LETTER OF TRANSMITTAL .us

[Pages:769]LETTER OF TRANSMITTAL

June 6, 2000

The Honorable George W. Bush The Honorable Rick Perry The Honorable James E. "Pete" Laney Members of the 76th Legislature Commissioner James E. Nelson

Ladies and Gentlemen:

I am pleased to present our performance review of the Galveston Independent School District (GISD), the first district to request a review under the provisions of HB 2553 passed by the 76th Legislature, signaling the district's willingness to pay 25 percent of the cost of the review.

This review is intended to help GISD ho ld the line on costs, streamline operations and improve services to ensure that more of every education dollar goes directly into the classroom, with the teacher and children, where it belongs. To aid in this task, I contracted with WCL Enterprises.

We have made a number of recommendations to improve GISD's efficiency. We also have highlighted a number of "best practices" in district operations- model programs and services provided by GISD's administrators, teachers and staff. This report outlines 130 detailed recommendations that could save GISD more than $12.6 million over the next five years, while reinvesting more than $8.3 million to improve educational services and other operations. Net savings are estimated to reach nearly $4.4 million-savings that GISD can redirect to the classroom.

We are grateful for the cooperation of GISD's board, staff, parents and community members. We commend them for their dedication to improving the educational opportunities for our most precious resource in GISD--our children.

I also am pleased to announce that the report is available on our Web site at .

Sincerely,

Carole Keeton Rylander Comptroller of Public Accounts

Galveston Independent School District

June 2000

Student performance?particularly among low-income

students?has dramatically improved over the last four years in the Galveston Independent School District (GISD). In the 1998-99 school year, more than 75 percent of all GISD students passed the Texas Assessment of Academic Skills (TAAS) test, compared to only 45.2 percent in 199495. The percentage of low-income students who passed

doubled from only 33.6 percent in 199495 to 66.6 percent in 1998-99.

These impressive gains in student performance, however, are overshadowed by the Galveston community's frustrations with the district's various administrative and financial problems, including controversial travel expenses. To help restore confidence in the district and garner the community support needed to move forward, the GISD Board of Trustees became the first school district in Texas to request a Texas School Performance Review (TSPR) and put up 25 percent of the review's cost.

After approximately six months of reviewing every aspect of the GISD operations, I am offering 130 recommendations that, if fully implemented, could result in net savings for GISD of more than $4.3 million over the next five years. These recommendations will help restore community confidence in the board and district leadership, as well as drive more of every education dollar directly into the classroom.

My number one recommendation that I want to see implemented is a significant pay raise for every teacher in the district beyond entry level with no tax increase. This will bring teacher salaries at least up to par with neighboring districts. GISD needs to focus on our most

precious resource?our children. And, recruiting and retaining high-quality teachers is a key to continued improvement in student performance. The fact is that the district's salaries are not competitive with area school districts, and it is losing 125-130 teachers per year, most with one to five years of experience. Basically, GISD is training teachers for other districts!

To get their financial house in order, GISD needs to attract and retain talented people for their top administrative positions, particularly those who deal with district finances. That is why I want to see administrative and staff salaries raised to compete with neighboring school districts.

Next, I recommend the immediate creation of a strong internal control system for oversight of board, administration and employee travel. The policy should require proof of the trip's value, as well as guidelines on what expenses are, and are not, covered. To further help restore confidence in the district's management, I recommend the hiring of an outside auditor to perform annual internal audits of the district's finances along with the creation of a formal procedure to ensure that swift corrective action will be taken on any discovered irregularities.

GISD has a lot of work ahead. However, I am confident that school board members and school administrators are committed to restoring community confidence and providing the children of GISD the very best education possible.

Carole Keeton Rylander Comptroller of Public Accounts

Key Findings and Recommendtions

During its six-month review, TSPR examined GISD

operations and interviewed employees, school board members, teachers, students, parents, and community and business leaders. TSPR also held a public forum at a district high school, hosted focus groups with community members and district stakeholders, and conducted written and telephone surveys.

Major Proposals

Personnel*

? Raise salaries to competitive levels. GISD has a hard time attracting and retaining highly qualified teachers and administrators due in part to the fact that salaries are lower than those in similar school districts. To help GISD overcome these salary disparities, TSPR recommends that the district increase salaries for experienced teachers and administrators at least to the average for area districts.

