Developing a school budget can be challenging for school principals; here’s a model for organizational improvement and instructional success.
by Richard Sorenson
Principal, September/October 2010
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“A budget will not work unless you do!” —Anonymous

Principals must devote a vast amount of time and energy to campus funding and budgetary issues because budgeting and accounting procedures are an integral part of an effective instructional program. In fact, a principal’s role in the budgetary process significantly impacts both budget development and instructional planning. 

Principals who fail to develop an effective budget commit a terrible disservice to their schools and, more important, to their students. Lloyd M. Goldsmith and I explain why budgeting is so essential in The Principal’s Guide to School Budgeting. First and foremost, the budgetary process enables principals to acquire an understanding of the need for strong organizational skills and technical competence. Second, principals who acquire technical budgetary competence positively impact teaching, learning, and thus increase student achievement.

Seven Steps

The late billionaire J. Paul Getty once stated, “I find all this money a consider­able burden.” While Getty no doubt found his extensive personal wealth to be burdensome, for principals the man­agement of the school budget, unlike the burden of handling immense wealth, does not need to be compli­cated. In fact, the practice of school budgeting will be effective and efficient when principals follow seven important budgetary considerations.

1. Identify budgetary allocations and restricted funds. Principals must know and understand revenue sources and how these sources impact a school’s budgetary allotment. Certain funds (special education, Title I, and bilingual education, for example) have specified restrictions associated with appropriate­ness of expenditures and student services. Principals can readily deter­mine restricted funding categories and related student services by communicat­ing with district business department leaders who understand how restricted funds must be expended.

2. Project incoming and exiting student populations. Effective princi­pals regularly monitor incoming and exiting student populations since stu­dent enrollment can significantly impact the budget allocation. Accom­plished principals learn to use the Cohort Survival Method as a process of projecting future student populations. The Cohort Survival Method, as out­lined in The Principal’s Guide to School Budgeting, accounts for the number of students enrolled in each grade level in a school or across a district over a speci­fied number of years. It further requires a school to account for the number of students expected to enroll over a projected five-year period. This infor­mation drives an average ratio calcula­tion for each cohort from year to year, which allows for future-year enrollment projections.

3. Conduct a needs assessment. A needs assessment allows principals to recognize which interventions are most effective in increasing student achieve­ment and which cost the least. An effec­tive needs assessment process allows for the prioritization of school goals and objectives through a four-part quality analysis approach in which a principal and site-based team examine: outside the school qualitative data and infor­mation (the best-practice literature); outside the school quantitative data and information (derived from federal and state entities and statutes, e.g., the adequate yearly progress report); inside the school qualitative data and information (survey results, focus group queries, school-site visits, teacher opin­ions, and brainstorming sessions); and inside the school quantitative data and information (e.g., state assessment data, accountability standards, and bench­marking records).

4. Seek input from all parties. Recall the old adage, “All of us are smarter than any one of us.” Effective principals incorporate collaborative strategies that in turn generate the involvement and input of stakeholders to include faculty and staff, students, and parents, along with local business and community members. When col­laborative decision-making is imple­mented, the overall budgetary process generates measurable improvements that ultimately serve to benefit students, faculty, and the organization.

5. Project and prioritize expendi­tures. Consider all line-item accounts within the campus budget, including supplies and materials, capital outlay, travel, and contracted services, when analyzing and prioritizing budgetary expenditures. Principals who actively monitor and regularly evaluate the school budget are able to project and prioritize expenditures that center on specified objectives that correlate with the instructional program, the school improvement or action plan, and the overall vision of the learning community.

6. Build the budget. Exceptional principals regularly meet with the site-based team to create a school vision, develop an action plan, and build a budget. This level of quality leadership serves to demonstrate the following out­comes essential to budget development:

•  Knowledge of the complete budget process;
• Knowledge of the amount of funding available and how and where the budgetary allotment is derived;
• Knowledge of collaborative decision-making procedures and proper proto­col involving the input of all parties; and
• Knowledge that the budgetary process reflects—on the part of the principal—honesty, integrity, and transparency.

7. Amend and adjust the school budget. Even with all the purpose­ful budgetary planning and careful monitoring and evaluation, principals can never expect the school budget to remain on target without certain adjustments being made during the course of a fiscal year. Budget transfers and amendments are necessary when unexpected circumstances and situa­tions inevitably arise. Having a working knowledge of the amendment process will facilitate the need to move funds from one account to another without leaving an impression of budgetary incompetence or mismanagement.

