Chapter 11

1. Chapter 11 Budgeting: Applying Policy Values

2. Savings Expenses Fixed: Variable A Budget Directs Expenses

3. Savings Expenses Those budget parts that we decidefor ourselves -- how much we spend each month on a mortgage, car, or dining out --- represent what is important to us. A Budget Directs Expenses, cont.

4. A budget – like cancelled checks -- is a “snapshot” of what we spend and where we spend it. The difference between educational & personal budgets is that one is public information and one is private. A Budget is a “Snapshot”

5. Budgets Are Controversial • “The management of resources is one of the most important and one of the most controversial areas of educational administration.” • The public varies greatly in how they believe their tax monies should be spent

6. Our education budgets involve a public process that reflects the economics, politics, & the moral values we hold as a community and society School Budgets Reflect OurCommunity’s Values

7. Budgets Reveal Our Priorities • Examining the particulars of how public monies are budgeted shows the priorities we as a society have for education and other public services • This can be seen at the federal, state, local, and building levels

8. Roe defined education budgets as, “The translation of educational needs into a financial plan which is interpreted to the public in such a way that when formally adopted, it expresses the kind of educational program the community is willing to support, financially and morally, for a one-year period.”

9. Comparison of 2 District Budgets

10. Comparison of 2 District Budgets

11. Same number of pupils Same total budget Same per pupil basis All schools built at the same time Two budget categories are the same (Instruction at 75%, Debt Service at 3%) School District A has 17 schools; School District B has 22 schools 5 additional schools means additional administration & transportation costs District A spends 12% of its budget on Operations and Maintenance while District B spends only 6%. District B may not be maintaining its buildings as well as District A Similarities & Differences

12. Putting off roof repair costs exponentially more next year than it does this year In the meantime, the public makes a determination about the quality of schools by how they are maintained Deferring maintenance costs increased expenses later and lost community relations now Issues with Facilities Maintenance

13. Selected States with School Budget Categories

14. Selected States with School% of Total Spending

15. The per-pupil spending ranges from a low of $5,278 in Utah to a high of $11, 510 in the District of Columbia The average per pupil spending in the United States is $8,032 The variance alone between the high and low state is $6,232, or more than double the per-pupil spending in Utah

16. Spending Reflects Community Values • The variance in state percentage spending on Instruction ranges from a low of 36% in the District of Columbia to a high of 54% in Arkansas & Utah • Spending on Administration varies from a low of 5% to a high of 8% • Spending on Operations and Maintenance ranges from a low of 7% to a high of 11%

17. Public Education (K-12) Higher Education Public Assistance Medicaid Corrections Transportation “All Other” Percentage range in state budgets for Public Education is from a low in Connecticut of 13.2% to a high of 35.3% in Wyoming State Budget Categories Besides Education

18. New England – 20.73% Mid Atlantic – 20.58% Great Lakes – 22.46% Plains – 20.97% Southeast – 20.93% Southwest – 22.98% Rocky Mountains – 26.16% Far West – 21.38% State Budget % Spending onK-16 Public Education

19. Budget Priorities • Just as states have priorities with and within their budgets, the federal government has priorities with its budget • With limited resources, decisions must be made as to where those resources should be placed

20. Federal Budget Spending, 2003 Totals $2157 billion 100%

21. Federal Budget Spending, 2003 Totals $2157 billion 100%

22. Local State Federal Notice that the federal percentage appears relatively flat since 1970 Three Main Sources of Revenue for Public Education

23. In 1314, the British Parliament insisted that the King spend tax revenue for the purpose for which the taxes had been levied In 1742, the authority to levy taxes was taken from the King and his Ministers and placed with the Parliament The Cabinet held the responsibility for preparing the budget and presenting it to the House of Commons By law, the English people controlled the country’s finances through a popularly elected legislative body Government Budgets Are ARelatively New Phenomenon

24. Process for Developing Budgets • Today, virtually all democratic governments use a similar method for the budget process developed by the British: • The executive branchdevelops the budget • The legislative branchreceives the budget, amends and approves it, & levies taxes to support it • The executive branch then administers the budget

25. A government budget is ultimately a process by which people govern themselves.

26. In 1921, Congress passed the first law requiring a national budget President Harding signed the legislation the following year U.S. National Budget Process

27. Likewise, local school boards moved slowly to adopt a formal budgeting process Accurate historical records of school budgeting are not available Today, every school district employs some form of budgeting process with varying levels of effectiveness and efficiency Local School Budgets

28. Revenue Sources for Public Elementary & Secondary Schools – 1970-71; 1999-2000

29. The Budget Process Evaluating Process Spending Funds Budget Planning Seeking Funds Evaluating Program

30. Budget Plan, Defined A budget is a comprehensive financial plan that involves 4 distinct essential elements: (1)Planning for the needs of the school district (2)Seeking adequate funding for the program (3)Spending the received funds (4)Evaluating the results of the process and program

