K12 Fundamentals: Common School Budgeting Methods
As states across the country brace for K12 budget cuts, appropriately managing finance and resources in education is sure to become a top-of-mind concern for lawmakers and private citizens alike. Here at Edstruments, we’re creating the best school finance software for transparent, equitable, and efficient school budgeting, no matter how schools manage their money.
“Wait,” you may be thinking. “There are different ways for schools to manage budgets?”
Indeed, schools do manage their financial decision making in a variety of ways and today we’ll briefly overview six of the most common ones. Public school organizations nationwide want public school finance to promote student centered learning, and these are some of the ways they budget to make that possible in their own, specific contexts. So, without further delay, let’s dive right in!
With this approach, a district uses historical spending and revenue data to set its budget for the upcoming year. There are budgets for different categories (facilities, transportation, salaries and benefits, etc.), making it easy to see historical spending records by category. It does not, however, make it easy to see why the spending occurred or whether it had its intended impact.
Districts simply add a percentage to the previous year’s funding level to set a new budget. A benefit of this method is that it’s relatively simple. A drawback, however, is that it doesn’t precisely account for the various needs of different schools, something especially important in large districts that encompass both wealthy high-poverty neighborhoods.
New Budget, who this? With zero-based budgeting, administrators annually create a budget from scratch: no referring to the previous years, meaning every item has to be justified all over again. While this guarantees ineffective programs don’t stick around and siphon scarce funds, it’s so time and effort consuming that schools rarely implement it fully.
Program and Planning
Organizations focus primarily on their programming, and place a secondary emphasis on objects. This method makes it easy to align the budget to specific goals since the most high-impact programs will naturally attract more funding. (It also lends itself to long-term strategic planning, since the long-term goals will continue to receive adequate funding.) However, big changes in strategic direction, which could be induced by unforeseen events (like, say, a large hurricane or a national pandemic), would be disruptive to budgets created in this manner.
This may also be referred to as decentralized budgeting. Funds go to individual school sites, and the principal manages them as they see fit. This allows those who have the best understanding of their school context to make funding decisions, and it also leads to more financial accountability and transparency at the school level. Unfortunately, many principals lack high quality tools and don’t receive adequate training in the best practices in school budgeting before taking the reins as administrators—a recipe for conflict, mismanagement, and fewer funds serving students.
This method makes students the main drivers of budget decisions. It also encompasses two main sub-methods that organizations utilize frequently.
Each school gets a certain amount of money based upon its enrollment. Each student elicits a certain amount from the district, so to get the full allocation, you would multiply the per-student amount by total enrollment. This method allows for relatively simple resource allocation decisions at the district level, but it doesn’t account for the differences in cost of educating students with additional needs (e.g., those in poverty, English learners, and those with disabilities).
In a weighted input, students with exceptionalities (who research suggests will have higher needs) elicit more funding based on a pre-determined weight formula. So, students in poverty may elicit 1.1x as much as a typical student would, and students with disabilities may elicit 1.2x what a typical student would. Districts have their own way of calculating weight for students with multiple exceptionalities, but the general idea is the same: students with higher needs will elicit more funds to meet those needs. This method is great for transparency in site allocations, but its emphasis on inputs doesn’t tie funding to outcomes—something critics find irksome as it can shield schools from accountability measures.
Districts often mix-and-match different methods to meet their unique needs (and sometimes, they do things because that’s how it’s been done for a long time). At Edstruments, we’ve designed our platform to ensure that school systems use best-practices in school budgeting with intuitive, timely resource allocation tools. Student learning in the wake of the pandemic represents uncharted territory for our education system, and our school budgeting software is here to ensure that leaders can navigate education budget cuts effectively and equitably. Want to learn more? Connect with us on Twitter or LinkedIn to remain up-to-date on how Edstruments is positively transforming K12 finance!
Edstruments exists to equip education leaders with the knowledge and tools to most effectively and equitably serve their students. To learn more about how we can help your school administrators make better financial decisions, email us at firstname.lastname@example.org or fill out the contact form on our main website.