school districts will pernit further subclassificationo of the accounts to show per unit costs as desired by the school nanagannnt. The accounting systenmets the conditions of the criteria. tin-Ansel... A. .- _- _ nu.“ ““‘xu—m'l. ‘ 177 Alaska A letter free Ir. Jerry I. laddell, chief Accountant in the Office of Oo-issioner of lducation indicated that Alaska since the printing of the Office of Education's Handbook II in 1957 has been using that publication as a guide. In accouting usual is contemplated 4.11 Na F for publication in the future under the provisions of the Iational Defense lducation Act. conformity to the recs-sendationa of the handbook II neets the conditions of the criteria, including budgetary procedures. __.. m__.ff—sn..a_.- an? W99 2 {.u\- ._‘ .. - \ Arisona The preface to the haunting and code Handbook carries the following consent from hr. O. 1.. Rarities, Superintendent of Public Instruction: 1 lo successful business of today would attenpt to operate wittnut an adequate, accurate, and uniform accounting system. Io one will deny that the operation of a modern school requires all the "know-how" of successful business Operation. In fact, the efficient operation of the schools'. business is more important, and more exacting than most any private enterprise. The uniform accounting system imposed on the school districts shows a refinement of accounting classifications which reflects the attitude ”bodied in the statanent above. The expenditure code has the following main headings which are further classified into more nunerous account titles: Masons Itate Depart-ant of Public Instruction, oun n W W. (Phoenix: State Superintendent of Public Instruction, 1955 . 178 Account Inaber of Series Acoomt Sub-accounts 1000 Administration 9 2000 Instruction 12 3000 Operation of School Plant 4 4000 laintenance of School Plant 3 5000 Auxiliary Agencies 11 0000 Fixed charges 7 7000 Capital Outlay 5 8000 Tuition to Other Districts - Disbursements for expenses are paid by the County duperintendents who keep records of the revenue, cash control, budget, warrants, and fund accounts for each school district within the county boundaries. Strict procedural control is exercised over monies received and paid out. The school accomting system not only meets the requirements of the criteria but also shows a progressive attitude looking toward accounting improvements. Arkansas The Department of lducation of Arkansas approves accounting forms called ems (meaning Comptroller's Office and Department of Education forms). Code 1 is a sensory form for recording income and expenditures from other codes which are nubcred free 2 through 13. A double entry systen is used with Code 1 as a simmer-y journal for debits and credits to the several accounts. No ledger is used because the totals shown in Code 1 constitute the entries for the period (monthly for large districts and quarterly for all districts). Thus, this fore is called a "ledger" rather than a journal. Control is exercised over expenditures by cornering the budgeted figures with accimnilated expenditures each time an entry is made in the several codes. The codes and their functions are as follows: .- “—“-m -_.““JM ‘pw a s. ‘ 1; ' A1 179 Gods l St-ary Seceipts and Expenditures 2 teachers' Salary had (showing gross euount of warrants and deductions) 3 Iarrent legister - Operating had Accents Instructional lap-so Operation of School Slant Iaintenance Auxiliary Service lined Charges Capital Outlay 1‘3- 9. “._‘: P Debt Service M rest bated Herr-ts (obligations duo) Record of School lends I—n. _‘”~--4 -_' ‘1 O 1 Teachers' Payroll Ledger (individual accents) School hpleyec Payroll Lodger (individual accounts) OQNOU‘fi Record of School Sue Dar-chases (including depreciation allowances) 10 Insurance lecord (register) ll lonthly Sn-sry of Operation of School buses 12 Record of. Buildings 13 ' Becord of Real lstate 14 ' School board Iinutes Instructions for the use of the several codes is issued by the budgets and Learn Division of the State Depart-ant of lduoetion and each school district is audited annually by the School Audit Division. The completeness of the records required to be used by school districts in Arkansas is remarkable. the records east the requir-eats of the criteria, and with respect to transportation costs, an introduction to costing procedures is already made. The accounting teruinology is being 180 changed to cenforn to the Office of Iducation Handbook 11 which will enable these school districts to profit by couperisons with national A - .. ‘— :T—A‘h” urn- nun-“us N? figures. California The following booklets relating to accounting are issued by the California State Departnent of Sdmetion: Title Date of Issue California School Accounting Iauual 1951 Supplement to California School Accounting Manual 1954 Administration of the School Insurance Program 1936 Administration of the School Mood Service Program 1957 Accounting lrocedures for Student Organizations 1957 School District Preperty and Equipment Accounting 1957 Attendance Accounting in California Public Schools 1957 A study of these booklets indicates that the State Depart-out of Sducstion has been very active in devising, fornuleting, and race-ending good accounting procedures to the school districts in California. lo uniform accounting form are required or issued by the State Depart-ant because, "Accounting cathode and devices nay vary and cost vary because of the fact there is such a range in sire of districts. leny districts find standard ledger ferns, available in great variety free ce-ercisl stationers, suitable for their needs. The larger districts usually require special designs for some ferns ."1 ICalifornia State Department of Sducetion, i t , bulletin of the California State Depart-ant of Sducstion, snore-cute: California State Depart-out of lducstion, 1951), p. v. 181 General ledger ecceimting is recon-ended although not required. Other suggestions are the use of double entry accounting, the preparation of financial statements (balance sheet and an operating statement), no provisions for depreciation (except for statistical cost studies), preper budget planning, and fund accounting with provisions for appropriations and encunbrances. The accrual basis is used for recording upenditures. An exactitude in accounting procedures and terminology is evident in the instructions to the school districts in the several booklets issued by the State Departnent of lduostion. Expenditure classifications are: Current Expense Adninistration Instruction Auxiliary Services Operation of School Plant laintenance of School Plant Fixed Charges (Prepaid Expense) Transportation of Pupils Food Cervico Co-mnity Services Capital Outlay The above accounts have 41 sub-classifications in the chart of accounts and the following suggestion is node for further subordinate aceounts:1 lsny school districts find that subdivision or expansion of the expenditure classes contained in the foregoing outline, in accordance with, or similar to, the unnumbered and unlettered classes of expend- iture by object, activity, or organised unit may be desirable for local administrative purposes. 11h;§., p. 12. 1r..— ’T‘T‘V‘? f‘—f"‘*.‘ "Hr-“*1? 