Budgeting:

1
Chapter 11

• Budgeting
• Applying Policy Values

2
A Budget Directs Expenses

• Savings

• Expenses
• Fixed
• Variable

3
A Budget Directs Expenses, cont.

• Savings
• Expenses

• Those budget parts that we decide for ourselves
  -- how much we spend each month on a mortgage,
  car, or dining out --- represent what is
  important to us.

4
A Budget is a Snapshot

• 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.

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
School Budgets Reflect OurCommunitys Values

• Our education budgets involve a public process
  that reflects the economics, politics, the
  moral values we hold as a community and society

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

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• 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.

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Comparison of 2 District Budgets
10
Comparison of 2 District Budgets
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Similarities Differences

• 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

12
Issues with Facilities Maintenance

• 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

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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
State Budget Categories Besides Education

• 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

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State Budget Spending onK-16 Public Education

• 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

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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
Three Main Sources of Revenue for Public Education

• Local
• State
• Federal

• Notice that the federal percentage appears
  relatively flat since 1970

23
Government Budgets Are ARelatively New Phenomenon

• 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
  countrys finances through a popularly elected
  legislative body

24
Process for Developing Budgets

• Today, virtually all democratic governments use a
  similar method for the budget process developed
  by the British
• The executive branch develops the budget
• The legislative branch receives the budget,
  amends and approves it, levies taxes to support
  it
• The executive branch then administers the budget

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

26
U.S. National Budget Process

• In 1921, Congress passed the first law requiring
  a national budget
• President Harding signed the legislation the
  following year

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Local School Budgets

• 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

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

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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 districts 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 School Needs

• Identifying the needs in the schools and the
  school district involves data analysis
• In todays world it is impossible to examine
  programs without using student achievement data
  in the decision-making process

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 districts 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
Program Building Follows Consensus

• Build the program that meets the schools
  communitys 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

36
Costing-Out the Program

• 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

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

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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
Closing the Deal

• Once a critical mass of the community has
  established support for the school budget, the
  school board and the superintendents role
  changes from selling to closing the deal

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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

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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 districts needs

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Appropriating School Funds, cont.

• 3. Appropriate funds by category on a
• monthly basis
• Would require the superintendent
• or designee attend the governing
• bodys 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 districts needs

43
Know Your Funding Status!

• It is important that the superintendent be aware
  of the funding status

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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
Budget Planning Does Not Anticipate Every Need

• Superintendents and school boards do not want to
  go back to their funding bodies and request more
  money for these unexpected occurrences

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

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Return on Investment

• 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

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
Improving Budget Accuracy Effectiveness Over
Time

• Each years budget should build on the previous
  years 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

51
Evaluating the Spending Program

• An accountant or business manager can evaluate
  the spending process
• Instructional leadership is required in
  evaluating the spending program

52
Evaluating Student Progress AYP

• In light of NCLB requirements that all subgroups
  make adequate yearly progress (AYP), it is
  increasingly necessary for instructional leaders
  to make certain that all children benefit from
  the program, including those
•        receiving special education services
•        receiving free or reduced lunch
•        English language learners
•        of a minority background

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Evaluating Subgroup Achievement

• Disaggregate student achievement data to
  determine appropriately which students are not
  progressing satisfactorily
• The planning process involves these students
  achievement (or lack thereof) and determining
  programs that may improve achievement
• Enact plans, solicit funds, spend monies, and
  wait for the accountability test results to
  return. Review results revise programs

54
Types of Budgets

•  Percentage Add On
• Zero-Base Budgeting
• Planning/Programming/Budgeting/Evaluation (PPBES)

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Percentage Add On

• Adding a percentage to the previous years
  funding level
• If the governing body granted a 5 increase over
  last years funding, the Superintendent would
  usually involve staff to make recommendations
  about what programs should receive additional
  funding

• Most common method
• Advantage simplicity
• Disadvantage it may be removed from the school
  districts real needs

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Zero-Base Budgeting

• Advantage - staff involvement, program
  evaluation, public confidence in selecting funded
  programs Disadvantage - time and complexity in
  administering this budget

• Requires the budget start from zero each year
  unlike a percentage add on
• Everything is reevaluated each year
• Each budget inclusion must be justified

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Planning/Programming/Budgeting/Evaluation
(PPBES)

• Advantage - more flexible, realizes goals,
  objectives, modifications are not met in a
  single fiscal year
• Disadvantage - few school district and governing
  body budgets are flexible enough

• Designed to be a more flexible fluid process
  that extended budget cycle to 5 years
• Planning and establishing goals
• Determining the cost and alternative plans costs
  for achieving the goal
• Evaluating the results of the plans
• Modifying and improving the goals
• Establishing and improving alternative plans to
  achieve the modified and improved goals

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Site-Based Budgeting

• Advantages Builds community support in meeting
  student needs
• Disadvantage More work for principals and staff

• Develops a district budget at each building level
  with staff and community input
• Allows the school site decision-making latitude
  for aligning goals with resources

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• A good educational leader promotes the success of
  all students by understanding, responding to, and
  influencing the larger political, social,
  economic, legal, and cultural context
• The budgeting process, as described in this
  chapter, lets educational leaders demonstrate
  that they understand, respond to, and influence
  the larger contexts

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Budgeting Professionalism

• As education is increasingly politically-driven
  towards a business management model, good
  budgeting knowledge especially in the area of
  program evaluation can establish a
  professionalism about our practices and encourage
  community support for education funding

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• The process of developing,
• amending, approving,
• and providing tax moneys
• to support and administer
• a budget is a uniquely
• democratic process and
• the means by which
• people govern themselves