Government Finance Officers Association

School Budgeting

October 11, 2019

Why Budgeting?

More than just a financial exercise

Bringing the goals and strategies of a

district to fruition

Making connections between desired

outcomes/service provision and the

dollars

S2

The Process Brings Together Strategic

Academic Planning and the Budget Process

…strategic planning and the budgeting process are merged to create a process for strategic

use of resources in the district:

In Smarter School Spending…

Merging these processes allows for greater alignment of district strategy

and finances, and allows the district to balance financial decisions as tradeoffs for increasing strategic investments in

students

Budget Process

Academic Strategic Planning

1. Strategic Plan

2. Strategic Finance Plan

3. Strategic

Annual Budget

…strategic planning and budget processes happen in parallel tracks

that don’t intersect:

In many districts…

Academic Strategic Planning

Budget Process 2. District Budget

1. Strategic

Plan

When these processes happen in isolation, a district is at risk for creating a strategic plan that cannot be funded and a budget

that has no strategic basis

S6

Background & Development

Best Practices in School Budgeting developed by GFOA in

conjunction with the Smarter School Spending website with input of

several districts and other experts (http://gfoa.org/pk-12-budget)

Smarter School Spending developed in partnership with four

districts working closely with consultants on their budget process

(http://smarterschoolspending.org/)

Award for Best Practices in School Budgeting is the new GFOA

budget award based on the Best Practices in School Budgeting

(http://gfoa.org/school-budgeting)

Alliance for Excellence in School Budgeting

is an early adopter group of nearly 100 districts

formed by GFOA to aid implementation

(http://gfoa.org/alliance-excellence-school-budgeting)

S8

S5

Best Practices in School Budgeting

1. Plan and Prepare 2. Set Instructional Priorities 3. Pay for Priorities 4. Implement Plan 5. Ensure Sustainability

How are they related?

S6

Best Practices

Guidelines

Aw

ard

Resources

Smar

ter

Sch

oo

l Sp

en

din

g

Core Concepts

Plan and Prepare

Set Instructional

Priorities

Pay for Priorities

Implement Plan

Ensure Sustainability

Implementing the Best Practices

Not meant as an outright replacement of

your existing budget process

Framework to integrate current efforts to

help move the bar forward

Way to help identify areas that may need

improvement

Not a linear path - focus on areas of most

immediate benefit to gain quick wins

S7

First – How to Begin

Emphasis on planning and setting the

stage

• Collaboration

• Framing the process

• Baseline performance

• Engagement

S8

S9

Best Practices in School Budgeting

1. Plan and Prepare A. Establish a Partnership between the

Finance and Instructional Leaders B. Develop Principles and Policies to

Guide the Budget Process C. Analyze Current Levels of Student

Learning D. Identify Communications Strategy

Establish a Partnership between the

Finance and Instructional Leaders

Collaboration between the academic and financial

leadership of a district is key to the Best Practices in

School Budgeting

Aligning the district’s scarce resources to programs that

have the greatest impact cannot be effectively or efficiently

done with the district working in silos…

Supports providing governing board with better

options/ideas for consideration

S10

Developing Principles

Use as a way to set tone/change culture

• Focus on students

• Data

• Cost-effectiveness

• Equity

• Long-term

• Transparency

S11

Developing Policies

General Fund Reserve

Definition of a Balanced Budget

Asset Maintenance & Replacement

Financial Emergency Policy - School

Long-Term Forecasting

Budgeting and Management of Categorical Funds

Budgeting for Staff Compensation

Program Review and Sunset/Alternative Service Delivery

Year-End Savings

Funding New Programs

S12

Analyze Current Levels of Student

Learning Collecting performance data

• Develop a well-rounded perspective on student performance

• Ensure data is – relevant, consistent and can be disaggregated

Measuring student performance • Comparison against a standard of proficiency

• Relative improvement

• Changes over multiple years

Data culture

Focus on future needs

S13

Identify Communications Strategy

Communication strategy components:

