Budgeting for Results

Transcription

1 Prince William County Public Schools S U P P L Y S E R V I C E S F Y ing for Results Finance Department As part of the annual, Prince William County Public Schools (PWCS) began implementing annual program reviews utilizing elements of performance budgeting and zero base analysis. This process, called ing for Results, breaks down program activities into core services for the purpose of defining the legal and strategic foundation in each activity (i.e. state/federal mandates, School Division policy, and Strategic Plan). This framework will be then used as the basis for building the program budget from the ground up (starting at $0.00 budget authority) to levels which meet or exceed federal/state mandates and School Division policies. ing for Results is designed to work collaboratively with stakeholders to develop a program budget that directs program performance towards desired School Division strategic outcomes and certifies programs are ultimately focused on delivering A World-Class Education.

2 A. Introduction I. Framework for Analysis..02 II. Overview Supply Services B. Supply Services Leadership & Administration I. Leadership Philosophy II. Future Outlook..09 III. Organizational Structure C. Supply Services Program Analysis I. Program Leadership and Administration II. School Mail: Courier Service III. School Inventory: Property Control...24 IV. School Support: Moving and Logistic Service..29 V. School Supplies: Distribution Center and Surplus D. Summary of Commendations and Findings.44 E. School Division Future Choices F. Attachments ing for Results Supply Services Prince William County Public Schools

3 I. Framework for Analysis This is a detailed program review to establish a formal relationship between the Supply Services annual budget plan and the organization s strategic performance. ing for Results is a program designed to consider risk and best practices during the evaluation of core services in each program as part of the process for setting results focused on delivering a World-Class Education. The evaluation process will be focused at the level of the program s core services by first defining the underpinnings of the agency s foundation (the Why ) and then finding their relationship to program activities that deliver services (the How ). The foundation of each program composed of federal/state mandates, school policies, and the School Division s Strategic Plan will serve as the basis for a budget plan. The development of this report is a collaborative process. A partnership between the Finance Department and the program under review is essential to ensure the information presented and the recommendations for each program have value for implementation and buy-in during the entire process. Using a zero base analysis approach, the program budget for Supply Services will be broken down into key elemental building blocks starting from $0.00 budget authority. This step will be followed by a process of laying activity costs on top of the agency s legal and strategic foundation. Finally, in order to foster an incremental planning philosophy that directs organizational changes in calculated strategic steps. An outline of key positive results as well as program choices based on this program review is provided at the end of the report. II. Overview of Supply Services Supply Services is a function of the Department of Finance and Support Services. Supply Services is an internal service program that serves all 94 schools and 40 central 2 ing for Results Supply Services Prince William County Public Schools

4 departments in the School Division. The main headquarters is located in central Prince William County (approximately one mile from the Kelly Leadership Center) and includes several buildings including the administrative office, a surplus warehouse, and a distribution center that receives, warehouses, and delivers supplies for schools and central offices. Supply Services Approved FY 2015 The FY 2015 Supply Services operating budget is $2.42 million and includes a total of full-time equivalent (FTE) employees. The Approved FY 2015 breaks down to 89% salary and benefit costs, or $2.16 million, and 11% operating costs, or $0.26 million. The FY 2015 salary and benefits budget currently includes $118K for overtime and temporary employees to assist with workload spikes at the beginning of the school year, coordinating school requests that must be done after-hours, and providing current levels of response for all service requests (generally same day or next day response). The overtime/temporary budget does not include costs for services provided to the Facilities Department for the opening of new school buildings (CIP Projects); these costs are reimbursed by the respective project. The FY 2015 operating budget for Supply Services includes $144K for services, $69K for supplies and materials, $40K for equipment, and $1K for association fees. The following pie charts illustrate the total and operational (or discretionary) budgets for Supply Services. Summary of Approved FY 2015 Total : 3 ing for Results Supply Services Prince William County Public Schools

5 Summary of Approved FY 2015 Operating (Discretionary) : Supply Services Warehouse Fund Supply Services is also responsible for oversight and management of the Warehouse Fund (Fund 015). This is a separate governmental fund created for the tracking of revenues and expenditures that are not directly linked to classroom instruction. This fund accounts for the purchase of warehouse stock items from vendors and the sale (or distribution) of supplies to schools and central departments. The Approved FY 2015 includes $5.50 million expenditure authority for the purchase and resale of goods. This budget currently does not include staff, operating, utility, capital, or transportation costs related to the Distribution Center. Supplies in the warehouse are broken down into 4 major categories: General, Art, Maintenance, and Furniture. Below is a breakdown of the FY 2014 Cost of Goods Sold (COGS) by Supply Services. 4 ing for Results Supply Services Prince William County Public Schools

