January 15, 2025 • 20 mins
Cobb County School District uses fiscally conservative principles of finance to achieve three of the strongest credit ratings in the nation, ultimately providing more value and reducing the tax burden for its citizens. Host David Owen invites Chief Financial Officer Brad Johnson to discuss the intricacies of managing a $1.6 billion budget and the various departments within finance that ensure accountability and transparency. Johnson highlights the importance of stringent internal controls, the separation of purchasing and finance duties, and the significant role of employee salaries in budget allocations. The conversation also covers the district's proactive approach to economic downturns, including the management of idle funds through strategic investments. With over 40 years of awards and a decade without audit findings, Cobb County's finance team demonstrates a commitment to excellence that directly benefits students, teachers, and taxpayers alike.
Chapters:
- 00:00 - Funding Student Success in Cobb
- 01:50 - Understanding Cobb School District's Financial Management
- 05:12 - Understanding the Budget Cycle
- 13:59 - The Impact of Financial Management in Cobb Schools
- 18:20 - Financial Accountability and Audits
Guest: Brad Johnson, Chief Financial Officer
Useful links from the podcast:
Podcast Home:
https://the-inside-scoop.captivate.fm/
Cobb Schools on YouTube:
http://www.youtube.com/@TheRealCobbSchools
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https://www.podchaser.com/TheInsideScoop
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https://www.surveymonkey.com/r/VYTRCLG
Cobb Sports Podcast:
https://cobb-sports.captivate.fm/episodes
The Cobb County School District:
https://www.cobbk12.org
Takeaways:
- Cobb County School District has a $1.6 billion budget that prioritizes classroom instruction over administrative costs.
- The finance department employs only ten people to manage payroll for over 19,000 employees, showcasing efficiency.
- Cobb's fiscal conservatism has led to three AAA credit ratings, unmatched by other public school districts.
- The budget cycle begins in October and ends with board approval in May, ensuring transparency.
- Over 94% of the district's budget is spent on salaries and benefits for educators and staff.
- Cobb County has not had an audit finding in ten years, demonstrating robust financial practices.
Companies mentioned in this episode:
- Georgia Municipal Association
- Moody's
- Standard and Poor's
- Kroll
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
What goes into responsiblyfunding student success in Cobb?
We'll find out in this week'sepisode of the Inside Scoop. Hello
and welcome back to the InsideScoop. I'm David Owen. If you hear
something helpful or somethingnew to you, make sure you like subscribe
and share this podcast episodewith a friend. When financial times
(00:23):
get tight, families pay closeattention to where every dollar goes.
Even when times are good, wealways want to get the best bang
for the buck, metaphoricallyspeaking. Here to give us an overview
of how Cobb stays in betterfinancial position than most other
school districts is our ownChief Financial Officer, Brad Johnson.
(00:44):
Brad, welcome to the podcast.
Thank you for having me.
Let's just start withsomething very simple. A lot of people
don't necessarily watch theboard meetings, as strange as that
may seem. It's must see tv,but they don't get to know who you
are. The guy who's in char ofall the financial picture of Cobb
(01:05):
county school district, that'sa huge thing, a huge responsibility.
Tell us a little bit about whoyou are and a little bit about your
past.
Since 83, I've been working inthe school district and I got on
with the school district backthen. Been with the school district
a long time. I did have adetour, went to another school district
(01:27):
for three years and thenaround 2010, but I came back in 2013.
So you were forgiven for that,that faux pas. Momentary faux pas.
I, when I left, I reallydidn't want to go. But it was good
for my career at that point.But I was blessed to be able to come
back. And Cobb is a great place.
Yeah, it's. It is. And I thinkyou've been a part of making it a
(01:49):
great place. Tell us a littlemore about the breadth of what finance
as a department does.
So finance is a majordepartment of the school district.
We have a $1.6 billion budget.We have over 19,000 employee full
time and part time employees.In the area of finance, we have payroll.
(02:15):
We have 10 people that pay19,000 employees. I don't know if
people knew that.
10 people manage all of that's correct.
And with technology thesedays, we can do that. But we also
have other responsibilities.Like we have local school accounting.
