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FINANCING THE PUBLIC SCHOOLS OF ATLANTA AND FULTON COUNTY '. ' A comprehensive approach to a study of the financing of the public ' _, i:· schools in Atlanta and Fulton Cqunty would involve an appraisal of the future policies of the State of Georgia and the federal government foi · school financing a we ll as a study or local school financing. i .

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Since such an appraisal is beyond the scope of this study, this section of the report will deal primarily wi~h problems of local school financing in the two districts. However, most authorities on school financing anticipate that in the future there will be further increases in school !I. i financial support from the federal government and state governments as well as from local school districts. Although the public schools will no doubt receive increased funds in the future from both state and I' I federal sources, strong local financial support of the public schools I I I will have to be maintained by all districts that desire something better than a mediocre quality level of education for their children. The following matters are treated in this section of the report: revenue receipts, current expenditures, taxpaying ability and local effort to support education, indebtedness, equalization that would result from consolidation, non-property local taxes and financial arrangements that would need to be made if the two districts were conso lidated. I • Revenue Receipts l I Table I shows the budgeted reven ue receipts of the Atlanta and Fulton County school systems. It will be noted from this Table that 55.4 per '. �-2- cent of the revenue of the Atlanta City schools is derived from the district property tax as compared with 29.6 per cent in Fulton County. However, both of these percentage figures are deceiving. Just what per cent of the revenue receipts of each school system i s provided by property taxes levied on property located in each district? It will be noted that the A~lanta City Council paid $2,835,045 in 1966 for the debt service on bonds the City iss~ed to construct school buildings. This amounts to 5.3 per cent of the revenue receipts of the Atlanta City board of education. Th i s added to the 55.4 per cent derived from the district property tax makes a total of 60.7 per cent of the revenue ' receipts of the Atl ant a Cit y schools derived from property taxes in 1966-67. It will be no t e d th a t Fu lton County receivis $1,762,892 from the county- wide tax ( 1½ mi ll s ) a nd $780;000 from a direct appropriation from the County Commission. sources. This makes a total of $2,542,892 from these two If it is a ssumed that t he appropriation from the County Commis- sion is also de ri ve d f rom prope r t y taxes , what part of this total is paid on prope r t y located i n Fu l t on County but outside of the City of Atla nta? Since only about 19 per cent of the digest of Ful t on County lies outside of the City of At l an ta, only app roxima t ely 19 per cent of t his amount, or $483,149, is pa id on t he prope rty in Fulton County l y ing outside the city of Atlanta, and $2 , 059,743 on the propert y in t he City of Atlanta. This represents only ap proximatel y 3.2 per cent of the revenue receipts of the Fulton County board. It wil l a l so be noted that 8.1 per cent of the revenue receipts of the Fulton County district is derived from th e 5½ mill levy for debt service. These two amounts, that is, 3.2 per cent plus 8. 1 per cent a dded to 29.6 per cent make a total of 40.9 per cent of the revenue receipts o f the Fulton County board of education obtained from property taxes pa i d on property located In Fulton County outside of the City of Atlanta. �-3- The Fulton Coun ty board of education receives 42.6 per cent of its · revenue from t he state Mi n imum Foundation Program appropriations as compared with 32.3 per cent for t he City of Atlanta. The Minimum Foundation Program law was des i gned to equalize educational opportunities among school districts that vary g rea tl y in wealth. The 1-½ mill countyw.ide tax levied in all of Fulton County but allocated exclusively to the Fulton County board also provides f o r considerable financial equalization at the local level. policy. . The equalization of educationa l opportunity is sound public Later in this report , it is shown tha t the adjusted gross digest is 32 per cent greater per pupil in t he City of Atlanta than in Fulton County. ' Table I shows the revenue receipts of the Atlanta Schools totaled $530.01 per pup il in 1966-67 as compared with $547.35 in Fulton County. This means tha t the State Minimum Foundation Program Law tQgether w_ith the 1-½ mi l l county-w ide levy and the direct appropriation from t he County Commission have gone a long way toward equalizing the financi a l su pport of the two systems. It should not be