6 Summary of FY 2014 Warehouse Fund: Cost of Goods Sold (COGS) Cost of No. of Description Goods Sold Items Art $ 249, Furniture $ 73, General $ 3,315, Maintenance $ 588, Grand Total $ 4,227, The top 10 warehouse supplies sold make up about 50% of the total sales. About 33% of total sales are 3 singular line items: (1) Printing/Copy Paper, (2) Trash Can Liners and (3) Toilet Tissue. The following is a summary of the top 10 warehouse supplies based on the COGS. The following data provides a high-level summary of the top 10 items supplied by the distirbution center to schools and central offices. Summary of Top 10 Warehouse Supplies: 3 Year %of # Commodity Description Total Total Cumulative 1 White Copy / Printing Paper $ 941,662 $ 920,928 $ 811,610 2,674,200 20% 20% 2 Trash Can Liner $ 271,166 $ 286,649 $ 280, ,061 6% 27% 3 Toilet Tissue $ 253,030 $ 269,324 $ 257, ,830 6% 33% 4 Floor Finish $ 143,550 $ 185,788 $ 169, ,460 4% 36% 5 Foaming Soap Refill $ 127,612 $ 144,047 $ 149, ,956 3% 40% 6 Hand Towels $ 132,759 $ 144,301 $ 139, ,772 3% 43% 7 Detergent for Dishmachines $ 81,492 $ 65,448 $ 103, ,570 2% 45% 8 Cleaning Solution $ 53,797 $ 58,634 $ 54, ,159 1% 46% 9 Floor Stripper $ 48,870 $ 55,650 $ 54, ,788 1% 47% 10 Trays $ 59,162 $ 44,153 $ 49, ,328 1% 48% Total of top 10 items: 2,113,100 2,174,923 2,069,101 6,357,124 Annual Total (All Stock): 4,549,379 4,407,751 4,227,042 13,184,171 Even though the Warehouse Fund has an expenditure authority of $5.5 million, the actual total over the last three years has been under $4.6 million and shows a downward trend towards $4.2 million. This is because Supply Services is constantly reviewing and deleting items from stock that do not turn over ; meaning they are not being purchased by schools and central offices. 5 ing for Results Supply Services Prince William County Public Schools

7 Supply Services Staffing Of the total FTEs in Supply Services: 2.00 FTEs perform property control, 2.00 FTEs perform management of surplus equipment, 5.00 FTEs perform courier duties, 7.00 FTEs provide moving and logistical services to schools, FTEs perform services related to the Distribution Center (i.e. Receiving, Warehousing, Delivery), and 4.00 FTEs perform central supervisory or administrative duties. As of FY 2015, all the FTEs in the Supply Services Approved budget are funded in the School Division s Operating Fund (Fund 001). This fund is used to account for the revenue and expenditures necessary for the daily operation of PWCS programs. As mentioned earlier, the Warehouse Fund (Fund 015) currently only includes the expenditure authority to purchase school supplies but does not include any related operating costs. The following matrix illustrates all FTEs included in the Approved FY 2015 for Supply Services. Summary of Approved FY 2015 FTE for Supply Services Program Activity Total Supply Services Program Leadership & Administration 4.00 School Mail: Courier Service 5.00 School Inventory: Property Control 2.00 School Support: Moving & Logistic Services 7.00 School Supplies: Distribution Center & Surplus Total Supply Services has one supervisor and one coordinator who are responsible for the remaining FTEs. The following chart describes the reporting structure currently in place for Supply Services. 6 ing for Results Supply Services Prince William County Public Schools

8 Supply Services Reporting Structure 7 ing for Results Supply Services Prince William County Public Schools

9 I. Leadership Philosophy The following is the leadership philosophy of Supply Services. This statement was developed by all the members of supply services in a collaborative forum and conveys their own thoughts and opinions. An organization with a leadership philosophy that resonates the vision of the School Division, complements the needs of its customers, and displays a track record with relevant performance data has the foundational elements of an exemplary team. Supply Services Leadership Philosophy: Prince William County Public Schools is dedicated to providing a World-Class Education. Supply Services supports this vision by serving as an internal service agency that provides behind the scenes support and reduces the burden of non-instruction related duties for teachers and administrators so their focus may be on students and learning. While each member of Supply Services has formal duties that they are responsible for, all members of the Support Services program foster and practice a core value of working as one team with a unified mission to support the School Division. The primary services provided by Supply Services include property control, courier services, moving and logistical services, distribution center services and surplus services. By working as close-knit team made up a complex web of interwoven policies, procedures, and systems, Supply Services provides seamless service. Supply Services believes and is dedicated to 100% customer satisfaction. The organizational structure endorses a culture where the majority of employees can perform cross-functionally to Supply Services provides ensure the continuous flow of goods and services to customers. Supply Services also works in partnership behind the scenes support with other agencies like the Purchasing Department to and reduces the burden of ensure the most cost effective pricing for school non-instruction related supplies. In closing, the leadership philosophy of duties for teachers and Supply Services is realized throughout the School Division when their seamless non-instructional administrators so their focus services allow teachers and administrators to keep may be on students and uninterrupted focus on instruction and providing a learning. World-Class Education. 8 ing for Results Supply Services Prince William County Public Schools

10 II. Future Outlook Building on their leadership philosophy, Supply Services is carefully monitoring important factors in their environment. *According to Supply Services, below is a summary of important issues in the horizon that relate to the services they provide. 1. New robust electronic catalog 2. The ability to communicate principals and bookkeepers in real time 3. School health and safety regulations 4. Regulations regarding disposal and recycling 5. Providing support to a growing student population 6. Continued process improvement 7. Continued commitment to customer service 8. Continued competitive pricing and service delivery *Note: The items above reflect the compass of Supply Services prior to going through the ing for Results program evaluation with the Finance Department. The next section will show Why the School Division has a Supply Services program from a foundational perspective. 9 ing for Results Supply Services Prince William County Public Schools