There's a bookkeeper at everyschool. We have after school programs
at the elementary schools. Infinance, we have financial systems
(02:39):
management because we have bigsystems that handle this amount of
money. We have inventorymanagement that that department handles.
We also have accounting whichhandles financial reporting. It handles
cash management, it handlesinvestments. And then we have another
department that handlesaccounts payable, where we pay all
(03:00):
of our vendors. Yeah, we also.
Let me. I'm sorry to interrupt you.
Go ahead. It's a lot of stuff.
It is a lot of stuff. A lot ofmoving pieces here. Just a moment
ago, you said investments.You're saying the Cobb school district
has investments?
We do. We invest all of ourmoney whenever it's possible. Now,
we have 19,000 employees thatwe pay, but any money that's idle,
(03:24):
we invest, even overnight.
So why would money be idle?
Money would be idle becauseit's in the budget. It just hasn't
been spent yet. For example,it's in the budget, and maybe it's
a planned purchase of buses orsomething that may not happen at
the first of the year, butit's waiting to be spent towards
the end of the year. So thereare idle expenses.
(03:45):
Yeah. Well, that makes sense.Just because you have the money to
buy something that's neededdoesn't mean that you immediately
spend it on that. So in themeantime, you're getting literally
the best bang for the buck.You are getting the investment interest,
I guess.
Absolutely. We invest with theGeorgia Municipal association and
(04:06):
we get some of the best rates available.
Okay, well, that goes rightinto my next question. Which was,
what is the involvement offinance with purchases? Is purchasing
a department that's a part ofyour department, or how does that
all relate?
In the area of finance, wehave strict internal controls, strict
(04:28):
procedures, and stricttransparency. So when I speak of
internal controls, I talkabout separation of duties. So in
the area of purchasing, theydecide and bid what's going to be
purchased, whereas finance istotally separate and we pay for it.
So we don't influence what'spurchased. So purchasing is separate
(04:48):
on purpose.
So it's almost like. And maybeit actually is, there is a business
office, so to speak, and thenthere is a finance office that supports
business operations. Is that fair?
Well, there's anotherdepartment called Business Services
that actually has food serviceand purchasing in it, and that's
(05:11):
separate from finance.
So let me move on from thatinto the budget cycle. Every year,
I think around May, we tend tohear a lot of budget presentation
stuff in the board meetings.So tell us a little bit about overall
how the budget cycle processhappens, and what do you see as the.
(05:35):
The biggest challenge inestablishing a budget for the next
school year?
Well, let me start with thebig picture. Our budget is $1.6 billion
for the general fund, but wealso have hundreds of millions of
dollars in special revenuefunds. We have hundreds of millions
in internal service funds, andwe have hundreds of millions of dollars
(05:58):
in SPLOSS funds. So there's alot going on. We have 106,000 students.
We're the second largest inGeorgia and the 23rd largest in the
United States. So all thatbeing said, it's a big budget. So
we start a budget that's thatbig. Usually our fiscal year is July
(06:19):
through June. We start thebudget process usually in the month
of October, and it ends withboard approval in May. And you can
imagine there's a lot ofthings that have to be done. And
we have a strict calendar thatwe have that divides out each responsibility
in the budget preparation andwho's responsible and when it has
(06:40):
to be done.
Yeah.
And so all the money isdivided up into funds and accounts,
and all those funds andaccounts are assigned to a budget
administrator, and they'reresponsible for those. And every
year, all those thousand tensof thousands of accounts are reviewed.
And so that goes into aprocess where positions, number of
(07:01):
students are counted,positions are calculated, revenue
is estimated, expenditures areestimated. And then we put together
a tentative budget for thesuperintendent to present to the
board, Usually in the month ofApril, the board approves a tentative
budget. The board also haspublic hearings for citizens to give
(07:24):
input on it, and then weusually have a final approval of
the budget in May. So I wishthe budget's much more complicated
to. But that's a big picture.
Yeah. Yeah. I've seen thebudget books that you guys bring
into the board meetings whenit's time to present your budget,
and those books are, like,that thick. They're huge.
(07:45):
Well, every account iscalculated, and there is a formula.
