Chapter 11
Budgeting:
Applying Policy Values
A Budget Directs Expenses
Savings
Expenses
• Fixed:
• Variable
A Budget Directs Expenses,
cont.
Savings
Expenses
Those budget parts
that we decide for
ourselves -- how
much we spend each
month on a mortgage,
car, or dining out ---
represent what is
important to us.
A Budget is a “Snapshot”
A budget – like
cancelled
checks -- is a
“snapshot” of
what we spend
and where we
spend it.
The difference
between
educational &
personal budgets
is that one is
public information
and one is
private.
Budgets Are Controversial
“The management of resources is one of
the most important and one of the most
controversial areas of educational
administration.”
The public varies greatly in how they
believe their tax monies should be spent
School Budgets Reflect Our
Community’s Values
• Our education budgets
involve a public process
that reflects the
economics, politics, &
the moral values we
hold as a community
and society
Budgets Reveal Our Priorities
• Examining the particulars of how
public monies are budgeted shows
the priorities we as a society have for
education and other public services
• This can be seen at the federal,
state, local, and building levels
• Roe defined education budgets as,
“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.”
Comparison of 2 District Budgets
School District A School District B
Total
Budget
$93,600,000
$93,600,000
# Students
12,000
12,000
Elementary
Middle
High Schools
10 @ 500
5 @ 800
2 @ 1500
12 @ 400
7 @ 600
3 @ 1000
Comparison of 2 District Budgets
Budget
Categories
School
District A
School
District B
Administration
4%
8%
Health Services
2%
3%
75%
75%
4%
6%
Operations &
Maintenance
12%
5%
Per Pupil
Expenditure
$7,800
$7,800
Instruction
Transportation
Similarities & Differences
• Same number of
•
•
•
•
pupils
Same total budget
Same per pupil basis
All schools built at the
same time
Two budget
categories are the
same (Instruction at
75%, Debt Service at
3%)
• School District A has 17
schools; School District B has
22 schools
• 5 additional schools means
additional administration &
transportation costs
• District A spends 12% of its
budget on Operations and
Maintenance while District B
spends only 6%. District B may
not be maintaining its
buildings as well as District A
Issues with
Facilities Maintenance
• Putting off roof repair
costs exponentially
more next year than it
does this year
• In the meantime, the
public makes a
determination about
the quality of schools
by how they are
maintained
• Deferring
maintenance costs
increased expenses
later and lost
community relations
now
Selected States with School
Budget Categories
State
Total Per Pupil
Spending
Instruction
School &
Gen.
Admin.
Operations
&
Maintenance
United States $8,032
$4,267
$535
$ 665
Wash’gton D.C.
$4,201
$6,088
$4,876
$3,828
$3,210
$2,858
$730
$867
$582
$462
$495
$306
$1,283
$1,064
$ 785
$ 676
$ 481
$ 397
New Jersey
Pennsylvania
Texas
Arkansas
Utah
$11,510
$11,471
$ 9,160
$ 7,743
$ 5,922
$ 5,278
Selected States with School
% of Total Spending
Instruction
School &
Gen.
Admin.
Operations
&
Maintenance
United States $ 8,032
53%
6%
8%
Wash’gton D.C.
