1. How much money are we talking about?
FALL (SEPTEMBER - NOVEMBER)
Didn’t we just pass our budget for this year? Yep, but it’s already time to start planning for next school year. I bet you are starting to appreciate your local district CFO more already!
Enrollment projections are a critical part of the budgeting process. Districts use a variety of data to inform their enrollment forecasts, including prior-years’ trends, Census data, and other local datasets that can help predict an increase or decline in enrollment. Enrollment serves as the basis for state revenue. Most states fund school districts based on their student enrollment, and increasingly states are funding districts not only based on how many students they have, but also based on student characteristics, such as English Language Learners, Special Education, or qualifying for Free and Reduced-Price Lunch. These variable funding weights are critical for ensuring resource equity, but they can make forecasting tricky if the district has a rapidly shifting population.
Most districts also receive substantial resources from local taxes, primarily from property taxes. Budget and finance staff also begin to review anticipated revenue from the local tax base, reviewing changes in assessed property value and the likely tax rate within their district. The best district budget and finance staff also need to be experts on local housing markets!
Enrollment is a key factor for how school districts allocate resources within the district. Many districts have target or required class sizes or student to faculty ratios. Changes in enrollment can change both the overall number of staff and their distribution within the district. Non-position expenses are also frequently provided for based on student enrollment and characteristic. Whether or not your district uses a method like weighted-student funding, student enrollment impacts how many resources are available to the district and what schools they are used at.
With students now attending schools, budget and finance staff review actual student enrollment in September and October to determine if any adjustments will be required because of differences with the prior year enrollment projections. And now armed with new current year enrollment data, the projection process starts again so that they can start making projections to estimate the needs for next school year’s budget.
2. What are we going to do with all that money?
WINTER (DECEMBER - FEBRUARY)
School district budgets are often more than half of all government spending in your community. Their budgets can seem enormous, with the largest districts in the country having budgets in the hundreds of millions or even billions of dollars. These budgets are easier to understand if we break them down into four main categories:
Debt and Obligations
Right off the top, districts have to deduct their costs such as retiree benefits or debt service. That new school the district built four years ago? Chances are a good portion of the school district budget is paying for a debt it used to fund its construction. There are also certain legal obligations the federal government places on school districts to serve residents with certain disabilities even before kindergarten, and up until they are age 22. In some states, school districts also have to supply transportation, textbook funds, or other services to private schools. These dollars are all grouped into this category because while critical, they are not used to support educating currently enrolled students directly.
Typically, 5-7% of a healthy district budget goes to central administration, which includes the Superintendent, CFO, and other personnel who are essential for uniting schools around a common mission and vision for the district, ensuring that school operations are running smoothly, and keeping the district in compliance with state and federal regulations.
Central Services to Schools
Personnel or services that are budgeted at the central office but provided for the direct benefit of students or schools fall into this category. These expenses may include school resource officers, counselors, psychologists, nurses, and other staff that work with multiple school sites. It’s easier to budget these positions centrally if their time is split across multiple schools. This category may also include expenses that are more efficient to negotiate and manage centrally, such as transportation, or building utilities and maintenance.
The ability to track the pace of spending in their accounts dramatically reduces the risk of over or underspending. Equipping budget owners with the autonomy to identify and adjust expenditure concerns early and often can have a positive effect on the health of the budget overall, and the outcomes for students.
Allocations to Schools
This is the category of spending that people are most familiar with because they are often the most visible resources. A combination of federal grants and General Fund dollars will be allocated directly to schools based on the district’s budget method, which may take into account enrollment-to-staff ratios, weighted-student funding, or a combination of allocation strategies designed to ensure that students have the right resources. These dollars typically include the salaries of the school principal, teachers, and other site-based personnel, as well as discretionary spending on things like technology, supplies, field trips, and other resources. Within school-based spending, staff typically account for 85-90% of all spending.
3. Let's create a spending plan.
SPRING (MARCH - MAY)
At this point in the process, everyone in the district who personally manages a budget, including principals, will have received their allocation for the following year. Now it’s time to create a detailed plan for staffing and discretionary spending to make sure that every dollar is spent to best support students. This is the season when principals may meet with their staff and community to discuss budgetary priorities for the upcoming year. If improving literacy rates by 3rd grade is a big goal, for example, principals may focus on freeing up resources for new literacy interventions. If the school wants to expand recess time or after-school programming, they may have to shuffle resources around to meet new needs.
Resources include people, money, and time. Since people make up the majority of the budget, schools can often free-up resources for new programs or class offerings by making creative and strategic scheduling changes. Our partners at Abl Schools are working with schools to create master schedules that will accommodate the evolving needs of school operations. Volunteers, local grants, community partners, and other fundraisers may help fill the resource gaps when there isn’t room in the budget. The more schools lead these conversations openly with parents and communities, the more creative solutions you will from them. Hopefully, parents will also come to appreciate the challenge of school budgeting.
As school budgets are solidified with their local communities, the district will share the entire budget and submit it to the board for approval.
4. I can't believe a year went by so fast!
SUMMER (JUNE - AUGUST)
Time flies when you’re having fun with budgeting! Summer may seem like a quiet time in the education world, but it’s actually one of the busiest seasons for the finance and human capital teams.
Close the books
Once the fiscal year ends (June 30 for most districts), it’s time to close out the accounting for this year and officially transition over to the new school year on July 1. This process usually includes reconciling any outstanding invoices, making sure that payroll is set to transition to the new budget, and comparing actual spending for the year against the budget. There are often numerous state and federal reports to complete at this time as well.
Adjust the budget
You thought you were done? Unfortunately, state and local revenue is often finalized in late-May or early-June. In some states, an August state budget is not unheard of. As a result, further adjustments to the budget may need to be made once revenue numbers are finalized. If the district’s projections are accurate then these adjustments should be minor, but they can still be disruptive to district planning.
Open the books
Welcome to a brand new fiscal year! Hopefully, the district budget has been board-approved well in advance of July 1 (or whenever the start of the fiscal year occurs) and spending plans are in place. School leaders may use the summer time to order supplies and materials for the upcoming year so teachers and students are ready for the first day of the school year in August or September.
Hire for vacancies
All those newly created positions from the budget process and/or newly vacated positions at the end of the year need filling. Ideally, hiring begins before the summer, but union rules and other local factors means summer is a busy time for posting new positions, recruiting, and ultimately filling those roles.
Great school budgeting doesn’t happen once a year. Districts and principals should evaluate their budgets regularly throughout the year to ensure they are making strong data-driven decisions to benefit their students. Budgets shouldn’t change too often, but there are times when making strategic reallocation is the best thing for students. It’s important to have established quarterly checkpoints to look at things like shifting resources and budget reorganizations to make sure you’re helping students to get the most from every dollar.
These are just some of the considerations that occur when school budgets are made. We encourage you to attend your local school district’s budget meetings so you can see for yourself how budgets are made in your area. If you have any questions about the methods discussed or want to improve the budget process in your district, send us an email at firstname.lastname@example.org.