MASBO Institute Budgets Small Schools 02-14€¦ · Involve administrators and supervisors in...
Transcript of MASBO Institute Budgets Small Schools 02-14€¦ · Involve administrators and supervisors in...
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School District Budgets Small School Perspective Randi Johnson Director of Finance and Human Resources
North Branch Area Public Schools
� 3,100 students and declining � 45 miles north of Twin Cities � Three traditional school buildings � No operating referendum
� Challenges of funding inequalities � Four day week
� Survival
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Small school district � Business manager typically fills many roles
� Finance, HR, Maintenance, Grounds, Food Service, Technology, Transportation, etc.
� Limited support staff � Struggle with separation of duties � May be the only person in district with any
depth of understanding of school finance � Limited amount of time to devote to
budget development and monitoring
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Today � Learning to budget will take more than 45
minutes � Some tips
� Where to start, things to look for
� Sharing my perspective and opinions � Decades of budget development � Decades of budget reductions � Surviving and thriving
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Your most important task! � Sets levels of staffing
� Your numbers determine other people’s livelihoods and whether they will have jobs
� Determines the programs kids in your district will have access to � What is more important to your families than their kids?
� Drives bargaining � Emotions run high
� Guides decisions about elections � People have to vote to raise taxes?
� Superintendent’s career depends on it almost as much as yours does
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Under the spotlight � People pay attention to budgets
� When you are bargaining � Employees
� When you need to cut budgets � Employees and parents
� When you have elections � Community members
� Can be very lonely when people are challenging
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Credibility � Budget work will impact credibility
� Superintendent � Must have confidence in your work
� School board � Will need to defend your work
� Employee groups � Very helpful if you can get it, but it is fleeting
� Public � Very difficult to get in highly political environment
� You � Believe in yourself and have confidence in your
numbers, because everyone else is depending on you
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Developing a budget � Make it a priority to figure it out and do it well!
� Work to understand funding formulas � Work to identify the nuances of your district � Share accountability
� Budget is collection of assumptions � No right or wrong answers, just guesses � Allocation of resources reflects priorities
� Be conservative, to a point � Ending the year with extra funds is far more
acceptable than coming up short
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Before you start � Try to understand the priorities of the district
to guide your work � Mission, vision and/or strategic plan
� Identifies direction for the school district � Should reflect shared values � Should guide budget priorities
� Every district has a unique identity � Traditions, strengths, community pride
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Creating a budget � Find a process that you will have confidence in
� Spreadsheets or financial information system � Final result needs to be a line item budget
� Project multiple years � Only to show trends
� Helps to see what to expect in the future � Shows the strengths and weaknesses of your
assumptions
� Impact of one-time versus ongoing expenses
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Creating a budget � Use consistent methodology from year to year
� Continually reflect on what you have done and what can be improved
� You will gain more confidence in your projections � Consistency will help you gain credibility
� Don’t operate in isolation � Superintendent should be in agreement with all
assumptions � Involve administrators and supervisors in decisions
about their functional areas � Don’t hesitate to ask for help:
� MASBO, peers in other districts, MDE staff
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� Two seasons � Budget time (winter/spring) � Audit time (summer/fall) � One revision to current year approved with next year adoption
� Always embed reasonableness checks � Don’t assume spreadsheets are perfect � Do the numbers make sense given what you know? � Project out five years
� Creates the expected values for the next year � Accept variances
� If I had time to do more frequent revisions, I would, but I don’t � Focus energy where it will have the biggest impact
My budget process
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Where to begin?
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General fund revenues
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� State aid/property taxes = 90% of general fund revenues
� Learn how the formulas work!
Estimating state revenues � Enrollments drive revenues
� Project enrollments based on October 1 counts � Compute “survival “ rates
� Final ADM’s compared to October 1 counts
� State funding formulas change with every legislative session � MDE has great resources
� Levy limitation forms � “What if” simulations � Aid entitlement reports
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Other revenues � Federal revenues
� More significant amounts if more poverty � Entitlements come out too late for planning � Most years, safe to assume prior year’s
entitlement � Sequestration
� Miscellaneous revenues � Look at history and what you know � Fundraising and donations
� Can you count on it year after year?
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My process for revenues � Enrollment projections
� Simple cohort survival method � Survival rates
� School-wide for K-8 � By grade 9-12
� Spreadsheets replicate state formulas � Allocate resources to sites � Updates expense based revenues
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General fund expenses
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� Personnel costs = 80% of general fund expenses
� Fairly predictable � Assumptions can
become political � Learn about your
employment contracts!