And the whole world can lookon the website or in those budget
books, and they can see how wecalculated our numbers. And so everything
is transparent. They can lookin the books. They can look on the
website, and they can seeexactly how we prepared the budget.
That is amazing. Do all schooldistricts do that? Is that a requirement
(08:09):
for school districts, at leastin Georgia, to do that?
No, I don't think so. And I'veseen other districts, many other
districts, and I don't thinkmost other school districts even
come close to the level ofdetail that we have to the level
of transparency that we have.And so we can present very confidently
(08:30):
to the public that we areusing and planning taxpayer money
in the most efficient way.
Yeah. I remember years ago, apresentation talking about the. I
believe it was administrativepercentage or administrative costs
versus the costs of theclassroom operations. I think Cobb
(08:56):
was around 4% at the time.Now, it's probably gone up a little
bit, but that means theremaining 96% was spent in the classroom.
What is the biggest expensefor teaching all of these? I think
you said over 106,000 students.
So the budget is very laborintensive. Over 94% is spent on salaries
(09:19):
and fringe benefits. Now, thatseems like a lot, but it's really
not because guess what, we'rein the people business. And so that's
where the budget is putforward. The focus of the budget
is classroom only. You said4%, but really right now only 1%
is going towards generaladministrative expenses, which is
(09:41):
amazing, really. And then avast majority is going into instruction.
And you can see on all theinformation that the school district
puts out that we spend verylittle money compared to other school
districts. And we have some ofthe highest test scores. In fact,
recently, I think we are thehighest test scores.
Aren't we like the largestemployer in Cobb County?
(10:02):
We are. Years ago, it used tobe Lockheed. And those of us who
have lived here for 40 or 50years, we remember when Lockheed
was by far. But now Cobbschools is the largest.
So whenever you and theleadership of superintendent do things
like issue a raise, I'm surethat has an impact on the overall
(10:23):
economy of Cobb county, right?
Absolutely. I mean, when youthink about 19,000 employees full
time and part time and that'sall over the county, it has a tremendous
effect on the economy of Cobb.
Yeah. Just about everydecision you guys make is so impactful
when it comes down to thevarious moving parts that you have
(10:47):
to manage. And you've gotabout how many people are in finance
department?
Probably around 65 or 70.
Okay.
Now every school has abookkeeper, too.
Yeah, yeah. And that's hugebecause if you don't get your original
entry right, then everythingafter that is going to be in trouble.
It's not going to be accurate.But one of the things that you guys
(11:08):
have gotten notoriety for isjust excellence and accuracy. Right.
Tell us a little bit aboutsome of the awards that you guys
have gotten or your staff hasgotten in the past few years.
Well, in finance, there's adeep history of best practices and
(11:28):
accountability. And some ofthe main financial organizations
in the country are theassociation of School Business Officials
and the Government FinanceOfficers Association. Well, we've
been getting awards from thosetwo organizations going back to 1980.
So you're talking 40 years, 45years or more. And our staff has
(11:49):
continually, as people haveretired, people have come in and
we've maintained that sense ofexcellence and hard work and Wanting
to do things right. We havecredit ratings from Moody's, Standard
and Poor's and Kroll creditrating agencies. And in fact, we're
(12:10):
the only entity in the UnitedStates that has three AAA credit
ratings. And the onlycorporations that even hold one is
Microsoft and Johnson. AndJohnson. So I think that's proof
to our taxpayers that financeis trying to handle taxpayer money
in a very professional manner.
(12:31):
Wait a minute. That'sastounding to me. Okay, let me reel
that back in, because that's.You're saying that not only are is
the Cobb School districtfinancial office, I give y'all full
(12:51):
credit because that's where itbelongs, responsible for having achieved
three AAA or top ratings withthese financial entities. It's not
just public schools thatyou're comparing against. It's major
corporations like Microsoft.
Yeah, we are literally theonly organization in the United States
(13:13):
that has three AAA credit ratings.
Holy cow.
