Government Finance Officers Association
School Budgeting
October 11, 2019
Why Budgeting?
More than just a financial exercise
Bringing the goals and strategies of a
district to fruition
Making connections between desired
outcomes/service provision and the
dollars
S2
The Process Brings Together Strategic
Academic Planning and the Budget Process
…strategic planning and the budgeting process are merged to create a process for strategic
use of resources in the district:
In Smarter School Spending…
Merging these processes allows for greater alignment of district strategy
and finances, and allows the district to balance financial decisions as tradeoffs for increasing strategic investments in
students
Budget Process
Academic Strategic Planning
1. Strategic Plan
2. Strategic Finance Plan
3. Strategic
Annual Budget
…strategic planning and budget processes happen in parallel tracks
that don’t intersect:
In many districts…
Academic Strategic Planning
Budget Process 2. District Budget
1. Strategic
Plan
When these processes happen in isolation, a district is at risk for creating a strategic plan that cannot be funded and a budget
that has no strategic basis
S6
Background & Development
Best Practices in School Budgeting developed by GFOA in
conjunction with the Smarter School Spending website with input of
several districts and other experts (http://gfoa.org/pk-12-budget)
Smarter School Spending developed in partnership with four
districts working closely with consultants on their budget process
(http://smarterschoolspending.org/)
Award for Best Practices in School Budgeting is the new GFOA
budget award based on the Best Practices in School Budgeting
(http://gfoa.org/school-budgeting)
Alliance for Excellence in School Budgeting
is an early adopter group of nearly 100 districts
formed by GFOA to aid implementation
(http://gfoa.org/alliance-excellence-school-budgeting)
S8
S5
Best Practices in School Budgeting
1. Plan and Prepare 2. Set Instructional Priorities 3. Pay for Priorities 4. Implement Plan 5. Ensure Sustainability
How are they related?
S6
Best Practices
Guidelines
Aw
ard
Resources
Smar
ter
Sch
oo
l Sp
en
din
g
Core Concepts
Plan and Prepare
Set Instructional
Priorities
Pay for Priorities
Implement Plan
Ensure Sustainability
Implementing the Best Practices
Not meant as an outright replacement of
your existing budget process
Framework to integrate current efforts to
help move the bar forward
Way to help identify areas that may need
improvement
Not a linear path - focus on areas of most
immediate benefit to gain quick wins
S7
First – How to Begin
Emphasis on planning and setting the
stage
• Collaboration
• Framing the process
• Baseline performance
• Engagement
S8
S9
Best Practices in School Budgeting
1. Plan and Prepare A. Establish a Partnership between the
Finance and Instructional Leaders B. Develop Principles and Policies to
Guide the Budget Process C. Analyze Current Levels of Student
Learning D. Identify Communications Strategy
Establish a Partnership between the
Finance and Instructional Leaders
Collaboration between the academic and financial
leadership of a district is key to the Best Practices in
School Budgeting
Aligning the district’s scarce resources to programs that
have the greatest impact cannot be effectively or efficiently
done with the district working in silos…
Supports providing governing board with better
options/ideas for consideration
S10
Developing Principles
Use as a way to set tone/change culture
• Focus on students
• Data
• Cost-effectiveness
• Equity
• Long-term
• Transparency
S11
Developing Policies
General Fund Reserve
Definition of a Balanced Budget
Asset Maintenance & Replacement
Financial Emergency Policy - School
Long-Term Forecasting
Budgeting and Management of Categorical Funds
Budgeting for Staff Compensation
Program Review and Sunset/Alternative Service Delivery
Year-End Savings
Funding New Programs
S12
Analyze Current Levels of Student
Learning Collecting performance data
• Develop a well-rounded perspective on student performance
• Ensure data is – relevant, consistent and can be disaggregated
Measuring student performance • Comparison against a standard of proficiency
• Relative improvement
