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    The Importance of Personnel Costs in Deficit Analysis

    We’re discussing how districts can cultivate staff who are happy and successful at supporting students.

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    Personnel is a sensitive subject. It is crucial to acknowledge upfront that any discussion about personnel has the potential to be a difficult conversation because when you hear finance, deficit, and personnel in the same sentence, it usually creates a sense of fear that layoffs could be coming.

     

    There’s a perception that when finance departments get involved with personnel, they view personnel as just an expense, as a dollar amount. When we talk about personnel, we’re talking about people. We’re discussing how districts can cultivate staff who are happy and successful at supporting students. People are an investment, not an expense. They are an important lever to improving education.

     

    Enrollment

     

    In any given school year, many districts with deficits will have to make some tough cuts. Declining enrollment is most frequently the driving force behind the circumstances that lead to cutting staff. In districts where enrollment has been steadily declining corrections need to be made. For example, when the Clean Air Act was passed, power plants began looking for greener sources of fuel, leading coal companies to shut down or relocate. This devastated rural communities that had been built around the coal industry. With fewer jobs, people begin moving away, enrollment declines, and any revenues that could have gone to education have now been depleted. As a result, the number of adults working at the school district must be adjusted to meet the needs and numbers of students enrolled at the district. These declines in enrollment have been ignored in the past and it often creates more pain in the district.

     

    Conversely, when enrollment goes up too rapidly in a short period of time, districts can find themselves underfunded because the budget hasn’t caught up to the larger population yet. This can create problems with things like class size, where there is now only 1 teacher for upwards of 30 students. Another common problem is inadequate facilities. Many large, urban districts typically have large old buildings that don’t meet the needs of schools today.

     

    It’s often too easy for school districts to have a short term mentality where, either because of financial capacity or being stuck in a “that’s just the way it’s always been done” mentality, the central office does not plan for long term expenses in a way that ties closely to enrollment. This affects every resource from textbooks to staffing.

     

    Administrative and Support Staff

     

    One thing the public often accuses school districts of is hiring too many administrative staff and then not allocating enough money to fully staff schools. There’s sometimes a mindset of cut money from the central office to put money back in the classroom.

    Obviously, this is not always the case. To avoid any misconceptions, schools should practice transparency. By effectively communicating how many cents on the dollar are going to the central office vs. how much is going to the schools, any doubts surrounding where funds are going is eliminated.

     

    One example is to publish a budget book and make it available online. This allows every parent and taxpayer in the community, as well as current district staff, to see the district’s budget plan and to allow for transparency.

     

    However, if there is a legitimate overstaffing problem in the central office, there needs to be an evaluation done by the superintendent.

     

    Realigning Rather Than Removing Staff

     

    The obvious desired outcome in any deficit situation is to realign the budget and avoid layoffs. Allovue aims to guide districts in doing exactly that. One client, Denver Public Schools, utilized their own method to avoid layoffs.

     

    While navigating a deficit analysis the district surveyed its schools to better understand what finance support needs each school had. They then constructed a system where financial support roles in the central office aligned with those needs. A principal could then purchase whatever level of services their school needed from the central office. For example, principals sought to take nursing out of the hands of the central office because they could save money by contracting individual nurses through Denver Health. Initially only a few schools were granted permission but it has expanded over the last few years. Now principals in the district can choose their own nursing personnel and staff their school with as many as they feel is necessary.

     

    Regardless of what financial system or budget is put into place, the goal remains the same. Hire a quality staff, avoid deficits and layoffs, and run an overall effective district. While it is not uncommon for there to be a disconnect between central office and the schools or for enrollment numbers to change, it does not have to spell layoffs for the personnel.

     

    By exhibiting transparency and asking the question, “what are the needs of my school and how can I build a service oriented culture to support those schools,” the disconnect between central office and schools can be repaired and jobs can be saved. 
    Allovue
    ABOUT THE AUTHOR

    Allovue works with districts and state departments of education across the country to allocate, budget, and manage spending. Allovue's software suite integrates seamlessly with existing accounting systems to make sure every dollar works for every student. Allovue also provides additional services such as chart of accounts and funding formula revisions.

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