3 Superintendent Tips for a Balanced Budget
By David Bein, Assistant Superintendent/CSBO, Downers Grove Grade School District 58 (IL)
As an assistant superintendent who manages budgeting for a district with 5,000-plus students, I know all about the financial challenges K-12 leaders face today. The biggest issue is how to responsibly manage the finances at a school district when expenses — namely salaries and benefits — are often growing faster than revenues.
For most districts, salaries and benefits constitute the vast majority of the budget. If you have healthcare costs growing at the national average of about eight percent for medical claims and 12 percent for prescription drugs, revenues won’t come close to covering the increase. But if you want to have a stable budget and finances for your school district, any growth in expenses will need to be offset by a comparable growth in revenue. It’s pretty easy to see that if you have expenses growing at eight percent and revenues growing at two percent, you’re not going to balance the budget automatically.
Unfortunately, there isn’t a magic solution. But there are several strategies that can help. Below are three tips that I find useful in managing our budget here at Downers Grove in Illinois. Tune into my webinar on April 19 for more details on these and to get my full list of budgeting best practices!
1. Make sure your budget is aligned with district goals.
Different school districts have different definitions for their objectives, vision, and mission. But it’s important to get clarity: What are you specifically trying to accomplish in your district that supports your overall goal of educating children?
What are your board’s mission and goals? What are the strategies and objectives of your administrative team, and how does your budget accomplish them? When you’re looking for ways to cut costs or to decide which programs to add or remove, focus on supporting programs that directly tie to your mission, goals, and objectives. It can be easy to forget to ask the question: Does this spending really impact what we’re trying to accomplish? There are many good initiatives to fund, but when resources are limited, you may need to sacrifice some good so that you can support the great.
2. Keep an eye on cash balances vs. fund balances
School district revenue streams are a little bit different than what many professionals may be accustomed to. Instead of getting paid, say, every two weeks, many districts receive the bulk of their funding in far less frequent increments.
In a fair number of states, school districts are funded heavily through local property taxes, and those payments usually come twice a year. As a result, you have to plan ahead to make sure you have enough money when you need it. Illinois, where I work, is a great example. One of these two payments arrives just before the end of the school year. Right before you get that check, you’re really low on cash. So even though your year-end funds may be fine, the reality is, a month-and-a-half earlier you had perhaps no money. If you think of those spring taxes as supporting the next school year, then even though your year-end balance is OK, your district is running very low on reserves.
As you work with your school business officials, you need to be thoughtful about the budget and the timing of your district’s expenses. K-12 district budget efficiency is more than just ending the year OK. You can end the year with cash in the bank, but you still may have had to get a loan partway through because you didn’t have enough cash on hand.
3. Use actual expenses to inform projections
As you begin to budget for the upcoming fiscal year, you may be torn between using the current year’s budget and the current year’s actual expenses as the starting point.
Using the budget as the launch point is fine, but it’s not nearly as useful as the actual expenses. A budget is just a plan, but the actuals tell the full story. If, for instance, you budgeted $6 million on health insurance for your employees last year, you might plan $6.5 million for next year, which seems reasonable enough. But if your actual expenses are tracking to be $7 million this year against a budget of $6 million… well, a $6.5 million projection for next year may be off the mark.
As a superintendent, you want to have visibility into that sort of thing. You need to know why your actual expenses differed from your budget: What were the big movers and trends that impacted it?
That can inform the discussion around next year and the approach you take for K-12 district budget efficiency. Using your actual expenses as the basis can help you make the right decisions.
See additional insights from fellow K-12 leaders on PowerSchool’s superintendent resource page. You’ll find webinars from subject experts, technology solutions to common district challenges, and a variety of other tools to help you improve outcomes in your district.