inferred from this comment, however, that educational opportunities are equal in the two school systems. The Atlanta City school sys tem provides kindergartens which are not provided in the Fulton County system. If Fulton County provided kindergartens, the revenue receipts per pupil in that school system wou ld probably be l ess t han the reven ue receipts per pupil in the Atlanta system. Both systems will benefit substantially in 1967-68 from increases from the Minimum Foundation Program Appropriation provided by t_he 1967 Legislatu re . It is estimated t hat the City of Atl anta wil l receive an increa se of approximately $1,863,000 from this source and Fulton County approximately $1,075,000. �TA BLE I - SO URC ES OF RE VENUE OF ATLA NTA AND FULTON CO-UNTY SCHOOL SYSTE MS 1966-67 (B UD GET ED REV ENU ES 1966-67, DATA FURN ISHE D BY CITY AND COU NTY SCHOOL OF FI CIALS). SOURCE Dis t ric t Proper t y tax for · ope ra t ion ATLANTA Per cent Amo unt $29 ,686 ,-415 ' .-r FULTON COU NTY Amount Per cent $ 4 , 922,451 29.6 1,762 , 892 10.6 County Commi s s ion 780,000 4.7 Intangibl e Taxes 230 , 000 1.4 42.6 .55.4 County Wide Proper t y Tax State Min imum Foundat ion Prog ram Othe r State Funds Vocat ional Funds Na t iona l Defence Education Act 17,322, 038 32 .3 7, 074 ,76 1 425 , 013 628 ,449 .8 0 1. 2 58 , 000 .3 520,781 1. 0 65 ,400 .4 Ful t on County Schoo l Dis t r ic t 5½ mi 11 lev, for debt service Fede ral Impacted Area Funds 802,3 66 1.5 Ci ty Co unc il Payments f or Debt Service on Sch. Bond• 2,835,0451 s.3 Other Income 1, 358,747 2.5 Total Revenue Re ceipts 53,578,854 100.0 Beginning Cash Balance Sub-Total Fede ral Funds El em. & Sec. Act. 1961 GRAND TOTAL 1,3 50 , 000# 8. l 210, 000 1.3 159,500 1.0 $ 16 , 613 I 004 532,250 818 , 609 54, 111 , 104 17, 431,6 13 2,519,743 461,383 $56,630,847 $ 17,892,996 100 . 0

Not Incl uded in the operating budget . Continued-- �TABLE I - (Con t.) SOURCE Ave rage Dai 1y Attendance Jan . 1, 1967 Revenue Receipt s Per Pup i 1 in ADA~\-

ATLANTA Amoun t Per cent FULTON COUNTY Amount Per cent 101 , 068 30 , 352 $ 530-. 0 1 $ 547.35 Excludes federal funds received under the Elementary and Secondary Act of 1965 which cannot be used for the regular school program. ' . ,,:· �-4The federal revenue s rece ived f rom t he Eleme ntary an d Secon da r y Educa tion Ac t of 1965 are a l so shown in Tab l e 1. These reve nues are shown s epa rately because they are al l earmarked f o r s pecia l purpos e s by the feder a l gover nme nt a nd can not be exp ende d for t he re gular sc hool p rog ram . Prac t icall y a l l of t hese reven ues mus t b~ expen ded for compen- sa tory ed uca t ion for the chi l dren of the disadvantaged . Cur rent Expe nditu res In Tab le 2 a n a nal ysi s of the budgeted curr en t expendi t ures of t he two s chool systems f or 1966- 67 is presen ted. Bo t h s ystems expe nd 75 pe r cent or mo re of total curren t ex pen d itu res for in s t ruc tion . Th i s i s ty pi ca l p ra ctice in large schoo l systems. Ca ut ion s hou l d be exercised in comparing t he different percenta ge all ocation s given to the same ex pendit ure functions in t he t wo systems. The se systems differ cons i derably i n t heir bases of fin anc ia l sup port , t he spread of popu l ation a nd ot her facto r s . al locates 3.0 per cent of its Fo r exampl e , Fu lton County current expenditu res to tra ns po r t at ion but At l an ta spends no funds for pup i l transpo rtat ion . The difference between the two systems i n curren t expen di t ure s per pupil is negligible. Fulton County $493.34. Atlanta budgeted $486.07 per pupil for 1966- 67 and The Research Division of the National Education Ass ociation estimated that the average current expe nditure per pupil in average daily attendance for the 50 states and t he District of Columbia was $564 In 1966-67. Therefo re, the current expenditures per pupil in both the Atlanta and Fulton County School systems are very low when compared with the national average. �TABLE 11 CURRENT EXPENDITURES OF ATLANTA AND FULTON COUNTY SCHOOL SYSTEMS 1966-67# (BU DG ETED EXPENDITURES FOR 1966-67) ACCOUNT FUNCTION 1. Adm in istration 2. Instruc t ion 3. _Ope r at ion of Pl ant ATLANTA Amoun t $1, 796,920 Per ce nt FULTON COUNTY Amount Per cent 3.7 $ 309,784 2. l 36,977 ,443 75.3 12,149,333 81. 1 4,224,543 8.G 1,228,200 8.2 2,810,500 5.7 663.550 4.4 96,368 .2 0 - - 4. Maintenance of Plan t " 5. Health Servi ces ' 6. Food Services 4 l, 209 9. Other 9,3 00 .l 0 - 444, 160 3.0 2,417,800 4.9 169,368 1. 1 1.5 0 7. Transportation 8. Fixed Charges •1 754,819* - TOTAL Average Daily Attendance Jan. 1967 49, 119,602 101,068 Current Expenditur ~s Per Pupi 1 in ADA $486.07 100.0 14 ,973,695 100. 0 30,352 $4~3-34

Data furnished by county and cit y schoo l off icial s. Expenditure accounts

do not include expenditures from federal funds received from the Elemen- . tary and Secondary Act of 1965.

