HB1119 - Conference Report

SECTION 1. Section 37-3-11, Mississippi Code of 1972, is amended as follows:

37-3-11. * * *

* * * The State Superintendent of Public Education shall perform the duties assigned to him by the State Board of Education, and he shall have the following duties:

(a) To serve as secretary for the State Board of Education;

(b) To be the chief administrative officer of the State Department of Education;

(c) To recommend to the State Board of Education, for its consideration, rules and regulations for the supervision of the public free schools and agricultural high schools of the state and for the efficient organization and conduct of the same;

(d) To collect data and make it available to the state board for determining the proper distribution of the state common school funds;

(e) To keep a complete record of all official acts of the state superintendent and the acts of the State Board of Education;

(f) To prepare, have printed and furnish all officers charged with the administration of the laws pertaining to the public schools, such blank forms and books as may be necessary to the proper discharge of their duties, which printing is to be paid for out of funds provided by the Legislature;

(g) To have printed in pamphlet form the laws pertaining to the public schools and publish therein forms for conducting school business, the rules and regulations for the government of schools that the state superintendent or the board of education may recommend, and such other matters as may be deemed worthy of public interest pertaining to the public schools, which printing is to be paid for out of funds provided by the Legislature;

(h) To meet all superintendents annually at such time and place as the state superintendent shall appoint for the purpose of accumulating facts relative to schools, to review the educational progress made in the various sections of the state, to compare views, discuss problems, hear discussions and suggestions relative to examinations and qualifications of teachers, methods of instruction, textbooks, summer schools for teachers, visitation of schools, consolidation of schools, health work in the schools, vocational education and other matters pertaining to the public school system;

(i) To advise all superintendents upon all matters involving the welfare of the schools, and at the request of any superintendent, to give an opinion upon a written statement of facts on all questions and controversies arising out of the interpretation and construction of the school laws, in regard to rights, powers and duties of school officers and superintendents, and to keep a record of all such decisions. Before giving any opinion, the superintendent may submit the statement of facts to the Attorney General, and it shall be the duty of the Attorney General forthwith to examine such statement and suggest the proper decision to be made upon such fact;

(j) To require annually, and as often as the state superintendent may deem proper, of all superintendents, detailed reports on the educational business of the various districts;

(k) On or before January 10 in each year to prepare, under the direction of the State Board of Education, and have printed the annual report of the board to the Legislature showing:

(i) The receipts and disbursements of all school funds handled by the board;

(ii) Reports of expenditures for public schools, which, upon request, must be made available on an individual school district basis by the State Department of Education. The reports must show the same level of detail as reports completed before the 2006 fiscal year and must be divided into the following categories and function codes:

1. Total Student Expenditures:

a. Instruction (1000s);

b. Other Student Instructional Expenditures (2100s, 2200s);

2. General Administration (2300s and 2500s);

3. School Administration (2400s);

4. Other Expenditures (2600s, 2700s, 2800s, 3100s, 3200s); and

5. Nonoperational Expenditures (4000s, 5000s, 6000s);

(iii) The number of school districts, school teachers employed, school administrators employed, pupils taught and the attendance record of pupils therein;

(iv) County and district levies for each school district and agricultural high school;

(v) The condition of vocational education, a list of schools to which federal and state aid has been given, and a detailed statement of the expenditures of federal funds and the state funds that may be provided, and the ranking of subjects taught as compared with the state's needs; and

(vi) Such general matters, information and recommendations as relate, in the board's opinion, to the educational interests of the state;

(l) To determine the number of educable children in the several school districts under rules and regulations prescribed by the State Board of Education; and

(m) To perform such other duties as may be prescribed by the State Board of Education.

SECTION 2. Section 37-9-18, Mississippi Code of 1972, is amended as follows:

37-9-18. (1) The superintendent of schools shall furnish to the school board a financial statement of receipts and disbursements, by funds, on or before the last working day of the following month covering the prior month. The school board shall be authorized to investigate and audit all financial records of the superintendent of schools at any and all times.

(2) The State Auditor, in his discretion, shall audit the financial records of school districts. The State Auditor shall give reasonable notice to school districts regarding the times during which he will perform such audits. In any fiscal year in which the State Auditor is not scheduled to perform an audit, the school board shall cause all the financial records of the superintendent of schools to be audited by a certified public accountant licensed to practice accounting in the State of Mississippi. If the school board so elects by resolution adopted each year, the audit shall be performed by the State Auditor. Contracts for the audit of public school districts shall be let by the school board in the manner prescribed by the State Auditor. The audit shall be conducted in accordance with generally accepted auditing standards and generally accepted accounting principles, and the report presented thereon shall be in accordance with generally accepted accounting principles. If the Auditor's opinion on the general purpose financial statements is a disclaimer, as that term is defined by generally accepted auditing standards, or if the State Auditor determines the existence of serious financial conditions in the district, the State Auditor shall immediately notify the State Board of Education. Upon receiving the notice, the State Superintendent of Public Education shall direct the school district to immediately cease all expenditures until a financial advisor is appointedby the state superintendent. However, if the disclaimer is a result of conditions caused by Hurricane Katrina 2005 and applies to fiscal years 2005 and/or 2006, then the Superintendent of Education may appoint a financial advisor, and may direct the school district to immediately cease all expenditures until a financial advisor is appointed. The financial advisor shall be an agent of the State Board of Education and shall be a certified public accountant or a qualified business officer. The financial advisor shall,with the approval of the State Board of Education:

