Budget
Chapter 10 in Guthrie
Dr. Len Elovitz
Objectives

TLWDTAT:

Articulate a standard budget cycle

Evaluate the merits of various budget models

Discuss the impact of the political process on the budget
process
What’s a Budget

A plan for acquiring and spending financial resources

Revenue
Balance
&
Expenditures

“… the translation of educational needs into a financial
plan which is interpreted to the public in such a way that
when formally adopted it expresses the kind of
educational program the community is willing to support,
financially and morally, for a one year period.”

William H. Roe
Line Item Budget

Groups appropriations under major headings

Utilizes a cart of accounts

Most school districts utilize Generally Accepted
Accounting Principles (GAAP)
NJ accounting history




Fund Accounting
POB
GAAP
What does a budget look like

Bloomfield Budget 2012-13

See other district budgets at
http://www.state.nj.us/education/finance/fp/ufb/2012/01.ht
ml

Program Budget
BUDGET CODES
Generally Accepted Accounting Principles
GAA vitz
GAAP
BUDGET CODES

FUND

PROGRAM/PROJECT

XX

XXX

11

190

CURRENT EXPENSE

REGULAR
BUDGET CODES

FUNCTION

OBJECT

XXX

XXX

100

610

INSTRUCTION

SUPPLIES
BUDGET CODES

Location

Program Area

XX

XX

41

28

MIDDLE SCHOOL

SOCIAL STUDIES
BUDGET CODES

MIDDLE SCHOOL SOCIAL STUDIES SUPPLIES

11.190.100.610.41.28

Fund.Program.Function.Object.Location.Program Area

Uniform Chart of Accounts
Budgeting Basic Concepts: Assumptions, Power, and
Methods




Budgeting aligns resources with purposes
Forges a link between planning and evaluation
Shows more than how monies will be spent
Involves political activity of give and take
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Basic Budget Concepts



An instrument of control
The budget translates into who has the power and
control
It reflects the organization’s objectives and goals
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The Budget Cycle
Planning for the needs of the district
Seeking Adequate Funding
Receiving and spending funds
Evaluating the process and results
Planning
 The
translation of educational needs into
a financial plan
 A management function that involves
systemic determination of future
resource allocation
Organizational Perspectives on planning,
budgeting, and evaluation

There are three contrasting perspectives on the
budgetary process



Rational: assumes stakeholders work in a logical fashion
to improve student outcomes
Bureaucratic: standard patterns of behaviors based on
the rules and regulations of a “top-down” hierarchy
Political: budgeting is a power play among actors seeking
organizational rewards
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Budget Planning Approaches
Rational
Assumptions:
development of an
educational plan and
budget that logically
improves student
outcomes
Planners have an
appropriate knowledge
and authority to develop
a plan centered on
student outcomes as a
primary criterion
Planners operate with
technical efficiency,
which requires that those
involved strive to
produce a maximum
level of outcomes with
financial, organizational,
and legal constraints
Bureaucratic
Assumptions: planning
focuses on sustaining or
increasing previous
year’s spending base
School or school
district’s educational
goals and objectives are
secondary
Planners support
existing organizational
processes - status quo is
maintained from one
year to the next
Political
Assumptions: budgeting
is bargaining among
self-interested
individuals and groups
The development of the
education plan and
budget is a political
activity. Student
outcomes are seldom
considered.
Conflict is seen as
normal
Power players develop
goals
Plans are subjective
without formal measures
19
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Budget Planning Process

First step is planning how to plan



Who will be involved
What is the planning time frame
Planning may be centralized or decentralized, depending
on leadership style, involvement of the BOE, relationships
with the community and/or organizational history.
Budget and Power:
Budget control is organizational control
Centralized

Top down

Superintendent and key
district personnel

Schools given a specific
amount and must account
for spending

All students treated the
same in the budget
Decentralized
 Site-based budgeting
 Participatory budgeting
process
 Lump sum given to
schools according to sitedeveloped plan
 Attends to individual
student
In actuality there exists a continuum from centralized to decentralized
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Fundamental Budgeting Assumptions:
annularity, comprehensiveness, balance
Annularity
Comprehensiveness
Balance
An agreed upon span of time
over which resource allocation
and financial administration
can occur
Process encompasses all
revenues received by and
monies spent by an
organization regardless of
source or purpose
Assumes explicit
organizational knowledge of
resources and obligations with
the two matching
Remains constant
Can keep track of a variety of
funds and accounts in a variety
of ways
Can borrow resources to
construct long-lasting capacity
Usually set for a year, but not
usually a calendar year
Tracks the input and output of
resources to know where all
monies are used
If what is spent exceeds what
is received, the organization is
out of control
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Budgeting Methods


Each method provides structure for budget estimates and
budget documents
Considerations for choosing a method





Individual needs of the school or the district
Legal restrictions
Size of the district
District financal condition
School governance structure
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Incremental Budgeting

