Trust, but Verify: What to Ask Your Finance Team

There is no textbook on school finance during a pandemic— it’s important now more than ever for Superintendents to be curious about school finance. As a Superintendent, knowing what to ask your finance team and engaging in the responses will allow you to leverage the strategic aspect of school finance to mitigate the impact of these cuts on your district. Ask the 10 questions below to get started!

1. What is my comfort level with financial data as a Superintendent?

Before you get to your finance team, assess your own comfort level with financial data. If you don’t have the ability to decode information to make it meaningful to you as a leader, this presents an initial challenge. While it is not your job to micromanage accounting and finance, there are high-level pieces of information that you should be comfortable with in order to communicate transparently with district stakeholders. 

Check out the following resources to increase your financial literacy:

2. How are dollars allocated to schools and what percentage of budget dollars are allocated to schools?

Resource allocation is the upfront work that covers how dollars are actually allocated to schools in the district. Does your district steer dollars through FTE ratios (for example, 1 assistant principal for every 300 kids)?  Does your district use a weighted-student funding model? You’ll need a strong understanding of the resource allocation model for your district to best communicate about your budget and answer the questions that stakeholders will be asking. 

3. Are finance and HR data consistent?

The majority of district costs (an estimated 88%) are driven by personnel - it’s the most consequential portion of spending in your district. Finance and HR data should be aligned and mapped to each other in a way that is easy to understand and analyze. 

4. Are budgets aligned to strategic priorities and indicators of progress?

At its very core, a budget is a statement of district priorities because it defines where the district directs its resources. As a district leader, you’ll want to understand how budgeting decisions map to strategic priorities and indicators of progress. This will help you decode why schools and departments are dedicating dollars to particular areas. 

5. Are there trends in over- or under-spending in departments or schools?

Budgets can be useful tools to measure actual progress by analyzing over- and under-spending in departments or at schools. Trends in under-spending are especially useful because they point to areas where you may have flexibility to reallocate dollars for unexpected purchases (think Zoom licenses and hotspots). Know which accounts have unspent dollars toward the end of the fiscal year, as this knowledge can be a really powerful tool for district leaders. 

6. Does spending, as with budgeting, map to strategies and priorities?

It’s one thing to change your budget in response to revenue reductions, but a change in spending must follow to avoid a deficit. Transparency here is key so that your community can see how (and why) dollars are being spent. Be sure to ask your finance team, “I see we updated our budget, but how have we updated our spending to map to this new budget and when is spending happening? How do the changes address student need, equity, and transparency?” 

7. Is spending strategic throughout the year or clustered in May/June?

When districts are strategic with budgeting, accounts should approach zero toward the end of the fiscal year if spent according to plan. However, spending spikes in May or June may indicate that 1) those dollars were not needed throughout the year to support students and/or 2) spending is happening now to avoid losing the money next year. 

8. How does school-level spending compare across schools in the district?

Follow your understanding of resource allocations to schools by reviewing how dollars are actually being spent. A major driver of differences in budgeted and actual dollars spent is teacher salaries since most districts typically budget on average salaries. (Keep in mind: in many cases, more experienced and more highly paid teachers land at higher performing schools with fewer needs. What does this mean for the students who need the most support?) 

9. How are we maintaining an equity focus — are resources equitably distributed to schools based on student need?

Although there will be variation from state to state, districts are facing revenue reductions across the board. When cuts need to be made, it’s important to remember that no two children require the same resources to educate - so an equal cut is inherently an inequitable cut. Equal cuts disproportionately affect students who need more support to succeed. District leaders need to apply laser-like precision in making cuts to mitigate the impact of revenue reductions on children who, on average, require more support. (Curious about how school finance relates to equity? Read this post on the topic.) 

10. Is finance data transparent for families and the community? 

Financial transparency during resource-constrained times is key to building trust. Transparency and open discussions can help to keep stakeholders informed and engaged (read about how one Superintendent accomplished this at his district). Allovue’s How Are Public Schools Funded blog post and infographic are great resources to share with communities! By engaging with your community early and often, you can help guide them through any changes, while at the same time receiving constant feedback on exactly how any cuts affect your students and parents.

 


 

This article was based on an interview with Allovue and The Institute for Education Innovation (IEI). Thanks for having us on the Talk Supes and CEOs podcast! You can listen to the episode here

 

About the Author

Justin Dayhoff

Justin Dayhoff, Senior Account Advisor, has more than a decade of experience working directly in and with public schools. His focus is school finance, with particular emphasis on school, district and state school funding models that attend to advancing vertical fiscal equity for students.