(a) Approve or disapprove all expenditures and all financial obligations of the district;

(b) Ensure compliance with any statutes and State Board of Education rules or regulations concerning expenditures by school districts;

(c) Review salaries and the number of all district personnel and make recommendations to the local school board of any needed adjustments. Should such recommendations necessitate the reduction in local salary supplement, such recommended reductions shall be only to the extent which will result in the salaries being comparable to districts similarly situated, as determined by the State Board of Education. The local school board, in considering either a reduction in personnel or a reduction in local supplements, shall not be required to comply with the time limitations prescribed in Sections 37-9-15 and 37-9-105 and, further, shall not be required to comply with Sections 37-19-11 and 37-19-7(1) in regard to reducing local supplements and the number of personnel;

(d) Work with the school district's business office to correct all inappropriate accounting procedures and/or uses of school district funds and to prepare the school district's budget for the next fiscal year; and

(e) Report frequently to the State Board of Education on the corrective actions being taken and the progress being made in the school district. The financial advisor shall serve until such time as corrective action and progress is being made in such school district as determined by the State Board of Education with the concurrence of the State Auditor, or until such time as an interim conservator is assigned to such district by the State Board of Education under Section 37-17-6. The school district shall be responsible for all expenses associated with the use of the financial advisor. If the audit report reflects a failure by the school district to meet accreditation standards, the State Board of Education shall proceed under Section 37-17-6.

(3) (a) When conducting an audit of a public school district, the Auditor shall test to insure that the school district is complying with the requirements of Section 37-61-33(3)(a)(iii) relating to classroom supply funds. The audit must include a report of all classroom supply funds carried over from previous years. Based upon the audit report, the State Auditor shall compile a report on the compliance or noncompliance by all school districts with the requirements of Section 37-61-33(3)(a)(iii), which report must be submitted to the Chairmen of the Education and Appropriations Committees of the House of Representatives and Senate.

(b) When conducting an audit of a public school district, the State Auditor shall test to insure correct and appropriate coding at the function level. The audit must include a report showing correct and appropriate functional level expenditure codes in expenditures by the school district. Compliance standards for this audit provision shall be established by the Office of the State Auditor. Based upon the audit report, the State Auditor shall compile a report on the compliance or noncompliance by all public school districts with correct and appropriate coding at the function level, which report must be submitted to the Chairmen of the Education and Appropriations Committees of the House of Representatives and Senate.

(4) In the event the State Auditor does not perform the audit examination, then the audit report of the school district shall be reviewed by the State Auditor for compliance with applicable state laws before final payment is made on the audit by the school board. All financial records, books, vouchers, cancelled checks and other financial records required by law to be kept and maintained in the case of municipalities shall be faithfully kept and maintained in the office of the superintendent of schools under the same provisions and penalties provided by law in the case of municipal officials.

SECTION 3. Section 37-61-9, Mississippi Code of 1972, is amended as follows:

37-61-9. (1) On or before the fifteenth day of August of each year, the local school board of each school district, with the assistance of the superintendent of schools,shall prepare and file with the levying authority for the school district, as defined in Section 37-57-1, at least two (2) copies of a budget of estimated expenditures for the support, maintenance and operation of the public schools of the school district for the fiscal year commencing on July 1 of such year. Such budget shall be prepared on forms prescribed and provided by the State Auditor and shall contain such information as the State Auditor may require.

(2) In addition, on or before the fifteenth day of August of each year, the local school board of each school district, with the assistance of the superintendent of schools, shall prepare and file with the State Department of Education such budgetary information as the State Board of Education may require. The State Board of Education shall prescribe and provide forms to each school district for this purpose.

(3) Prior to the adoption of a budget pursuant to this section, the school board of each school district shall hold at least one (1) public hearing to provide the general public with an opportunity to comment on the taxing and spending plan incorporated in the proposed budget. The public hearing shall be held at least one (1) week prior to the adoption of the budget with advance notice. After final adoption of the budget, a synopsis of such budget in a form prescribed by the State Department of Audit shall be published in a newspaper having general circulation in the school district on a date different from the date on which the county or any municipality therein may publish its budget.