182 School district sccomting as prescribed by California regulations not only nests the requirements of the criteria but excels with suggestions and instructions in confornity with recognised accounting theory. Colorado Uniform budget and annual reports are used by all school districts in Colorado. The standard accounting system is patterned on the recon- nendstions of handbook II of the Office of Education and uses a simplified double entry system. This system is for the smaller school district which conprises 902 of the school districts in the state (those with fifty or less staff menbere); and larger school systems are encouraged to develop a system suitable for their particular needs. The basic recording doth is a Financial Record which consists of monthly memories of receipts and disburse-outs. Iarrsnts are paid by the County Treasurer and are analysed with respect to type of fund disbursement and type of expense mount, and then su-sarired in the Financial Record. The chart of accounts has these classifications: Administration Instruction Attendance Services health Services Pupil Transportation Services Operation of Plant and Equipment Maintenance of Plant and Squipmont tired Charges Food Services Student-body Activities Cemnity Services Capital Outlay Debt Service Outgoing Transfers 184 The classification of accomts to be kept by the school boards is as follows: Administrative Control Instruction Operation of Plant Repairs and Isplscenents (lsintenance) Fixed Charges Auxiliary Services Health Adult Education Attendance Transportation Capital Outlay Debt Service There are 49 additional sub-classifications listed in the chart of accounts. The accounting records are kept on distribution sheets which record receipts and disbursements. Budgets for school districts which receive state funds are sent to the State heard of lducation for approval before the beginning of the school year. The state law requires that each district shall keep detailed accounts of all receipts and expenditures in the classifications prescribed by the Budget Connission. All invoices, including payroll disbursements based on a uniform salary act, are paid by the State Treasurer after trsneuittal on approved ferns and signed by the local school board. The budget Co-ission audits the school records and annual reports which are prepared by the school boards in conformity with the uniform accounting systen. Transportation costs are also paid from state fade by the State Board of lducation. Strictcr financial control is exercised over 1-2-3 teacher schools whose budgets are prepared by the State heard of lducstion. smear 9"“ .0. ~| “I ." - i I 185 The means for developing coat informtion is hherent in the account classifications and, therefore. the state accounting recom- mendations meet the require-cuts of the criteria. However, it is problenatical whether, with the strict control exercised by the State of Delaware. it is incunbent upon the school boards or the State bepartnentof Education to develOp cost studies for the benefit of the school districts. ‘ \ District of Golmbia L The public schools of the District of Golunbia conduct their systems of accomting as prescribed by governmental regulations in the Federal Government Accounting flannel. Ur. Bert K. Adana, Finance Officer, stated in a letter to the writer that the schools maintain two types of accounts: allotments and costs. These accounts are recorded in an Allotment Ledger for receipts and a Goat Ledger for expenditures. Cowarisons of the accounts maintained by the schools and those main- tained by the Accounting Officer of the District of Golunbia provide a check on the accuracy of the accounting. In addition, post audits are conducted by the auditors of the General Accounting Office of the U. S. Government and by the auditors of the District of Golunbia. The public school budget office determines the amounts available for each account. The operation of the accounting systa of the District of colunbia is being improved in conjunction with improvements in accounting for the Federal Government. Mlic Law 863, enacted in 1956, established "the principles of budgeting in terns of costs and for accounting on the 186 accrual basis.“ In connection with the District of colunbis, the General Accounting Office and the budget Office "developed a standard classification for coding which, when fully implanted, will permit a more complete application of punchcard methods to accounting for all agency budgetary transactions."2 Hhile the criteria conditions are being met in this circumstance, it is improbable that cost accounting methods can be developed in this school system unless such policies are to be used in the Iederal Government. while individual administrators can use cost studies in their particular schools, it is improbable, that without Federal sponsorship, such studies will be utilized extensively. Florida The schools in Florida are administered on a county-unit basis. As approximately 507. of the school funds are appmpriated by the State, a close control is exercised over the county programs. Uniform accounting is used throughout the state with variations in printed forms for those countiu using data processing and bookkeeping machines. The school budgets for each coulty are approved by the State Department of lducation and this agency also reviews the monthly statements. Anmnal audits are conducted by the State Audit Section (not a part of the Department of Sducat ion) . 10. 8., Secretary of the Treasury, Director, bureau of the Budget, Comptroller General of the United States, Ssh g%1 Progress heart 95;; the .101 t in the P eral Govermuent, (flashing- ton, D. 6.: U. S. Government Printing ffics, 1957), preface. 2212.. p. 93. 187 The county superintendent: of schools keep a record of the expenditures for each school within their jurisdiction. Account classifications for expenditures are: lmnber of Account Sub-accounts General Control (Administration) 11 ., M Instruction 10 7‘ ' Operation of fleet 4 Iaintenance - lepsirs - Auxiliary Agencies 7 Fixed Charges 5 Other Schools 2 ‘ Capital Outlay 8 5 Debt Service 10 g j The annual report requires that the county superintendent submit a comprehensive account of the year's operations with detailed analyses of transportation, instructional salaries, and insurance. The uniform accounting system in florida is a well-integrated system of control over the financial transactions of the county-unit district. The uniform accounting system meets the specifications of the criteria. It. Donald R. The-sen, Assistant in Finance, indicated to the writer that Florida is changing its accounting to conform more closely with the Office of lducstion Handbook 11 recounendations, but the changes will be only in the grouping of the accounts within the major classifications listed above. Georgia The State of Georgia does not have any published booklets on financial accounting for dissemination to the school districts. The 183 The account numbers for these classifications correspond to those listed in the Office of lducation handbook II. There are 64 sub- classificstions of the major accounts recon-ended for the use of the school districts. The State of Colorado was one of the first to convert their accounting system to reflect the improvements suggested by the n.‘: “72. Office of ldueation Handbook II. Their systa meets the requirements ‘1 of the criteria and contains a base for cost accounting records. Connecticut 1‘ A letter from Ir. Hillis H. liarger, Chief of the Bureau of Federal-State-Iocal kelstims states that the Connecticut State Department of Iducation does not require any particular accounting forms or procedures but teen-sends that the school districts follow the accounting classifications shown in the Office of “nation Handka II. Budgetary procedures, year-end report forms are required using the accounting terminology and other suggestions advocated by the Handbook. The users of the Office of ldscation Handbook II meet the requirements of the criteria for accounting records ad, therefore, the school districts \ in this state have the essential information necessary for preparing cost reports . Delaware Ir. 3. l.. Herbst, Assistant Superintendent in Charge of Business Administration, sent to the writer the booklet which he had written entitled, "A Handbook for boards of School Trustees in Delaware," published in 1954. 