11 III. Organizational Structure This section explains the organizational structure of Supply Services as it relates to its foundational underpinnings. Every activity in Supply Services should be built upon a business policy/regulation set by the school and/or a legal mandate which construct the framework as to why services are being provided. Understanding why services are being provided should provide a logical relationship in regard to how services are being provided by Supply Services. These steps provide a basis for developing a zero base budget and setting performance goals. After the zero base budget is developed, it is not recommended that this be a ing for Results recurring annual process, but rather, the organization undergo incremental improvements based on the guidance of the School utilizes zero base budgeting Board and Superintendent. ing for Results utilizes zero as a means to an end. base budgeting as a means to an end. This approach fosters a strategy of ensuring that budgets are built from the ground up for the purpose mandated by law and set by School Division policies, in addition to supporting the Strategic Plan and providing a springboard for incremental and continuous improvement. The following illustration is a summary of the strategy being utilized in this report: Zero Base ing and Future Incremental Improvement Organizational Structure Organizational Plan Incremental Improvement Understand Current Plan Understand Foundational Underpinnings (WHY) Understand Activities and Core Services (HOW) Evaluate Risks and Industry Best Practices Develop Collaborative Zero Base Plan Set Performance Targets & for Results Provide School Division with Future Choices Understanding the Current Plan This study breaks down the Supply Services program into detailed activities and core services. Currently, the Approved FY 2015 describes the operating costs of Supply Services budget plan at the program level. Detail can be seen by line items but there is no breakdown of the core services being provided. In addition, there is no direct relationship to service levels and budgets for each activity. The information below can be found on page 123 of the Approved FY 2015 Book for the School Division. 10 ing for Results Supply Services Prince William County Public Schools

12 Supply Services Approved FY 2015 Foundation of Supply Services The Why Why does this activity exist? Every activity in Supply Services was asked this question, followed by an extensive process of researching the mandates, policies and regulations associated with each core service. It is critical for public administrators to understand this link in the development of a zero base budget because it gives context and a basis as to why, what, and how expenses are justified for inclusion. Supply Services, by design, needs to focus on providing services that link back to the purpose outlined by the School Division. For example, per school regulation, Supply Services is the agency responsible for providing courier services to the School Division. This 11 ing for Results Supply Services Prince William County Public Schools

13 provides a logical relationship and justification for expenses related to delivering school mail. Supply Services supports compliance with several federal and state mandates. This includes the management of assets purchased with state and federal funds by maintaining a property control system, in addition to the legal redistribution, recycling, disposal, or auction of property at end-of-life. Federal regulations determine the disposal equipment purchased with federal funds. Supply Services also plays an important role in providing data that is annually used by the Accounting Office for the management of grants and capital assets. Based on the policies and regulations of the School Division, Supply Services is interwoven into various business processes across the organization. For example, the supervisor of supply services plays a role in supporting the Hazard Communication Program (required by the Virginia Occupational Health and Safety Standard) and ensures that Safety Data Sheets for products being delivered to the warehouse have been obtained by the School Division. Supply Services also plays a critical role in supporting controls in the Facilities Department by being responsible for the warehousing, issuing, and delivery of custodial cleaning supplies. The following chart summarizes the main foundational objectives and how it relates to why Supply Services exists in the School Division. 12 ing for Results Supply Services Prince William County Public Schools

14 Foundation of Supply Services No. Mandate/School Policy Description Supply Service Support 1 Virginia Occupational Health and Safety Standard 2 School Board Equipment - Removal From School Board Property The School Division shall maintain a Hazard Communication Program as required by the Virginia Occupational Health and Safety Standard No Prince William County School Board equipment shall be removed from its assigned place of use except with prior written permission of the appropriate administrator. 3 Disposition of Surplus Property Property, other than real property, determined to be surplus may be disposed of by the most advantageous method. Property may be determined to be surplus if the items are unserviceable, economically unrepeatable, obsolete, or no longer needed. 4 Property Classification and Inventory Hazard Communication Program: New shipments of materials received at the main warehouse without an Safety Data Sheet (SDS) shall not be accepted unless the Supervisor of Supply Services verifies that an SDS has already been obtained by checking the product name against the master list. The Supervisor of Supply Services is responsible for the implementation and monitoring of this regulation. Property received into the system via a grant program will be disposed of in accordance with the provisions of the grant. The grant manager/recipient will be responsible for coordinating with the Supervisor of Supply Services for the disposition process of these items. All accountable personal property determined to be surplus will be returned to Supply Services for disposition. Conduct the physical transfer, or disposal of items as may be approved by one of the disposal methods Maintain accountability of items for disposal or that have been disposed of by the approved methods Maintain records of items that have been disposed of for one (1) year The Superintendent shall establish a system The Supervisor of Supply Services is responsible for implementing, to classify all property and supplies acquired reviewing, and monitoring this regulation; In addition to procedures and retained by Prince William County for Ordering Expendable Property from the Warehouse Public Schools. The system will include inventory procedures so that adequate controls will be maintained. 5 Mail Service Instructions and guidelines for the operations of courier service set by School Board 6 Replacement of Equipment The Superintendent shall establish a system for the replacement of equipment applicable throughout Prince William County Public Schools. 7 In 1976, the United States Congress passed the Resource Conservation and Recovery Act. The Act requires businesses and agencies to take special steps when they dispose of hazardous waste. Whenever feasible, the generation of hazardous waste is to be reduced or eliminated as expeditiously as possible. Waste that is nevertheless generated should be treated, stored, or disposed of so as to minimize the present and future threat to human health and the environment. Mail service between all schools and administrative offices of the School Division. If the item is found to be unserviceable, it is to be turned in to Supply Services for disposal action and removed from the budget holder's inventory. All property and equipment being disposed by Supply Services must follow the Hazardous Waste Disposal Procedure and Removal of Excess Supply 8 Custodial Supply Control Cleaning chemicals and related cleaning agents will be stored in tightly closed containers and labeled as to contents and use in accordance with all E.P.A. and OSHA requirements. Supply Services is responsible for warehouse inventory, issuing and delivery of custodial cleaning supplies. 13 ing for Results Supply Services Prince William County Public Schools