36%
53%
53%
49%
54%
54%
6%
7%
6%
5%
8%
5%
11%
9%
8%
8%
8%
7%
State
New Jersey
Pennsylvania
Texas
Arkansas
Utah
Total Per Pupil
Spending
$11,510
$11,471
$ 9,160
$ 7,743
$ 5,922
$ 5,278
• The per-pupil spending
ranges from a low of
$5,278 in Utah to a high
of $11, 510 in the District
of Columbia
• The average per pupil
spending in the United
States is $8,032
• The variance alone
between the high and
low state is $6,232, or
more than double the
per-pupil spending in
Utah
Spending Reflects
Community Values
• The variance in state percentage spending
on Instruction ranges from a low of 36% in
the District of Columbia to a high of 54% in
Arkansas & Utah
• Spending on Administration varies from a
low of 5% to a high of 8%
• Spending on Operations and Maintenance
ranges from a low of 7% to a high of 11%
State Budget Categories
Besides Education
• Public Education (K-12) • Percentage range
in state
• Higher Education
budgets for
Public
• Public Assistance
Education is
• Medicaid
from a low in
Connecticut of
• Corrections
13.2% to a high
• Transportation
of 35.3% in
Wyoming
• “All Other”
State Budget % Spending on
K-16 Public Education
20.73%
Mid Atlantic – 20.58%
Great Lakes – 22.46%
Plains – 20.97%
Southeast – 20.93%
Southwest – 22.98%
Rocky Mountains – 26.16%
Far West – 21.38%
• New England –
•
•
•
•
•
•
•
Budget Priorities
• Just as states have priorities with
and within their budgets, the federal
government has priorities with its
budget
• With limited resources, decisions
must be made as to where those
resources should be placed
Federal Budget Spending, 2003
Social Security
$475 billion
22%
Health
$493 billion
23%
Defense
Income Security
Interest
$404 billion
$336 billion
$153 billion
19%
16%
7%
Other
$190 billion
9%
Education
$ 57 billion
3%
Environmental
$ 28 billion
1%
Internat’l Affairs
$ 21 billion
1%
Totals
$2157 billion
100%
Federal Budget Spending, 2003
Social Security
Health
Defense
Income Security
Interest
Other
Education
$ 57 billion
3%
Environmental
Internat’l Affairs
Totals
$2157 billion
100%
Three Main Sources of
Revenue for Public Education
 Local
 State
 Federal
 Notice that the
federal
percentage
appears
relatively flat
since 1970
Government Budgets Are A
Relatively New Phenomenon
• In 1314, the British
• The Cabinet held the
Parliament insisted that
the King spend tax
revenue for the
purpose for which the
taxes had been levied
• In 1742, the authority to
levy taxes was taken
from the King and his
Ministers and placed
with the Parliament
responsibility for
preparing the budget
and presenting it to the
House of Commons
• By law, the English
people controlled the
country’s finances
through a popularly
elected legislative body
Process for
Developing Budgets
• Today, virtually all democratic governments
use a similar method for the budget process
developed by the British:
• The executive branch develops the budget
• The legislative branch receives the budget,
amends and approves it, & levies taxes to
support it
• The executive branch then administers the
budget
A government budget is
ultimately a process by
which people govern
themselves.
U.S. National Budget Process
• In 1921, Congress
passed the first law
requiring a national
budget
• President Harding
signed the legislation
the following year
Local School Budgets
• Likewise, local
school boards
moved slowly to
adopt a formal
budgeting process
• Accurate historical
records of school
budgeting are not
available
• Today, every school
district employs
some form of
budgeting process
with varying levels
of effectiveness and
efficiency
Revenue Sources for Public Elementary
& Secondary Schools – 1970-71; 1999-2000
The Budget Process
Evaluating
Process
Budget
Planning
Seeking
Funds
Evaluating
Program
Spending
Funds
Budget Plan, Defined
A budget is a comprehensive financial
plan that involves 4 distinct essential
elements:
(1) Planning for the needs of the school district
(2) Seeking adequate funding for the program
(3) Spending the received funds
(4) Evaluating the results of the process and
program
Planning Budgets With the
Community in Mind
• This is a vital stage of the
budgeting process
• It involves a 4-step process of
– Identifying school district’s needs
– Establishing goals and organizing
objectives to obtain those goals
– Building a program to meet the objectives
– Costing-out the program/s to develop the
budget
Identifying School Needs
• Identifying the needs in the
schools and the school district
involves data analysis
• In today’s world it is
impossible to examine
programs without using
student achievement data in
the decision-making process
School Leaders Bring
Data to Community
• Good principals and superintendents obtain
data & have a constituents involved in
analyzing & interpreting what the data
mean
• Parents, business & community leaders,
teachers, administrators, clergy, students and
other vested groups meet to determine needs
• They seek patterns and meaning to what
the data indicate and achieve a consensus
about the school or district’s pressing needs
School Leaders Bring
Data to Community, cont.