188 forms which the state provides to the school districts are: Journal - Record of receipts and payments Ledger sheets - Permanent record of classified receipts and payments other than personnel Check register - Payroll There are 123 comty-unit system in the state, which is the predominant a type of school organisation. A letter from lir. Allen C. hith, Director, Division of Administration, to the writer indicates that the State does f not exercise control over the accounting systems in the county-units. { V 3“ With the scent information that is available on school district accounting H is this state, it cannot be determined that the criteria requirements are being satisfied, except with respect to the use of a budget. Therefore, unless further study is undertaken on an individual county unit basis, there can be no statement on the status of east accounting possibilities in the Georgia school districts. Hawaii 0 sum retains the statewide syst- which prevailed during the territorial period. The State of Huaii gives allotments to the schools; issues purchase orders for them, processes invoices, and makes payments on behalf of the schools. School budgets are prepared by the principals, and the accotnting syst- comprises a general ledger, cash journal, and check register. The accrual method for school accounts is disnissed as too cumbersome and the modified cash basis is advised. A double-entry system is recon-ended in the accounting manual issued by the Superintendent 189 of Public Instruction to cover internal accounting activities by the school districts. The accounts for which the school keeps records are: Cash Investments Funds Hook lental Cafeteria School Peas School Activities Trust and Agency had (P. T. A., Re as To Go. .tco) As the major accounting records are retained by the Department of Public Instruction for each school, only incidental cost accounting studies can be undertaken by the individual school administrator. Thus, there is no incentive to develop cost accounting records on the local level. The conditions of the criteria are met, however, on the state level where cost studies can be developed from the general accounting records and from the reports submitted by the schools. Idaho Hy legislative action (House Bill Is. 245), an accounting counittes was comissioned to establish a uniform accmnting system for the school districts in the State of Idaho by July I, 1959. Improvements in accounting effected by this co-sittee are physical verification of inventories, complete audits bisnnially, and detailed annual school district reports. The State Heard of lducetisn supervises and amines the books and accounts of each school district. The state advocates proper budgetary procedures with the use of the accounting system. The uniform accounting syst- pertains to filing uniform reports and using prescribed account classifications, I Iii..- .‘fit .7. .- ." 190 but no attempt is made to enforce the use of uniform accounting forms. Accounts are maintained for the following expenditures: Rasher of Account Bub-accounts Administration 6 Instruction 14 Operation of Physical Plant 4 m, Iaintenanse of Plant ~ Auxiliary Agencies 18 “ Pired Charges 3 Capital Outlay 19 Debt Service 2 The school districts are required to suhnit cost analyses of transportation l.ft:-_—~_1.l..-‘-.gg “mus-‘3‘ 4‘7] M-~ .. 1.; expenses, including provisions for depreciation of school buses. A state mini-us salary schedule for teachers is in effect and detailed reports of salaries paid to teachers is required to be filed with the State Board of Iducation. The revised accounting system in force typifies the best and latest material in use in public school systems. The enactitudes of the criteria are met in this uniform sccomting system. A step in the direction of the utilisation of cost accounting methods has been made with the introduction of transportation cost analyses. Illinois Illinois was changing to the accounting terminology race-ended in the Office of Education handbook II, but as of August 1961, the change had not yet been effected. The changes to he made will enlarge the sub- classifications of the accounts. Prior to the change, the following accounts, which correspond very closely with the classifications sponsored 191 by the Office of Iducation. The State Depart-ant of Public Instruction advocates proper budgetary procedures. The annual reports submitted by the school districts are examined by the county superintendents of schools before they are filed with the State Department of Public Instruction. The conditions of the criteria are net in this accounting systua . Indiana A.system.of uniform.accounting prevails in Indiana with control exercised over accounting forms and procedures by the State hoard of Accounts. The Indiana Accounting handbook prescribes 43 forms for the use of school districts. Intries are made in the Punds Ledger of Receipts and Disbursements, which is a distribution sheet with columns for the different classifications of receipts and expenditures. Intries to coincide with the expenditure columns of the Funds Ledger are made in the Punctional Distribution Ledger which is numbered with the account letters of the functional expenditures. TEOOO accounts are: Account Letter Account Administrative Instructional Coordinate Activities (library, transportation, etc.) Operation of Ichool Plant Maintenance Piued Charges Auxiliary Activities (cafeteria, adult education, etc.) Debt Payments Capital Outlays (new) Capital Outlays (old) level: disable! (seno- 192 These accounts are subdivided into 131 classifications which permit a minutiae of accounting information to the administrator. Special regulations are written for the handling of school extra-curricular activities. Proper budgetary procedures are advocated by the state Board of Accounts. The accounting system prescribed in the State of Indiana amply meets the qualifications of the criteria. Ilhen accounts are subdivided to the extent indicated in the uniform accounting system, the interrelations of cost factors becomes discernible to the administrator. Iowa The State of Iowa provides in its Uniform Pinencial Accounting lanual a well-defined and integrated system of general accounting which groups expenditures along the following lines: General Control (Administrative) Instruction Auxiliary Services Operation of Plant laintanance Fixed Charges Capital Outlay Debt Iervice These accounts are sub-classified into 35 lesser items. Budgeted figures ‘ are also shown in the accounts for conparison purposes. Pour pages in the Ianual are devoted to a description of the computation of unit costs by departments; these departments representing separate schools. Direct charges, where applicable, are advocated for allocating expenditures and other methods, well recognized in cost aceouting, such as floor sphce allocations, etc., are described and, illustrated for the use of the administrator. The school district accounting in this state amply meets the conditions of the criteria. _.—q-_—c ‘ "u. . . .