And so that's been a long timecoming. We have been working on that
for a long time. But we puttremendous effort and emphasis on
internal controls, procedures.And I think these credit ratings
(13:34):
reflect. And it's not justfinancial practices. This goes back
to the superintendent, theexecutive cabinet and management
of the school district,including principals, of sound management
practices, a sound tax basethat the school, the Cobb county
citizens, will support us andfund balance reserves so that we
(13:54):
can actually do the thingsthat we need to do for our students.
So a lot of people listeningto this and, you know, as soon as
we mentioned awards, some ofthe cynical ones might have said,
oh, here we go, tooting theirown horn. Okay, fine. But it's more
than just putting acertificate on the wall or a statue
(14:16):
on the mantle. What does thismean in terms of benefit to the students
and teachers in classrooms andthe taxpayers?
Well, I think it means thatwe're handling money in such a way,
and we call it frequently inour board meetings, conservative
budgeting practices. So ifwe're going to be off in our estimates,
(14:37):
we're going to be off to thegood, either, whether it be revenue
or expenditures. And so wefeel like we can budget in that way,
putting as much money into theclassrooms as possible. And I think
that that's our indirect wayof supporting instructional success.
And so when I hear these testscores, I'm thinking, well, finance
(14:59):
had a part in that, and I'mproud of it. And it's our whole team.
Yeah, it's our whole team.
So one of the things that wealso benefit from, I was thinking
of this a moment ago, isanother school district Nearby has
a bond that they had to issueto be able to do major construction
(15:20):
projects. We. And they alsohave a SPLOST ED SPLOST in place.
We have ED splost, but nobond. So how does that all interact?
Is that related to our credit rating?
Absolutely. It's critical untoit. All school districts in Georgia
used to utilize bond issuesgoing back to the 1960s and 70s.
(15:45):
But in the 1990s, Georgiaallowed school districts to utilize
a $0.01 sales tax. And we havetaken advantage of that. And so in
2007, we paid off our lastbond issue. And if you have bonds,
if you look at anyorganization that have bonds, they
pay millions of dollars ininterest expense. We don't pay anything.
(16:06):
And having splossed money forschools and technology, it allows
us to buy these things andessentially work as a pay as you.
Yeah, so we're saving allkinds of money for that.
So it's almost like getting a discount.
Yeah.
So when taxpayers open theirtax bill, they're looking at just
the regular school tax but noadditional bond payment. So that's
(16:31):
the benefit directly to the homeowners.
Yeah. No. No long term debt,adequate financial reserves. We try
to prepare for downturns inthe business cycle, and we've had
some downturns back in 2010 inthat area. It was a bad economy at
that point, and we always tryto prepare for that. And I think
(16:52):
the way we've handled themoney, we're probably in a better
position than most to be ableto handle that.
So I'm glad you brought thatup because that's one of the things
I wanted to ask you. At arecent board meeting, the superintendent
said that there were economicindicators that were kind of broaching
that same thing that weexperienced in the, what was it,
(17:13):
2008, 2009 downturn,economically. Has any of that changed
since he said that, or do you.Is it too soon to tell?
Well, we monitor economicindicators very closely and one of
the big indicators is staterevenue. And so I watch how the state
is collecting revenue, whetherit be sales tax or income taxes.
(17:37):
And believe it or not, overthe last 24 months, the state has
been down in their collections.
Oh, yeah.
And by, I don't know, 1 or 2%,which is a reflection of an economy
that's not quite as good as wewould like it to be. But what the
(17:57):
state has done, though,alternatively, though, they have
put together a prettyimpressive reserve fund. So the state
has handled their financespretty well too, because they'll
have money available in casesomething does happen in.
An economic downturn, they cancover that shortfall or a gap.
It'll be great. It would bevery helpful for what they've done.
(18:18):
Okay, very good. Anything elseyou want to add before we close out
here?
Well, just some moreaccountability things as far as handling
taxpayer funds. We haven't hadan audit finding in 10 years. Financial
statement audit finding.
Okay, so that's a great pointfrom the auditors. So you guys go
(18:40):
through an annual audit.
Annual audit.
Okay. And that means that theyare looking at everything you do
and trying to find a problem. Right.
They're looking at hundreds ofthousands of transactions, and they
literally find nothing. And we.
We.
We have a system in place. Wehave a way of producing transactions.