• Changes over multiple years
Data culture
Focus on future needs
S13
Identify Communications Strategy
Communication strategy components:
• Process overview
• Explanation of decisions
• Stakeholder engagement
Implement communication strategy
• Identify the messengers
• Identify target audience and tailor messages
• Select communication channels
• Gather feedback and adjust
S14
Key Resources
S15
Collaboration Case Study: https://smarterschoolspending.org/resources/gfoa-best-practice-establish-partnership-between-finance-and-instructional-leaders Principles Example: http://smarterschoolspending.org/resources/district-examples/portland-public-schools-budget-principles Policy Templates: http://www.gfoa.org/step-1-plan-and-prepare Engagement Case Study: http://smarterschoolspending.org/resources/district-examples/traverse-city-area-public-schools-elevator-speech-case-study
Second – What is the Focus
Establishing direction
• Goal-setting
• Deep dive on issues
• Develop strategies
• Prioritization
S16
S17
Best Practices in School Budgeting
2. Set Instructional Priorities A. Develop Goals B. Identify Root Cause of Gap between Goal and Current State C. Research and Develop Potential Instructional Priorities D. Evaluate Choices amongst Instructional Priorities
Broader Goal Purpose
Two-fold:
• Direction
• Expectations
S18
Connections
19
Strategic plan
Long-term
financial plan
Capital plan
Budget Results
evaluation
GOALS
Develop Goals
SMARTER framework:
• Specific - precise outcome or result
• Measureable - verifiable, ideally quantifiable
• Achievable - grounded in reality
• Relevant - focused on student achievement
• Time-bound - short and long-term objectives
• Engaging - reach for ambitious improvement
• Resourced - finances aligned with goals
S20
Moving beyond…
S21
“Every student will graduate college and
career ready”
Major Goal: Immediate Investment in Struggling Students
Sub-Goal: ELL Students. Fund programs aimed at closing the achievement gap of English Language Learner (ELL) students
What is the need? LCS spends less on ELL students than comparison districts. The LCS ELL population is growing steadily as the student achievement rates continue to be low
Specific - Adds Precision to the Major Goal
Relevant – says why this goal matters
Example: Lake County Schools,
Florida
S22
Example: Lake County Schools,
Florida What will the District do?
Determine programming options
Compare options by potential A-ROI
Select highest return option(s)
What will it cost?
What gains does the district expect?
Year 1 Year 2 Year 3
$1.9 million $2 million $2 million
Measure Proj. ’15
Act. ’15
Goal ’16
Goal ’17
Goal ‘18
Goal ’19
ELL Grad. Rate 70% 57% 70% 80% 90% 95%
Achievable Clear path
laid out
Resourced – Est. cost for budget
Measureable, Time-bound, & Engaging
S23
Define and Distribute Goals
Defining goals for academic achievement
and distributing goals to schools
• Assess the district’s strategic environment
• Set SMARTER goals for multi-year district-
wide improvement
• Understand baseline performance at the
school level
• Set school site goals
S24
Measurability – Setting Targets
S25
District Example (from budget doc) - http://www.fultonschools.org/en/divisions/finserv/Pages/Budget-Services--.aspx
Measurability – Another Example
S26
Identify Root Cause of Gap between
Goal and Current State
Rationale for root cause analysis
• Move beyond addressing symptom level
solutions
• Find underlying cause of issue
• Process should involve different perspectives
– not only to assist analysis - but also develop
a broad base of support to implement
solutions
Possible technique – 5 Whys
S27
Root Cause Analysis Example
S28
A Root Cause Analysis on Special Education from Beaverton
Q. Why are so few 8th graders who receive special education not meeting State standards? A. They are not prepared to meet the standards.
Q. Why are they not prepared to meet the standards? A. They lack access to appropriate instruction in grade level content.
Q. Why are they not participating in general education classes, where they can get instruction in grade level content? A. The general education teacher may not have the tools or skills to address behavioral needs and scaffold instruction.
