Budget Flexibility as the Key to Sustainability

• By Jay C. Toland
• 07/01/18

Even though the Great Recession has come and gone, its effects still linger with many public school districts. They continue to need the ability—and flexibility—to move money around to pay for high-quality programs, products, and services.

Budget flexibility can help districts stay relevant and successful. Districts create such flexibility by taking control of their finances. This is a two-step process. The first step is making sure the budget—or the plan to spend the district’s money—is aligned with the strategic plan. The second step is to monitor costs from every angle, especially from the noninstructional support side.

Because districts are not in a position to have funds unallocated, the majority of the budget is a zero-sum game. To increase the budget for one project is to decrease the budget for another.

How then does a district “find” the money to create new programs, accommodate the new expenditures, and move the district forward?

Where to Start

Districts can build a flexible budget in two ways:

1. Begin with a new budget at the start of the fiscal year.
2. Make adjustments to the current budget midyear or in mid-budget cycle.

The strategies are similar but are implemented in different ways.

New Year, New Budget

With a fresh budget, begin with the total funds available for expenditures and work backward, including the new projects first. For example, the district would like to start a new initiative that requires a $1 million investment, but no new money is coming in. Put that initiative first; then fill in the other programs and estimate the goals and costs of the existing programs.

At the end of this process, expenses will typically top revenues, which means you’ll need to trim expenses. First, look at the projected increases from the forecasted figures to the previous year’s data. Are the increases justifiable? If not, look for areas to cut that will have the least effect on the goals of the strategic plan.

Peter Drucker describes the concept of yield in The Effective Executive: The Definitive Guide to Getting the Right Things Done. When resources are limited, increasing the yield of the available resources is critical. Therefore, it is important to look at every program and use money as the catalyst to maximize yield. Hopefully, in the process of maximizing yield, funds can be diverted to the higher-yielding priorities. With high yield comes flexibility and success.

Midyear Budgeting

Spending in public schools needs to be frontloaded to ensure that this year’s money is spent on this year’s students. When adding a new set of strategic plan–oriented expenses midyear, look for underused budget initiatives; you may find an opportunity to increase the yield of those funds by spending them on something else.

Next, look at the vacancies list. The majority of public school funds are tied to people. If you have a long-term vacancy, determine whether those funds can be diverted temporarily or permanently.

Next, reach out to district vendors—your strategic partners. They can help by lowering their costs or reducing or eliminating underused services. They may also be able to provide the new goods or services the district needs at a reduced rate or within the current constraints of their contract or agreement.

Making Allowances

Flexibility comes with a constant discipline. Think of the district’s efforts to reach its goals as a trip. A map and a well-thought-out itinerary are key to a successful trip just as a strategically aligned budget is key to district success.

Furthermore, just as allowances for time are critical for a successful trip, flexibility is important to a district’s budget. With no time allowed for unexpected emergencies, trips become stressful and might stray off course. The same is true if the district’s budget has no flexibility—but the consequence can be a student’s future.

— This article is reprinted with permission from the May 2018 issue of School Business Affairs, published by the Association of School Business Officials International. asbointl.org.

This article originally appeared in the School Planning & Management July/August 2018 issue of Spaces4Learning.