American School Board Journal/May 2007 19

T he school district sits in the center of town. It once sprawledacross large expanses of farmland. Soon it will trace theedges of a metropolis. Despite its changes, it is still the heartof the community.

For nearly a century, this school system has served gen-erations of residents, sending many off to grand collegesand careers. But misfortune has struck, suddenly it seems,although school officials have seen it coming for a while.

The district’s budget is in shambles. Years of shiftingenrollment—the population ballooned, then nosedived—had taken its toll. So has the state’s funding formula, whichnow relies heavily on local revenue to carry the cost of edu-cation—an expense that continues to mount unabated.

The district needs to take action, and fast. Officials stripeverything to the bare essentials. Programs and staff are cut.The budget is frozen. The board contemplates closingschools, then decides to turn to the voters.

Sound familiar? It should. The nameless, faceless schooldistrict described above is a composite, a representation of ayear’s worth of headlines and headaches lived out by educa-tors nationwide trying to do the most they can with what theyhave. It’s a scenario more and more districts—rural, subur-ban, and urban—find themselves in today as firm financialfooting becomes a near anomaly in school systems.

Just about anything can throw a district’s budget off. Toomany kids. Too few kids. Natural disaster. Human error. Old

ManagingYour

Money

Naomi Dillon

To squeeze more out of less, districts are

relying on creativity and outside-the-box

thinking to keep budgets balanced

Reprinted with permission from American School Board Journal, May 2007 © 2007 National School Boards Association. All rights reserved.

20 American School Board Journal/May 2007

buildings. New mandates. About the only constant in thebusiness of educating the next generation is that the stakeswill get higher.

“You always are doing more with less,” says John Musso,executive director of the Association of School BusinessOfficials (ASBO) International. Most school funding formu-las try to account for inflation at some level but it’s alwaystoo little, too late, he says. “You really never can catch upwith that kind of race. You are always technically behind.”

Indeed, while the cost of public education nearly dou-bled from 1990 to 2002 (the most current data analysis avail-able from the National Center for Education Statistics),state and federal contributions each rose just 2 percent dur-ing the same period.

But before you throw up your hands in exasperation andsuccumb to the inevitability of financial instability, here aresome practices and attitudes you can cultivate to help max-imize your resources. Maybe you can even earn a buck ortwo in the process.

Better, faster, cheaper

It’s unclear when the term “efficient” morphed into a way oflife and not just a word to impress management. But some-how the promise of attaining the same results with less

effort, less money, or less negative impact has attacheditself to everything from apartment dwellings to laundrydetergent.

Ironically, as things become more streamlined, the ideaof what it means to achieve efficiency is under pressure tobecome more efficient. It’s not enough to realize a cost-sav-ings, get a better product, or expend less time and energy.Being truly efficient means reaching all of these objectives.This is especially true for school districts.

Before he was tapped to head ASBO, Musso spent morethan 30 years in schools and central offices, most recentlyas the chief financial officer at the financially troubledDistrict of Columbia Public Schools.

“I’ve been in many school districts over the years, and inthat period, I’ve seen many ups and downs in student fund-ing formulas,” he says. “Everyone has had to be more cre-ative and sophisticated in their budgeting.”

Energy efficiency, for instance, became a catchphraseduring the energy crisis of the 1970s. It was typified byadmonishments to shut off lights and turn down ther-mostats. The results were lower bills but also dim hallwaysand classrooms that were too hot or too cold.

“Now we understand by adding capital investments andpurchasing modernized equipment, we can help reduce

School finance is arguably the most complicated part of schoolgovernance. With so many vested groups involved, competinginterests to juggle, and mandates to follow, it’s a wonder thatbudget and board meetings don’t dissolve into angry shoutingmatches or maddening stalemates over how money should bespent. Well, at least not regularly.

A skilled and savvy financial officer can help you understandand navigate the intricacies of managing a budget with so manyvariables. But it’s still a steep learning curve, which is why the fol-lowing pointers are simple, easily applied lessons from school dis-tricts like yours.

Don’t rush to cutAll too often, district officials approach a budget with red

pen in hand, says John Musso, executive director of the Asso-ciation of School Business Officials International. “Why do welook at cuts first instead of increasing funding?” he asks.