(4) * * * There shall be imposed limitations on budgeted expenditures for certain administration costs, as defined hereinafter, in an amount not greater than One Hundred Fifty Thousand Dollars ($150,000.00) plus four percent (4%) of the expenditures of all school districts each year. For purposes of this subsection, "administration costs" shall be defined as expenditures for salaries and fringe benefits paid for central administration costs from all sources of revenue in the following expenditure functions as defined in the MISSISSIPPI PUBLIC SCHOOL DISTRICT FINANCIAL ACCOUNTING MANUAL:

2300 = Support Services - General Administration

2310 = Board of Education Services

2320 = Executive Administration Services

2330 = Special Area Administration Services

2500 = Business Services

2510 = Fiscal Services

2520 = Purchasing Services

2530 = Warehousing and Distributing Services

2540 = Printing, Publishing and Duplicating Services

2590 = Other Support Services - Business

* * *

Any costs classified as "administration costs" for purposes of this subsection which can be demonstrated by the local school district to be an expenditure that results in a net cost savings to the district that may otherwise require budget expenditures for functions not covered under the definition of administration costs herein may be excluded from the limitations imposed herein. The local school board shall make a specific finding of such costs and spread such finding upon its minutes, which shall be subject to the approval of the Office of Educational Accountability of the State Department of Education. Any school district required to make expenditure cuts, as a result of application of this subsection, shall not be required to reduce such expenditures more than twenty-five percent (25%) in any year in order to comply with this mandate.

The State Auditor shall ensure that functions in all expenditure categories to which this administrative limitation applies shall be properly classified.

This section shall not apply to central administration with five (5) or less full-time employees, or to those school districts which can substantiate that comparable reductions have occurred in administrative costs for the five-year period immediately prior to school year 1993-1994. In the event the application of this section may jeopardize the fiscal integrity or operations of the school district, have an adverse impact on the ability of the district to deliver educational services, or otherwise restrict the district from achieving or maintaining a quality education program, the State Board of Education shall be authorized to exempt the application of this section to such school district pursuant to rules and regulations of the State Board of Education consistent with the intent of this section.

SECTION 4. Section 37-61-21, Mississippi Code of 1972, is amended as follows:

37-61-21. (1) If it should appear to the superintendent of schools or the school board of any school district that the amounts to be received from state appropriations, taxation or any other source will be more than the amount estimated in the budget filed and approved, or if it should appear that such amounts shall be less than the amount estimated, the school board of the school district, with assistance from the superintendent, may revise the budget at any time during the fiscal year by increasing or decreasing the fund budget, in proportion to the increase or decrease in the estimated amounts. If it should appear to the superintendent of schools or the school board of a school district that some function of the budget as filed is in excess of the requirement of that function and that the entire amount budgeted for such function will not be needed for expenditures therefor during the fiscal year, the school board of the school district, with assistance from the superintendent, may transfer resources to and from functions and funds within the budget when and where needed; however, no such transfer shall be made from fund to fund or from function to function which will result in the expenditure of any money for any purpose different from that for which the money was appropriated, allotted, collected or otherwise made available or for a purpose which is not authorized by law. No revision of any budget under the provisions hereof shall be made which will permit a fund expenditure in excess of the resources available for such purpose. The revised portions of the budgets shall be incorporated in the minutes of the school board by spreading them on the minutes or by attaching them as an addendum. Final budget revisions, pertinent to a fiscal year, shall be approved on or before the date set by the State Board of Education for the school district to submit its financial information for that fiscal year.

(2) On or before the fifteenth day of October of each year, the local school board of each school district, with the assistance of the school district superintendent, shall prepare and file with the State Department of Education year-end financial statements and any other budgetary information that the State Board of Education may require. The State Board of Education shall prescribe and provide forms to each school district for this purpose. No additional changes may be made to the financial statements after October 15 of each year.

SECTION 5. Section 37-37-1, Mississippi Code of 1972, is amended as follows:

37-37-1. The State Department of Education is hereby authorized and directed to prescribe and formulate for use by all school districts of this state, including municipal separate school districts, adequate accounting systems and other essential financial records which shall be uniform for all of the school districts of this state. Such uniform system shall include a method of accounting for and keeping records of all funds received, handled and disbursed by such school district, whether derived from taxation or otherwise, including funds derived from donations, athletic events and other special activities of the school district. The uniform system of accounts so prescribed and formulated by the State Department of Education shall be distributed and disseminated to all of the school districts of this state and it shall be mandatory that the boards of trustees of all such school districts install, utilize and follow said uniform system of accounts in keeping the financial records of the school district. At the request of the Mississippi Department of Education, the Office of the State Auditor shall provide advice for implementation of this section.

SECTION 6. Section 37-61-23, Mississippi Code of 1972, is amended as follows:

37-61-23. The superintendent of schools of each school district shall open and keep regular sets of books, as prescribed by the State Department of Education, which shall be subject to inspection during office hours by any citizen so desiring to inspect the same. The books for each fiscal year shall be kept separately and same shall be safely preserved by the superintendent of schools.

SECTION 7. Section 5 of Senate Bill No. 2604, 2006 Regular Session, is amended as follows:

Section 5. This act shall take effect and be in force from and after its passage. The amendments to Section 37-151-7, Mississippi Code of 1972, contained in this Senate Bill No. 2604, 2006 Regular Session, shall supersede the amendments to that section contained in House Bill No. 563, 2006 Regular Session.

SECTION 8. This act shall take effect and be in force from and after July 1, 2006.


X (SIGNED)	X (SIGNED)
Cecil Brown	Mike Chaney

X (SIGNED)	X (SIGNED)
Gregory Holloway	Eugene S. Clarke

X (SIGNED)	X (SIGNED)
Esther Harrison	Gary Jackson