In most districts, the budget process begins with a roll-forward of the current budget and is adjusted for any known changes (i.e., employee compensation, benefit and pension rates, planned contract increases). In short, the budget of tomorrow is a product of the budget of today. With traditional budgeting strategies, there is often less scrutiny during the budget process as the numbers are merely tweaked to meet the needs of the next fiscal year without a comprehensive review.
One of the increasingly adopted methods is that of “zero-based budgeting” (ZBB). The premise of ZBB is that each individual budget in the district is built from scratch; forcing decision leaders and budget owners to justify their existing and new spending according to district criteria. This budgeting strategy allows department heads to identify alternative ways to utilize resources and is often used as an opportunity to reflect on district goals, programs, and needs that require improvement or support.
With this method, every expense is justified and every function within an organization is analyzed for its needs and costs. It can help districts provide context and detail to their expenditures, and lead to significant improvement in both spending and student achievement. However, this method requires a considerable amount of staff time and planning for development, and can be tedious and time-consuming for large districts with thousands of budget items.
Pros of ZBB
- Greatly reduces overspending because considerable thought is put into each request
- Site-level participation can be increased to include additional stakeholders
- Budget justification increases transparency and public confidence
- Outdated allocation methods are discarded
- Programmatic spending can be linked to student achievement or district success
Cons of ZBB
- Time and research intensive
- Lack of financial expertise at the school level
- School and department leaders may feel great pressure to spend less than needed
- Requests for funds are often denied based on lack of research or adequate justification
If the task of building every budget from the ground up seems too overwhelming, consider implementing a rotational ZBB process whereby budgets are divided into 3 to 4 cohorts. Every 3 to 4 years each cohort goes through a full zero-based budgeting process and during the “off years” budgets are planned in a more traditional way. This approach still allows district stakeholders to reap the benefits of a detailed budget review, while significantly reducing the burden of reviewing and prioritizing every line in every budget.
As districts look for financial models to budget for student and site-level success, it’s critical to vett each model and decide which one works for you and your constituents. Zero-based budgeting is a proven model that requires a profound level of financial understanding, school board buy-in, and stakeholder support. For school districts looking for a more comprehensive method to decide whether to maintain, build, eliminate or introduce programs that support student achievement, ZBB can help align funding to students and programs.
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