This account consists principally of undistributed expenditures made

from federal funds received under the National Defence Education Act. �-5I Financi~l Abil i1:_y . r·;· The best measure of the relative local taxpaying ability of the Atlanta and Fulton Co unty s chool systems is the: gross property digest per pupil in average daily attendance computed on the basis of 100 per cent valuation . This is due to the fact ihat most local school revenue is derived from property taxes. Following is t he adjus t ed 100 percent gross digest for 1966 of the Atlanta City School district estimated by the State Revenue Department: Atlanta City in Fulton County $. 4, 141,663,000 · Atlanta City in DeKa lb County 173 , 149,000 Tota 1· $ 4,314,812,000 The average dally a t t e ndance ~f the At1~nta City schools was 101,068 in Janua ry, 1967. Therefo re, t he gross digest of the At l anta Ci t y ~chool ~i strict adju s ted on a 100 pe r cent basis was $42,692 . per pupil. The 1966 . gross digest of t he Fu l ton Count y school d istrict adjusted ·on a 100 per cent basis was $982, 348 , 000 according t o da ta f urn,i shed by t he State Revenue Department. The gros s dige st .include s t he va l uat ion of homesteads even though homesteads up .to a valuat ion of $2, 000 are exempted from County operating levies for schools. It is necessary to include the valuation of homesteads in order to compute an accurate mea sure of the relative wealth of the two districts. · County schools in January was 30,352. was $32,365. The ADA of the Fulton · The gross digest per pupil In ADA Therefore, the Atlanta City schoo·1 system has a gross digest approximately 32 per cent greater than the Fulton·County school system. However, each of these school systems has considerably more wealth per pupil than the average school district In the United States. .,I �-6.Local Financial Effort to Support Education A valid measure of local tax effort to suppor t sch6ols can be obtained by dividing the taxes paid on the property . located in each school district by tbe adjusted 100 per cent gross digest of that district. It is difficult to compute exactly the local tax effort ~f the Atlanta City District because a part of that district is in DeKalb .:. County. However, the following is a fairly close approximation for 1966-67 . r. District property tax 2. Payments of City Council for debt ~ service on school bonds 2,835,045 The portion of the 1½ mill countywide tax and the portion of the approximation made by the County Commission which was paid on property located in the City 2,059,743 3. $29,686,415 TOTAL LOCAL PROPERTY TAXES FOR SCHOOLS $ 34,581,203 The 100 per cent gross digest of the Atlanta school district for 1966 was $4~314,812,000 • . The total local taxes for schools .divided by the gross digest equals .008 o r 8 mills on the adjusted 100 per cent gross digest or true value of property. The local taxes for schools in the Fulton County school district In 1966-67 were as follows: $. 4,922,451 1. Dis tric t property tax 2. The portioh of the l½ mill countywide tax and the appropriation made by the County Commission which was paid on property located in the county district 3. Fulton County district levy of mills for debt service 483; 149 S½ TOTAL LOCAL PROPERTY TAXES FOR SCHOOLS 1,350,000 $ 6,755,600 �I i . -7I' ' The 1966 gross dig~st of the County school system on lOO per cent basis was $982,348,000. The total local taxes fo~ schools divided by the gross digest equals .006877 or approximately 6. 9 mills on the gross digest on true valuation of property. It is evident that the Atlanta City school district made a greater local tax effort in proportion to its ability to support schools than Fulton County. If the Fulton County schopl district had made as great a tax effort In proportion to its ability as the Atlanta school district in 1966-67, it would have raised .001123 times $982,348,000 or $1,103,176 in additional local revenue in 1966-67. Special attention is directed to the fact that Fulton County could not legally have made this extra local effort in 1966-67. The District levied 25 mills of operating taxes which was the legal limit it could levy. Furthermore~ property was assessed at less than 25 percent of true value. However, the limitations on the taxing power of the Fulton County '. board of educa tion wi l l be eased somewhat in the future because of the ruling of the cour t in the Mclennon vs State Revenue Commission case. The cour t ru l ed tha t all proper ty must be assessed at a uniform percent of t rue va l ue regar dless of the c l ass of prope r ty o r whe re it was locat ed. Upon t he r ul •ing, the Revenue Commi s sioner o rde red that a l l count y d i ge sts be based on assessing all property a t 40 pe r ~ent of t r ue value. Th is wi l l ~ake it possible to increase consi dera bly th e loca l reven ue s of the Fulton County school district beginning with t he 1967-68 f isca l year. There are no legal limits on the amount of mills which the Atlanta City board of education may levy for the operation of the public schools of the ~Jty. Therefore, there ar~ no legal barriers to Increasing local school support for schools in Atlanta. (· '· �-8Actually the loca·J taxes for schools are extremely ·low both in Atlanta and in Fulton County when compared with - the school taxes levied in other sections of the nation. Recently one of the members of the staff making this survey participated in a study of school financing in all school districts of 20,000 population or more in Illinois. It was found that the average school district in Illinois levied local property taxes for schools equivalent to 12 mills on the 100 per cent true valuation of property. This is a fifty per cent greater local effort than the City of Atlanta. The local tax effort for schools in the Fulton County school district is only 58 per cent of the average effort in Illinois. Indebtedness The bonded indebtedness of the Atlanta City Council for schools totaled $52,905,000 in 1967. This was less than 3.8 per cent of the unadjusted gross digest. The . bonded indebtedness of the Fulton County school district was $22,661,000 in 1967. This was 9. 1 per cent of the unadjusted gross digest of the county school distri ct . This Is close to the 10 per cent consti- tutional limit on school indebtedness for the Fulton County district. However, the bonded indeb ted ness margin of Fulton County will be greatly increased when the property digest i s raised from an estimated 25 per cent of t rue value to 40 per cent. The unadjusted 1966 gross digest for the Fulton County district was approximatel y $248,000,000. Assuming that the 1966 digest was at 25 per cent of true value,the 1967 digest at ~O per cent of true value should be approximately $400,000,000 allowing for a reasonable amount of growth. than The present county school Indebtedness wouid be less 5.7 per cent of the gross digest at a 40 per cent valuation. �-9Another way of looking at the indebtedness of the two districts is to compute the pe~ cent that the school ind~btidness of each district is of the _a djusted gross dig·est of each district at 100 per cent of true value. In 1966 this figure for the Atlanta city district was 1.23 per cent and for Fulton County 2.31 per cen t. If . the ·two districts - were consolidated, it is assumed. that the territory that originally issued the bonds would continue to be responsibJe for the debt service on the - bonds that it had Issued. It does not appear that this would work any great hardship on either district because the indebtedness of neither district is excessive. Non-Property Local Taxes Some school districts in the United States have obtained . legal authority to levy non-property local taxes for schools. both for and against this practice. There are arguments Following are some arguments against the levy· of local non-property taxes for schools: 1. Usually only urban or metropolitan school districts are able to derive substantial funds from this source. 