Q. Why do general education teachers feel unprepared to instruct students who receive special education services? A. Professional development for general education teachers may not support how to instruct students with varied learning and behavioral needs.
Q. Why doesn’t professional development support these skills? A. The budget for professional development to support special education students is provided exclusively by the special education department, which only trains special education teachers.
! Solution: We need to change the budget so that professional development for helping special education students goes to all teachers, not just special education teachers.
Research & Develop Potential
Instructional Priorities
What is an instructional priority?
• Strategy for overcoming identified problems and achieving stated goals
How to research and develop instructional priorities? • Look at proven practices
• Guidelines for development
S29
Inputs Activities/
Strategies Outputs
Evaluate Choices between Instructional
Priorities
Identify and describe the options
• Does the option meet the guidelines?
• Reduce/organize options
Consequences of decisions
• Impact, affordability, feasibility, support
Public engagement
S30
Key Resources
S31
Inputs Activities/
Strategies Outputs
Goals Case Study: http://smarterschoolspending.org/resources/district-examples/lake-county-school-district-smarter-goals-case-study Root Cause Analysis Case Study: http://smarterschoolspending.org/resources/district-examples/beaverton-school-district-root-cause-analysis-case-study Instructional Priority Planner Tool: https://smarterschoolspending.org/resources/instructional-priority-planner Priority Setting Tool: http://www.gfoa.org/pk-12-budgeting-evaluating-options
Specific Measureable Achievable Relevant Time Bound Engaging Resourced
Third – How to Fund
Allocating/finding resources
• Analyzing current programs
• Evaluating new proposals
S32
S33
Best Practices in School Budgeting
3. Pay for Priorities A. Applying Cost Analysis to the Budget Process B. Evaluate & Prioritize Use of Resources to Enact the
Instructional Priorities
Apply Cost Analysis to the Budget
Staffing analysis
Cost of service analysis
• Per unit costs
• Cost per outcome
• Relative cost per outcome
• Academic return on investment (A-ROI)
But – crucial to understand the need for
pairing context with analytical results
S34
A-ROI
Academic Return On Investment
• Basic formula:
Or, more simply:
S35
A-ROI = ((Learning increase) x (Number of students helped))
Dollars Spent
Measure of Student Success (BANG) Amount Spent (BUCK)
What is Success?
Program A Program B
100 additional graduates 75 additional graduates
$10,000 $5,000
$100/graduate $66/graduate
1% A-ROI 1.5% A-ROI
Which do you go with?
S152
A-ROI Themes from Smart
Practices
Establish your own principles of A-ROI
Recognize that not all forms of evidence are equal
Be meticulous about the research question and outcomes
Make sure the program is implemented well
Make the results resonate
Specify the outcome you are measuring and how it will be measured
Avoid common decision-making pitfalls
S37
GFOA Research Paper -http://www.gfoa.org/sites/default/files/AROIWhite%20PaperFINAL.pdf
How to Pick AROI
Candidates
Does the program consume a lot of staff time or money?
Are the necessary data readily available?
Are there plans to substantially expand the program?
Does the program serve a large number of people?
Is it politically feasible to make changes?
Is there uncertainty about the program’s effectiveness?
