TBTPSRecommendationOfWorkingGroup

Date: February 22, 2005

Recommendations from American For Prosperity - Texas
Working Group on Fiscal Accountability

Americans For Prosperity convened a working group on financial accountability. The group agreed that
financial accountability involves transparency as well as what information is made available to taxpayers, how
accessible it is and how it is made available.   This document sites problems and recommendations which if
remedied, would go a long way toward insuring taxpayers that their dollars are being used wisely, not being
used in advancing any agendas, and would open the door for financial transparency in the public school system.

Both state agency rules and powerful, taxpayer funded associations discourage school board members from
providing leadership. Until these issues are addressed, the argument that citizens elect school trustees who
should address some of these problems is moot.

We urge that existing laws be enforced with penalties (such as open records violations) and that laws providing
for taxpayer approval of additional expenditures be passed. The members of the group expressed repeatedly
that November Trustee and Bond Elections are a critical step toward financial accountability.

Our group wants to further emphasize that the only way to completely remedy the problems cited, taxpayers
must be treated as consumers in a free market for education services. First, taxpayers and parents should be
treated as the customer. Second, if the schools are not doing so, parents could be given that control in the form
of tax credits or vouchers to parents who choose to send children to private schools.

The working group identified problems and came up with suggestions in the areas of:
•        Lobbying with taxpayer dollars
•        Suing with taxpayer dollars
•        Spending information disclosure to taxpayers
•        Bond elections
•        Open meetings and open records
•        Preferential treatment of certain entities
•        Associations of school administrators and trustees
•        Money managers in school districts
•        School audits
•        School construction and land acquisition

Following are the identified problems and recommendations.

Lobbying with Taxpayer Dollars

Problem: ISDs and school administrators (superintendents, administrators, and boards) use taxpayer dollars
to lobby for more of those dollars.

Recommendation: Our elected officials are representatives of the taxpayers and as such, taxpayers should
not be forced to expend funds on lobbyists to lobby our elected officials (often for more of our tax dollars). At the
least, we should insure that the disclosure language in HB 2 remains. And we also recommend that teacher “in-
service" training is for classroom/education training only and not for trips to Austin to lobby.

Suing with Taxpayer Dollars

Problem: School use taxpayer dollars to sue for more money (taxpayer dollars).

Recommendation: RECOMMENDATION: Ban school districts from using public tax dollars to join lawsuits to
sue for more taxpayer money. An alternative would be to hold a local election to allow voters to approve large
expenditures for joining a lawsuit against the State of Texas (or taxpayers) and such an election should be held
on a regularly-scheduled November election date.

Spending Information Disclosure to Taxpayers

Problem: While information is available on the TEA website, it is practically impossible to access, it is
confusing, and the majority of voters will not take the time to navigate through it.

Recommendation:   Voters need concise, easily accessible information in order to make informed decisions
about their money and who will represent their interest when their money is spent. To find the information
suggested for inclusion in a post card, would takes hours to find on the TEA website if it is available. Since 1/3
of the state budget is spent on education, group members believe it is not unreasonable to ask that a few
thousand dollars in informational post cards be made available to citizens prior to November trustee elections
and after the school year. Post cards to voters to be mailed 90 days prior to a trustee election stating:
1.        When the election will be held
2.        Number of school trustees place openings
3.        Trustees running if known
4.        Superintendent’s salary (and benefits)
5.        Total dollar amount of all district salaries over 100,000 (reported annually) including number of positions
in the total.
6.        Total annual combined Administration salaries
7.        Cost per pupil
8.        Ratio of cost per pupil
9.        Teacher to non teacher ratio
10.      Amount of taxpayer dollars spent that school year on legal fees or lawsuits.
11.      Amount of taxpayer dollars spent on association/union dues.
12.      Number of parent, student and administrator complaints filed against the ISD (that past school year.)

NOTE: since the postcard would be an unfunded mandate, another recommendation would be that the
information both be prominently available on the ISD website, and also be printed on the report cards.

We also suggest that if legislation passed this session does not do this, an interim study be conducted to
determine consistent and reliable definitions of expenditure categories and uniform and complete methods on
how data is and should be interpreted. The interim study charges should include determining what information
is now available to taxpayers and how easily the taxpayers can access the information.