• Once the schools’ needs have been
determined through this extensive and
collaborative data analysis process,
goals can be established and objectives
can be organized
• In this step, it is important to maintain
the community involvement
• People will not support what they do
not understand
Program Building
Follows Consensus
• Build the program
• Maintain the
that meets the
community
schools’ &
involvement in this
community’s goals &
stage
objectives
• Explore various
• Develop programs
programs and select
“in house” by the
the best fit
school district staff or
purchased by
outside developers
Costing-Out the Program
• Constituent groups
involved at the
beginning of the
planning process
should continue in the
phase of costing-out
the program
• Their continued
support for financing
the programs is
essential
• Once these programs’
costing-out numbers
are determined, the
various program
budgets are combined
to form a total dollar
value for the planned
programs
Seeking Adequate Funding
• Funding sources vary district to state
• The school board may seek budget approval from:
– The municipal authority or the governing body
– The community
– The school board, itself, may set
the tax rate (sometimes called a school tax)
• Regardless of which funding source is determined, a
majority of the public must support the budget if
the budget is to be approved
Maintaining Community
Support Assures Funding
• When school officials & budget planning team
members speak in local civic & religious
gatherings, the public can see the community
involvement in the budget process
• Involving influential community members from
the start benefits school finance – they already
understand the educational needs, support its
funding, & bring public credibility to the process
& product
“Closing the Deal”
• Once a critical mass
of the community
has established
support for the
school budget, the
school board and
the
superintendent’s
role changes from
“selling” to “closing
the deal”
Appropriating School Funds
States and localities have various methods for
appropriating funding to local school boards.
1. “Lump sum” appropriation
–
–
While the school board budget may be
divided into categories (instruction, administration,
transportation, and the like), the funding is by
the total amount and not by each of the
categories
In this case the school board is usually free to
transfer funds between categories to meet
various needs as they may arise during the year
Appropriating School Funds,
cont.
2. Appropriated by category
–
The governing body may either
allow or not allow the
school board to transfer funds
from one category to another
– This tends to be restrictive to meeting the
school district’s needs
Appropriating School Funds,
cont.
3. Appropriate funds by category on a
monthly basis
– Would require the superintendent
or designee attend the governing
body’s monthly meeting & request that funds
already approved, be appropriated by
category to the school board so the bills can
be paid
– Highly restrictive and inflexible in meeting the
school district’s needs
Know Your Funding Status!
• It is important that the superintendent
be aware of the funding status
Spending the Received Funds
• Once the new fiscal year begins, the new
budget cycle starts
• The purpose of administering the budget
is to spend the funds wisely in accordance
with the education plan
• To have a surplus at the end of the year can
make the school board and the
superintendent appear less than trustworthy
and competent in the budget process
Budget Planning Does Not
Anticipate Every Need
• Superintendents
and school boards
do not want to go
back to their
funding bodies and
request more
money for these
unexpected
occurrences
Planning for the Unexpected
• First, a “contingencies” line item can be
inserted into the budget to allow for the
unexpected situations
• Unfortunately, the public can see
“contingency” as a way of “padding”
or “putting fat” into the budget
• The public can also interpret “contingency” as
the school board and superintendent have
put insufficient thought into the overall school
system operation
Planning for the Unexpected,
cont.