• Process overview

• Explanation of decisions

• Stakeholder engagement

Implement communication strategy

• Identify the messengers

• Identify target audience and tailor messages

• Select communication channels

• Gather feedback and adjust

S14

Key Resources

S15

Collaboration Case Study: https://smarterschoolspending.org/resources/gfoa-best-practice-establish-partnership-between-finance-and-instructional-leaders Principles Example: http://smarterschoolspending.org/resources/district-examples/portland-public-schools-budget-principles Policy Templates: http://www.gfoa.org/step-1-plan-and-prepare Engagement Case Study: http://smarterschoolspending.org/resources/district-examples/traverse-city-area-public-schools-elevator-speech-case-study

Second – What is the Focus

Establishing direction

• Goal-setting

• Deep dive on issues

• Develop strategies

• Prioritization

S16

S17

Best Practices in School Budgeting

2. Set Instructional Priorities A. Develop Goals B. Identify Root Cause of Gap between Goal and Current State C. Research and Develop Potential Instructional Priorities D. Evaluate Choices amongst Instructional Priorities

Broader Goal Purpose

Two-fold:

• Direction

• Expectations

S18

Connections

19

Strategic plan

Long-term

financial plan

Capital plan

Budget Results

evaluation

GOALS

Develop Goals

SMARTER framework:

• Specific - precise outcome or result

• Measureable - verifiable, ideally quantifiable

• Achievable - grounded in reality

• Relevant - focused on student achievement

• Time-bound - short and long-term objectives

• Engaging - reach for ambitious improvement

• Resourced - finances aligned with goals

S20

Moving beyond…

S21

“Every student will graduate college and

career ready”

Major Goal: Immediate Investment in Struggling Students

Sub-Goal: ELL Students. Fund programs aimed at closing the achievement gap of English Language Learner (ELL) students

What is the need? LCS spends less on ELL students than comparison districts. The LCS ELL population is growing steadily as the student achievement rates continue to be low

Specific - Adds Precision to the Major Goal

Relevant – says why this goal matters

Example: Lake County Schools,

Florida

S22

Example: Lake County Schools,

Florida What will the District do?

Determine programming options

Compare options by potential A-ROI

Select highest return option(s)

What will it cost?

What gains does the district expect?

Year 1 Year 2 Year 3

$1.9 million $2 million $2 million

Measure Proj. ’15

Act. ’15

Goal ’16

Goal ’17

Goal ‘18

Goal ’19

ELL Grad. Rate 70% 57% 70% 80% 90% 95%

Achievable Clear path

laid out

Resourced – Est. cost for budget

Measureable, Time-bound, & Engaging

S23

Define and Distribute Goals

Defining goals for academic achievement

and distributing goals to schools

• Assess the district’s strategic environment

• Set SMARTER goals for multi-year district-

wide improvement

• Understand baseline performance at the

school level

• Set school site goals

S24

Measurability – Setting Targets

S25

District Example (from budget doc) - http://www.fultonschools.org/en/divisions/finserv/Pages/Budget-Services--.aspx

Measurability – Another Example

S26

Identify Root Cause of Gap between

Goal and Current State

Rationale for root cause analysis

• Move beyond addressing symptom level

solutions

• Find underlying cause of issue

• Process should involve different perspectives

– not only to assist analysis - but also develop

a broad base of support to implement

solutions

Possible technique – 5 Whys

S27

Root Cause Analysis Example

S28

A Root Cause Analysis on Special Education from Beaverton

Q. Why are so few 8th graders who receive special education not meeting State standards? A. They are not prepared to meet the standards.

Q. Why are they not prepared to meet the standards? A. They lack access to appropriate instruction in grade level content.

Q. Why are they not participating in general education classes, where they can get instruction in grade level content? A. The general education teacher may not have the tools or skills to address behavioral needs and scaffold instruction.