15 Activities and Core Services of Supply Services The How How are services being provided? Supply Services provides services built on the foundation of mandates, policies, and regulations. How services are provided can be seen at the macro level as FTE, a $2.4 million operating expenditure budget, and a $5.5 million warehouse expenditure budget. Supply Services currently breaks down into the following five main activities: Program Leadership and Administration provides supervision over all the core services provided by Supply Services and performs central administrative functions. School Inventory: Property Control provides property control for the entire School Division. This includes coordination with the Accounting Office to ensure assets are disposed in accordance with the provisions of grants and are accounted for financial reporting. School Supplies: Distribution Center & Surplus performs receiving, warehousing, and delivery of school supplies (Distribution Center) in addition to the management of surplus equipment (Surplus Warehouse). This activity is an extension of property control and provides centralized accountability for school supplies. School Support: Moving and Logistical Service responds to work order requests from schools to provide help in several main areas which include special education, testing, records, pickup/delivery, moving, setup for school events, and special projects (i.e. CIP). School Mail: Courier Service coordinates scheduled delivery of mail between schools and administrative offices in addition to business and instructional related mail to businesses and the community. All the activities and core services provided by Supply Services serve mandates and school polices that support non-instructional operations in the School Division. The leadership philosophy by Supply Services provides a compass for this team to deliver services in the culture embraced by School Division. Below is a summary of the activities in Supply Services and the logical relationship back to its foundation. This is the cornerstone that the zero base budget will be founded upon. In addition to the zero base budget, this report will set performance measures for each core service to create ing for Results framework. 14 ing for Results Supply Services Prince William County Public Schools

16 Supply Services Activities and Core Services Program Activity Core Service State/Federal School School Regulation Description Mandates Policy Supply Services Program Leadership & Admin Supervision & Administration Virginia Occupational Health and Safety Standard, Code of Virginia, Title [403.05] [424] [420] [426] [ ] [ ] [ ] [420-1] [ ] [ ] School Mail: Courier Instruction & Business N/A N/A [ ] Service Service School Support: Moving & Logistic Central Admin Workorders N/A [422] [926] [ ] [422-1] [926-1] [ ] Services School Workorders N/A [422] [926] [ ] [422-1] [926-1] [ ] School Supplies: Distribution Center & Surplus School Inventory: Property Control Supply Services & Warehouse Surplus Warehouse: Disposal, Auction, Recycling, Redistribution Asset Lifecycle Management N/A Resource Conservation and Recovery Act - 42 U.S.C et seq. (1976) Title 34, Code of Federal Regulations (EDGAR) Code of Virginia, Title Code of Virginia, Section Code of Virginia, Section Code of Virginia, Section Code of Virginia, Section Code of Virginia, Section VAC [422] [470] [410] [403.05] [403.10] [424.02] [422-2] [470-1] [ ] [ ] [ ] [ ] [422] [420] [420-1] [422-1] 15 ing for Results Supply Services Prince William County Public Schools

17 Activity I Leadership and Administration $429,553 This activity provides supervision over all the core services provided by Supply Services, performs central administrative functions, and is ultimately responsible for compliance with mandates and school regulations. In addition, this activity provides guidance and leadership to the direction the program and ensures overall customer satisfaction. In the Approved FY 2015, the Supply Services program has 2 major outcomes: (1) To fill 75% of customer requisitions immediately upon receipt [FY 2014 = 90%]; and (2) Maintain warehouse physical count of stock levels at a level consistent with automated calculations of procurements, shrinkage, and issues [FY 2014 = 0.64]. This activity is also responsible for the workplace health and safety of employees, organizational development and training, and strategic planning for cyclical replacement of equipment related to Supply Services (i.e. Fork Lifts, Postage Meter, etc.) This activity authorizes all purchases in Supply Services; all historical (non-salary) expenses are listed in Attachment 1 by vendor paid. Attachment 1 was a key document used in the development of the Zero Base for this program. Staffing Level and Cost 4.00 FTE / $398,119 Management of Supply Services under current service levels and program structure requires 4.00 FTE at a total cost of $398K. These costs include salary and benefits, in addition to other costs for temporary employees and overtime required for the Supervisor of Supply Services to be able to direct resources in areas needed to meet service needs throughout the fiscal year. All the costs included are not reimbursed by CIP projects and are solely related to providing operational support. Operating (Non-Salary) Costs $31,434 Leadership and Administration manages central costs for the entire Supply Services program. This activity is responsible for providing training, managing office furniture and supplies, professional association fees, and employee issued uniforms since this program is highly visible program to the School Division and community. 16 ing for Results Supply Services Prince William County Public Schools