‘ 1_°-’—‘ T"T *- I k‘ua 193 Kansas Annual reports by the county superintendents in Kansas show receipts and expenditures as well as budgeted figures for all school districts under county supervision. Expenditures are listed for the following items: F“fi. General Control - Administrative 1 1 Instruction 3‘ 3 Operation 1 '13“ GMT ‘C. } Auxiliary Agencies *3 Pupil Transportation _ lhimtenance g .' Capital Outlay E J The financial summary is compiled by the county superintendent from annual reports submitted by the boards of education of the several cities or by the teacher, clerk, or treasurer of the common, rural high, and con-unity high school districts. The annual report shows a complete analysis of transportation expenditures. A letter to the writer from Ire. Kay Kapschroeder, Assistant Director of School Pinance in the State Department of Public Instruction, stated that there is no uniforn accounting system for school districts in that state but many reporting forms are furnished to schools by that department. As sub-classifications of the major accounting classifications are requested from the school districts in the compiling of the report forms to the State Department of Public Instruction, the conditions of the criteria are met in this state. Kentucky This state has 49 county-units which places the county as the 194 prevailing reporting unit. Reports by both the county and independent school districts are subject to the regulations for uniform school financial accounting which had been revised in June 1958 to conform to the recom- mendations of Handbook II of the Office of Education. In addition to this revision, improve-ants were made in auditing procedures by the Department of Education, in control procedures for accounting for athletic activities, in policies for issuing checks, and in policies and regulations relating to budgets, bonds, and insurance. The expenditure nomenclature of the Kentucky chart of accounts is almost identical with that shown in Handbook II except that the accounts in the handbook are subdivided to a larger extent. The changes that were made reflect a greater concern with costs than is evident in the Pederal manual. Indicative of this sentiment, is a statement in the introduction to the Kentucky manual:1 It will be expedient for many local districts to maintain an even more detailed analysis of their financial activities than is provided herein. The accounting system instituted in Kentucky complies with the requirements \ of the criteria . Louisiana Incept for three independent city systems, the schools of Louisiana are administered by the parish (county) unit. Louisiana does not have a 1Kentucky Department of Education, W Accmtigg, (Frankfort: Department of ldueation, 1950 , p. 287. 195 uniform accounting system nor is there any indication that the county records are checked by aqstate agency. The budget, however, is approved by the State Budget Co-ittee. Anual statistical reports are required to be filed with the State Writ of Sducation listing receipts and expenditures. The expenditure accounts show the following classifications: General Control (Administrative) Instructional - White legro Operation of Plant Iaintenence of Plant Auxiliary Agencies Pixed Charges Capital mutlsy Debt Service There are 130 sub-classifications of the major account classifications. Inventories of parish-owned property is accomted for in the annual report together with a cost breakdown of transportation expenditures. Salaries to the teachers are based on a state-wide schedule enacted by the legislature. The basis for developing cost accounting records is evident in the information requested in the unreal report and budget from each reporting unit. The accounting requirements in this state satisfy the requirements of the criteria. Heine The State of Kaine has adopted the classification of accounts recess-ended in the Office of Sducation handbook II. The accounting records consist of distribution sheets with columns for the account classifications separated into elementary and secondary sections. 196 The annual reports as prepared by trnsferring the totals of the distribution sheets to the report sm-ary. Budget and annual reports are required of each school district. There is no indication that cost accounting methods are in use in any of the independent, supervisory union, or town school systas. As Handbook II of the Office of Education is the annual for accounting purposes in the State of Kaine, the conditions of the criteria are met. Iaryland According to the Maryland School Code, the county superintendents bear the responsibility for the maintenance of an adequate set of accounting records. Except for the City of Baltimore, the school districts are operated as a part of the county in which they are situated. There is no uniform account classification system in use but the State Department of Sducotion recon-ends that the system in use be checked periodically with outside auditors to determine whether the system conforms to good accounting principles. Annual financial reports are submitted to the State Department of Education and are published for interested citiesnn. Procedures on internal control, contents of agreements between the auditor and the board of education, m audit programs, and standards of audit reporting are defined in a procedural bulletin issued by the State Department of lducation. A suggested procedure for recording receipts and disbursements is also contained in the bulletin promulgated by the State Department, which is to be used by individual schools for internal activities. A single entry cash receipts and disbursements record which employs the 19'] modified cash basis of accounting is the method recon-sanded by the State Department. There is no recommendation for account classifications or for the use of cost methods for analyzing expenditures because centralised accounting is conducted by the counties. An itemized budget is required by the State Code from each county as well as an audit report of income and expenditures. mile the lack of control over expenditure groupings may not be conducive to cost accounting develOpments, the conditions of the criteria are not due to the mandatory requirements for proper accounting procedures which are verified by independent auditors. lasoachusetts ‘ The Department of Sduoation of the leth of Iassachusetts requires that city and superintendency school unions file annual reports disclosing coqlete financial figures but there is no requirement that the reporting unit adopt a uniform system of accounts. Information on the following types of expenditures is requested in the annual report: General Control (Administrative) Instruction Operation of School Plant laintenance of School Plant Auxiliary Agencies Capital Outlay Ixcept for the major groupings of general control and capital outlay, the expenditures are required to be apportioned between day schools (elementary, junior high, and senior hish). evening schools (olenentary and high), and vacation schools. A-ual budgets are required by state law. 198 a letter (rm Ir. John !. m. Director. Divisions of Research end Btatistics of the W of Idueation. to the uriter indicated that the Depart-eat use ”in the process or suggesting the accounting nethods outlined in Federal “book 02.” ‘l'ho expenditure classifications listed in this section onion to the generally accepted classifications for ocbol districts. .d it nay be pros-ed that an revision will not be of najor inportsnse. no account classifications in this state conforn to the specifications or the criteria. Michigan Iichigsn's nsnual of instrutions tor tinusial reporting has been revised to contorn to the aeeoueting recs-endotions in the can. of Iducation handbook 11. Although the classifications are basically the sane. the accounts do not bear the one account actors as race-ended by the Isndbook. Iichigen also prescribes uniform accounting for school activities by reporting those receipts and disburse-lento under fund accounting principles. An annual statistical and financial report is filed with the county superintendent of schols, and requiruonts for the preparation of budgets by school districts are stated in the general school loss. the conditions of the criteria are not in the nnifiorn accounting systen enployed in llichigen. ”tum"! .tx' m4 .