Q. Why do general education teachers feel unprepared to instruct students who receive special education services? A. Professional development for general education teachers may not support how to instruct students with varied learning and behavioral needs.

Q. Why doesn’t professional development support these skills? A. The budget for professional development to support special education students is provided exclusively by the special education department, which only trains special education teachers.

! Solution: We need to change the budget so that professional development for helping special education students goes to all teachers, not just special education teachers.

Research & Develop Potential

Instructional Priorities

What is an instructional priority?

• Strategy for overcoming identified problems and achieving stated goals

How to research and develop instructional priorities? • Look at proven practices

• Guidelines for development

S29

Inputs Activities/

Strategies Outputs

Evaluate Choices between Instructional

Priorities

Identify and describe the options

• Does the option meet the guidelines?

• Reduce/organize options

Consequences of decisions

• Impact, affordability, feasibility, support

Public engagement

S30

Key Resources

S31

Inputs Activities/

Strategies Outputs

Goals Case Study: http://smarterschoolspending.org/resources/district-examples/lake-county-school-district-smarter-goals-case-study Root Cause Analysis Case Study: http://smarterschoolspending.org/resources/district-examples/beaverton-school-district-root-cause-analysis-case-study Instructional Priority Planner Tool: https://smarterschoolspending.org/resources/instructional-priority-planner Priority Setting Tool: http://www.gfoa.org/pk-12-budgeting-evaluating-options

Specific Measureable Achievable Relevant Time Bound Engaging Resourced

Third – How to Fund

Allocating/finding resources

• Analyzing current programs

• Evaluating new proposals

S32

S33

Best Practices in School Budgeting

3. Pay for Priorities A. Applying Cost Analysis to the Budget Process B. Evaluate & Prioritize Use of Resources to Enact the

Instructional Priorities

Apply Cost Analysis to the Budget

Staffing analysis

Cost of service analysis

• Per unit costs

• Cost per outcome

• Relative cost per outcome

• Academic return on investment (A-ROI)

But – crucial to understand the need for

pairing context with analytical results

S34

A-ROI

Academic Return On Investment

• Basic formula:

Or, more simply:

S35

A-ROI = ((Learning increase) x (Number of students helped))

Dollars Spent

Measure of Student Success (BANG) Amount Spent (BUCK)

What is Success?

Program A Program B

100 additional graduates 75 additional graduates

$10,000 $5,000

$100/graduate $66/graduate

1% A-ROI 1.5% A-ROI

Which do you go with?

S152

A-ROI Themes from Smart

Practices

Establish your own principles of A-ROI

Recognize that not all forms of evidence are equal

Be meticulous about the research question and outcomes

Make sure the program is implemented well

Make the results resonate

Specify the outcome you are measuring and how it will be measured

Avoid common decision-making pitfalls

S37

GFOA Research Paper -http://www.gfoa.org/sites/default/files/AROIWhite%20PaperFINAL.pdf

How to Pick AROI

Candidates

Does the program consume a lot of staff time or money?

Are the necessary data readily available?

Are there plans to substantially expand the program?

Does the program serve a large number of people?

Is it politically feasible to make changes?

Is there uncertainty about the program’s effectiveness?

S38

Evaluate & Prioritize Expenditures to Enact

the Instructional Priorities

Finding resources

• Revenues, sunset existing programs,

efficiencies

Weighing trade-offs

• Consistency, transparency, data

Overcoming constraints

• Funding limitations, legal issues, culture,

contracts

S39

Key Resources

S40

> A-ROI GFOA AROI White Paper: http://www.gfoa.org/academic-return-investment-foundations-and-smart-practices AROI Case Study: http://smarterschoolspending.org/resources/district-examples/traverse-city-area-public-schools-academic-roi-case-study Cost Savings Idea Tool: https://smarterschoolspending.org/resources/cost-savings-options-screening-sizing-tools Strategic Abandonment Tool: http://www.gfoa.org/pk-12-budgeting-strategic-abandonment-tool Procedural Justice Case Study: https://smarterschoolspending.org/resources/gaining-commitment-paying-your-priorities-0