The committee also recommends that online banking of school district accounts be made available on the
internet. Banks wanting to do business with ISDs should be required to allow public access to the accounts
while putting in place security measures that block potential tampering. Online viewing should show each check’
s date, payee, school or activity associated with that expense and the check amount. Each item should be
viewable with categories of expenditures noted (i.e. office supplies, construction costs, furniture, etc.)

Bond Elections

Problem: The school bureaucracy uses taxpayer dollars to promote bond elections.

Recommendation: HB 159 (Rep Talton) addresses this problem for political subdivisions. Amend HB 159 to
specifically include prohibition of expending school funds on brochures, videos, use of school facilities. School
can provide an informational brochure up to 60 days prior to the election, which must be approved by the
Secretary of State and would include
•        What yearly tax increase would be years 1 -30 for the average district property owner (including rates in
years 1-30)
•        Total cost   incurred when the bond is paid off or mature.
•        Tax rate of the district before and after the proposed bond
•        Amount of debt the district will be carrying after the bond yrs 1-30
•        Ranking of district among other ISDs on district tax rate, before and after the bond.

   (b) A political subdivision that holds an election on a
   measure may not spend funds on advertising, other promotional
   materials, or educational materials related to the election or
measure for the period beginning on the 60th day before the date of the election and ending on election day.

Problem: Bond Money is used for items other than real property (RRISD has chalk boards in their $350 million
bond package) which then is paid out over a number of years incurring more in interest than the real property is
worth. Bonds are structured to cover costs which then free up existing funds to pay for more administrators and
to give raises, when existing money should have been used.

Recommendation: Specify what can be paid for with bond money. Exclude anything other than real property,
construction on real property, including buses and computers and equipment. The Attorney General’s Office has
to sign off before bonds can be issued. They would insure that real property only is included when issuing.

Problem: Bond Elections are an “all or nothing proposition”

Recommendation: Taxpayers deserve a line item veto.

Problem: Bond Elections promise voters improvements that they may not be able to deliver on as the bond
may put the district over the legal taxation cap. This deceives voters.

Recommendation: AG reviews all bond elections and stops the bond election from proceeding if all projects
or improvements cannot be built under state taxation caps and existing debt service.

Problem: Bond elections are held at times other than the November elections and as a result, turnout is low. In
addition, elections cost taxpayer dollars.

Recommendation:    All elections should be held in November. Districts could save money – and increase
participation -- by combining bond elections with regular elections in November.

Open Meetings and Open Records Violations

Problem: Many ISDs are not complying with open records and open meetings regulations. Currently penalties
violations aren’t a deterrent. District attorneys are reticent to investigate their local school officials.

Recommendation: Citizens can file complaints with the attorney general when open records and open
meetings have been violated. These cases will be referred to the State Office Of Administrative Hearings
(SOAH-AG)’s office) which will be able to award court costs, attorneys fees and fixed fines. Violation would
result in $2,000 fine, increased by $2,000 for each subsequent violation.

Payment of the fine would come from personal funds and not taxpayer dollars. Award of attorney’s fees would
go to the SOAH to offset attorney’s fees. Therefore there would be no fiscal note for this bill.

Problem: Open Meetings laws are ambiguous and are used by some to skirt the Open Meetings requirements
and as a result violate citizens and school employee’s free speech, the right to be involved in matters of
employee complaints, allowing the offending employee power to hide wrongdoings behind closed doors.

Recommendation: Amending Texas Govt Code 551.074 to include the following subsections would no longer
allow hidden agendas, and would allow citizens open scrutiny of board deliberations and decisions.
•        Add subsection c that states: If the complaint involves a matter of public concern, it has to be held in open
meeting before the board of trustees, and not made subject to any prerequisite district grievance procedure.   If
the matter involves a child, an alias must be used in making the complaint or the parent or guardian can request
a closed meeting.
•        Again, Add subsection “c” to Texas Govt code 551.082 that states: If the complaint involves a matter of
public concern, it has to be held in open meeting before the board of trustees, and not made subject to any
prerequisite district grievance procedure.   If the matter involves a child, the complaint must be held in closed
session.