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Estimating personnel costs � Contract provisions
� Wage advancement (steps and lanes) � Benefit costs
� Set dollar amounts or variable � Years of service based
� If you have to cut staff… � Rules for layoff and bumping � Teacher tenure � Notice requirements will force your timelines
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My process for personnel � Advance staff based on current contract
� Steps and lanes � Years of service
� Assume they are all coming back or being replaced
� If enrollment is growing, add staff to maintain current class sizes
� Freeze salary schedules and benefit contributions in negotiations years � Don’t cut in advance for settlements
� Use history to identify amounts for extra wages � Substitutes, extra hours, summer school, etc.
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Other expenses � What can you predict?
� Big capital projects � Specific initiatives � Ongoing contracts
� What is hard to predict? � Energy costs � Tuition costs � Disasters
� How big is the impact?
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My process for other expenses � Identify big projects and initiatives
� Capital projects � Curriculum adoptions
� Identify inflation factors for categories of expenses
� Consistent by object code � Freeze controllable costs
� Discretionary budgets � Inflate other costs
� Energy, contracted services
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When there is a deficit! � Before you go too far, revisit assumptions
� Do the numbers make sense? � Wage and benefit inflation � Inflation assumptions
� Once you are confident � Plan a process to develop recommendation � Timelines and communication plan
� Be creative and stay positive � Vision, mission, strategic plan � What can be done to provide the best
programming possible with the resources available
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Some ideas for adjustments � Staff turnover
� Retirements, resignations, leaves of absence � Savings from teacher turnover can be significant
� Cooperatives, sharing and contracting � Can you share with neighbors? � Might contracting be an option?
� Fund balance � What is your policy target?
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More ideas � Energy savings
� Changes to mechanical systems � Changes to human behavior
� Review procedures and processes � Redundant processes? � Can you streamline?
� Equipment changes � Technology changes
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Longer term ideas � Excess capacity
� How are buildings being used? � How could buildings be used? � Could some square footage be eliminated?
� Schedule � Staff assignments and utilization � Four day week
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Fund balance � Assigned, designated, restricted, reserved,
unrestricted, non-spendable � Why does everything have to be so complicated?
� Fund balance (within reason) is a good thing � Cushion for the unexpected � You can only spend it once � Allows consideration of deficit spending � Negative fund balance has consequences
� Statutory operating debt � Borrowing
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My fund balance approach � Align expenses with revenues � Spend reserves first, unless you have a plan
� Unassigned fund balance gives you the most flexibility
� Create assigned fund balances if useful � Plan deficit spending if fund balance exceeds
policy target � Identify one-time expenses for use of fund
balance � Spend down over time
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Reality of budget cuts � It will impact people
� Whether you eliminate programs or increase class size
� 80% of the budget is personnel � People will lose jobs � Emotions will run high
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Shared accountability � Hold administrators/directors accountable
� Don’t permit overspending � Consequences if they do
� Involve administrators/directors in budget development � Food service and community education must be self supporting
� Site budgets � Allocate resources based on enrollment
� Adjust to actual � Carryover unspent funds
� Why? � More people paying attention to spending � Increases broader understanding of resources with staff � Administrators/directors have more ownership of budget decisions � Helps reduce your isolation
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Budget Boot Camp � Collaboratively identify priorities and needed changes
with district leadership team � Process
� Superintendent identifies areas to investigate � Small teams research, debate, recommend � One or two days of intensive sharing of recommendations
with full team � Budget priorities established � Why?
� Increases creativity and decreases competition � Expanded programming while cutting budgets
� More sharing between buildings and departments � Increases understanding of district-wide perspective
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Gaining credibility � Function with integrity
� You will never go wrong � Avoid politics
� Stay focused on doing the right thing for kids � Don’t threaten things you don’t intend to do
� Be transparent � Publicly share budget to actuals � Publicly share the challenges of creating budgets � Clearly articulate your assumptions � Make information readily available on your
website
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Gaining credibility � Simplify and translate everything into English
� School finance is complicated � No one wants to understand it � It helps if you can show that you do
� Public budget presentations � Describe the big picture � Provide summary numbers that are meaningful � Use graphics � Revisit what prior projections said, what the current one says, and why
they are different � Use simple terms to describe what it all means
� Be consistent and predictable � If you can explain the budget in simple, understandable terms…
you gain trust
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Summary � Remember that budgeting is really important work � Spend the most time on the areas of biggest impact � Reflect on your work and find ways to improve � Hold administrators/supervisors accountable � Be transparent � Translate all the jargon into the simplest terms
possible � Believe in yourself…
� No one else in your district knows as much as you do � They are all depending on you
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Questions?
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