Cost Savings Options

S41

https://smarterschoolspending.org/resources/cost-savings-options-screening-sizing-tools

Next – Put Plans to Action

Implementing with fidelity

• Financially

• Clear steps/responsibilities for implementation

• Impacts to school sites

• Communicating through the budget

S42

S43

Best Practices in School Budgeting

4. Implement Plan A. Develop a Strategic Financial Plan B. Develop a Plan of Action C. Allocate Resources to Individual School Sites D. Develop Budget Presentation

Strategic Financial Plan Framework

Reference to district’s strategic plan

Goals for the district

Description of the instructional priorities

Evaluation criteria for student outcomes

Funding of instructional priorities

Long-term forecasts

Analysis of scalability to impact

Review trigger

S44

Co-Dependency

“Good financial planning without aspirations

is accounting. Great aspirations without

financial planning is a recipe for disaster.”

- Former Minneapolis Mayor R.T. Rybak

S45

Plans vs. Planning

“Plans are nothing, planning is everything”

-General Dwight D. Eisenhower

Again – the Connections

47

Strategic plan

Long-term

financial plan

Capital plan

Budget Results

evaluation

GOALS

Strategic Planning – Breakdown

48

Ground

Mission

Strategic Priority

Areas/Themes

Strategic Goals

Objectives

Strategic Initiatives

Measures

& Targets

35,000 ft.

15,000 ft.

Vision

25,000 ft.

What is our purpose? What do we do?

What are the main focus areas (“Pillars of Excellence”) of our business?

What results do we want to satisfy our customer/stakeholder needs?

How will we evaluate performance to know if we are achieving the results we want?

Specifically, what projects and programs

will lead to the desired results?

What continuous improvement activities are needed to get results?

What is our picture of the future? Customer/

Stakeholder Needs

Strategic Planning – Key Steps

1. Initiate the process

2. Prepare a mission statement

3. Assess environment

4. Identify critical issues

5. Agree on limited number of broad goals

6. Develop strategies to achieve goals

7. Create action plan

49

Strategic Planning – Key Steps (continued)

8. Develop measurable objectives

9. Incorporate performance measures

10. Obtain approval of plan

11. Implement plan

12. Monitor progress

13. Reassess strategic plan

50

GFOA Best Practice - http://www.gfoa.org/establishment-strategic-plans

Strategic Financial Planning

Process

51

Staff Task

Board & Staff Task

Board & Staff Task

with Critical Point of

Public Input

KEY

Strategic Planning

Identify & Confirm

Critical Issues

Analyze Financial Trends,

Debt, & Develop Forecasts Analyze Critical Issues

Identify Imbalances

Financial Strategy Workshop

Prepare Strategic Financial

Plan

Implement & Monitor

Implement through

Budget

Deliberate &

Approve Critical

Assumptions

Strategic Financial Plan –

Recommended Components

Reference to district’s strategic plan

Goals for the district

Description of the instructional priorities

Evaluation criteria for student outcomes

Funding of instructional priorities

Long-term forecasts

Analysis of scalability to impact

Review trigger

S52

Example - Lake County Schools, FL

S53

‘Balance Sheet’ Approach S54

Develop a Plan of Action

Taking the steps to ensure instructional priorities are successful

The following elements should be included in the plan of action:

• Instructional priorities

• How the priorities will be funded

• Actions intended to implement and fund priorities

• Sponsorship structure

• Sources of evidence that action is occurring

• Process for review and adjustment

S55

Allocate Resources to Individual School

Sites

Districts, particularly those with multiple schools sites, need to have a clear and transparent method for allocating resources to each school site

GFOA does not advocate a specific method between staffing ratio and weighted student funding methods, but ensure: • Use of current enrollment