S38
Evaluate & Prioritize Expenditures to Enact
the Instructional Priorities
Finding resources
• Revenues, sunset existing programs,
efficiencies
Weighing trade-offs
• Consistency, transparency, data
Overcoming constraints
• Funding limitations, legal issues, culture,
contracts
S39
Key Resources
S40
> A-ROI GFOA AROI White Paper: http://www.gfoa.org/academic-return-investment-foundations-and-smart-practices AROI Case Study: http://smarterschoolspending.org/resources/district-examples/traverse-city-area-public-schools-academic-roi-case-study Cost Savings Idea Tool: https://smarterschoolspending.org/resources/cost-savings-options-screening-sizing-tools Strategic Abandonment Tool: http://www.gfoa.org/pk-12-budgeting-strategic-abandonment-tool Procedural Justice Case Study: https://smarterschoolspending.org/resources/gaining-commitment-paying-your-priorities-0
Cost Savings Options
S41
https://smarterschoolspending.org/resources/cost-savings-options-screening-sizing-tools
Next – Put Plans to Action
Implementing with fidelity
• Financially
• Clear steps/responsibilities for implementation
• Impacts to school sites
• Communicating through the budget
S42
S43
Best Practices in School Budgeting
4. Implement Plan A. Develop a Strategic Financial Plan B. Develop a Plan of Action C. Allocate Resources to Individual School Sites D. Develop Budget Presentation
Strategic Financial Plan Framework
Reference to district’s strategic plan
Goals for the district
Description of the instructional priorities
Evaluation criteria for student outcomes
Funding of instructional priorities
Long-term forecasts
Analysis of scalability to impact
Review trigger
S44
Co-Dependency
“Good financial planning without aspirations
is accounting. Great aspirations without
financial planning is a recipe for disaster.”
- Former Minneapolis Mayor R.T. Rybak
S45
Plans vs. Planning
“Plans are nothing, planning is everything”
-General Dwight D. Eisenhower
Again – the Connections
47
Strategic plan
Long-term
financial plan
Capital plan
Budget Results
evaluation
GOALS
Strategic Planning – Breakdown
48
Ground
Mission
Strategic Priority
Areas/Themes
Strategic Goals
Objectives
Strategic Initiatives
Measures
& Targets
35,000 ft.
15,000 ft.
Vision
25,000 ft.
What is our purpose? What do we do?
What are the main focus areas (“Pillars of Excellence”) of our business?
What results do we want to satisfy our customer/stakeholder needs?
How will we evaluate performance to know if we are achieving the results we want?
Specifically, what projects and programs
will lead to the desired results?
What continuous improvement activities are needed to get results?
What is our picture of the future? Customer/
Stakeholder Needs
Strategic Planning – Key Steps
1. Initiate the process
2. Prepare a mission statement
3. Assess environment
4. Identify critical issues
5. Agree on limited number of broad goals
6. Develop strategies to achieve goals
7. Create action plan
49
Strategic Planning – Key Steps (continued)
8. Develop measurable objectives
9. Incorporate performance measures
10. Obtain approval of plan
11. Implement plan
12. Monitor progress
13. Reassess strategic plan
50
GFOA Best Practice - http://www.gfoa.org/establishment-strategic-plans
Strategic Financial Planning
Process
51
Staff Task
Board & Staff Task
Board & Staff Task
with Critical Point of
Public Input
KEY
Strategic Planning
Identify & Confirm
Critical Issues
Analyze Financial Trends,
Debt, & Develop Forecasts Analyze Critical Issues
Identify Imbalances
Financial Strategy Workshop
Prepare Strategic Financial
Plan
Implement & Monitor
Implement through
Budget
Deliberate &
Approve Critical
Assumptions
Strategic Financial Plan –
Recommended Components
Reference to district’s strategic plan
Goals for the district
Description of the instructional priorities
Evaluation criteria for student outcomes
Funding of instructional priorities
Long-term forecasts
Analysis of scalability to impact
Review trigger
S52
Example - Lake County Schools, FL
S53
‘Balance Sheet’ Approach S54
Develop a Plan of Action
Taking the steps to ensure instructional priorities are successful
The following elements should be included in the plan of action:
• Instructional priorities
• How the priorities will be funded
• Actions intended to implement and fund priorities
• Sponsorship structure
• Sources of evidence that action is occurring
• Process for review and adjustment
S55
Allocate Resources to Individual School
Sites
Districts, particularly those with multiple schools sites, need to have a clear and transparent method for allocating resources to each school site
