Chapter 2: Financial Reporting Within a System of Education Information — Useful Applications of Education Information

As measured in total funding or in number of people employed, education is the largest policy arena for state and local governments, with growing interest at the federal level. Therefore, the potential value of data on education is enormous.

The demand of policymakers at the local, state, and federal levels for high-quality data and outcome measures with which to evaluate fiscal and programmatic policy changes drives the need for data systems to become increasingly comprehensive. For example, the financial reports of state and local education agencies are used to compare actual financial results with legally adopted budgets; to assess financial conditions and results of operations; to assist in determining compliance with finance-related laws, rules, and regulations; to assist in evaluating the efficiency and effectiveness of processes; and in planning.

The Governmental Accounting Standards Board (GASB) defines financial reporting as the means of communicating financial information to users (GASB Statement 1, Paragraph 62). For this communication to be effective, financial information must have the following basic characteristics:

• Understandability. Information should be clear, but not oversimplified. Explanations and interpretations should be included where necessary.
• Reliability. Information should be verifiable and free from bias. It should be comprehensive; thus, nothing should be omitted that is necessary to accurately represent events and conditions. However, nothing should be included that might cause the information to be misleading.
• Relevance. There must be a close, logical relationship between the information provided and the purpose for which it is needed.
• Timeliness. Information should be available soon enough after the reported events to affect decisionmaking.
• Consistency. Once a principle or a method is adopted, it should be used for all similar events and conditions. If a change is made, the nature of and reason for the change, as well as its effects, should be explained.
• Comparability. Procedures and practices should remain the same across time and reports. If differences occur, they should be due to substantive differences in the events and conditions reported rather than because of arbitrary implementation (GASB Statement 1, Paragraphs 63 through 68).

These standards imply wide uses of data and require carefully designed policies to help guide decisions about control over the use of an information system. Some policies are codified in laws or regulations; others are official statements, executive orders, or agency directives. Government policies on information systems are guided by two complementary, but sometimes conflicting, purposes: stewardship and usefulness. Stewardship encourages policies that regard government information as a public good, such as personal privacy and records management, whereas usefulness promotes policies that encourage the dissemination of information to improve the quality and lower the cost of government services, such as public access and interagency information sharing. Stewardship policies address confidentiality, information security, data quality and integrity, and long-term preservation of information. Usefulness policies address interagency and intergovernmental sharing, public access, public-private information partnerships, and reuse of information.

Furthermore, technological advancements such as the Internet have made policy issues concerning data appropriateness, privacy, and ethics as they relate to data availability (e.g., of individual student and staff records) more apparent, and it is now more difficult for education information systems to provide high-quality data that are useful to both the general public and policymakers but that also meet privacy and security concerns.

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