• Supported by solid rationale

• Transparent

S56

Develop Budget Presentation

Fundamental organization of the budget:

• The Challenges

• Goals – remember SMARTER framework

• Strategies and programs

• Financial plan

• Risks to long-range financial sustainability

Telling the district’s story

Use as a communication device

S57

Example Budget Document

S58

https://smarterschoolspending.org/resources/district-examples/goochland-county-public-schools-budget-document

Key Resources

S59

Strategic Financial Plan Template: https://smarterschoolspending.org/resources/strategic-financial-plan-template District Strategic Financial Plan Example: http://smarterschoolspending.org/resources/district-examples/lake-county-school-district-strategic-financial-plan-case-study Case study/District example – Allocation Methodologies: http://smarterschoolspending.org/resources/district-examples/beaverton-school-district-allocation-models-case-study Budget Document Example: https://smarterschoolspending.org/resources/district-examples/goochland-county-public-schools-budget-document

Finally - Sustaining

Measuring results and evaluating process

S60

S61

Best Practices in School Budgeting

5. Ensure Sustainability A. Put the Strategies into Practice and Evaluate Results

Continuous Improvement

Monitor Strategy Implementation

Evaluate Interim Results throughout the

Year

S62

What is Monitoring?

“A formal set of processes for comparing budget to actual results to monitor financial performance. Budget monitoring should include analysis of a diverse set of indicators to best inform the analysis and facilitate evaluation of a government’s overall performance. Establishing and conducting regular budget monitoring provides organizations the opportunity to promptly adjust for any significant variances to ensure continuity of program/service delivery.”

GFOA Best Practice - http://www.gfoa.org/budget-monitoring

Essential Components

Identify elements to be reviewed

How to analyze elements

Level of detail for analysis

Responsibility for analysis

Tools for conducting analysis

Communicating analysis

Action/next steps

S64

What are Performance Measures?

“Performance measures are used by governments to collect

information about operational activities, achievement of goals,

community conditions, or other environmental factors to better

understand a situation and make informed decisions. Regardless if an

organization has a centralized collection system for performance

measures, the use of performance data should be integral to an

organization’s decision making processes and leaders within an

organization should set expectations that key decisions are

supported by evidence. For optimal use, performance measures need

to be developed considering the potential audience for the information.

As a result, organizations need to identify and track measures at an

operational, managerial, policy making, and community level.”

GFOA Best Practice - http://www.gfoa.org/performance-measures

Key Conditions

Useful

Relevant

Reliable

Adequate

Collectible

Consistent

66

S66

Less Obvious Conditions

Environment – externalities impacting

services

Responsibility – who collects, stores and

disseminates

Systems – leverage systems

appropriately or identify need for new

systems to ease burden of collection

S67

Comparisons Are Tricky

Comparing/benchmarking measures with other

organizations can lead to misinterpretation

Problems include unique environments,

different measurement approaches, different

ways of measuring and differing service levels

S68

Resources

Smarter School Spending

• Free resources – including case studies, district examples,

templates, etc.

• www.smarterschoolspending.org

GFOA School Budgeting Resource Center

• Additional resources – more district examples, outside

links, GFOA best practices, etc.

• www.gfoa.org/pk-12-budget

GFOA Best Practices

• http://www.gfoa.org/best-practices

Upcoming Events

GFOA Annual Conference 2020 – New Orleans – May 17-20 • Preconference session for

school budgeting on May 15

• Other networking opportunities

with school districts

Alliance for Excellence in School Budgeting • November 5-6, 2020 in Chicago

• More information at

http://www.gfoa.org/alliance-excellence-school-budgeting

Additional Trainings on Best Practices in

School Budgeting: • Austin, TX – December 10

• Long Beach, CA – February 4, 2020

• See http://www.gfoa.org/search-for-training

Questions?

Contact:

Matt Bubness, Senior Manager

Government Finance Officers Association

Research & Consulting Center

mbubness@gfoa.org

312-578-2267