(19:02):
And so I'm very proud of thefinance team for actually making
that happen. And it's not onlythe finance team. It's all the other
departments in the centraloffice, as well as the schools to
where they follow ourprocedures. And we appreciate how
they do that. We train them,and everybody handles it in a very
professional way. So I thinkthat contributes to the financial
(19:24):
success as well.
Yeah. As cheesy as it may comeoff teamwork, right?
Yeah, well, it is teamwork,and so I'm just proud of the finance
team.
Yeah. Well, that's fantastic.Well, Brad, thank you so much for
coming in and sharing some ofthese things with us. Obviously,
a massive budget, a massivefinancial picture like the one that
(19:44):
you are at the helm of. That'shorrible grammar. Sorry, that's not
something you cover in onepodcast or even a series of podcasts.
It's. But thank you for takingtime out of your busy schedule to
come tell us about some ofthese things and help us learn a
little bit more. If you foundsome of this information helpful
(20:06):
or new, enlightening, whathave you, make sure you give us a
like, subscribe and share itwith a friend. Thank you for listening
to this edition of the InsideScoop, a podcast produced by the
Cobb County School.
What goes into responsiblyfunding student success in Cobb?
We'll find out in this week'sepisode of the Inside Scoop. Hello
and welcome back to the InsideScoop. I'm David Owen. If you hear
something helpful or somethingnew to you, make sure you like subscribe
and share this podcast episodewith a friend. When financial times
(00:23):
get tight, families pay closeattention to where every dollar goes.
Even when times are good, wealways want to get the best bang
for the buck, metaphoricallyspeaking. Here to give us an overview
of how Cobb stays in betterfinancial position than most other
school districts is our ownChief Financial Officer, Brad Johnson.
(00:44):
Brad, welcome to the podcast.
Thank you for having me.
Let's just start withsomething very simple. A lot of people
don't necessarily watch theboard meetings, as strange as that
may seem. It's must see tv,but they don't get to know who you
are. The guy who's in char ofall the financial picture of Cobb
(01:05):
county school district, that'sa huge thing, a huge responsibility.
Tell us a little bit about whoyou are and a little bit about your
past.
Since 83, I've been working inthe school district and I got on
with the school district backthen. Been with the school district
a long time. I did have adetour, went to another school district
(01:27):
for three years and thenaround 2010, but I came back in 2013.
So you were forgiven for that,that faux pas. Momentary faux pas.
I, when I left, I reallydidn't want to go. But it was good
for my career at that point.But I was blessed to be able to come
back. And Cobb is a great place.
Yeah, it's. It is. And I thinkyou've been a part of making it a
(01:49):
great place. Tell us a littlemore about the breadth of what finance
as a department does.
So finance is a majordepartment of the school district.
We have a $1.6 billion budget.We have over 19,000 employee full
time and part time employees.In the area of finance, we have payroll.
(02:15):
We have 10 people that pay19,000 employees. I don't know if
people knew that.
10 people manage all of that's correct.
And with technology thesedays, we can do that. But we also
have other responsibilities.Like we have local school accounting.
There's a bookkeeper at everyschool. We have after school programs
at the elementary schools. Infinance, we have financial systems
(02:39):
management because we have bigsystems that handle this amount of
money. We have inventorymanagement that that department handles.
We also have accounting whichhandles financial reporting. It handles
cash management, it handlesinvestments. And then we have another
department that handlesaccounts payable, where we pay all
(03:00):
of our vendors. Yeah, we also.
Let me. I'm sorry to interrupt you.
Go ahead. It's a lot of stuff.
It is a lot of stuff. A lot ofmoving pieces here. Just a moment
ago, you said investments.You're saying the Cobb school district
has investments?
We do. We invest all of ourmoney whenever it's possible. Now,
we have 19,000 employees thatwe pay, but any money that's idle,
(03:24):
we invest, even overnight.
So why would money be idle?
Money would be idle becauseit's in the budget. It just hasn't
been spent yet. For example,it's in the budget, and maybe it's
a planned purchase of buses orsomething that may not happen at
the first of the year, butit's waiting to be spent towards
the end of the year. So thereare idle expenses.