18 Risk Factors Leadership and Administration manages risk factors related to the health and safety of the employees working in Supply Services. The budget provides the Supervisor of Supply Services to outfit employees with the necessary uniforms and safety equipment necessary to perform their respective duties. The supervisor of this activity guides the direction of the program and has a track record of making continuous improvement to enhance service to customers. Based on interviews conducted, the leadership of Supply Services has evaluated resource needs and instituted process changes that have resulted in increased efficiencies many of the recent changes adopted by Supply Services are a result of the 2007 State Efficiency Review. One recent improvement includes continuous monitoring of Warehouse goods sold to eliminate items kept on stock and not sold or moved to schools; as a result, hundreds of items have been removed from stock. Most importantly, this activity plays a critical role in monitoring many of the mandates and policies supported by Supply Services, including: Safety Data Sheets for the School Division, providing property control for school equipment, and ensuring legal surplus management. Core Services and Performance Leadership and Administration is responsible for all the outcomes within Supply Services. Most significantly, these outcomes include: Adherence to all applicable mandates regarding disposal of surplus equipment Management of all School Division inventory Providing all Mail Service for the School Division Management of Safety Data Sheets for Hazardous Materials in School Division Removal of all School Board Property Leadership and Admin Performance Measures: Customer Satisfaction with Supply Services (Rating of Excellent or Good) FY11 FY12 FY13 FY14 FY15 Goal FY16 Target 99% 98% 99% 98% 98% 98% Strategic Plan Support 17 ing for Results Supply Services Prince William County Public Schools

19 Leadership and Administration activity in Supply Services provides the strategic guidance to Supply Services that complements the School Division s Strategic Plan. Serving as a support agency to the School Division, below are three Strategic Plan goals that have a direct and/or indirect link to Supply Services. 1. GOAL 2: The teaching, learning, and working environment is caring, safe and healthy, and values human diversity. By managing Safety Data Sheets and controlling custodial supplies, Supply Services helps provide a safety and healthy environment in schools. 2. GOAL 4: Faculty, staff, and leaders are qualified, high performing, diverse, and motivated. By providing organizational development and training, Supply Services ensures high performing staff with a leadership philosophy and customer service focused motivation. 3. GOAL 5: The organizational system is aligned, integrated, and equitable. By being customer focused, Supply Services takes responsibility for services they provide to customers in the School Division. Supply Services plays a critical supporting role in helping schools open at the beginning of each school year and represents the School Division when providing delivery, moving, and logistical services. Best Practices There are mixed findings in regard to how this activity is represented in other School Divisions. This program review studied surrounding jurisdictions including: Arlington, Fauquier, Fairfax and Loudoun. There were no cases of there being an exact replica of the activities management by Supply Services (known by other names in surrounding divisions: Distribution Center, Warehouse, Facilities, etc.). Leadership and Administration is designed to support the existing activities in Support Services because this is how the School Division wishes to manage inventory. Based on findings in the school policy, the spirit of centralized inventory management is what has driven the need and growth of the warehouse function in the School Division. Supply Services could move towards a service model of only providing central inventory control and provide school supplies through contract vendors as Just in time service delivery. Supplies with Safety Data Sheets and Custodial Supplies; however, would still need to be centrally managed (per current school regulation.) Also, all contacted jurisdictions have services (at various levels) such as courier services, logistical/moving coordination, surplus, maintenance supplies, etc.; but are sometimes found in other departments (i.e. 18 ing for Results Supply Services Prince William County Public Schools

20 Facilities, Buildings and Grounds). The reason this is important is to explain that the shape and size of the administrative overhead for Supply Services is directly linked to the strategy by which the School Division wishes to provide these services. So, as an example, if the School Division decided to move courier services to the Facilities Department, a proportionate amount of administrative costs would need to also shift to the Facilities Department. There is a possibility of cost reduction, but this depends on the ability of the other departments to be able to accept increased administrative and supervisory duties. Zero Base Analysis: Leadership and Administration Below is a summary of the zero base budget (ZBB) analysis to fully fund Leadership and Administration for Supply Services under the current service levels. 1. Total Staffing Costs: $398, Total Non-Salary Costs: $331,434 Total Cost: $429,553 Zero Base for Staffing Costs Program Leadership & Admin FTE Object Code Summary Summary Total 1000 / 2000 FTE Salary & Benefits $ 377,006 FTE Straight Time $ 4,843 FTE Overtime $ 11,270 Temps & Other $ 5,000 Total Staffing Costs for Leadership & Admin: $ 398, ing for Results Supply Services Prince William County Public Schools

21 Zero Base for Operating (Non-Salary) Costs Program Leadership & Admin Object Code Summary Summary Total 2000 Prof Assoc Fees $ Training - Customer Service $ 3,000 Training - Safety & Prof Dev. $ 2,880 Printing/Duplicating $ 5, Office Equip & Furniture $ 5,850 Office Supplies $ 4,894 Uniforms & Safety Gear $ 9,600 Total Non-Salary Costs for Leadership & Admin: $ 31,434 Total ZBB for Leadership & Admin: $ 429, ing for Results Supply Services Prince William County Public Schools