Problem: Financial Accounting Transparency is needed if taxpayers or legislators are ever going to get their
arms around school finance.
School districts don’t want taxpayers to see their check book and credit card charges. To get around this they:
1) delay – many requests have to be made and if every “i” is not dotted it is often used as an excuse to deny or
ignore the FOIA; 2) give information in unmanageable formats such as on paper rather than electronically; 3)
when they do comply, often exorbitant fees are quoted for the documents, sometimes totaling several thousands
of dollars; and 4) when taxpayers get the information, the quality of the answers may be suspect. This lack of
responsiveness to FOIA requests, particularly taxpayer requests, often covers up conflict of interests with board
members, contractors and superintendents.

Recommendation:
•        A requirement that disbursements be posted via internet in their respective
     PEIMS account codes.
•        A requirement that each school board post, via internet, a certified comparison of those disbursements
VS. board approved budget
    amounts. This list would also be audited monthly for accuracy, with results posted.
•        An amendment of open records laws as suggested above to provide for enforced penalties with
increased amounts as violations occur.
•        Activity funds (AKA known as Pepsi/Coke money)- require a separate checking account and mandatory
viewing of checks written on the
    account and specify how these funds can be spent

Preferential Treatment of Certain Entities

Problem:   The PTA is given preferential treatment for use of school facilities, use of e-mail names gathered
from school websites to push the schools political agenda, and contributes to the public education system's
power and political base which is used against taxpayers. School districts currently link their websites to local
schools who advertise PTA meetings and bond proposal meetings/discussions. Currently, the PTA constitutes
a monopoly and yields the individual ineffective as compared to a state subsidized and assisted organization.
The PTA is in effect the political arm of the public school system assisting them with the passing of bond
proposals and other school district recommended election outcomes and has consistently fought improvement
or positive change in the public education system. The leadership of the PTA uses parent dollars to fund a
political objective that if known, many participating parents would not support.

Recommendation: TEA should send a letter to districts to advise school districts that their policies have to be
viewpoint neutral. For example, information favoring bond elections, opposition to vouchers should not be
allowed. Select organizations such as the PTA, should not receive exclusive school resources or funds, or
receive the exclusive right to collect dues on campus, send membership forms home in student backpacks, use
district copiers, phones or facilities or be “favored” in any way by the TEA or the state over other parent or
taxpayer organizations. ANY entity wishing to present arguments for or against a bond proposal or on any other
subject should be allowed equal access to students and parents. PTA must disclose lobbying efforts on their
applications. Taxpayer and parent lead organizations should be given access to school facilities and resources
equivalent to the PTA/PTO in every possible way.

Associations of School Administrators and Trustees

Problem: Taxpayer dollars are used to fund association fees for school officials. Although they are
“Associations” they are either funded with taxpayer money or taxpayer dollars are expended for their services,
and as such should be subject to the Open Records Act if schools and TEA regional service centers are not
forbidden to pay dues from taxpayer dollars.   TASB’s funds come from dues which are paid from school funds
(taxpayer dollars) or services they sell to school districts. HB 2 provides for lobbying and disclosure.

SECTION 2D.24. Subchapter A, Chapter 44, Education Code, is amended by adding Section 44.0072 to read
as follows:
   Sec. 44.0072. NONINSTRUCTIONAL EXPENDITURES. (a) Each fiscal year, a school district shall
compute and report through the
Public Education Information Management System (PEIMS) to the commissioner:
           (1) the district's significant noninstructional expenditures for the preceding fiscal year, as determined by
the commissioner; and
           (2) any money spent by the district during the preceding fiscal year on dues or contributions to a
noninstructional group, club,
                 committee, organization, or association, including dues or contributions used for the purpose of
lobbying.

TASB policies have violated first amendment rights. TASB policies confine teachers, taxpayers, etc from going
directly to their elected school board as in the Nacogdoches case, or from distributing information without board
approval as in the Plano case. Yet law requires that new school board members attend training (19 TAC
Chapter 61.1). TASB training indoctrinates members to fall in line with the superintendent, (unelected
bureaucrat) never voice opposition (Team of 8 training) and that they have little to no authority. TASA training
provides for the “Care and Feeding of School Board Members”

"Example from the American Association of school Administrators website:
“One of the most important ways of maintaining the board-superintendent partnership is to consciously manage
the human dimension of the relationship, paying close attention to the psychological care and feeding of board
members, paying close attention to meeting their ego needs and employing strategies to build feelings of
ownership and commitment among them.”