Each budget line receives same increase or decrease

Gives little attention to how budget fits education plan
Incremental Budgeting at 4%
KEAN TOWNSHIP PUBLIC SCHOOLS
SCHOOL:
41 - MIDDLE
2008-2009
2009-2010
2010-2011
INCREASE
CODE
EXPENDED
BUDGETED
PROPOSED
(DECREASE)
Contracted Services
420
$106,908.17
107,300
111,592
4,292
Lease/Purchases
440
$23,336.84
29,000
30,160
1,160
Communication/Postage
530
$4,271.60
4,700
4,888
188
Travel/Conferences
580
$3,600.00
4,000
4,160
160
Supplies
610
$85,178.40
74,427
77,404
2,977
Textbooks
640
$20,673.97
22,508
23,408
900
Miscellaneous Expenses
890
$6,787.09
13,726
14,275
549
$250,756.07
255,661
265,887
10,226
FUND 11
Sub-Total Fund 11
FUND 12
Equipment, Instructional
731
$14,009.14
18,412
19,148
736
Equipment, Non-instructional
732
$6,321.36
7,324
7,617
293
$20,330.50
25,736
26,765
1,029
$271,086.57
281,397
292,653
11,256
Sub-Total Fund 12
TOTAL
Line-Item Budgeting

Line-item is the basis for expenditure

Uses workload and inflationary increases with last
year’s numbers
Line Item Budgeting at 4% + 2% for Increased Enrollment
KEAN TOWNSHIP PUBLIC SCHOOLS
SCHOOL:
41 - MIDDLE
2008-2009
2009-2010
2010-2011
INCREASE
CODE
EXPENDED
BUDGETED
PROPOSED
(DECREASE)
Contracted Services
420
$106,908.17
107,300
108,373
1,073
Lease/Purchases
440
$23,336.84
29,000
29,000
0
Communication/Postage
530
$4,271.60
4,700
4,888
188
Travel/Conferences
580
$3,600.00
4,000
4,160
160
Supplies
610
$85,178.40
74,427
78,893
4,466
Textbooks
640
$20,673.97
22,508
23,858
1,350
Miscellaneous Expenses
890
$6,787.09
13,726
14,275
549
$250,756.07
255,661
263,447
7,786
FUND 11
Sub-Total Fund 11
FUND 12
Equipment, Instructional
731
$14,009.14
18,412
19,148
736
Equipment, Non-instructional
732
$6,321.36
7,324
7,617
293
$20,330.50
25,736
26,765
1,029
0
0
Sub-Total Fund 12
0
0
TOTAL
$271,086.57
281,397
290,213
8,816
Formula Funding

Major functions budgeted centrally

Budget formula used for schools includes enrollment

Principal is not the decision maker
Formula Budgeting at 4% + 2% for Increased Enrollment
- 10% for Equipment
KEAN TOWNSHIP PUBLIC SCHOOLS
SCHOOL:
41 - MIDDLE
2008-2009
2009-2010
2010-2011
INCREASE
CODE
EXPENDED
BUDGETED
PROPOSED
(DECREASE)
Contracted Services
420
$106,908.17
107,300
108,373
1,073
Lease/Purchases
440
$23,336.84
29,000
29,000
0
Communication/Postage
530
$4,271.60
4,700
4,888
188
Travel/Conferences
580
$3,600.00
4,000
4,160
160
Supplies
610
$85,178.40
74,427
78,893
4,466
Textbooks
640
$20,673.97
22,508
23,858
1,350
Miscellaneous Expenses
890
$6,787.09
13,726
14,275
549
$250,756.07
255,661
263,447
7,786
FUND 11
Sub-Total Fund 11
FUND 12
Equipment, Instructional
731
$14,009.14
18,412
16,571
(1,841)
Equipment, Non-instructional
732
$6,321.36
7,324
6,592
(732)
$20,330.50
25,736
23,162
(2,574)
0
0
Sub-Total Fund 12
0
0
TOTAL
$271,086.57
281,397
286,610
5,213
Programming, Planning & Budgeting Systems

Builds a budget to execute the educational plan

Budget reflects estimated costs of meeting objectives

Alternatives investigated

Last year’s numbers are only a guide

Proposed Budget
Zero-based Budgeting

Builds a budget with little regard to the previous year

No guarantees that an item continues from one year to
the next

Forces careful consideration of priorities and goals
ZBB Steps


Define decision units – school, dept., etc.
Develop decision packages to include:








Goals to be achieved
Alternative means of meeting the goal
Levels of effort needed to reach each alternative
Cost & benefits of each alternative
The technical & operational feasibility of each alternative
The consequences of not funding each alternative
Rank decision packets
Approve and fund decision packets
School Based Budgeting