~— a. n‘ r. ‘th . 199 liasosota Iinnosota requires that the schools maintain their accounting records in confornity with their nenual. “Uniform financial Accounting for linneuta School Districts." the financial acmting systen designates that annual reports he filed with the county superintendent of schools by July 10. The follooing expenditure account classifications are budgeted and shown in both the records and the annual report: Adninistration Instruction Operation of tlant lepair and Upkeep (hintensnce) of fleet Auxiliary Services lined charges Transportation capital Outlay Debt Service The nsjor accent classifications are subdivided into 55 lesser groups. 'i'hoss classifications are used in connection with the following funds: General Omity School Lunch Veterans' Training ‘ School Library Capital Outlay Iuilding Iobt ledeqtion School Auxiliary heat the roquirensnts of the criteria are net in the accounting systen which is recenendod for the school districts in lionesota for this systen is sinilar in the extent of its account classifications to the systen suggested by the Office of [donation scum n. 200 liseissippi The State Auditing Depart-ant has prepared mung forms and a bulletin for the use of counties and separate school districts in the State of Iiseissippi. Such school district which is a part of a county unit, sub-its its proposed school budget to the County Superintendent of Sducotion for approvel. In turn, the county Superintendent submits the county budget for approval to the State Dcpertnent of lducation. Separate school districts ouhnit their budgets directly to the State bepartnent of Sducatioa. The classification of cnpenditure accounts shown on these budgets is as follows: Adninistrstion Instruction nigh Schools lie-eatery Transportation Auxiliary Services Operation and lsintenance of School Plant Other costs Capital Outlay and Ion-operating costs There are M additional classifications of the nejor accounts. .‘l'ho oonprehensive aecouting usual of 58 pages describes the accurate handling of the accounting records. and the preparation of annual reports and budgets. The uniforn systen in Iississippi nests the conditions of the criteria. 201 Missouri The lissouri uniforn systen of accounts contains this quotation in its preface:l The basic structure of good school business adninie- r“, tration is a sound syet- of general accounts. a set of 1 accurate cost accounts, trust-worthy auditing, intelligent budgeting, and a series of popular and technical reports for parents, school boards, state departments of education, and national agencies. The accounting systen provides for the ace-untied of current rah-“Ht 1.“. a: 31.-(“- 5.1 F'Lr- -‘ ..u . _ costs, conparisons with budgeted figures, and the use of appropriation and encunbrance accounts. Vouchers are race-ended for recording disburse- nents. lntries for expenditures are node in distribution "lodgers" provided with column into which the amounts for the separate accounts are entered. The titles of the accounts are those race-ended by the Office of Sducation Handbook II. The one classification of accounts had been in use prior to the adoption of the handbook II series of account nunbers. It was mccseery to change only the account embers to conforn to the national classification. Cost studies are recouended for use in allocating salaries to pertinent cost centers, such as attendance. health, transportation, etc. Also, the total cost of instruction is uslysad to show snounts spent for teaching. supervisory, and instructional supplies. Special regulations relating to the handling of school lunch and activity nonies are in effect —A— M‘— 1)litasouri State Department of Education, u o W. (Jefferson City: Iissouri State Department of Education. 19 , p.5. . 202 under the direction of the State Departneat of Sducation. The school records are audited biannially as provided by Iissouri General Assenbly Senate Bill 107, dated August 29, 1955. This accounting systu, as devised, is in confornity with generally accepted accounting principles as well as enbodying the reco-esndations of the Office of Sducation Handbook II. Supple-antary gum , cost records are already being used, and the rcquiruonts for meeting the conditions of the criteria are present in this accounting systen. butane Montana has no uniform accomting system in effect, but by state law, the trustees of the school district are to provide for a system of bookkeeping and an annual audit of the extra-curricular funds. It is the duty of the school board budget supervisors to approve the annual budget. Information is. furnished to the Office of Education in Washington, D. O. on the costs of administration, instruction, operation of school plant, neintenance of school plant, auxiliary school services, and fixed charges. Ihile the writer was not furnished any infornation relative to the implementation of the accounting records, the conditions of the criteria are net based on the infornetion furnished bxthe State Department of Public Instruction. Nebraska The Departnent of lducation of lobraska states in its handbook of instructions for miforn financial “counting that the Office of Education handbook II was used as a guide in depertnentelising incens 203 and expenses. line nejor depart-ate are used: Adninistration Instruction Other School Services Operation of fleet laintenance of Tlant Fined charges Capital Outlay Oo-nity Services St.» Schools Adult Sducation Debt Service and Transfers Tech of the departnents is subdivided snaking a total of O3 subdivisions. loithcr the nenenclatuu nor the series of account nunbers conforn to those suggested in hudbook II of the Office of Sducation; however, the broad categories suggested by the Indbook are evident in lebrssha's uniforn accounting systen. rude sccouting is provided in the instructions in the state accounting neutral as well as the use of a continuing budget record. The conditions of the criteria are satisfied in the «counting systen race-ended by the State Depart-eat of Sducstion based on the neterial in Iebraska's 47-pege accounting annual. levada Tho levada school laws require that county school districts prepare budgets, publish a statenent of school district expenditures quarterly, and cause the school books to be audited at least biennially. levada's school syst- is coqoeed of 11 comty-units. budget elusi- fications are patterned after the Office of Sdueation's Handbook II, except that the series of numbers is not as expensive. The account classifications are: 204 Adniaistration Instruction Auxiliary Services Attendance and Health School Lunch Progra- Trsnsportation of Pupils Operation of Plant Iaintenance of Plant Pinod Charges lvening Schools, Sunset schools, and Omity Services capital Outlay Transfers Debt Service Detailed costs are kept for transportation, and evening and sue-er schools expenditures. There are 65 subdivisions of the above accounts enabling the school adninistrator to accmlate and analyze costs relating to specific activities. This systen of accounts meets the essentials of the criteria and establishes the basis for developing cost analyses. law henpshire School districts in this state are required to subnit to the Dopartnent of Sducation finoeial budgets and annual reports in which are disclosed expenditures in the following groupings: \ ministration Instruction Operation of School Plant hinteaance of School Plant Auxiliary Activities Fined Charges Capital Outlay Debt and Interest Adult Sducation There are 30 sub-classifications of the above accounts. A balance sheet disclosing assets, liabilities,-snd surplus is also prepared. 