Resist the urge to slash areas that seem like easy elimina-tions. For example, many districts cut travel and professionaldevelopment first because it’s discretionary and looks good tothe public. But Musso says conferences and training seminars

can help you learn new approaches to maximize dollars. “Effec-tive and efficient are two different things,” Musso says. “I maybe able to cut millions out of my budget, but if I’ve harmedsome program or student in the end that’s not efficient.”

Go for the lootStretching dollars is a skill every smart money manager

must master. An even wiser one knows how to find new re-sources. Advertising, if handled appropriately, is one easysource of revenue. “I don’t see a problem with advertising,”Musso says. “Of course, you’re not going to advertise alcoholor cigarettes, but anything kids see on TV already shouldn’tbe a problem. But it all comes down to community values.”

Entrepreneurial school districts also can find pots of moneyin grants, an often-ignored revenue source. At Musso’s firstschool district, teachers were trained in grant writing. The dis-trict also offered incentives, such as one that awarded thewriter of a winning proposal a salary increase equal to the per-centage of the awarded grant. “We were a small system—a$30 million budget,” Musso says. “But I think, one year, we se-cured about $5 million in grants.”

A few simple budget rules

Reprinted with permission from American School Board Journal, May 2007 © 2007 National School Boards Association. All rights reserved.

American School Board Journal/May 2007 21

energy costs and get the same level of light,”Musso says.

By the federal government’s accounting,school districts that are conscientious andproactive about energy consumption canreduce their bills by 30 percent or more.

Up for review

Such savings are certainly impressive, but utilities aren’t theonly budget items school districts can finesse and refine.But where do you start? If you’re in Virginia, a good place tobegin is with Michael Shook.

Shook oversees the Virginia School Efficiency ReviewProgram, which debuted in 2004 as a way for lawmakers todetermine if schools were using their dollars as wisely aspossible. “In essence, we looked at and continue to look atnoninstructional areas,” Shook says. “We don’t look at howwell kids are being taught. That’s No Child Left Behind.”

Districts volunteer for the program and pay a quarter ofthe $100,000 to $125,000 it costs the state to hire an outsideconsulting firm to conduct the review. It is an intensiveprocess, lasting up to five months and infiltrating virtuallyevery corner of district operations.

“I’ve been through federal reviews, from time to time,and we have our regular audits but nothing compares to

this,” says Roy Geiger, superintendent of New Kent CountyPublic Schools, which was the first district in line to expe-rience the scrutiny. “They took everything. It was painful forme and my staff.”

Geiger willingly put his employees through the wringerand his district in the spotlight because, he says, he wantedto remove the misperception that educators always havetheir hands out and excuses ready.

“I think we’re looked at as big government, and mostpeople remember the stories of yesteryear regarding gov-ernment waste,” Geiger says. “Though most of that was atthe federal level, there’s a generalization that, if there iswaste there then it must be in schools, especially sincethey’re not ‘finance’ people.”

Business minded or not, educators are certainly lifelonglearners. To date, 20 districts have taken the state up on itsoffer to find ways to do things better, whether it’s in teacher

Keep it simpleUnder Aaron Hardy’s direction, Nevada’s Washoe County

School District has an employee wellness program that hasgarnered national attention and accolades. Hardy has keptinterest and participation rates up by introducing activitiesthat are easy and minimally invasive. “I think what we’vefound is small and simple things are best by far,” he says.

The same methodology works for Steve Skrocki, who hassaved thousands of dollars for Pennsylvania’s Penn ManorSchool District by mining eBay for deals on common itemsand having students assemble desktop units for schoolsunder the supervision of IT staff. “Small ideas that are easy toimplement; that’s what we really go for,” he says.

Do your homeworkFor the past several years, the Mackinac Center for Public

Policy has polled Michigan school districts about the use ofoutside service providers. The latest survey, conducted in thesummer of 2006, shows that more districts are outsourcingfood, janitorial, and busing services to private companies.“School districts have no other choice. Their backs are against

the wall,” says Michael LaFaive, the center’s director of fiscalpolicy. “This is happening everywhere, and it’s especially attrac-tive in states with economic problems.”