(03:45):
Yeah. Well, that makes sense.Just because you have the money to
buy something that's neededdoesn't mean that you immediately
spend it on that. So in themeantime, you're getting literally
the best bang for the buck.You are getting the investment interest,
I guess.
Absolutely. We invest with theGeorgia Municipal association and
(04:06):
we get some of the best rates available.
Okay, well, that goes rightinto my next question. Which was,
what is the involvement offinance with purchases? Is purchasing
a department that's a part ofyour department, or how does that
all relate?
In the area of finance, wehave strict internal controls, strict
(04:28):
procedures, and stricttransparency. So when I speak of
internal controls, I talkabout separation of duties. So in
the area of purchasing, theydecide and bid what's going to be
purchased, whereas finance istotally separate and we pay for it.
So we don't influence what'spurchased. So purchasing is separate
(04:48):
on purpose.
So it's almost like. And maybeit actually is, there is a business
office, so to speak, and thenthere is a finance office that supports
business operations. Is that fair?
Well, there's anotherdepartment called Business Services
that actually has food serviceand purchasing in it, and that's
(05:11):
separate from finance.
So let me move on from thatinto the budget cycle. Every year,
I think around May, we tend tohear a lot of budget presentation
stuff in the board meetings.So tell us a little bit about overall
how the budget cycle processhappens, and what do you see as the.
(05:35):
The biggest challenge inestablishing a budget for the next
school year?
Well, let me start with thebig picture. Our budget is $1.6 billion
for the general fund, but wealso have hundreds of millions of
dollars in special revenuefunds. We have hundreds of millions
in internal service funds, andwe have hundreds of millions of dollars
(05:58):
in SPLOSS funds. So there's alot going on. We have 106,000 students.
We're the second largest inGeorgia and the 23rd largest in the
United States. So all thatbeing said, it's a big budget. So
we start a budget that's thatbig. Usually our fiscal year is July
(06:19):
through June. We start thebudget process usually in the month
of October, and it ends withboard approval in May. And you can
imagine there's a lot ofthings that have to be done. And
we have a strict calendar thatwe have that divides out each responsibility
in the budget preparation andwho's responsible and when it has
(06:40):
to be done.
Yeah.
And so all the money isdivided up into funds and accounts,
and all those funds andaccounts are assigned to a budget
administrator, and they'reresponsible for those. And every
year, all those thousand tensof thousands of accounts are reviewed.
And so that goes into aprocess where positions, number of
(07:01):
students are counted,positions are calculated, revenue
is estimated, expenditures areestimated. And then we put together
a tentative budget for thesuperintendent to present to the
board, Usually in the month ofApril, the board approves a tentative
budget. The board also haspublic hearings for citizens to give
(07:24):
input on it, and then weusually have a final approval of
the budget in May. So I wishthe budget's much more complicated
to. But that's a big picture.
Yeah. Yeah. I've seen thebudget books that you guys bring
into the board meetings whenit's time to present your budget,
and those books are, like,that thick. They're huge.
(07:45):
Well, every account iscalculated, and there is a formula.
And the whole world can lookon the website or in those budget
books, and they can see how wecalculated our numbers. And so everything
is transparent. They can lookin the books. They can look on the
website, and they can seeexactly how we prepared the budget.
That is amazing. Do all schooldistricts do that? Is that a requirement
(08:09):
for school districts, at leastin Georgia, to do that?
No, I don't think so. And I'veseen other districts, many other
districts, and I don't thinkmost other school districts even
come close to the level ofdetail that we have to the level
of transparency that we have.And so we can present very confidently
(08:30):
to the public that we areusing and planning taxpayer money
in the most efficient way.
Yeah. I remember years ago, apresentation talking about the. I
believe it was administrativepercentage or administrative costs
versus the costs of theclassroom operations. I think Cobb
(08:56):
was around 4% at the time.Now, it's probably gone up a little
bit, but that means theremaining 96% was spent in the classroom.
What is the biggest expensefor teaching all of these? I think
you said over 106,000 students.