5“ “W25 I-M -‘l 9 '2‘. \-"._ 205 Mr. Paul B. fillion, Ghief, Division of Administration, indicated to the writer that the Mt of lducation use in the process of developing a new nsnual for financial eceouting procedures. The classification of accounts for school districts in lav Inshire conforns to the general grouping of accounts as race-nonded by the Office of lducation Handbook II, and the accounting systen also confer-s to the specifications of the criteria. Ion Jersey The Depart-out of Public Instruction requires that school diotricts naintein their records according to the uniforu accounting systen pres- cribed by their office. It is necessary for the school districts to distribute their costs to day, evening, sneer, or special classes; by types of schools, such as kindergarten, elenentary, etc.; and by school buildings. Budgets are a part of the accounting systen and their use is required. The nsjor classification of accounts are: Adninistretion Instruction Operation lsintonanee . Coordinate Activities (Attadance and Health) Auxiliary Agencies Pined Charges ‘ Capital Outlay The accounts are subdivided into 100 separate classifications to pernit control over specific itens. coet records are kept for property, insurance, and supplies. A revision of the accounting systen is in process although the ' C A. .'.L‘ 206 the najor classifications ssnfon to the Office of Iducation Handbook 11. This accounting systen is based on generally accepted accomting principles and nests the conditions of the criteria. lowlanico A uniforn syst- of aoeoalnting is in effect under the direction of the Public school Finance Division of the Departnent of Finance and Adninistration. Dodgets, nonthly reports showing unencubered budget balances, annual physical inventory-taking, and annual audits are ”so :n-.'r.‘»p.‘- .-.-~-% -' ~ 34 ~. required. Control accounts are provided for the following items: labor of Account Sub-accounts General Control 10 Instructional Services 8 Operation of Ilant 4 Auxiliary Agencies 6 Duo Transportation 4 Direct Charge (lined charges) a The accounts are entered in a distribution ledger where the mnthly totals are aces-ulsted and censred with budgeted figures. This is a single entry systen providing for cost analyses for insurance, trans- portation, and operation of plant. This accomting systen nests the specificltions of the criteria. low York The uniforn cyst. of accounting in lav Tort enploys a cash entry systu, i. e., receipts and expenditures are recorded when received or paid. hpenditures are recordod in a voucher register. The distribution 207 ledger which amsriaea enpenditurea has the following nsjor categories: General control Instructional Services Regular schools Special Schools Operation of Plant Iaintesance of Plant Auniliary Agencies Pired Ohargss Debt service Capital Outlay These accounts are further subdivided into 92 sub-accounts. Dudget and annual reports are required as well as cost analyses of transportation expenses; the use of an insurance register, a note register, and a bond register; and payroll records for each employee. This systen of accounts corresponds very closely with the race-endatious of the Office of Education handbook II with a few variations in account descriptions. The accounting requirements in this state conply with the criteria definitions . lorth Carolina lorth carolina has ‘8 county-unit school districts and 58 city districts. Operating budgets for the school districts are subnitted to the controller's office of the State Doard of Iducation and local superintendents draw vouchers upon the ltate Treasurer up to the enount of their approved budgets. The accounts for which disburse-ants nay be node are for general control, instructional service, operation of plat, and auxiliary services. There is no uniforn accounting systen to record the budgeted expenditures. A uniforn systen of accounting for school activities is in use ,1 4.“- .10' “-‘n “In.“F . s. .I 6 l w -«—.— 208 which dodies the principle of one central set of records (with only one bank account for all funds). A single entry cash systen has been adapted which .ploys a distribution ledger for receipts and disbursements. The ledger, when totaled, provides the necessary interaction for report purposes. In 1953, a uniforn systen of cost accounting and perpetual inventory records for transportation coats was instituted, and the General Assembly of lorth carolina appropriated sufficient noney to provide for the enploynant of property and cost clerks in the counties. Oonaequently, couplets cost records are available for transportation expenditures. The alertness ‘of the State Board of lduoation to the usefulness of cost records indicates an uusual awareness of cost procedures. The conditions of the criteria are satisfied in the accounting controls inposed upon the state's school units . lorth Dakota There is no uniforn accounting ayaten in use in north Dakota. The school district clerks and treasurers are required to transnit individual annual reports on activities to the county superintendents of schools. The clerk's annual report records warraus issued for budgeted disburs-ente while the treasurer's report discloses warrants paid during the year. At the year end, the two reports are reconciled. The classifications of expenses on these reports are: ‘F 'fwnn’fi‘| ~.‘! gnu-nemdq H;\ H. a ‘. ‘a a .. 209 Adninistration Instructional Services Other Services health Transportation School Lunches Tuition to Other School Districts Iiccellaneoue Operation of Plant lisintenance of Plant Fined Charges Capital Outlay Debt Service There are 32 cub-classifications of the above accounts. Despite the lack of information on the accounting eyoteu in use in the several school districts, the infornstiu required of the school districts indicates that sufficient records are naintainod to nest the requirenents of the criteria . Ohio The Bureau of Inspection and Supervision of Public Offices prescribed the systen of accounting for the use of achool districts in the State of Ohio. The systen has been developed to disclose the cash balancea of the various funda so that no unlawful appropriation will issue. Appropriations in the budgets are approved by the county budget comisaion. The ferns used are the cash journal, receipts journal, and a appropriation and authorisation ledger. Consequently, the use of a general ledger with asset and liability accounts, and the developneut of cost infornation is left to the discretion of the school official. The classification of accounts is as follows: i mrkis‘ifltnfit"Ikiifl '1'$‘ .'_a: ‘ 4 mil ‘ I 1!..- _ nu e.,}...uQJMI’VllVa-n .9 r 210 Personal Service Salaries and Vegas Adninistration Instruction Day Schools S\-er Schools Svening Schools Coordinate Activities Auuiliary Agucies Operation of School Plant Isinteunce Special Services Supplies Materials for hintenance Squipnsnt Replacements Contract and Open Order Service Pined Charges and Contributions Contingent Debt Service Capital Outlay There are no sub-classifications of these najor accounts. further divisions are recon-ended by the bureau if deansd necessary by the local board of education. The account classifications are sufficient to enable the school adninistrator to develop cost records and, therefore, the accounting systen nests the criteria specifications. filahona The Otlahena landbooh on budget and business nsnagenent stateaxl School accounting ad reporting are geared to one end--the continuous inprovenent of the total education progrsn. Thus the sin is to naninise education and not, as in business and industry, to naxiniae profits. ‘0th our. Board of lducstion, Finance Division, M _... and n -. n ._n .. . . he . of r * tio wati- -.. at ‘h. ° '-;rt- ' . W, (Ohlahona City: State Board of Sducation, l9”), p. 62. "F It ‘. '4 I". ‘.w’ 'ix'u'fif". e. e ul .