• Another way to handle unanticipated
expenses is to “expand” another budget
area
• One old trick used frequently is
to “overestimate” the fringe
benefit factors for the employees’ wages
• A 2% pad on a $10 million salary and fringe
benefit factor budget allows for an additional
$200,000 to be used at the discretion of the
school district
Return on Investment
• With No Child Left
Behind legislation,
schools are more likely
to evaluate their
spending patterns to
determine the value of
spending
• In business circles, this
is akin to Return on
Investment
Evaluating the
Spending Process
• Superintendents provide the school board with
periodic (monthly printouts) budget updates
– budget line items in major categories
– the amount of funds expended to date
– the %age of funds expended to date
– anticipated problems with over-financed or
under-financed budget categories
Keep the school board informed in case of need
to shift funds from one category to another
Improving Budget Accuracy &
Effectiveness Over Time
• Each year’s budget
should build on the
previous year’s data
and allow for
refinements in
forecasting needs
• Superintendents’
relatively short job tenure
means the new leader
reassesses all the budget
practices and implements
a new budgeting system
that disturbs the
refinement process
Evaluating the
Spending Program
• An accountant or business manager
can evaluate the spending process
• Instructional leadership is required in
evaluating the spending program
Evaluating Student
Progress: AYP




In light of NCLB requirements that all
subgroups make adequate yearly progress
(AYP), it is increasingly necessary for
instructional leaders to make certain that all
children benefit from the program, including
those:
receiving special education services
receiving free or reduced lunch
English language learners
of a minority background
Evaluating Subgroup
Achievement
• Disaggregate student achievement data to
determine appropriately which students are
not progressing satisfactorily
• The planning process involves these
students’ achievement (or lack thereof) and
determining programs that may improve
achievement
• Enact plans, solicit funds, spend monies, and
wait for the accountability test results to
return. Review results & revise programs
Types of Budgets
•
Percentage Add On
• Zero-Base Budgeting
• Planning/Programming/Budgeting
/Evaluation (PPBES)
Percentage Add On
• Most common
• Adding a percentage to the
method
previous year’s funding level
• Advantage –
• If the governing body granted
simplicity
a 5% increase over last year’s
• Disadvantage – it
funding, the Superintendent
may be removed
would usually involve staff to
from the school
make recommendations about
district’s real
what programs should receive
needs
additional funding
Zero-Base Budgeting
• Advantage - staff
• Requires the budget start
involvement,
program evaluation,
public confidence in
selecting funded
•
programs
Disadvantage - time
and complexity in •
administering this
budget
from zero each year –
unlike a percentage add
on
Everything is reevaluated
each year
Each budget inclusion
must be justified
Planning/Programming/
Budgeting/Evaluation
(PPBES)
• Advantage - more
flexible, realizes
goals, objectives,
& modifications are
not met in a single
fiscal year
• Disadvantage few school district
and governing
body budgets are
flexible enough
• Designed to be a more flexible &
fluid process that extended
budget cycle to 5 years
•
•
•
•
•
Planning and establishing goals
Determining the cost and alternative
plan’s costs for achieving the goal
Evaluating the results of the plans
Modifying and improving the goals
Establishing and improving alternative
plans to achieve the modified and
improved goals
Site-Based Budgeting
• Advantages –
Builds
community
support in
meeting
student needs
• Disadvantage
– More work
for principals
and staff
• Develops a district
budget at each building
level with staff and
community input
• Allows the school site
decision-making latitude
for aligning goals with
resources
• A good educational leader promotes the
success of all students by
understanding, responding to, and
influencing the larger political, social,
economic, legal, and cultural context*
• The budgeting process, as described in
this chapter, lets educational leaders
demonstrate that they understand,
respond to, and influence the larger
contexts
Budgeting &
Professionalism
• As education is increasingly
politically-driven towards a
business management
model, good budgeting
knowledge – especially in
the area of program
evaluation – can establish a
professionalism about our
practices and encourage
community support for
education funding
The process of developing,
amending, approving,
and providing tax moneys
to support and administer
a budget is a uniquely
democratic process and
the means by which
people govern themselves