2. The state can collect most types of local non- property taxes more efficiently than local untts of government. 3. Local non-property taxes for schools place cities in competition with each other for industries. 4. If the larger urban districts are able to .levy local non-property taxes for schools, they may not support a state f i nancing program which helps the less · fottunate school districts. 5. Some type!,; of local non- property taxes make it possible for wealthy districts to shift a part of the incidence of their taxes on the residentj of less wealthy dlstricts • . I; .. d· �-10Some arguments fo r the levy of local non-propert~ taxes for schools are as follows: 1. The property tax is a regressive tax and public resistance to it is growing. If we main ta in the vigor of local school support, many believe that a source of loca l revenue more nearly related to ability to pay than the property tax must be found. 2. The more progressive areas of . a state desire a better quality program tha n the legi slature is usually willing to provide from nonproperty state taxes. Those areas should be given the authority to provide this higher quality program from some local source other than the property tax. 3. It is possible to select types of local non-property taxes the burden of which can not be shifted to the taxpayers of less wealthy areas. ' ! 4. The cost of administering local non-property taxes can be held to a reasonable level by using the state's tax collection machinery or by levying local non-property taxes by metropolitan areas rather than by ind ividual school districts. 5. The taxpayer should be given the choice of what type or types of local taxes he will kvy for schools in order to broaden the base of local taxation. As has been pointed out above, local property taxes for schools are very l ow both in Atlanta and in Fulton County. There is considerable leeway in both districts for increasing local property taxes for schools without those taxes becoming burdensome. · Therefore, there is no immediate urgency for the consideration of obtaining the authority to levy local non-property taxes for schools. �-11- If the Atl a nta and Fulton County school authorities - decide to study the possibility of levying local non-property taxes, it is recommended that consideration be given to t he following: 1. That any local non-property taxes that are levied for schools in the AtlaAta area be lev ied over the entire metropolitan area of Atlanta including all school districts in the following counties: Fulton, DeKalb, Clayton, Cobb, and Gwinnett . 2. That a metropol itan s chool taxing authority be established with the sole responsi bil ity for collecting any local non-property taxes for schools authorized by law and for apportioning such t axes among the several school dis tricts in the f i ve counties named above in proportion to the average daily attendance of pupils. 3. That only t hos e types of non-property local taxes be levied, the burden of which cannot be shifted to tax payers residing outside of the Atl anta metropolitan area . Financing Education in a Reorganized District A number of reports have been presented to the people of the Fulton County and Atlanta School distric ts in which arguments for and against the consol itation of the two districts have been set forth. the purpose of this report to review those arguments. It is not Therefore, the di scuss ions of schoo l finance presented in this study have been focu sed primarily on the financing of schools in each district rather than on the financing of schools in a consolidated district. Certain suggestions particularly concerning the level of school financ ing have already been presented. Those suggestions are as app li cab l e to the financing of education in Atlanta and Fulton County as separate school districts as they wou 1d be app li cab 1e to the financing of education in a conso 1 i dated district. �-12- It wou ld no dou~t be possi ble to provide reasonably adequate sch~ol financing in each of t he t wo districts operating as separate districts. However, if the two districts were consolidated, it would be possible to establish a more equitable and more efficient financing plan. It has already been pointed ou t t ha t the 1966 gross digest adjusted at 100 per cent in t he ci ty of Atla nta ~ as $42,692 · per pupil In ADA and in the Fulton County district $32 ,365. If the two d1stricts were consolidated, the '. gross diges t at 100 per cent valuation· for the consolidated district would be $40,307 per pupil. It has also been pointed out that the taxpayers in the Fulton Coun ty schoo l district are making a lower tax effort to support schools in propo rtion to ability than the taxpayers•in the Atlanta City district . Therefore, consolidation of the two districts would equalize the weal t h. back of each child and it would also equalize the tax effort to suppor t schools in the Atl anta-Fulton County consolidated district. Consolidati on would a l so simplify local financing because there would no longer be a need for t he special l½ mill couhty equalizing levy or direct appropr iations from the County Commi ss ion. It has been s uggested in other st udies presented to the Local Education Commission of At l ant a a nd Fulton Cou nty that the consolidation of the two districts migh t resu l t i n t he l oss of some state school funds under present me t hods of s tate apportionment . If there is anything in present state laws that would place a penalty on des i r able reorganization of school districts, the Jaws shou l d be amended and the penalties eliminated. This should not be a difficu l t undertaking. As has already been po i nted out , improvements in s chool f inancing should be made In the Atlanta and Fulton County school distr i cts regard l ess ' .. r·i· �-13of whether they are consolidated. If . the two districts are consolidated, consideration should be given to the following financial recommendations: 1. The board of the consolidated district should be given the same power for levying taxes for school operation as that now possessed by the Atlanta City Board of Education and it should be fiscally independent of any other local body. · , I ·I 2. The board should be given th e power to issue bonds for capital . outlay purposes up to a reasonable per cent of the gross digest. The board should also be given the power to obtain tax anticipation loans to be repaid within the fiscal year. 3. Homestead exemption from school taxes should be abolished in the reorganized dtstrict. 