22 Activity II. School Mail: Courier Service $254,595 The School Division s strategy for business operations includes detailed instructions and guidelines for the operations of courier service between all schools and administrative offices of the School Division. This activity provides daily courier service between the administrative offices at Independent Hill, the Kelly Leadership Center (KLC), and each school in the county. This service includes mail, correspondence, small parcels requiring priority delivery, and the delivery of special school requests such as report cards to parents. The activity costs described in this analysis only include the service costs for mail service included in the Supply Services budget and not the total costs (for example, fleet and postage costs are not included.) Staffing Level and Cost 5.00 FTE / $253,211 Mail Service for the entire School Division is currently performed by 5.00 FTE and meets all the service requirements outlined in regulation Operating (Non-Salary) Costs $1,384 The Mail Service activity has limited operating costs included in the Supply Services program budget. These costs include mail supplies and the cyclical purchase of mail bags. The expense for vehicle maintenance and fuel is managed by another department. At this time, the Transportation Department is not able to provide detailed maintenance and fuel costs. This program analysis does not include the postage fund (this budget in Dept. 039), only the service provided by the Supply Services activity. Risk Factors Centralized mail service has direct impact on business operations at all levels of the School Division. While a significant portion of business operations can be done via , government operations still requires formal mail correspondence. This activity acts as an extension of every school and central office. Not providing this centralized service would have a direct impact on teachers and administrative staff who would then have to increase their scope of duties to include the delivery and coordination of mail. Because mail service acts as an extension of every department in the school division, the risk factors extend to every agency they serve for example correspondence of purchasing bids, delivery of report cards, etc. 21 ing for Results Supply Services Prince William County Public Schools

23 Core Services and Performance Mail Service for the entire School Division is currently performed at a level of same day or next day service. This current business procedure requires staff to stay after hours during certain events such as days when Board items need to be routed. The following are the recommended outcome and workload measures set for this activity. Courier Service Performance Measures: School Mail Delivered Same Day or Next Day FY11 FY12 FY13 FY14 FY15 Goal FY16 Target N/A N/A N/A N/A 100% 100% Report Cards & Interim Reports FY11 FY12 FY13 FY14 FY15 Goal FY16 Target 320, , , , , ,000 Metered Mail (Annually) FY11 FY12 FY13 FY14 FY15 Goal FY16 Target N/A N/A N/A N/A 230, ,000 Best Practices Mail Service is still a standard practice in most organizations in the public sector. Supply Services uses the minimum amount of staff required to process the School Division s mail within one business day from the date picked up. This activity also handles the delivery of report cards, which has a direct link to instruction. Zero base Analysis: Mail Service Below is a summary of the zero base budget (ZBB) analysis to fully fund Mail Service for Supply Services under the current service levels. 22 ing for Results Supply Services Prince William County Public Schools

24 1. Total Staffing Costs: $253, Total Non-Salary Costs: $001,384 Total Cost: $254,595 Zero Base for Staffing Costs School Mail: Courier Service FTE Object Code Summary Summary Total 1000 / 2000 FTE Salary & Benefits $ 246,656 FTE Straight Time $ 2,460 FTE Overtime $ 4,095 Total Staffing Costs for Mail Service $ 253,211 Zero Base for Operating (Non-Salary) Costs School Mail: Courier Service Object Code Summary Summary Total 4000 Mail Supplies $ 1,384 Total Non-Salary Costs for Mail Service $ 1,384 Total ZBB for Mail Service: $ 254, ing for Results Supply Services Prince William County Public Schools

25 Activity III. School Inventory: Property Control $127,838 This activity implements and monitors the classification, responsibility, and accountability of property in Prince William County Public Schools. The classification of property managed by Supply Services includes: Fixed Property (~10 yr. life / < $25K), and Non-Expendable Property (~3 yr. life / > $500). The main purpose and design of this activity is to work with schools and administrators to maintain records and inventory of school property described above. Disposal of school property needs to be coordinated through this activity to maintain accurate records for financial reporting purposes. From a legal perspective, this program oversees the core services highly linked to federal and state mandates in addition to supporting financial reporting for the School Division. Staffing Levels and Costs 2.00 FTE / $110,796 Property Control for the entire School Division is currently performed by 2.00 FTE and meets current School Regulations for property control; however, there are a few areas of improvement that could be achieved with some minor enhancements in data collection and reporting. This team manages almost 80K assets and provides training to schools on how to use the inventory equipment in addition to providing updates on school regulations. This activity also provides supervisory oversight over the surplus operation in the Distribution Center in order to ensure effective life cycle management (cradle to grave) of assets. Operating (Non-Salary) Costs $17,042 Property Control has a limited amount of equipment and supplies needed for operations. This activity requires an Asset Management System for centralized management of all assets in addition to tags for equipment and scanners required to conduct audits. There is also a limited amount of budget for minor system maintenance and support. Risk Factors Property Control, though centralized, strongly relies on schools and central agencies to follow regulations and communicate the purchase, transfer, and deletion of property in addition to gifts received for entry into the system inventory program. All inventory 24 ing for Results Supply Services Prince William County Public Schools

26 status reports for the School Division are prepared by June 30, and require intensive coordination with agencies. Any missing equipment is discovered during random audits or at the end of each fiscal year. There is currently no formal authority for Supply Services to report missing inventory items to the internal auditor. The chart on this page shows the trend history of unaccounted inventory from fiscal year 2011 to 2014 The staff currently maintains data in collaboration with schools and central departments, and then annually reports it to management. The biggest area of improvement in property control can be found in the area of assets purchased with grants. It is currently estimated that 5% of total school assets have been purchased with Perkins or Title 1 funds, but this data does not capture all grants and it is not certain if the information available is comprehensive. Including detailed information about assets purchased with federal and state dollars will increase compliance with conditions relating to the management and disposal of this equipment (i.e. compliance with EDGAR). It is recommended that that Supply Services initiate a meeting with the accounting office in order to develop enhanced controls for assets linked to grants. This is especially concerning because the performance data in this activity shows that the acceptable target for inventory loss is 0.3% or less than $264K. Missing inventory purchased with federal and state dollars needs to be reported to the internal auditor. Core Services and Performance Per school regulations, property inventory is provided annually to the Superintendent s office for all schools and central offices. The School Division has a goal of having less than 0.3% unaccounted inventory. It is important to highlight that this is setting an acceptable risk level at $264K and this inventory includes assets purchased with federal and state funds. The following are the recommended outcome and workload measures set for this activity. 25 ing for Results Supply Services Prince William County Public Schools