31. Planning Budgets With the Community in Mind • This is a vital stage of the budgeting process • It involves a 4-step process of • Identifying school district’s needs • Establishing goals and organizing objectives to obtain those goals • Building a program to meet the objectives • Costing-out the program/s to develop the budget

32. Identifying the needs in the schools and the school district involves data analysis In today’s world it is impossible to examine programs without using student achievement data in the decision-making process Identifying School Needs

33. School Leaders Bring Data to Community • Good principals and superintendents obtain data & have a constituents involved in analyzing & interpreting what the data mean • Parents, business & community leaders, teachers, administrators, clergy, students and other vested groups meet to determine needs • They seek patterns and meaning to what the data indicate and achieve a consensus about the school or district’s pressing needs

34. School Leaders Bring Data to Community, cont. • Once the schools’ needs have been determined through this extensive and collaborative data analysis process, goals can be established and objectives can be organized • In this step, it is important to maintain the community involvement • People will not support what they do not understand

35. Build the program that meets the schools’ & community’s goals & objectives Develop programs “in house” by the school district staff or purchased by outside developers Maintain the community involvement in this stage Explore various programs and select the best fit Program Building Follows Consensus

36. Constituent groups involved at the beginning of the planning process should continue in the phase of costing-out the program Their continued support for financing the programs is essential Once these programs’ costing-out numbers are determined, the various program budgets are combined to form a total dollar value for the planned programs Costing-Out the Program

37. Seeking Adequate Funding • Funding sources vary district to state • The school board may seek budget approval from: • The municipal authority or the governing body • The community • The school board, itself, may set the tax rate (sometimes called a school tax) • Regardless of which funding source is determined, a majority of the public must support the budget if the budget is to be approved

38. Maintaining Community Support Assures Funding • When school officials & budget planning team members speak in local civic & religious gatherings, the public can see the community involvement in the budget process • Involving influential community members from the start benefits school finance – they already understand the educational needs, support its funding, & bring public credibility to the process & product

39. Once a critical mass of the community has established support for the school budget, the school board and the superintendent’s role changes from “selling” to “closing the deal” “Closing the Deal”

40. Appropriating School Funds States and localities have various methods for appropriating funding to local school boards. 1. “Lump sum” appropriation • While the school board budget may be divided into categories (instruction, administration, transportation, and the like), the funding is by the total amount and not by each of the categories • In this case the school board is usually free to transfer funds between categories to meet various needs as they may arise during the year

41. Appropriating School Funds, cont. 2. Appropriated by category • The governing body may either allow or not allow the school board to transfer funds from one category to another • This tends to be restrictive to meeting the school district’s needs

42. Appropriating School Funds, cont. 3. Appropriate funds by category on a monthly basis • Would require the superintendent or designee attend the governing body’s monthly meeting & request that funds already approved, be appropriated by category to the school board so the bills can be paid • Highly restrictive and inflexible in meeting the school district’s needs

43. Know Your Funding Status! • It is important that the superintendent be aware of the funding status

44. Spending the Received Funds • Once the new fiscal year begins, the new budget cycle starts • The purpose of administering the budget is to spend the funds wisely in accordance with the education plan • To have a surplus at the end of the year can make the school board and the superintendent appear less than trustworthy and competent in the budget process

45. Superintendents and school boards do not want to go back to their funding bodies and request more money for these unexpected occurrences Budget Planning Does Not Anticipate Every Need

46. Planning for the Unexpected • First, a “contingencies” line item can be inserted into the budget to allow for the unexpected situations • Unfortunately, the public can see “contingency” as a way of “padding” or “putting fat” into the budget • The public can also interpret “contingency” as the school board and superintendent have put insufficient thought into the overall school system operation

47. Planning for the Unexpected, cont. • Another way to handle unanticipated expenses is to “expand”another budget area • One old trick used frequently is to “overestimate” the fringe benefit factors for the employees’ wages • A 2% pad on a $10 million salary and fringe benefit factor budget allows for an additional $200,000 to be used at the discretion of the school district

48. With No Child Left Behind legislation, schools are more likely to evaluate their spending patterns to determine the value of spending In business circles, this is akin to Return on Investment Return on Investment

49. Evaluating the Spending Process • Superintendents provide the school board with periodic (monthly printouts) budget updates • budget line items in major categories • the amount of funds expended to date • the %age of funds expended to date • anticipated problems with over-financed or under-financed budget categories Keep the school board informed in case of need to shift funds from one category to another

50. Each year’s budget should build on the previous year’s data and allow for refinements in forecasting needs Superintendents’ relatively short job tenure means the new leader reassesses all the budget practices and implements a new budgeting system that disturbs the refinement process Improving Budget Accuracy & Effectiveness Over Time