‘fi‘ 211 With this concept in nind, the landhook authors offer 116 pages of constructive suggestions for proper record-keeping. lacy of the ideas incorporated in the Office of Sducation handbook II are also in the Oklshcns Handbook. Provision is node for the detailed recording of general fund, building fund, bond fund, sinking fund, and school activity fund transactions. The state low requires that budget apprOpriations have to provide for a nininun education progran ac defined in the law. The following expenditure classifications are to be used by the school districts: Administration Instruction Attendance and Health Servicea Pupil Transportation Services Operation of Plant Isintenance of Plant Fixed Charges Pcod Services and Stud-t-Dody Activities Commity Services Capital Outlay There are 198 sub-classifications of the above accounts. The rcfinenent of the various classifications pernits an easy acct-elation of various cost elenenta. The conditions of the criteria are satisfied in this uniforn accounting systen. Oregon The Departnnt of Sducation of the State of Oregon is patterning its accounting systen on the classifications recon-landed by the Office of Education anchor 11, according to a mm- to the writsr from Ir. J. 1.. Turnbull, Assistant Superintendent. Accounts are to be naiatainad for: 212 General Control Instruction Operation of Plant Iaintenance and Repairs Auxiliary Services health Transportation School Lunch Other tired Charges Capital Outlays Debt Service 1 a" '7 -r .1531...“— ‘3’ There are 55 sub-classifications of enpenditures which are recorded on “: distribution ledger sheets. Budgets and annual financial reports are required. Based on the requir-ents of the accounting systen in force 3 j in the State of Oregon, the conditions of the criteria are satisfied. Pennsylvania The Departnent of Public Instruction is incorporating into its uniforn systen of accounting the race-sandations for proper accounting clarification advocated in the Office of lducation Handbook II. Prorating of expenditures to the several departments, 1. e., types of schools, was nsdc nandatory for all school districts. Audits by the ccnptrsller of the Departncnt of Public Instruction are performed annually. The Joint School Plan in this state per-its the pooling of resources by one or note school districts causing a central adninistrative control unit. The school districts may use either a strict cash basis, or strict accrual basis, or nodifiod cash basis of accounting. Budgets are also required. The accounting classifications used in the uniform system in Pennsylvania will not be stated here for they are the accounts listed in 213 the Office of Education Handbook II. It is interesting to note that the school districts are required to furnish a balance sheet and a special expenditure report with their annual financial report. The special expenditure report varies each year depending on the activity being analyzed by the Department of Public Instruction. The uniform accounting system‘which has for its foundation the accounting regulations of the Pennsylvania Department of Public Instruction and the account classifications of the Office of Education Handbook II contains the !. requisites set by the criteria. { I Rhode Island A.letter to the writer from Hr. Edward P. Wilcox, Director of Pield Studies, Department of lducation, indicates that this state does not have any published regulations for the keeping of books of account for school districts. Horns are prescribed for the keeping of cash receipts and disburse-cut records in a distribution ledger with separate sheets provided for the following major groups of accounts: - number of Account Sub-accounts General Control 22 Instruction \ 19 Operation of School Plant 7 ‘Inintenance of School Plant 7 Fixed Charges 7 Auxiliary Agencies 17 Capital Outlays 10 Although this is a single entry system, the account classifications easily permit the analysing of the expenses into cost units. Budgetary procedure 214 is also in effect to allow tor accounting for appropriations. The system of accsutiag for school districts in this state neets the conditions of the criteria. South Carolina The uniforn systen of accounting devised for the use of school districts has been patterned after the Office of Sducation handbook II. Sleven najor accounts are used; these accounts. however, were retained tron prior account classifications. The chart of accents shows the fiellwing classifications: Adninistration Instruction Attendance and Health Services Pupil Transportation Services Operation of. rlant lsintenance of Ilant Fixed Charges l‘ood Services and Student-Body Activities Cos-mity Services Gapital Outlay Debt Service There are 64 sub-classifications in the uniforn accounting system which also provides for cost analyses. budget preparation. and other statistical studies. ’ In addition to the accounting nsnual. South carolina prepared for the use of school district personnel. a uniform accounting systen for school activity funds, and a handbook of business manage-ant for public schools. Reports by county superintendents consolidate the infatuation received iron the individual school districts within their jurisdiction and provide for conpsrisons of costs of school district activities. Disbursenents 215 require the county superintudent's approval before paynsnts are node. The uniforn accouting systu provides for sufficient accounts to permit cost analyses. The systen nests the conditions of the criteria. South Dakota The uniforn accounting system in South Dakota uses the account classifications of the Office of Sducation Handbook II. These account titles will not be repeated here. The entries for expenditures are made “'1 3.1“?" ‘Mfifir “'” ”‘3' in distribution lodgers which are totaled to arrive at the figures necessary :. 157C“: for the annual report to the Depart-ant of Public Instruction. Additional records naintained by the county and independent school districts are a securities record, warrant register , promissory note record. and bond record. The public school budget is adopted in July of each year. and annual reports are due fron public. private, and parochial schools. In view of the conversion of the accounting system to the accounting terminology in Handbook II, the uniforn system nests the conditims of the criteria. Tennessee The revised uniforn acc‘outiag systen was developed in 1958 in accordance with the recomendations contained in the Office of lducation Iandbooh. The classifications of receipts and expenditures are identical with those of the Mndbook. The balance sheet accounts also conform to the Handbook II races-sedation. The system is based on double-entry bookkeeping, and the modified cash basis of accounting has been prescribed 216 by the State Department of Education. Careful control of expenditures is accouplished through constant cowarison with budgeted figures. A nanuel describing uniforn accounting procedures for school internal funds is also provided for the school districts. The detailed and elaborate systen of uniforn accounting procedures for the 153 school districts in Tennessee nests with the conditions of the criteria. Texas The Tones Iducation Agency prescribes the uniforn accounting systen for the Office of Education for use by school districts. According to Tunas law. the scbol accounting systen nust be used in conjunction with the school budget so that the budgeted figures will not be exceeded. A defile-entry system is advocated with the general ledger as the central accenting fern. The fund basis of accounting is required with continuing infer-ation on usecunbcred appropriation balances. The books should be usintaiaed on a modified accrual basis. Standards for audits are also prescribed by the Texas lducation