27 Property Control Performance Measures: Value of Assets Managed by Property Control FY11 FY12 FY13 FY14 FY15 Goal FY16 Target $73,366,425 $83,376,732 $ 87,897,991 $86,386,113 $88,000,000 $ 88,000,000 Unaccounted School Total Inventory FY11 FY12 FY13 FY14 FY15 Goal FY16 Target 0.05% 0.08% 0.26% 0.60% <0.3% <0.3% Value of Unaccounted Total Inventory FY11 FY12 FY13 FY14 FY15 Goal FY16 Target $34,795 $65,291 $232,020 $534,940 <$264,000 <$264,000 Value of Unaccounted Grant Inventory FY11 FY12 FY13 FY14 FY15 Goal FY16 Target N/A N/A N/A N/A $0.00 $0.00 Best Practices The School Division has a centralized inventory system that records assets valued greater than $500. Many surrounding governments don t use a centralized system and in many cases the owners of the equipment maintain detailed inventory. For example, generally the IT Department is responsible for managing computer assets. Because the Accounting Office needs to provide financial reporting, they generally maintain a database with assets valued greater than $5,000 and coordinate required information with departments that own assets. 26 ing for Results Supply Services Prince William County Public Schools

28 One of the benefits of centralizing asset management is the ability to have a central control of school There is no singular right inventory; however, one of the problems is that it way of managing assets, lessens the ownership of assets from departments. it is more important that There is no singular right way of managing assets, it is more important that the outcome of managing assets the outcome of managing is successful. In the decentralized structure of this assets is successful School Division, a centralized would be the better option in order to provide a system of checks and balances. The trend data in this case highlights some concern due to an increasing number of missing property. It is recommended that Property Control increase data management by including more detailed information about assets purchased with grants and have the authority to report a list of unaccounted equipment to internal audit for further review. Zero Base Analysis: Property Control Below is a summary of the zero base budget (ZBB) analysis to fully fund Property Control in Supply Services under the current service levels. 1. Total Staffing Costs: $110, Total Non-Salary Costs: $017,042 Total Cost: $127,838 Zero Base for Staffing Costs School Inventory: Property Control FTE Object Code Summary Summary Total 1000 / 2000 FTE Salary & Benefits $ 110,796 FTE Straight Time $ - FTE Overtime $ - Total Staffing Costs for Property Control $ 110, ing for Results Supply Services Prince William County Public Schools

29 Zero Base for Operating (Non-Salary) Costs School Inventory: Property Control Object Code Summary Summary Total 3000 Asset System Annual Maintenance $ 5, Asset Management: SW $ 1,722 Asset Management: Tags $ 2, Asset Management: HW $ 7,500 Total Non-Salary Costs for Property Control $ 17,042 Total ZBB for Property Control: $ 127, ing for Results Supply Services Prince William County Public Schools

30 Activity IV. School Support: Moving and Logistic Services $333,356 This activity provides moving and logistical services to the School Division. There are six major categories of work orders performed by this activity: (1) Testing, (2) Equipment Pickup (for disposal/redistribution/auction), (3) Student Events, (4) Records, (5) Student Equipment, and (6) Food Service. Most of the work performed by this activity can be done during business hours with the exception of after-hours emergencies (such as a food service freezer outage and snow pellet deliveries) and special requests by schools for student events that must be done after hours (i.e. prom, wrestling matches, etc.) Staffing Levels and Costs 7 FTE / $318,077 Moving and Logistic Services for the School Division is currently performed by 7.00 FTEs. This general support serves as an extension of the departments and schools in the county. One FTE is solely dedicated to responding to work orders for the central office. Non-Salary Costs $15,279 Moving and Logistic Services has some overlap between warehouse equipment, but most of the supplies needed in this activity relate to packing, shipping, moving, etc. The activity costs described in this analysis only include the service costs for this activity and not the total costs (for example fleet costs are not included.) Risk Factors Most of the risk factors related to this activity are associated with minimizing the need to have teachers and administrators perform tasks that require heavy lifting and moving by having a trained staff perform these duties. Of all the work orders performed by this activity, request for testing, special education, student events, and food service have the most direct impact to students (Priority Requests). Pick up of equipment such as textbooks, furniture, and computers (Non-Priority Requests) should be given a different level of priority than requests that have an impact to students. In addition, requests for student records can be scheduled and planned. Because this activity acts as an extension of the Because this activity acts as an extension of the departments they serve, the ultimate risk lies in the customer agency. 29 ing for Results Supply Services Prince William County Public Schools

