• Farhan Khera

Bridging the Divide Between the CFO and the School Leader

Ever heard the story of the four blind people who encounter an elephant? As it’s popularly told, each person touches a different part of the elephant (leg, tusk, trunk, tail) and comes up with a different conclusion of what this creature is they’ve found, arguing with the others who disagree. The story is one meant to illustrate how multiple experiences can be simultaneously true, but that any one of them in isolation likely fails to capture the full picture.


In this article, we explore another such "elephant” – a school district’s budget management process. The people interacting with it include central office finance personnel and school leaders. Each of their experiences of the same process likely differs because of the vastly different contexts they operate in. These disconnects can result in the acquisition of solutions that don’t fit the needs of all groups or a communication breakdown between two parties that results in an inefficient process.


As we’ve spoken with CFOs from across the country, some say that their processes are sufficient and some think that there is room for significant improvement (going so far as paying external consultants to spend multiple years developing custom internal systems for budget management). Outside of the finance team, budget owners (like school leaders and department heads) often express confusion and frustration with the timing of and format in which they receive budget information. Many rely on complicated, custom-built spreadsheets to monitor their spending. Ultimately, this misalignment results in a compliance-based approach to resource management, rather than giving decision-makers the space to make strategic decisions based on what would impact students the most. Below, we outline four common disconnects that we see between central finance teams and budget owners.



Disconnect #1: Access to an ERP/accounting platform is enough transparency for school leaders


Many CFOs have taken meaningful steps to provide school leaders with access to their central ERP/accounting platform. Given the comfort that finance teams have with this software, it’s easy to see why they may believe that school leaders can easily use these tools to monitor their finances. What we hear from school leaders is that these platforms are not user-friendly for non-finance personnel, and they’re so difficult to navigate that many do not open the ERP system at all and rely on other methods to get their budget information (including phone calls, emails, and in-person meetings that cause extra work for everyone). Although the accounting system can be a thorough platform, the high level of complexity often makes it inaccessible to school level personnel who are closest to students. Driving stick-shift may be ideal for a professional racer who needs to control every measure of the car, however traffic runs more smoothly if everyday drivers can have an automatic transmission.



Disconnect #2: School leaders have access to real-time data


In line with the above disconnect, the most common source of real-time financial information coming to school leaders is in the form of an ERP system. In the case that school leaders don’t feel comfortable navigating their ERP, they’re waiting on manual communication from central office to get updated budget data. We hear from both central offices and school leaders that the data lag is often 4-8 weeks between when spending occurs and when budget owners receive updated information.


School leaders need this information in a timely fashion because oftentimes by the time they get the budget information, the budget picture has changed entirely. This impacts their spending habits making them more conservative when their students need supplies or activities. The lack of timely budget data also means any poor spending trends take longer to resolve for both central office and schools.



Disconnect #3: Meetings with budget analysts are efficient and effective for budget monitoring


Often, school districts rely on monthly meetings between school leaders and finance staff to update them on their budget vs. actuals status. Central office finance staff say that school leaders are disengaged in these meetings, making it difficult to involve them in budget planning. On the other side of the table, principals feel like the information is not presented to them in a way that makes their choices clear. This mix of experiences creates an overall negative perception of these meetings. Although these meetings are a good work around when ERP platforms aren’t the most user-friendly, it is really just putting a band-aid on the real issue at hand: lack of user-friendly tools that allow school leaders to meaningfully interact with their financial data. These meetings ultimately perpetuate a more compliance-focused view of finance rather than a strategic view.


Beyond delayed information, this medium of budget communication means that budget transfers and adjustments are done less efficiently and dynamically. From an efficiency perspective, if districts adopted the use of the right tools for school leaders to access school finance, the time of budget analysts could be saved and devoted to more strategic decision-making as far as higher-level resource allocation.



Disconnect #4: Principals don’t want more financial responsibility


The final disconnect worth noting here is one surrounding school level decision making autonomy. District central office staff often note that because of regulation and the nature of budget composition in school districts, giving school leaders a greater hand in their finances would over-complicate things for principals and central office alike. However, principals often express interest in taking on more financial responsibility for their schools. After all, principals are the administrators who are closest to their students and most in-tune with their students’ unique needs.


Research has shown that principals that hold more autonomy have lower turnover rates – and it is well documented that principal stability has a positive impact on student outcomes. In addition, about 40-50% of principals have reported that they are not able to “organize school resources in ways that advance school goals”. This issue makes these principals more likely to leave than their counterparts thus robbing students of highly effective and experienced principals. The solution to this issue is not to find principals who can deal with the archaic systems that districts are forced to use; the solution is to adopt tools and processes that allow principals to more easily engage with their finances. These systems should also allow central offices to confidently push financial responsibility downstream to school leaders without fear that compliance will be violated. Furthermore, districts should invest in training their school leaders on everything from staffing composition to restricted fund management to empower them as complete leaders in their buildings.


The Solution


The major points made above about disconnects in the school budget process show the need for better systems that enable budget owners to make more strategic decisions with their finances without sacrificing compliance. This is particularly true at a time when funds are tighter than ever and the future more uncertain than times past.


Edstruments exists to resolve the disconnects described in this article and enable this strategic decision-making. Our user-friendly, intuitive platform allows central office staff to organize and communicate financial data to school leaders in real-time while ensuring compliance and promoting ownership. Edstruments builds on top of existing ERP systems to make data easier to navigate, drive meaningful action for budget owners, and save central offices hours of time. It allows all parties to collaboratively see the complete elephant.

©2020 by Edstruments, Inc.