So the budget is very laborintensive. Over 94% is spent on salaries
(09:19):
and fringe benefits. Now, thatseems like a lot, but it's really
not because guess what, we'rein the people business. And so that's
where the budget is putforward. The focus of the budget
is classroom only. You said4%, but really right now only 1%
is going towards generaladministrative expenses, which is
(09:41):
amazing, really. And then avast majority is going into instruction.
And you can see on all theinformation that the school district
puts out that we spend verylittle money compared to other school
districts. And we have some ofthe highest test scores. In fact,
recently, I think we are thehighest test scores.
Aren't we like the largestemployer in Cobb County?
(10:02):
We are. Years ago, it used tobe Lockheed. And those of us who
have lived here for 40 or 50years, we remember when Lockheed
was by far. But now Cobbschools is the largest.
So whenever you and theleadership of superintendent do things
like issue a raise, I'm surethat has an impact on the overall
(10:23):
economy of Cobb county, right?
Absolutely. I mean, when youthink about 19,000 employees full
time and part time and that'sall over the county, it has a tremendous
effect on the economy of Cobb.
Yeah. Just about everydecision you guys make is so impactful
when it comes down to thevarious moving parts that you have
(10:47):
to manage. And you've gotabout how many people are in finance
department?
Probably around 65 or 70.
Okay.
Now every school has abookkeeper, too.
Yeah, yeah. And that's hugebecause if you don't get your original
entry right, then everythingafter that is going to be in trouble.
It's not going to be accurate.But one of the things that you guys
(11:08):
have gotten notoriety for isjust excellence and accuracy. Right.
Tell us a little bit aboutsome of the awards that you guys
have gotten or your staff hasgotten in the past few years.
Well, in finance, there's adeep history of best practices and
(11:28):
accountability. And some ofthe main financial organizations
in the country are theassociation of School Business Officials
and the Government FinanceOfficers Association. Well, we've
been getting awards from thosetwo organizations going back to 1980.
So you're talking 40 years, 45years or more. And our staff has
(11:49):
continually, as people haveretired, people have come in and
we've maintained that sense ofexcellence and hard work and Wanting
to do things right. We havecredit ratings from Moody's, Standard
and Poor's and Kroll creditrating agencies. And in fact, we're
(12:10):
the only entity in the UnitedStates that has three AAA credit
ratings. And the onlycorporations that even hold one is
Microsoft and Johnson. AndJohnson. So I think that's proof
to our taxpayers that financeis trying to handle taxpayer money
in a very professional manner.
(12:31):
Wait a minute. That'sastounding to me. Okay, let me reel
that back in, because that's.You're saying that not only are is
the Cobb School districtfinancial office, I give y'all full
(12:51):
credit because that's where itbelongs, responsible for having achieved
three AAA or top ratings withthese financial entities. It's not
just public schools thatyou're comparing against. It's major
corporations like Microsoft.
Yeah, we are literally theonly organization in the United States
(13:13):
that has three AAA credit ratings.
Holy cow.
And so that's been a long timecoming. We have been working on that
for a long time. But we puttremendous effort and emphasis on
internal controls, procedures.And I think these credit ratings
(13:34):
reflect. And it's not justfinancial practices. This goes back
to the superintendent, theexecutive cabinet and management
of the school district,including principals, of sound management
practices, a sound tax basethat the school, the Cobb county
citizens, will support us andfund balance reserves so that we
(13:54):
can actually do the thingsthat we need to do for our students.
So a lot of people listeningto this and, you know, as soon as
we mentioned awards, some ofthe cynical ones might have said,
oh, here we go, tooting theirown horn. Okay, fine. But it's more
than just putting acertificate on the wall or a statue
(14:16):
on the mantle. What does thismean in terms of benefit to the students
and teachers in classrooms andthe taxpayers?
Well, I think it means thatwe're handling money in such a way,
and we call it frequently inour board meetings, conservative
budgeting practices. So ifwe're going to be off in our estimates,
(14:37):
we're going to be off to thegood, either, whether it be revenue
or expenditures. And so wefeel like we can budget in that way,
putting as much money into theclassrooms as possible. And I think
that that's our indirect wayof supporting instructional success.
And so when I hear these testscores, I'm thinking, well, finance
(14:59):
had a part in that, and I'mproud of it. And it's our whole team.