4. Present outstanding bonds should be retired in accordance with the convnitments made at the time of issuance but all new bonds should be issued on a district-wide basis and retired from taxes levied thro~ghout the consolidated district. . . �BUSINESS ADMINISTRATION SERVICES The primary purpose of business administration is to provide the services netessary for obtaining the maximum return per dollar invested In public education. It is not the pu r pose of business administration to minimize educational expenditures. Business and industry have long been aware of the fact :that t he investment .of additional fu nds In an enterprls-e wi 11 freque ntly return more profi t s per dolla r -invested than a smaller Investment. Thi s same pril'lcip le applies to the educational enterp ri se. However, wasteful or ineffici ent ex pend i ture of fu nds ~anno~ be Justified by the returns rece i ved In either business or education. A limited survey was made of the bus iness administration service s and policies of the Atlanta an d Fulton County school systems. Th i s survey was made f irst to dete rm i.ne t he adequacy of t he bus iness adminis tration services of each school system and second to dete rmine whet her major economies in business adminis tra tion could be obtained by the conso l_idation of the two systems. The f i ndi ng s of that su rvey are set forth be low. Atlanta Ci ty School Sys tem The At lan ta City schoo l system has a we l l developed program of busines s a dm i n is t ration serv ices typical of cities the size of Atl anta. Except fo r s ta ff organization, business admin istrati on policies are generally consistent woth the policies recommended by authorit ies on school bus iness mana gement. Organh:atlon. The organization for school business management does no t follow the.pattern generally recommended by authorities in this fiel d. Fi nance, Inc luding administration of t he budget, Is under the supervision of a comptroller appointed by the Atlanta Ci ty boa rd of education and he Is directly ' ·I f �-2- responsible to the boai d. Legally the comptroller is not required to report to the _superintenden t noi is he under the supervis1on of the superintendent. i In practice however he works closely with the superintendent. An assistant superi~tendent for school plant planning and construction reports directly to the :superintend~ nt . All ot her busine~s administr~tion services are under the direction of an assistant-superintendent for administrative services who -~ W:.!.E _<!Lrectly to the superintendent. Th e services under the supervi n of the assis t ant superintendent for administrative services include the following : ~urchasing, school plant operation and maintenance, food ~ervices, records center, warehousi ng, .inventory, print shop, statistical services and school detective services. Autho r ities on school business management usually recommend that all business administration s e rvi ce s should be coordinated by one assistant superintendent directly responsible to the superintendent. Howeve r, if thos e services are divided among two or more assistant superintenden ts, each of these superintendents should report directly to the superintendent. The disa dvantage of this latter system as compared with· the system usually recommended is that the superintendent of schools is required to coord .i nate the different administrative services rat her t ha n the assistant superintendent for business a ffa irs . rhe system of orga n ization now use d by ·At lanta viola te s the princ ipal of coo rdination of the ac t ivities of an o r ganization through a single executive. Potentially this system could cause friction and lack of coordination in t he administration of the Atlanta public schools. That it has not done so is a credit to the educational and business executives of the A~lanta school s ys tem. '. ,r' ' �-3Facilities and Equi pment. Office f acilit ies for t he business admini- · I stration staff are provided for in a central admin istrative bu il ding for the Atlanta City board of education. ' Another bu ilding , located approximately- one. block from the adminis trative office building, is being renovated to house . re~ords and data process ing eq uipment. When t his i~ done fairly adequate office space will be ava ilable for t he business administration staff at present. However, the central off i ce building is located on a limited site with inadequate parking facilitie s. It would be diffi cu lt a ~d expens iv~ to expand the present central office fac ili ti es of the Atlanta City board of education. Sophis ticated data proces sing equ ipme nt i s in proces s of be i ng installed. That equipmen t includes an IBM 360 computer, tape and dis~ sys tem and related equipment includ ing a 1428 document reade r. When th is system is in full ope r - ation, the fina ncial accounting system, the central record system for warehouses and othe r record systems involving da t a processing can be greatly improved. All other business administration services are housed in a newly constructed educational se r vices building. This is an excellent building located near an expressway and it is served by a railroad siding. The site is fairl y adequate. The building houses the school plant maintenance shop ; warehousing for school supplies and school plant maintenance and custodial supplies, storage for schoo l food service, the print shop and other t ypes of educational services. The warehousing and storage facilities of the educational services building are efficiently arranged for accessions to and withdrawals from stock. At the time this building was constructed it was thought to be adequate for all the ,< storage and warehousing needs of the Atlanta system. However, it was soon found necessary to utilize the ~Id abandoned city jail building to store old �' ·· •' : - 4- school furniture and ce rtain other ty pes of non-rapidly moving stock. While not ideal, t his buildi ng is s til l usefu l for th~s type of storage. School Plant Maintenance . The At lanta Ci ty board of education operates a city owned school plan t ma in tenance shop. It is adequately staffed with employees of the Ci ty board of educati on and we ll equipped. Experience has shown t hat. a proper ly operate~ school plant maintenance shop can not only save money on school plan t maintenance but that Jt usually provides better service tpan when school_ plan t maintenance is pr6vlded for by job contract. The board has developed a program for the repair and maintenance of school buildings and ~ this policy not only exte nds the life of a bui l ding but it also reduces the Some di fficulty has been . number of hazards to pupil s and s chool employees. experienced In obtainin g employees with t he desired skit .t s. School transpo r tation Is not provided for at public expense by the Atlan ta City board of educati on . Budgetary Procedures. Work on the budget starts approximately six months before the beginning of the fiscal year. prior to the beginning of the fiscal year. The budget is not always ap proved Best practice dictates that the ,' budget be approved prior to the beginn ing of the fiscal year. However, it is reported that delays In receiving tax di gests and estimates of revenue sometimes make it difficult to approve t he budget in final form prior to the beginning of the fiscal year. The comptroller has primary responsibility for preparing the budget document. However, the comptroller consults with the superintendent, the assistant