Do your research and spell out everything before enteringinto a contract with an outside provider. The Katy IndependentSchool District, in Texas, outsourced its tech support to HewlettPackard in 2002. It seemed like a no-brainer since HP providedthe district’s hardware, but it turned out to be a big mistake.

“When you outsource with a company that is very prevalent inthe private sector, the biggest challenge is understanding thereis a difference between the private and public sector. That wasour whole problem,” says Lenny Schad, the district’s deputy su-perintendent of information and technology services. “It was try-ing to fit a square peg in a round hole.”

After a year, the district terminated the HP contract, but theexperience didn’t sour the IT department from outsourcing. Infact, Katy ISD contracts out systems and network engineers,positions that are hard to fill and even harder to retain becausethey are so specialized. “The biggest piece of advice is youneed to be selective on what you outsource and what you ex-pect from that relationship,” Schad says.

As things become more streamlined, the idea of what it means to

achieve efficiency is under pressureto become more efficient.

Reprinted with permission from American School Board Journal, May 2007 © 2007 National School Boards Association. All rights reserved.

22 American School Board Journal/May 2007

recruitment, building maintenance, or central administra-tion. Those reviews and the implemented recommendationshave resulted in a net savings of more than $19 millionannually.

Spotsylvania County Public Schools is by far the biggestwinner, recouping nearly $4 million. New Kent saved about$240,000 by doing things like buying items online andrestructuring its busing system.

Truth be told, the reviewer had a difficult time findingareas for New Kent to streamline. Staff members alreadydid, or knew they could do better than, many of the sugges-tions that were made. It was the sort of affirmation Geigercould put in the bank.

“My people know how valuable dollars are; it’s part ofthe culture,” Geiger says. “I tell my staff when I see my wifeI say, ‘I’m glad to see you, I hope you had a good time, nowlet me see the Visas.’ … That’s the attitude I try to convey.”

Promoting health has benefits

By the time he hit college, Aaron Hardy had also hit the 300-pound mark. When he should have been having the time ofhis life, Hardy was struggling to fit in socially.

“I didn’t feel good and I was thinking this wasn’t workingat all,” he says. “I needed to do something.”

Through exercise, proper nutrition and sheer dint of will,he shed 100 pounds in two years, a transformation that alsoshaped his career path. “It changed my life completely,”says Hardy, now the wellness director for the WashoeCounty School District in Reno, Nev.

Now, it’s no secret that escalating health care costs havebecome one of the most pressing issues in the country. Butdid you know that it’s the biggest single concern for districtbudget officers? ASBO surveyed more than 800 of its mem-bers in 2005 and found that rising medical costs worriedbusiness officials the most, even more than having to makebudget cuts.

Two-thirds of respondents said the expense was risingfaster than revenue. A like number said that, despite theirbest efforts to curb medical costs, they already wereimpinging on the district’s ability to provide academic ser-vices. Many said passing the cost on to employees was onemethod of containment, but about half also cited districtwellness plans as a promising alternative.

In 1994, six years before Hardy joined the district,Washoe County was slapped with a 43 percent increase inemployee health insurance costs. For the previous twoyears, the district tried to encourage employees to takeadvantage of medical screenings at district-sponsoredhealth fairs, but the participation rate was dismal. Withfinances now askew, the school board passed a policyrequiring employees to get annual health exams or have $30deducted from their paychecks every month.

The response, as you can imagine, was immediate.Employees protested, but they participated. As for the 5percent who didn’t, their contributions went into a kitty thatpaid for programs and services aimed at improving thehealth and well-being of staff members.

Under Hardy, those offerings have become engaging,entertaining, and all but impossible to resist. He kickedoff the school year, for example, with the “Healthy LunchClub,” a monthlong challenge to employees to add atleast one serving of fruits and vegetables to their middaymeal.

Besides receiving a nutritional guide and a lunch totebag, the 3,300 participants also got daily e-mails containinga healthy lunch tip and recipe. Some 2,400 employeespassed the challenge, losing a self-reported 1,800 pounds.