Yeah, it's our whole team.
So one of the things that wealso benefit from, I was thinking
of this a moment ago, isanother school district Nearby has
a bond that they had to issueto be able to do major construction
(15:20):
projects. We. And they alsohave a SPLOST ED SPLOST in place.
We have ED splost, but nobond. So how does that all interact?
Is that related to our credit rating?
Absolutely. It's critical untoit. All school districts in Georgia
used to utilize bond issuesgoing back to the 1960s and 70s.
(15:45):
But in the 1990s, Georgiaallowed school districts to utilize
a $0.01 sales tax. And we havetaken advantage of that. And so in
2007, we paid off our lastbond issue. And if you have bonds,
if you look at anyorganization that have bonds, they
pay millions of dollars ininterest expense. We don't pay anything.
(16:06):
And having splossed money forschools and technology, it allows
us to buy these things andessentially work as a pay as you.
Yeah, so we're saving allkinds of money for that.
So it's almost like getting a discount.
Yeah.
So when taxpayers open theirtax bill, they're looking at just
the regular school tax but noadditional bond payment. So that's
(16:31):
the benefit directly to the homeowners.
Yeah. No. No long term debt,adequate financial reserves. We try
to prepare for downturns inthe business cycle, and we've had
some downturns back in 2010 inthat area. It was a bad economy at
that point, and we always tryto prepare for that. And I think
(16:52):
the way we've handled themoney, we're probably in a better
position than most to be ableto handle that.
So I'm glad you brought thatup because that's one of the things
I wanted to ask you. At arecent board meeting, the superintendent
said that there were economicindicators that were kind of broaching
that same thing that weexperienced in the, what was it,
(17:13):
2008, 2009 downturn,economically. Has any of that changed
since he said that, or do you.Is it too soon to tell?
Well, we monitor economicindicators very closely and one of
the big indicators is staterevenue. And so I watch how the state
is collecting revenue, whetherit be sales tax or income taxes.
(17:37):
And believe it or not, overthe last 24 months, the state has
been down in their collections.
Oh, yeah.
And by, I don't know, 1 or 2%,which is a reflection of an economy
that's not quite as good as wewould like it to be. But what the
(17:57):
state has done, though,alternatively, though, they have
put together a prettyimpressive reserve fund. So the state
has handled their financespretty well too, because they'll
have money available in casesomething does happen in.
An economic downturn, they cancover that shortfall or a gap.
It'll be great. It would bevery helpful for what they've done.
(18:18):
Okay, very good. Anything elseyou want to add before we close out
here?
Well, just some moreaccountability things as far as handling
taxpayer funds. We haven't hadan audit finding in 10 years. Financial
statement audit finding.
Okay, so that's a great pointfrom the auditors. So you guys go
(18:40):
through an annual audit.
Annual audit.
Okay. And that means that theyare looking at everything you do
and trying to find a problem. Right.
They're looking at hundreds ofthousands of transactions, and they
literally find nothing. And we.
We.
We have a system in place. Wehave a way of producing transactions.
(19:02):
And so I'm very proud of thefinance team for actually making
that happen. And it's not onlythe finance team. It's all the other
departments in the centraloffice, as well as the schools to
where they follow ourprocedures. And we appreciate how
they do that. We train them,and everybody handles it in a very
professional way. So I thinkthat contributes to the financial
(19:24):
success as well.
Yeah. As cheesy as it may comeoff teamwork, right?
Yeah, well, it is teamwork,and so I'm just proud of the finance
team.
Yeah. Well, that's fantastic.Well, Brad, thank you so much for
coming in and sharing some ofthese things with us. Obviously,
a massive budget, a massivefinancial picture like the one that
(19:44):
you are at the helm of. That'shorrible grammar. Sorry, that's not
something you cover in onepodcast or even a series of podcasts.
It's. But thank you for takingtime out of your busy schedule to
come tell us about some ofthese things and help us learn a
little bit more. If you foundsome of this information helpful
(20:06):
or new, enlightening, whathave you, make sure you give us a
like, subscribe and share itwith a friend. Thank you for listening
to this edition of the InsideScoop, a podcast produced by the
Cobb County School.
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