Decentralized process that involves various school
personnel and the local community
School makes choices on most things except capital
projects
Principal is given varying degrees of power over
budget allocations
The most important aspect is power over staffing
Total Student Load and NYC
Budgeting Methods
Incremental
Budgeting
Line-Item
Budgeting
Formula Funding
Programming,
Planning &
Budgeting
Systems
Zero-based
Budgeting
School Based
Budgeting
Most common
approach
previous year
builds budget
Commonly used
with more
specificity than
incremental
Used by large
districts
Perceived as fair
and efficient
Builds a budget to
execute the
educational plan
Builds a budget
with little regard
to the previous
year
Decentralized
process that
involves various
school personnel
and the local
community
Each budget line
receives same
increase or
decrease
Line-item proper
basis for
expenditure
Major functions
budgeted
centrally
Resource allocation
is more complex
No guarantees
that an item
continues from
one year to the
next
More consistent
with current
research on
productivity
Gives little
attention to how
budget fits ed.
plan
Uses workload
and inflationary
increases with
last year’s
numbers
Budget formula
used for schools
includes
enrollment
Budget reflects
estimated costs of
objectives,
alternatives
investigated
Forces careful
consideration of
priorities and
goals
School makes
choices on most
things except
capital projects
Method is time
consuming and
expensive
Increased
popularity with
new
accountability
Used by large
Principal is not
systems with
the decision
capacity to use this
maker in this
method
model
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Focus on inputs
Little attention to
how budget fits
ed plan
Schroeder-Elovitz Method of Budgetingschools
1.
2.
3.
4.
5.
6.
Determine approximate increase percentage that might
fly
Complete enrollment projections for each building and
each course at HS & MS
Develop Building budget base for each building by
increasing this year’s base per student by the projected
number of students
Provide principals with their base amounts and
projected enrollments
Provide principals with program budget sheets
Principals submit completed budget requests and
decision packets for expenditures beyond the base
7.
8.
9.
10.
Principals and other purchase center heads meet with
supt, sba, asst. sups. To defend their budget requests
(may bring dept heads)
Items inside the BBB are reviewed and approved
Decision packets are presented and approved or
rejected
Approved appropriations are folded into the district
proposed budget
Pesonnel
1.
2.
3.
4.
5.
6.
Cost of guides are determined by moving each staff
member up a step on the appropriate guide.
If in negotiations, reasonable expected settlement is
included
Known retirees are deducted and replaced with step 3
on the guide
Additions and RIF’s that are are determined at individual
defenses are factored in
SBA determines benefit costs
Appropriations are folded into the budget
Salaries

Guides

Increments

Retirees
Level Changes
Don’t forget benefits


Physical Plant Needs





Principals and facilities director submit project requests
to SBA
SBA and facilities director tour the buildings with
principals
SBA and facilities director prioritize list
SBA and facilities director present list and other building
operation requests at budget defense
Appropriations are folded into the budget
Other CO administrators and
supervisor present and defend program
sheets
1.
2.
3.
4.
5.
Transportation
Curriculum & Instruction
Technology
Special Education
Approved appropriations are folded into the budget
Preliminary budget
1.
2.
3.
4.
5.
6.
Developed from totaling the program sheets into
appropriate lines
Presented to the Board per their request
Modifications are made per Board direction
Proposed budget presented at public hearing
Board may modify again and approves for presentation
to NJDOE.
Election
Budget Calendar

July – Fiscal year begins –



October




closeout previous year
Begin to administer current budget
Enrollment projections
Staff needs projection
Facility needs projections
November



Current budget revision
Central office input on needs and changes
Maintenance & operations requests
Budget Calendar

January


February



Compile budget draft
Prioritize and adjust to reach desired level
March



Principal and Purchase center requests
Present Budget to the BOE
Revise as necessary
April



Get state approval
Budget hearing - Adoption
Local approval or Appeal
Budget Calendar

May –


Establish tax rate
July – Start again
Superintendents Role















Evaluate economic climate - talk to the board
Estimate other revenues
Come up with an idea of what might fly in terms of percentage
Translate into building budget base
Consider enrollment projections
Provide principals and other purchase center heads with their base and budget
planning forms
Personnel
Principal defense
Compile budget
Make adjustments
Present to Board
Get Board approval
“sell” the budget
Election/Board of School Estimate
Pass/Fail
Selling the Budget

Linden 2011-12 budget presentation
Cutting the Budget

Determine the amount to be cut

Develop Decision Packets

Prioritize

Prepare list of cuts
Budget Reduction

Methods similar to Budget development






Incremental – all lines reduced by same percentage
Line Item – lines are reduced by determined amounts that add
up to reduction
Formula – budget reductions based on formula usually driven
by enrollment
PPBS – Objectives and their funding are delayed or eliminated
ZBB – Decision packets are prioritized into proposed cuts
SBB – Principal is given the amount and he/she determines
what will be cut

Line Budget Reduction
Summary

Although often considered as a concrete activity, budgeting is
an area of school finance that is heavily influenced by the
values and philosophies with which one approaches the
endeavor.
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