Recommendation:
•        Apply the Open Records Act to TASA and TASB. Although TASA and TASB are not governmental
agencies they function as such and receive government funds for most, if not all of their operating expenses.
•        Amend disclosure section of HB 2 to include “any group which uses any part of its dues to lobby.” (TASB
and TASA could claim they are “instructional” groups but should be subject to this disclosure.)
•        Revise Education Code to read “School Boards may not adopt policies that violate free speech”.
•        The TEA or some entity should inform school board members and superintendents that these
associations are not governmental agencies.
•        Repeal laws requiring trustees and superintendents to attend “educational” seminars of associations
which tend to indoctrinate attendees.
•        Ban school district trustees from determining poll locations and times for November Trustee and Bond
elections. Allow county commissioners in the counties comprising the ISD to determine poll times and
locations. Require multi jurisdictional ISD’s to advise all counties and county commissioners in their ISDs of
upcoming elections within 60 days of an election.   (NOTE, currently in their own races, Trustees determine their
optimal polling places. This gives incumbents too much political power.)
•        Ban trustees from giving superintendents a “perpetual” or “revolving contract. This “entrenches”
superintendents and forces taxpayers to pay “golden parachute” amounts to get rid of inefficient and ineffective
Superintendents.

Money Managers in School Districts

Problem: Superintendents who do not have financial backgrounds are not capable of handling multi million
dollar budgets. In the private sector, people responsible for this much money have business and finance
degrees and years of experience. Taxpayers will never be confident that their money is being managed wisely
until superintendents are required to have business or accounting degrees and an acceptable level of financial
and management experience.   Nepotism laws regarding Superintendents and Administrators should be
strengthened and loopholes closed (Note RRISD/AG case).

Recommendation: Repeal Requirement that superintendents must be “certified” by the State Board for
Educators Certification to serve as Superintendent. HB 2 SECTION 2A.01 allows individuals to be issued a
Temporary Certificate for Superintendent or Principal by the district as long as elected Trustees approve their
employment. Amend this section to require business degrees and several years experience.

School Audits

Problem: School audits by the Legislative Budget Board (previously handled by the Comptroller) only look at
the process of financial management and do not look at fraud, waste and abuse. Schools have undergone
financial audits resulting in good reports and only a few weeks later, fraud, waste and abuse was uncovered. A
recent LBB report, said that a certain school did not have enough Hispanic cheerleaders! The recommendation
was to buy cheerleading uniforms for the school population because the assumption was that Hispanics did not
try out for cheerleader because they couldn’t buy the uniforms!

Recommendation:   Amend statute governing what school audits cover to include items which would expose
fraud, waste and abuse of taxpayer dollars.

School Construction and Land Acquisition

Problem: News accounts have been ripe with accounts of kickbacks on school construction. Parents pass
bond packages only to find that the schools their children attend are more elaborately built and appointed than
the houses the taxpayers can afford to live in. Architects lobby for and use Taj Mahal school buildings to
advertise their design awards to get more facilities contracts.

Recommendation: Florida instituted a SMART Schools design criteria statewide that provided incentives for
building schools with economy in mind. They developed “Frugal Construction Standards which guides
architects and school boards away from costly and frivolous features. Delegate to SBOE the authority to create
building standards with a maximum cost per square foot which 1) may vary by region and 2) is adjusted for
inflation and is based on a percentage of the average cost per home in the district. The SBOE shall distribute
to districts sample guidelines including a cap on costs per square foot, which if exceeded, must go to taxpayers
for a vote.

Problem: Land Acquisition for schools is becoming increasingly questionable due to nepotism, good old boy
networks, etc.

Recommendation:
•        Strengthen the state ethics laws for school board members in districts with smaller student populations to
reduce conflicts of interest.
•        Smaller school districts which are growing rapidly are susceptible to questionable land acquisition issues
behind closed doors/special           sessions, i.e. "Good Old Boy" friends of the school board.
•        Require more disclosure of business dealings of family members of school board members with vendors
or land developers.
•        School properties must be posted on the school website stating who the properties were purchased from.
•        If the properties were owned by a partnership or corporation, the partners and top shareholders must be
listed. This is important information so parents will know that land acquisitions are made for the benefit of
children and not special interests. The train of title for the last 5 years and have full disclosure of buyer seller and
the HUD statement.
•        The school should post on their web site or the property, who the land was purchased from and who owns
the land immediately surrounding the property

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