Agency. In view of the adoption of the principles outlined in the Office of lducation Iandbook II, the uniforn accounting systen conplics with the specifications of the criteria. Utah The uniforn accounting system adopted in Utah requires detailed infer-tion on receipts and disburs-snta based in principle on the race-sedation issued in the Office of Sducation handbook II. The classification of expenditures shows the following accounts: .ih-‘fiMFE‘rj-On‘ -i-Qyi‘ .Ar - 217 Administrative (General Control) Instruction Other School Services Health Attendance Transportation School Lunch fiber Operation and laintsnancs of Plant Fixed Charges Cuaunity Services Public St-aor School I Adult Sducation Capital Outlay Debt Service There are 88 sub-classifications of the major accounts. Mnual financial reports and budgets are required. Instructional expenses are allocated to types of schools. The Utah naaual of accounting provides for constant revisions of the accounting procedure as necessary changes present themselves. In view of the comprehensive classification of accounts prevailing in this uniform system, the requirements of the criteria are lit. Vermont lo rules or regulations are published by the State Department of Sdueation of Vsrmnt for it is their belief that the contents of the Office of Sducatioa‘flndbook n are sufficient for the needs of their school districts according to a letter received by the writer from Ir. Winn 1.. Taplin. Director of Iducationsl Plnning. The bus which the writer procured from a supply house in Vermont show that expenditures are accmlated separately for elementary, secondary, and st-er schools, including dult education. in each district. Distri- bution ledger sheets sunrise the expenditures monthly (Judy through ‘CHXSHU'IH_}VI?~‘_V}3. .‘- _‘ J. !v a- H. fill-ant. . 218 June). The totals placed on the distribution ledger sheets are transferred to the regular books of accent which confsrn to the reconsndations of the Office of lducation Indbosk II. At the end of the school year, the accunulated monthly totals shown on the distribution sheets becone a part of the district's annual report by writing in the totals on a perforated stab at the right side of the ledger sheet and detaching it for insertion in the anal statistical report. budgetary planning is also required. In view of the csqlete adoption of the rec—endations in findbook II of the Office of Sducation. this syst- nsets the conditions of the criteria. Virginia In Virginia. the schools are a part of the county or city govern- ment in which the school systen is situated. Therefore. these school systus operate as depart-ants of a county or city unit. The receipt and disburse-eat of funds lies with the comty or city treasurer who pays school expenditures with city or county checks. the school board merely approving invoices or issuing warrants for the use of the treasurer of the governing unit. School operations are reflected in the city or county budgets and those schools which maintain their own accounting records reconcile their figures with the controlling accounts of the governing units while those schools which do not nsiatain their own records are furnished with monthly financial reports to infers then whether they stay within their budgeted figures. The classification of accents is as follows: "'_ W ‘W 1': it"! out tuna-.11..“ '1 [“1 ‘ ‘.. 219 Huber of Seeeunt Suboaccounts School Soard - Mninistration 10 Instruction 39 Regular boy Schoola (cl-entery. secondary, vocationel, supervisors) tart-tine. Ironing. and Substitute Coordinate Activities 3 Aniliary Agencies ll loosing - Operation and hintenence of School Slant ll lined Charges 5 liecellaneous Operating Factions 4 Capital Outlay 6 Debt Service 3 In ell cases, records are neintained with respect to estineted revenues. realized and unrealirod revenues. appropriations. expenditures, encmbrancoo, and unenc-borod appropriation balances. Year-end audits of school records are conducted by the Auditor of Public Accounto at the tine of the governing political unit audit end school operations are included as a port of the report on the larger unit. A uniforn accounting systu is prescribed for achool netivity funds. The accounting systen in force complies with the standarda of the criteria. lalhinston The accounting systen for echool districts in this stste is patterned after the Office of Educntion Inndbooh 11. Changes fron the eerlier accomting guide iesued by the Office of the Superintendent of Public Instruction were not nejor because the State of Weehiegton school districts had been using the generolly accepted ocoounting classificstiens which is repented throughout this aoction on state eceeunting provisions. "h. “'io" mp-ur—M-.a—_.-57 ~vee-‘ .— w-me-u- .u— an- . n - 220 herations of toeehers' salaries to the types of schools and to the type of art. whether supervisory or teaching. is reco-ended in the «coating nanual. Per cspita costs are comutod eccording to levels of instruction and budgetary procedures are strictly defined. In vial of the edeptiun of Headboct II sec-antics recon-endations, the accounting systen of the school districts in this state neets the requirenente of the criteria. West Virginia In Vest Virginie. the schools are adninistered es a part of the county in which they are located. The school boards receive a mthly fins-cisl report showing unoncufiored belancos fron the County hoards of Sdncetion to. aid th- in holding to up: sstinnteo. The state um of School nee-cc input. .. .3ch syston of accounting on the county school districts which provides for nonthly .d gusrtorly reports of expenditures. encuhrsnces. Id free balances for the budgeted appro- pristions. Account classifications are so follows: labor of Account Sub-occurs Genersl Control ‘ 23 Instruction lS Operation of Plant 13 Repairs end leplasasnts lS Transportatim 19 ‘ Auxiliary Agencies 18 Fixed Charges 15 Capital Outlay 19 Veterans Trnining Progrsn 3 Building Progr- S 221 The school districts are edited by the heard of School Tinence end by the Ten hissioner. This accounting systen conplios with generally accepted accounting principles-and nests the coditions of the criteria. hisconsin The Departnent of Public Instruction prescribes a uniforn accounting systen for school districts no well as budgeting. accounting. and auditing procedures. Provision is node for asset. liability, surplus. revenue. and expenditure scoot-ts. Special ecoeounts are uintained for E capital outlay and special funds. The clssoificetion of expenditures Lg; is as fella“: luber of Account Ssh-accounts Gonerel Control 9 Instruction 9 Operation 6 Iaintenanee 2 Auxiliary Services 6 Other Disbursonents for current Operations It Transportstion 9 c-lnity Services 4 capital Outlay 6 Debt Service 6 Asnusl audits of the school booha are required by state law. Motion for sllocetida of operational costs for purposes of developing tuition fees is one srea in which the principles of cost accounting are onployed. Sesed on the well-integrated set of eeceunting procedures sdvocated by suthority of the state. the scoousting systen in Wisconsin conplias with the specifications of the criteria. 222 MS A letter to the writer fron Ir. Zen Lewis. Fiscal Agent in the Dopertnsnt of ldncation indicates thst while there is no penphlet availahle on school district sceomting. the districts within the state of flyonieg adhere to the recs-endetions of the Office of Education Isndbooh II, with ninor nodifications. Budgeting for the school districts is required. In view of this infornation. it is reasonsble to conclude thet the accounting systen in this stoto nests the conditions of the criteria. .eu . .1, .....Unnh.:.,. .huvhrwrrcgtirtol: M'TITJ'I‘EIEEEEEEEE'I}WEN 6 566 EE“