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New I.I. Report Shows Colo. Local K-12 Agencies Have Lots of Room to Follow the Law and Improve Financial Transparency

So here we are, almost a week after the election here in Colorado that got a lot of big people’s attention. Prop 103’s “for the kids” tax hike went down in a ball of flames. A record number of local school tax and debt elections ran headlong into defeat. In at least one case, “negative perceptions” of a school district’s level of financial transparency has been credited with bringing down a mill levy override proposal.

If that’s the case, then the timing couldn’t be better for the release of my Education Policy Center friends’ new issue paper Time to Show the Money: Complying with Colorado’s Public School Financial Transparency Act. Research associate Devan Crean was the lead author, and senior policy analyst Ben DeGrow was the co-author.

In 2010 our state legislature passed HB 1036, a bipartisan measure requiring local K-12 agencies to post budgets, financial audits, financial statements, salary schedules, and as of July 2011, expenditures in the form of check registers and purchase card statements. So how well are they doing?:

During the summer of 2011 the Independence Institute examined the extent to which local education providers have complied with the financial transparency law by observing the substance and presentation of online financial information for each of 178 school districts, 16 BOCES and the Charter School Institute. Each website was evaluated on the requirements of the law, as well as other criteria. The findings were unsettling, as there were only eight school districts fully in compliance as of the law’s July 1, 2011, deadline, and 24 school districts fully in compliance 90 days later. (Extra time was allowed due to an ambiguity in the law that allows for diverse interpretations.)

Ouch. The remarkable thing is that many agencies are doing a truly bang-up job, some even exceeding the basic requirements of the law — with searchable expenditure databases. Most of them are larger districts, like Jefferson County and Cherry Creek and Colorado Springs 11, but smaller districts can find true inspiration in the transparency efforts of tiny Silverton School District in southwestern Colorado’s gorgeous mountain country.

While one could respond in disgust or despondency at the less-than-stellar results statewide, I prefer to look at the bright side. For one thing, 69 other school districts and BOCES are “almost compliant,” meaning they could easily fall in line with the full requirements of HB 1036 with just a little more effort.

And what about the other half of agencies? Well, fiscally-conscious citizens should take heart and take notice. While local K-12 agencies basically depend on the honor system to report whether they are in compliance with the transparency law, it’s Joe Q. Public who now has the leverage of the law to make sure districts are sharing the required information, and go beyond and make the information user-friendly. The consequences for failing to comply are a downgrade in the accreditation rating.

As for the law itself, it could stand some small improvements to tighten up a few loopholes. State lawmakers would be advised especially to take a look at this case from the new issue paper:

In July 2011 a Colorado citizen activist emailed Aurora’s director of finance asking why she was unable to find the transactions of withholdings for dues to the teachers union, the Aurora Education Association (AEA). The director responded that those withholdings are not listed within the check registers because they are done by wire transfer and in her “understanding of HB 1036 that wire transfers were not included.” This potential loophole is very troubling, because it opens the door for districts to use wire transfers in order to guard against transparency.

In the end, government spending transparency should continue to improve as technology becomes more enhanced, citizens kindly but firmly exert their rights, and public school agencies realize it’s in their best interest to post financial information online in the clearest, most comprehensive manner possible. One of my Education Policy Center friends stated it well in a media release that accompanied the new publication:

“Transparency helps to encourage productive spending of tax funds, and builds good faith between citizens and their local school systems,” said DeGrow.

Productive spending indeed — strong transparency is one ingredient to help effective innovation forge ahead as budgets have stagnated. It’s Time to Show the Money!