31 departments they serve, the ultimate risk lies in the customer agency. For example, Special Education needs is ultimately responsible for providing students with needed equipment, schools are responsible for facilitating school events, and the records center is responsible for maintaining records. Core Services and Performance Since this is a service driven activity, the outcomes for their efforts are reflected in the departments they serve. The workload measures below reflect the support provided by Moving and Logistic Services to schools and central offices in the School Division. Due to Supply Services Leadership Philosophy for 100% customer satisfaction, current service levels have the same priority level all service requests. However, due to limited overtime resources, it is recommended that requests for Special Education, Student Events, Testing, and Food Service (emergencies only) should be given higher priority than pickup request for equipment. The following are the recommended outcome and workload measures set for this activity. Testing Work Orders FY11 Moving and Logistic Services Performance Measures: FY12 FY13 FY14 FY15 Goal Pickup and Move Work Orders FY11 FY12 FY13 FY14 FY15 Goal Total Student Records Transferred FY11 FY12 FY13 FY14 FY15 Goal FY16 Target FY16 Target FY16 Target 11,588 8,513 9,053 10,294 11,200 12, ing for Results Supply Services Prince William County Public Schools

32 Special Education Work Orders FY11 FY12 FY13 FY14 FY15 Goal FY16 Target Food Service Work Orders FY11 FY12 FY13 FY14 FY15 Goal FY16 Target Best Practices All School Divisions contacted have some level of moving and logistical service (inhouse) and in some cases use contractor support for special projects (i.e. CIP). Prince William County Government has a contract in place for moving and logistical services that is used for moving and logistical projects. There is also in-house staff that provides small scale logistical and moving services. Comparing the County contract with the Supply Services in-house staff, the hourly rate for contractual laborers is $19.76 and this is fairly comparable to the average cost of in-house staff estimated at $21.18 (regular work hours). This is only a comparison of estimated hourly rates; a full cost benefit analysis would require detailed in-depth analysis. However, it is valuable for schools and central departments to know that one hour of moving services from an existing local contract could break down like this: (1) Supervisor [$24.08] + (1) Laborer [$19.76] + (1) Truck [$43.02] = $86.86 per hr. Zero Base Analysis: Moving and Logistic Services Below is a summary of the zero base budget (ZBB) analysis to fully fund Moving and Logistic Services in Supply Services under the current service levels. 1. Total Staffing Costs: $318, Total Non-Salary Costs: $015,279 Total Cost: $333, ing for Results Supply Services Prince William County Public Schools

33 Zero Base for Staffing Costs School Support: Moving and Logistic Services FTE Object Code Summary Summary Total 1000 / 2000 FTE Salary & Benefits $ 289,104 FTE Straight Time $ 5,573 FTE Overtime $ 8,400 Temp Employee $ 15,000 Total Staffing Costs for Moving and Logistic Services $ 318,077 Zero Base for Operating (Non-Salary) Costs School Support: Moving and Logistic Services Object Code Summary Summary Total 3000 Duplicating/Printing $ 10, Packing/Moving Supplies $ 5,279 Total Non-Salary Costs for Moving and Logistic Services $ 15,279 Total Moving and Logistic Service $ 333, ing for Results Supply Services Prince William County Public Schools

34 Activity V. School Supplies: Distribution Ctr. & Surplus - $1,156,549 Supply Services serves as the School Division s distribution center and centrally manages receiving, warehousing, delivery and disposal (surplus) of supplies purchased by schools and the central offices. In addition to the $1.16 million in the Operating Fund, the cost of goods is expended in the Warehouse Fund and has an expenditure authority of $5.5 million. From the perspective of the program s foundation, the spirit of warehouse services is inventory and logistical control for the purpose of having central management of supplies and reducing the burden of large scale receiving, warehousing, From the perspective and distribution by schools. From the perspective of schools of the program s and central offices, this activity serves as a "store" stocked foundation, the spirit with supplies to support the administration, custodial, of warehouse services maintenance, food service, and instructional needs. The staff is inventory and process over 25,000 supply requests annually that account logistical control. for approximately $4.6 million in sales (revenue goes back to the Warehouse Fund for restocking). Operating Costs Currently, the overhead costs of providing these services are in the Operating Fund and therefore, there is no markup to cover overhead costs. The total cost to operate the Distribution Center is approximately $1.16 million in addition to utility costs (approx.. $70K)and fleet costs for the vehicles required to provide delivery (*The Transportation Department was not able to provide fuel and maintenance records). If this activity was a fully separate and comprehensive internal service fund (revenue would cover expenses), it would require approximately a 20% markup on the cost of goods sold to cover the overhead expenses budgeted in this program for services (for salary, benefits, and operating not including utilities and fleet). The 20% markup includes $250K in revenue currently being generated by surplus sales and is based on $4.6 million COGS. It is important to stress that determining the value of the warehouse to the School Division is not a simple mathematical exercise. Along with the other services provided by Supply Services, the Distribution Center provides services that are currently deeply integrated into the daily process and business strategy of schools and central offices. Based on a recent survey conducted by the Office, almost 80% of schools and 33 ing for Results Supply Services Prince William County Public Schools

35 central offices always use Supply Services or an approved purchasing contract to buy *Office Supplies (i.e. printer paper), as opposed to about 20% who sometimes or always use a non-contract vendor. Distribution Center Strategy The purpose of the Distribution Center is to move products from receiving to delivery with the primary purpose of receiving massive shipments in order to supply them to various locations. According to Supply Services, the strategy for stocking an item in the warehouse is based on the following principles: 1. Must be a Divisionwide requirement. (For example: plain white copy paper is used by all schools and central offices) 2. Potential usage rate per year warrants buying in large (bulk) quantities. 3. The discount obtained by buying in bulk quantities is sufficient to warrant the expense of stocking in the warehouse. 34 ing for Results Supply Services Prince William County Public Schools