GFOA does not advocate a specific method between staffing ratio and weighted student funding methods, but ensure: • Use of current enrollment
• Supported by solid rationale
• Transparent
S56
Develop Budget Presentation
Fundamental organization of the budget:
• The Challenges
• Goals – remember SMARTER framework
• Strategies and programs
• Financial plan
• Risks to long-range financial sustainability
Telling the district’s story
Use as a communication device
S57
Example Budget Document
S58
https://smarterschoolspending.org/resources/district-examples/goochland-county-public-schools-budget-document
Key Resources
S59
Strategic Financial Plan Template: https://smarterschoolspending.org/resources/strategic-financial-plan-template District Strategic Financial Plan Example: http://smarterschoolspending.org/resources/district-examples/lake-county-school-district-strategic-financial-plan-case-study Case study/District example – Allocation Methodologies: http://smarterschoolspending.org/resources/district-examples/beaverton-school-district-allocation-models-case-study Budget Document Example: https://smarterschoolspending.org/resources/district-examples/goochland-county-public-schools-budget-document
Finally - Sustaining
Measuring results and evaluating process
S60
S61
Best Practices in School Budgeting
5. Ensure Sustainability A. Put the Strategies into Practice and Evaluate Results
Continuous Improvement
Monitor Strategy Implementation
Evaluate Interim Results throughout the
Year
S62
What is Monitoring?
“A formal set of processes for comparing budget to actual results to monitor financial performance. Budget monitoring should include analysis of a diverse set of indicators to best inform the analysis and facilitate evaluation of a government’s overall performance. Establishing and conducting regular budget monitoring provides organizations the opportunity to promptly adjust for any significant variances to ensure continuity of program/service delivery.”
GFOA Best Practice - http://www.gfoa.org/budget-monitoring
Essential Components
Identify elements to be reviewed
How to analyze elements
Level of detail for analysis
Responsibility for analysis
Tools for conducting analysis
Communicating analysis
Action/next steps
S64
What are Performance Measures?
“Performance measures are used by governments to collect
information about operational activities, achievement of goals,
community conditions, or other environmental factors to better
understand a situation and make informed decisions. Regardless if an
organization has a centralized collection system for performance
measures, the use of performance data should be integral to an
organization’s decision making processes and leaders within an
organization should set expectations that key decisions are
supported by evidence. For optimal use, performance measures need
to be developed considering the potential audience for the information.
As a result, organizations need to identify and track measures at an
operational, managerial, policy making, and community level.”
GFOA Best Practice - http://www.gfoa.org/performance-measures
Key Conditions
Useful
Relevant
Reliable
Adequate
Collectible
Consistent
66
S66
Less Obvious Conditions
Environment – externalities impacting
services
Responsibility – who collects, stores and
disseminates
Systems – leverage systems
appropriately or identify need for new
systems to ease burden of collection
S67
Comparisons Are Tricky
Comparing/benchmarking measures with other
organizations can lead to misinterpretation
Problems include unique environments,
different measurement approaches, different
ways of measuring and differing service levels
S68
Resources
Smarter School Spending
• Free resources – including case studies, district examples,
templates, etc.
• www.smarterschoolspending.org
GFOA School Budgeting Resource Center
• Additional resources – more district examples, outside
links, GFOA best practices, etc.
• www.gfoa.org/pk-12-budget
GFOA Best Practices
• http://www.gfoa.org/best-practices
Upcoming Events
GFOA Annual Conference 2020 – New Orleans – May 17-20 • Preconference session for
school budgeting on May 15
• Other networking opportunities
with school districts
Alliance for Excellence in School Budgeting • November 5-6, 2020 in Chicago
• More information at
http://www.gfoa.org/alliance-excellence-school-budgeting
Additional Trainings on Best Practices in
School Budgeting: • Austin, TX – December 10
• Long Beach, CA – February 4, 2020
• See http://www.gfoa.org/search-for-training
Questions?
Contact:
Matt Bubness, Senior Manager
Government Finance Officers Association
Research & Consulting Center
312-578-2267