superintendents and the area superintendents before he prepares the budget. area superintendents consult with the principals. The There seems to be no fo rma l �,------------- - - 5- arrangemen t s fo r providing opportuni ties for classroom teachers or their representat ives to partic ipa te in t he formulation of the budget. Certain items, including ins tructional supplies, library expenditures, . band equipment and janitorial su pplies, are budgeted by individual schools. The budget for 1966-67 is a formi dable document consisting of more than 160 pages. tin it It contains detailed financial schedules of re143.215.248.55ues and expenditures, cos ts, and comparisons of the proposed_ budget with receipts and expend i • t_ures for previ ous years. understood by laymen. attended. This Is a technical document and is not readily The board holds public hearings but they are not well The board is fiscally independent and adopts its budget without being subject to review by · any other local body. to make the board fiscal ly independent. It .fs sound pub I i c pol Icy Under t his policy the public is able to fix responsib ility fo r t he school budget because the board of education is the sole responsible body. Howeve r , as taxes inc rease in the fu t ure and the public becomes more tax conscious, t he board may need to develop better methods than it is now using to commun icate the educational needs of the pupi ls to the public. Financial Accounting and Audit ing. The financial accounting system utilized in the Atlanta City schools conforms with the principal accounting standards and account classifications reconvnended by t he United States Office of Education. This is important in order that t he financial data for the Atl anta City school system may be comparab le not only with other school systems In Georgia but also comparable with the financi al data from other school systems throughout the nation. The accounting system is completely mechanized by the use of the data processing equipment already described. Accrual or encumbrance �-6- accounting is used. Thjs is essential for close budget control. Under accrual accounting, a budget account is encumbered as soon as an obligation is incurred against that account. The accounts of the Atlanta City schools are audited annually by a firm of certified public accountan t s. The board requires the principal of each school to keep a uniform system of account records of internal accounts. co11ec~ed at individual schools . Internal accounts consist of funds These accounts are also audited annuallyo The accounti ng and auditing procedures of the Atlanta City school system are in accord with standard practice. Purchasing Procedures. All items of any importance used by the Atlanta City schools are cent r ally purchased in quantities on competitive bids. policy undoubtedly saves large sums of money annually. This The construction of central warehousing facilities and the establishment of an efficient distribution system made it practicable for t he board to establish its broad policy · of central purchasing. Business Administration, School Lunch Rooms. provided for school lunch rooms. Central supervision is All school lunch rooms receive federal aid in the form of cash and commodities. From 60 to 70 percent of the pupils participate in the school lunch p rogram. This compares very favorably with a national part icipation average of only 35 percent. The board provides for central purchasing and central accounting for all school lunch rooms. The business administration policies of the board for the operation of school lunch rooms are in line with best practice. Insurance and Bonding. School buildings are insured for 100 percent '.I . , ,; �r I -7of appraised wor t h on blanke t f ire and extended coverage policies. The board deals with one agen t who re prese nts the Association of Independent Insurance Agents. Build ing s and equ ipment are insured at an appraised value of $77,736,493 a t an ann ua l cost of $53,000. ' sometimes find it advisab le to be self insurers. Large school systems However, since the amount of money expended for f ire insurance in the Atlanta City school system is relatively small , very little money cou ld be saved by a self-insurance program. All officia ls and employees who handle ~funds in the Atlanta City school system are bonded . The board pays t he cost of the bonds. Workman's Compensation insurance is provided for all the employees of . _: the board. The boa r d is sel f-insurer for t his type of insurance. Income Management and Depository Security. The board has been able during the past few years t o keep a sufficient working ba]ance on hand to pay all current obligations when due. tax anticipation loans. Therefore t he board has not been requi red t o obtain The board does not have the authority to bo rrow money. All borrowing, eithe r on short term loan·s or bonds, mus t be done by the Atlan ta City Council for t he board of educa ti on. The board fo ll ows the soun d policy of operating on a balance d budget and it carries over a reasonable working balance from one fiscal year into the next year. The board wisely follows the policy of investing i'ts idle funds in appropriate United States Government obligations. in In t erest earnings from this ~ouri.:e It obtained $302,301.24 in 1965-66. The board requires its depository bank to escrow collateral in another bank in the amount of $500,000 in order to protect the funds it has on deposi t. The balances in the depository sometimes exceed this amount . Howeve r, the board '. .. ,.;' - 1 �-8- follows the pol icy of promp t l y inves ti ng its idle funds and this provides some protection . Fringe Benefi ts for Em ployeeso The following fringe benefits are provided for all employee s of t he board , both certificated and uncertificated: r'e tirement, sick leave , me dical and hospitalization insurance and a limited amoun t of li fe insur ance . Both the board and the empl oyee participate in - financing mos t of these be ne fit s. Boards of educati on must participate in making provis ions for thes e benefits if they compete on equal terms with the private sector of the economy i n obtai ning needed personnel. The Fulton Co unty Schoo l System The Ful t on Coun t y boa rd of e duca tion has provided fairly adequate business adminis t ration se rv ices for the public schools of the County. The busine ss adminis tra t ion pol ic ies a re basically sound. As indicated below , improvements t hat need to be made involve increasing the s ize of staff and provid i ng for a ddi t iona l space and equipme nt rat he r than any change in ope ratin g policies. Organ izat ion. The pr incipal busines s admi nistration services are unde r the di r ec t ion of an assi s tant supe r i nten dent for maintenance and operation and a di rec t o r of fi na nce. di rect ly to the super i ntende nt . Ea ch of thes e of fi cial s report s The assistant supe r intende nt f o r mai n- tenance and opera tions supe r vis e s school pl ant opera ti on and ma intena nce, warehous i ng and s t ora ge and dis t ri bution serv ices , school plant planning and purchas i ng . Th e director of finance and h i s staf f kee p all accounts, administer t he budge t and audit Inte rnal accounts. In addition , schoo l transpor ta ti on is supervised by t he director of