? Improve recruitment efforts. While GISD annually recruits about 125 to 130 new teachers, the district had 45 teacher vacancies in December 1999, or the equivalent of one fully staffed elementary school. As a result of this chronic inability to recruit teachers, the district's issuance of temporary or emergency permits increased from two in 1994-95 to 40 in 1998-99. To reverse this trend, the district should develop a specific focus for its recruiting efforts and study best practices used by other school districts.

? Create a controlled retirement incentive plan. More than 200 teachers and other professional employees are eligible for retirement over the next five years. To avoid a critical staff shortage, TSPR recommends a controlled retirement incentive plan that gives retiring staff an incentive to leave at an opportune time for the school district. A controlled retirement plan is estimated to save the district $3.2 million over five years.

* The money for pay raises for teachers, administrators and staff could be financed without a tax increase by implementing a controlled retirement plan and increasing secondary class size by one student per class.

District Organization and Management

? Establish strong internal controls for oversight of board, administration and employee travel. Board travel was a major concern with the public at the time we began our review. While the district has adopted new board and staff travel policies, its internal control processes fail to ensure compliance with accepted practices and do not specifically address out -of-country travel. The district must include procedures to review the status of travel requests and advances on a monthly basis, create timelines for submitting requests in advance, and develop budget preparation guidelines for travel expenses. The internal controls also must include punitive measures for noncompliance.

? Develop self-policing guidelines for board governance. GISD's board increasingly is divided, making it difficult for the board to meet its responsibilities as trustees to govern and oversee the management of the district. This relationship is undermined further by the lack of trust some board members have in the superintendent, and by a lack of mutual respect between and among board members and the superintendent. To function more effectively, the board should examine, implement and institutionalize the Texas Association of School Board's guidelines for "self-policing" with the assistance of a facilitator. The guidelines will help the board identify good governance practices and avoid micro management.

? Examine cost-effective options for improving educational opportunities on Bolivar Peninsula. Bolivar Elementary School, which houses elementary and middle school students, is located on Bolivar Peninsula and only is accessible via ferry. Because of geographic and other factors, the parents of 123 GISD students opted to pay tuition in 1999-2000 to

the neighboring High Island ISD (HIISD). Problems cited with Bolivar Elementary include access to extracurricular activities in middle school and transportation problems in getting to Galveston Island by ferry.

A number of options have been considered over the years for dealing with the challenges facing the Bolivar school, including detaching the lower peninsula and permitting HIISD to annex this area. Other options explored include allowing HIISD to operate the Bolivar campus, contracting with HIISD for handling students on Bolivar, or granting a local charter to the Bolivar area.

? Increase student -teacher ratios by one student per class in secondary schools. GISD classes are below both state and regional averages. At least ten classes had fewer than 10 students, and some had fewer than five students. TSPR recommends classes be increased by one student per class on the secondary level for estimated five-year savings of $3.4 million.

Financial Management

? Reorganize the business management structure. GISD has had widely publicized reports of financial problems, including budgetary shortfalls. Our review also found that the district operates a costly tax collection office, has a lack of written responses to external audit findings, and has no internal audit function. Compounding these financial concerns is a fractured business organizational structure with longterm vacancies in key positions.

We strongly recommend a reorganization of the business management structure to include:

? Contracting with an external auditing firm for annual internal audits;

? Creating formal procedures to ensure recommended corrections from the audits are quickly implemented;

? Conducting actuarial studies to determine appropriate premium contributions for annual health and workers' compensation claims, and adjusting funding to the self-funded health workers' compensation plans accordingly which would give the district an estimated one -time savings of $300,000;

? Transferring its tax levy and collection functions to the Galveston County Tax Office for an estimated 5year savings of $960,000; and

? Reorganizing central administration.

Prior to the completion of this report, the district addressed one of these concerns by contracting with a tax specialist to conduct legal reviews of all debt issues and hired an assistant superintendent for Business Services.

Food Services

? Meet and maintain proper sanitation and health standards to be in compliance with all applicable state and local laws. Texas Department of Health and Galveston County Health Department found 50 violations in GISD kitchens during their 1999-2000 inspections. TSPR observed such problems as inadequate storage facilities, containers and equipment; inconsistently labeled and dated food items: and improper refrigeration. It is imperative that GISD's Child Nutrition Services Department meets and maintains proper sanitation and health standards.

Safety and Security

? Update the student code of conduct in easy-to-read language with standard discipline policies and the consequences for violations. GISD's campuses do not handle discipline consistently. The district's current student code of conduct is not written in language that is easy to understand, which has resulted in several GISD principals producing their own, individual student handbooks. By standardizing the discipline process in easy-to-read language, district

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