<< Back to Helpful Tips

Creating an Operationally Oriented Budget in Times of

Fiscal Stress In School Districts: Issues and Strategies

Philip R. Stover - The Portolan Group, Inc

 

Creating an operationally oriented budgeting in times of fiscal stress is a challenge for school district operators/managers because it requires them to:

 

  1. Focus on the core mission and purpose of their group, division or department.
  2. Face the possibility of costing in less (upsetting employees and labor groups) or more (creating strains on budgets) employees.
  3. Be willing to reduce expenditures after having fought for additional resources and/or having experienced cuts.
  4. Become proficient in projecting budget allocations and line items when they may never previously had to manage to the same.
  5. Balance the use of staff with purchased services, materials and supplies for the same functions/duties.
  6. Accomplish this with incomplete and at times, inadequate data. 
  7. Rely on the assistance of budget analysts/employees who are trained to think in terms of past expenditures (based on multi-year averages) and funding sources rather than on operational requirements. 
  8. Be willing to go through the HR process to match existing employees to needed job classifications.
  9. Be knowledgeable of:
    • The implications and realities of employee agreements.
    • Best practice/metrics/KPIs for expenditures in their departments.
    • Job classifications and appropriately project needed positions by the same.  Often times districts have varied and confusing job classifications.
    • Job descriptions for each job classification. 
    • Funding source(s) in which to place each expenditure.
    • Ancillary and support costs (travel, printing, technology, materials and supplies) needed to perform as a group, division or department.
    • Changing district priorities impacting their budgets (centralization of technology and budget/finance functions, for example).
    • Changing district-wide factors (square feet, student population, free and reduced percentages, for example).
    • Changing state-wide priorities and requirements (new or revised programs, statutes, etc).
  10. Commit significant time to the effort, both individually and with their teams.  It is a messy process, especially in the early stages.
  11. Be aware of resistance, bias and discomfort with the process (including their own).
  12. Be optimistic that the process will not be for naught. 

Effective operationally oriented budget strategies must:

  1. Be based on actual salaries, not averages or allocated at mid-step levels.
  2. Be done without consideration for existing staffing levels, which may or may not be accurate or appropriate.
  3. Be aimed at in-sourcing of functions instead of outsourcing unless there is a compelling financial savings to be realized.
  4. Be accomplished in stages; initially without regard for previous allocations or spending, especially at the line item level.  Budgets should then be incrementally modified to reflect overall district financial realities.
  5. Accurately reflect line item expenditure needs.  Padding line items to support overages in other line items needs to be discouraged, if not banned.
  6. Where ever possible, be done without regard to existing positions or job classifications.  Operationally oriented budgets need to reflect new group, division or departmental tables of organization. 
  7. Be done in a climate where every expenditure and position is evaluated for value to the core mission of educating students.
  8. Be looked at as a multi-year process.  Each succeeding budget year should produce greater accuracy.
  9. Include allocation of expenditures by line item and the month in which spending will occur throughout the calendar year.  As a general rule the majority of expenditures should not be divided by twelve (for each month), but allocated where expenditure is anticipated.  Outside of staffing costs, school district spending is rarely identical each month.

 

To support a successful operationally oriented budget process:

  1. Budget analysts must provide accurate salary information by job classification and employee.
  2. Managers must have:
    • Job descriptions for every desired positions.
    • Job classifications for each existing and desired position.
    • Metrics, KPIs for each function within the group, division or department.
    • Details of purchased services needed for the group, division or department.
    • Information on district-wide initiatives impacting previous practices in the group, division or department.
    • Information on changing district demographics, student population, facilities, etc impacting the group, division or department.
  3. Managers must understand how to identify core functions and interactions needed to support the group, division or department’s goals (technology, finance, HR, etc).
  4. Managers must be aware of district-wide goals and priorities and how these impact the group, division or department.
  5. Managers should be brought together in joint training with budget analysts to discuss challenges and ask questions.  This training should include preparation for all the challenges, roadblocks and forces against such an effort.

 

A suggested path to effective operationally oriented budgeting:

  1. Identification of group, division or department core mission, goals and purpose.
  2. Identification of what (which) tasks will be outsourced; which will be provided in-house.
  3. Identification of district-wide policies involving support functions (finance, technology, purchasing, etc.).
  4. Identify KPIs and metrics for departmental functions.
  5. Identify district-wide changes impacting group, division or departmental functioning.
  6. Identification of core organizational structure needed to accomplish 1, given 2, 3, 4 and 5.
  7. Further delineation of positions needed in the organizational structure by job classification given job description realities.
  8. Working with budget analysts to determine salaries and benefits for 5.
  9. Given the chosen structure, determine what purchased services, by cost and vendor (if known) are needed to support the group, division or department’s function.  Determine costs for the same with appropriate buyer or procurement specialist.
  10. Given the chosen structure, determine supplies and materials needed to support function.  Determine costs for the same with appropriate buyer or procurement specialist.
  11. Determine miscellaneous costs (training, travel, printing, etc) needed to support function with appropriate budget analyst.
  12. Place budgeted expenditures in appropriate line item and month.
  13. Only at this point should expenditures be compared or reviewed with previous years.  Any large variances should be reviewed.
  14. Budgets and organizational charts should be reviewed and amended with and by senior managers.
  15. Organizational charts should be forwarded to HR for review of labor/staffing implications.
  16. Final product approved by senior managers and HR should be forwarded to budget/finance for aggregation and review.
  17. Where necessary, based on budget/finance review, projected expenditures should be adjusted.
  18. Review actual expenditures each month, with adjustments as necessary.

 

The Portolan Group, Inc is the nation’s premier provider of school, district and higher education central office, business and support services consulting.  For more on this and other school, district or college management related needs, please feel free to contact us at info@portolangroup.com or 1-87-PORTOLAN.

<< Back to Helpful Tips