attendance and transpo rtation and the d i rector of the s chool l unch program is under the supe r visi on of the �' I' ,, r';· -9- assistant supe rinte nden t for curri c ulum. This latter arrangement is a 1 ittle unus ual beca use the central servi ces provided for the school lunch program at the county l evel have more rela t ionship t o finance , accounting, purchasing and s torage and distribut ion which are business adminis t ration services, than to cu rr icu lum. It is generally considered good organization policy to organize simi iar t yees of operations in the same organizational units. All the top off ic ia l s re~ponsible fbr bus-iness administration services report to the s upe r in tendent r a ther t han directly to the board. This is sound policy because it prov ides for central coordination of all educational serv ices at t he coun ty l evel. It appea rs t hat the staff employed by the board for accounting, purchasi ng , budget a dmi n i stratron , etc., is inadequate in size to provide for these serv ices . The staff provided for these services is as fo ll ows: a d irector of fi nance and a ss i sta nt , a purchasing agent, an a dm ini s t r ative assistant, f our bookkeepe rs, and t hree secre ta ries. This is a ve ry small staff f o r these services in a schoo l s ys tem with a budget exceeding sixteen mi l li on dollars annually. Fac i litie s a nd Equi pment . The ce ntra l s t a ff f or bus iness ma na gement i s hous ed in offi ce s pace provide d in t he Ful t on County Court House. Thi s space is ina deq uate . Data process i ng equ i pment is not avai l ab l e. used fo r payro ll purpos~s and account records. Accounting machines are If Fulton County remains a separate school sys tem , the board should investigate the poss ibility of Ins ta lli ng or renting certa i n t ypes of data processing equi pment. �-10- The board has cons t ruc t ed an excellent educational services bui l ding on a site some d ista nce from the cour t house. centrally adjacent to an expre ssway . Th_is bui-1:ding is located However, it was constructed on a very limited site with but littl e room for parking or expansion. ,that another story can be added to the present structure. It is understood However, this too would become inadequate in a few years and parking space is already inadequate. There fore the present site should be expanded if possible. The educational services building houses the school plant maintenance shop, warehousing for school supplies , school plant maintenance and custodial supplies and storage for school furnit ure , instructional materials and supplies. a very useful building. This is It makes it possible for the board to do quantity pur- chasing on competitive bids. Thi s policy is not possible without adequate ware- housing and a distribution system. The board has ' established a centrally located S·chool Plant Maintenance . school plant maintenance s hop located in the educational services building . It is well equpped and staffed with personnel possessing the necessary sk il ls . Reports from t he State Depa rtmen t of Education indicate that the board has an excellent school plant maintenance program. However, it is reported that some additional employees are needed. School Bus Maintenance. The board operates 78 county-owned buses and contracts for eight other buses. The policy of district ownership and operation of school buses almost al ways results in better service at a lower unit cost than contract transportation. The provision of school transportation is not a simple matter in the Fulton County school district because of its geography. The district is divided into two separate parts by the Atlanta City School I �-11- district. It is approximately 70 miles between a schoo1 in the northern part of Fulton County and a ichool located in the southern part ~f the County school district. Road and traffic conditions vary from the conditions typically found in rural Georgia to conditions usually found in a densely settled metropol itan area. The board contracts for bus maintenance and inspection with a private garage at a cost of $1,300 per month. Parts used in repairing buses are "bil led to the board at list price less 10 .percent . . Buses appear to be well · maintained and very few road failures are experienced. The operator of the garage with whom the board contracts for its bus maintenance takes a genuine pride in maintaining school buses. He appears to h~v~ the interest ~nd enthusiasm of a board empl oyee. The board has explored the possibility of constructing its own school bus repair shop and operating it. Available evidence does not indicate that the board could save money by establishing its own shop as long as it is able to contract for its bus maintenance at so favorable a rate. The contractor operates a branch shop in the nort he rn part of the County which does light repairs a nd inspections. This reduces the amount of empty mileage traveled by buses . The board puys its gasoline for school buses from filling sta tions. Discounts are received at only a few stations. The board has considered purchasing its own tank truck and serving its own buses. However, schools · are so widely separated that this method would probably not save very much money. The board could probably save some money on its gasoline 'purchases if filling stations were required to bid for the board's business. '. ' �-12- Financial Accounting and Auditing . The financial accounting system follows in general the account classification for receipts and expenditures recommended by the United Sta tes Office of Education. state requirements . It also conforms to The accounts of the Fulton County schools can readily ' be compared with the accounts of school systems not only in Georgia but also throughout the Nation. As poin te d out above , data processing equipment is not available for keeping financial accoun ts. Furthermore,· the s taff provided for accounting, purchasing and budget administration is insufficient in number to provide all of the se rvices needed . on an accrual basis . For example, expenditure accounts are not kept This should be done in order to provide a more efficient method of budget control. If Fu lton County is continued as a separate school system, accrual accounting s hou l d be installed along with data processing equipment. The accounts of the board have been audited eight times during the past f our years, four ti mes by state auditors and four times by independent certified public accountants. The board requires school principals to maintain a uniform system of accounts for al I of the internal funds handled at school cente=rs. . These accounts are audited annually. Budgetary Procedures. The director of finance is assigned the res- ponsibility of preparing the budget document. As pointed out above, he is directly responsible to the superintendent and works under his supervision in preparing the budget. He also works with the assistant superintendentSp director of Instruction, principals and others In preparing the budget. �1-- -13- Work is started on the budget from 6 to 12 months prior to the beginning of the fiscal year but it is not always approved in final form by the beginning of the fiscal year. The budget is a technical budget not readily understood by the lay public. Detailed schedules of anticipated receipts _and proposed expenditures by function and object are presented. In addition certain unit costs and data for the previous year are i ncluded in the budget. Program accounting is not used In interpretihg the budget. Budget hearings are held but they are not well att~nded. The budget is advertised in the newspaper and a dopted by the board at a later date as prescribed by law. The boar d is fi scally independent' and its budget is not subject to review by any ot her local body. However, as school costs continue to increase and the public becomes more tax conscious, the board will undoubtedly find it advisable to deve lop more adequate means than are now used to communicate school needs to t he public. Purchasing Procedures. The boar d purchases all important items in quantity and requires competitive bids for all items costing in excess of $150.00. money. This policy undoubtedly resu lts in the saving of considerable Quantity buying requires storage and a distribution system. The educational services building and t he distribution system established in connection with it greatly facilitates quantity purchasing. Business Administration of the School Lunch Program. The board provides some central supervision for the school lunch program but it does not provide for central accounting and purchasing for school lunch rooms. Central account- ing and central purchasing usually resu lt in considerable savings for the �-14- school lunch program • . Howeve r as pointed out above, distribution is a problem in Fulton County beca use of the remoteness of many schools from a central warehouse. The educational se rvi ces building is not equipped for food storage but this deficiency could be remedied. It is believed that considerable money could be saved by centr?l accounting and purchasing for school lunch rooms. However, these services could not be provided without expanding the b~siness management s taff. Approxima te ly 61 percent of the pupils enrolled participate in the school lunch program . All school s either receive federal aid in the form of cash and commod it ies or conmodities only. Insurance a nd Bonding. fidelity bond . Al l employees· are under a blanket position Principa l s are also under a name bond. The board pays the '. ,,j' · cost of all bonds . The board carri e& fire and extended coverage insurance under the Public and Institutional Property Plan. Under this form of insurance (avai lable only to publi c institutions) t he board insures a buiiding and its contents for replacement cost rather than appra ised cost. This g ives the board rather compl ete coverage but it is a fair ly .expensive type of insurance. The board pays $50,755.66 annually for carrying fire and extended coverage Insurance on buil dings and equipment ins ured at a replacement value of $32,773 ,199.92. This may appear rather expe nsive when compared with the insurance costs of the Atlanta City system. However, insurance rates a re greatly affected by the fire protection ava ilable and the City of Atlanta has far better fire protection than Is ava ilable in most sections of Fulton County. �-15- Income Manageme nt and Depos ito ry Security. The board has been able to carry a su fficient workin g bala nce t o be abl _e to pay Its current obi igations on ti me without having to resort to tax anticipation loans . This is good po licy. The board has operated on a balanced budget and has carried over a reasonable working bal ance from on~ f!scal year to another. The board wise l y fol lows._ the pol icy of investing idle funds in United States Government securiti es. It realized $199,640.39 in interest from this source dur ing the 1965-66 fis cal year. The boa rd does not follow standard procedures for protecting its funds in depositories. The standard procedure is to require the board's depository bank to protect the board's deposits by escrowing in another bank, government securiti es in an amount equal to the maximum balance carried by the board. In 1 ieu of t h i s pol icy the Fulton County board of education keeps its f unds in 10 bank accounts and attempts to invest funds not needed during a given mon th as quickly as possible. During the period of heavy tax collections, the board may receive as much as $2,000,000 in a single remittance. While these fun ds are invested in United States Government obliga tions promptly, nevertheless the board should have some protection for its funds in depositories in the form of escrowed collateral. Fringe Benefits for Employees. The board provides the following fringe benefits for all of its employees both cert ifica ted and non-certificated: retirement, sic~ leave, medi cal and hospita lization insurance and a limited .,l amount of life insurance. ! the costs of most of these benefits. I The employer and the employee share in financing These are the same types of benefits provided by the Atlanta City board of education for its employees. ,i ., '. ' _. r•i ' �'i I • I Summary The business administration policies of the Atlanta City school sy,s tem and the Fulton County school system ·a re both basically sound. The available evidence indicates that no great amount of money could be saved by consolidating the business administration operations of the two systems. Few if any business administration personnel could be eliminated by the consolidation of the two systems. It might be necessary and desirable to change a few titles and to do some reorganization but the services of all of the present employees would be needed. Both ~ducattona l services buildings would still be needed because of the shortage of warehousing and storage space. The consolidation of the two systems would not elimina t e the great distances between schools which cause distribution problems . If the two systems were consolidated and public transportation provided for qualifying pupils who now live in the city of Atlanta , different arrangements for the mai nt~nance and ope ration of ~chool buses would have to be ma de. Those arrangements would probably involve the construction of two school bus repa i r s hops , one l ocated in t he nor t hern half of the reorganized dis t r i ct and the ot he r in t he sout·he r n ha 1f . From t he standpoint of bus ine s s a dm i nistration, t he c h ief sa ving i n consoli dat ing t he two school distr ic t s would be the elimi nati on of t he cost o f one da ta processing system. The newl y i nstal le d da ta proce ssing sys t em for the Atlanta City schools has sufficient capacity to serve both school systems. All other business administration savings would have to be obtained �-17 - from increases in efficiency derived from economy of scale. for example, consolidation of the two systems would result in increasing the volume 9f specific items submit t ed for bid. The increased volume might result in lower unit costs for some items. Some financial savings could probably be obtained by eliminating certain duplicating educatio~al programs or the provision for better coordination of existing educational progra~s if the two districts were consolidated . Since this section of this report is concerned only with business administration policies, no attempt is made to estimate the amount of savi ngs on t he opera t ion of educational programs that could be obtained through consolidati on .

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