When it comes to budgeting in school districts, a common misconception is that budget planning is the only major component of this process. Once planning is done, execution on this budget is seen as a simple process that requires little emphasis in the form of tools and processes.
Meanwhile we see significant inefficiencies in public education nationally when districts don’t take a strategic view of their spending. So where does this waste come from? Planning processes are generally conducted over a 4-6 month period by school districts and take careful account of academic priorities and needs of specific student groups in allocating funds. This plan is approved by a board and then goes into an execution phase.
How is it that with such meticulous planning, there is still so much waste in K12 finance? The basis of any planning process is making assumptions about the future, but unfortunately we can never truly know the future. When it inevitably shifts, school systems need measures in place to ensure that they can adapt to a new environment as information is learned. A perfect example is the impact of COVID-19. It’s unlikely that there were any budget planning processes that considered the possibility of a complete shutdown and alteration of the educational setting halfway through the year.
This need for adaptability in the face of uncertainty leads us to an equally important yet underemphasized part of K12 finance: budget management. As the assumptions in a plan change and reality reflects something different, a strong budget management process allows districts to stay nimble and reallocate funds to ensure that academic and strategic goals are achieved. Below are some fundamental components of a strong budget management process.
The first and most important component of a strong budget management process is having transparency across the organization. In order to stay flexible in an efficient manner, budget owners need to have real-time visibility into their finances, particularly those items which they have direct influence over. This visibility allows them to identify what budgeted amounts are still necessary and which can be reallocated to more pressing areas.
For example, in the midst of mass shutdowns a district’s travel expense budget may be irrelevant and can now be reallocated to device purchases that are necessary for continuity of learning plans. To make that shift, one needs to be able to clearly see all aspects of their financial position to pivot effectively and efficiently. The greater the transparency exists in an organization, the higher the chance that allocation inefficiencies can be spotted and resolved.
Aside from the direct financial impact, transparency helps build trust and a positive work environment that has an immense impact on effectiveness of district initiatives.
Decentralized Decision-Making: Giving More Autonomy to Leaders Closest to Students
Alongside the transparency that allows for making informed choices, a decentralized decision-making structure should be in place to allow customized pivots to occur across a school district. A district might designate an amount for equity initiatives; however, it may be up to the specific schools to determine how that manifests in their building. One could argue that centralization is a faster decision-making process, however applying a uniform solution to all schools fails to consider the unique needs of students at different campuses. A school that has a substantially higher percentage of English Language Learners needs different interventions than a school that has none. A balance should be struck between decision-making speed and effectiveness of spending. We recommend that decisions are decentralized as much as possible while allowing for standardization, accountability, and cost efficiency to be retained through centralization of specific aspects.
This greater autonomy has tangential effects on student outcomes by increasing the longevity of various budget owners such as school leaders. Longevity translates to greater strategic decision-making ability over time.
To have a decentralized structure that acts on transparent data, districts need to have tools that are right for the job. Few tools exist on the marketplace for real-time, visual, and actionable budget management for K12 leaders, which is why we built Edstruments.
An optimized tool for budget management streamlines transparency of data, makes it easy for downstream budget owners to engage with finances, and reflects K12 compliance requirements to ensure that decision-making can focus on strategic and academic goals. Edstruments is designed specifically for the nuances and challenges of K12, with the mission of improving financial decision-making at all levels.
Training School Leaders around Strategic Decision-Making
The final major ingredient for a strong budget management process is effective training for budget owners in making strong financial decisions. Often, finance training for budget owners like school principals is limited to compliance requirements and basic system navigation instead of how to make strategic allocation decisions. With the above pre-requisites in place, a principal finance training can shift to strategic decision-making. This means being able to weigh trade-offs and invest in advancing school goals for their students. It empowers leaders to use stronger financial judgement in the face of uncertainty as we see during the COVID-19 era.
This training is particularly important as we are starting to get a clearer picture of school by school spending data across the country thanks to ESSA. The people best positioned to use this data to mold learning experiences for their students are school leaders, but they need to know how to do so within the constraints of available resources.
The importance of proper budget management cannot be understated. In order to maximize the impact we can have on the education of our students, we need to ensure we have mechanisms in place to make the best financial allocations for their success. Incorporating these principles can help districts move closer to a comprehensive approach to budgeting that allows them to plan and manage as effectively and efficiently as possible.