The district also maintains the “Pay for Success” pro-gram, which runs all year and doles out $10 for every pounda participant loses, up to a maximum of $250 annually. Thedistrict has shelled out $50,000 to more than 900 employees.But there is a catch: If the person regains the weight, he orshe has to return the money.

Not all programs focus on weight loss. Hardy has enticedemployees to sleep, floss their teeth, and wash their hands,among other things, with ingenious little slogans, factoids,and cool prizes. During “Scrub-a-Dub,” the hand hygieneprogram, the custodial staff at one school e-mailed Hardy totell him they’d never gone through so much soap before.

Most activities are paid for by that monthly fee, now $40,assessed on employees “who refuse to engage in appropri-ate health actions,” Hardy says. But last year, as the fundsbegan to dwindle, the school board voted to chip in $2 forevery employee into the pot.

Reprinted with permission from American School Board Journal, May 2007 © 2007 National School Boards Association. All rights reserved.

American School Board Journal/May 2007 23

It wasn’t just a feel-good kind ofmove. The board’s decision wasbacked up by cold, hard numbers.Not only do wellness participantsmiss three fewer days on averagethan nonparticipants, but alsothey file fewer medical claims andwhen they do, it costs about 7 per-cent less than non-participants.

“Most wellness programs miss the mark in trying to mir-ror what health-care programs do by diagnosing problemsand dumping limited resources into high-risk people,”Hardy says. “They miss the thousands of people lined upready to be the next risk factors. We simply encouragehealthy behavior adherence.”

Get creative

Taking a risk, by definition, yields an uncertain outcome.When it’s your own money, the game of chance is easier toplay. But when your decisions impact thousands and hun-dreds of thousands, that approach is a little harder to jus-tify.

Still, stepping outside the box to trace unconventionalpaths is really a big part of being a successful, financiallystable school district. We’re not talking about wild, unex-plored, and unsubstantiated money management methods.But there’s nothing wrong with trying something new.

Or in the case of Pennsylvania’s Penn Manor SchoolDistrict, something old, tried, and true. “You can find any-thing on eBay,” says Steve Skrocki, the district’s assistantsuperintendent of financial operations, who turned to thispopular online auction house as a means to save the district

money. “I’ve been a customer for years.”So, it was with some familiarity two summers ago that

Skrocki proposed that the district use the site for purchas-es and offloading surplus material. Since getting the go-ahead from the school board and clearance from auditors,Skrocki has bought textbooks, maintenance equipment, andgift cards from national retail chains while selling obsoletephone systems and other outdated technology.

“We’ve had a great experience,” he says. “Everything isnew. We haven’t had any problems receiving it on time. Webuilt a maintenance facility a year ago and landscaped thewhole area with eBay purchases.”

While it won’t save them millions, using eBay for small,common items adds up, Skrocki says. “We eke out dollarshere and there and before you know it, it ends up beingthousands.”

That’s been the experience for Daniel Shearer, the trans-portation director for Scottsdale Unified School District in

Arizona. For the past several years, he’s implemented a hostof cost-saving measures in his department, including con-tracting out bus maintenance, installing a department-owned radio system, and using a fuel additive that con-served gasoline.

Shearer even found a way for his department to makemoney for the school district by selling ad space on thesides of buses. Parents were included in that discussion anddeliberateness was used in crafting a policy for that rev-enue-generating idea.

“We’re really restrictive on what we allow on the buses,”Shearer says. “No fast-food restaurants or [soft drinks].Real health-conscious things and positive messages.” So far,the district has been able to pull in about $100,000 annuallythrough this endeavor, and only about a third of the buseshave advertising.

“The changes I make don’t have a huge impact on theoverall budget,” Shearer says. “But if I can save $50,000,$100,000, that’s a teacher or two. Every dollar makes a dif-ference.” ■

Naomi Dillon (ndillon@nsba.org) is a senior editor of AmericanSchool Board Journal.

Stepping outside the box to trace unconventional paths is

really a big part of being a successful,financially stable school district.

Reprinted with permission from American School Board Journal, May 2007 © 2007 National School Boards Association. All rights reserved.