Alignment With Academic Goals

School budget development must be based on a process whereby funding is allocated to the educational needs, goals, and school programs on a prior­ity basis. The purpose of aligning the budget with our school’s instructional goals is to increase student achievement and ensure organizational improve­ment and success.

Prior to collaboratively developing a school budget, effective principals provide necessary budget development training to members of the site-based team. Principals then initiate a needs assessment, as described earlier. This process serves as the impetus for set­ting educational goals, developing instructional objectives, and prioritiz­ing school-based needs with student achievement and the academic pro­gram in the forefront of any budgetary considerations and ultimate funding expenditures.

Setting goals and developing perfor­mance objectives are critical compo­nents of the budgetary process. Goals unify stakeholders by providing mean­ing and purpose to the instructional program and budget development process. Goals are broad statements of expected outcomes that are consistent with the mission, vision, and philosophy of a school. Goals must be driven by student performance-based needs and further correlate with the anticipated expenditure of school funds.

Performance objectives identify spe­cific, measureable, and expected out­comes for all student populations, and they must be driven by student-based needs assessment data. It is essential that all objectives in a school action or improvement plan be measureable if a school is to be data-driven in its plan­ning and budgeting processes.

The budgetary process is a constant course of action that requires principals to engage decision-making teams in collaborative and problem-solving efforts. This ever-revolving process allows for a continuous commitment to instructional and programmatic change, and further provides for stake­holders to be actively and constructively engaged in a budgetary process that promotes ongoing assessment, plan­ning, development, implementation, and evaluation.

 In Times of Fiscal Conservatism

Current budgeting systems often fail to adequately link the availability of crucial funds to campus instructional programs. As a result, essential funding from federal and state governments, as well as the local school district is fre­quently limited, especially during times of fiscal conservatism and cost contain­ment. Principals must seek new funding sources and address the challenge of making every budgeted dollar stretch to meet mandated instructional initiatives, individual student needs, teacher requests, parent demands, district desires, and state expectations.

Principals must pursue additional sources of income for a school beyond the funds already allocated by districts. According to Robert D. Ramsey in Fiscal Fitness for School Administrators, principals should realize that the district allocation is just one of numerous revenue sources that can be generated if a school is to establish a comprehensive, high-quality, and cost-effective program. Tightening budgets, tax limitations, district cost containment, and a depressed economy all threaten to reduce local revenue. As a result, principals must be prepared to seek nontraditional sources of funding for their schools.

Grants. Grants are generally tied to a request for proposal (RFP) process whereby principals and teams must devote time and effort to ensure that their applications are given serious consideration. Most grants are cat­egorical in nature; funds are restricted to certain activities such as technology, science, mathematics, or accelerated instruction. Grants and funding infor­mation can be identified and located by accessing governmental, commer­cial, nonprofit, and educational organization websites.

Private Foundations. Foundations are nonprofit, nongovernmental organizations that support charitable, educational, religious, and public service activities. Examples of private foundations include J. Paul Getty Trust, Bill and Melinda Gates Foundation, The Broad Foundation, The Andrew W. Mellon Foundation, AT&T Founda­tion, ConAgra Inc., Eastman Kodak Co., and Motorola Inc., along with numerous community foundations and public charities.

Business Partnerships. Gifts from business partnerships (e.g., Adopt-A-School, Friends of Education, and Partners in Education) are essential when campus funds are insufficient. Some of the best partnerships are just a walk away from your school and include fast food businesses, restaurant chains, discount centers, hospitals, and corpo­rations, to name a few. Principals will be surprised how many businesses are will­ing to fund a school if only asked for assistance.

Fundraisers. School-site income is most frequently generated through the fundraising efforts of school-sponsored groups, parent-teacher organizations, booster clubs, and in some instances, school administration. However, if fund­raising efforts are not properly planned and organized, principals can very well face numerous pitfalls. Principals must carefully follow designated district poli­cies and proactively establish guidelines and regulations that call for the proper management of fundraising merchan­dise, the selection of merchandise ven­dors, the designated responsibilities of individuals involved, and the necessary bookkeeping systems. Principals who fail to do so break one of the cardinal rules of school budgeting: Safeguard school interests through the responsible stewardship of public funds.

In addition to seeking supplementary sources of income, principals must prac­tice fiscal stewardship, ensuring that accountability practices are in place to detect any theft of cash. Such practices include:

• Ensuring that individuals who expend monies are not the custodians of accounting for said monies;
• Reviewing all bank statement reconciliation procedures;
• Developing and using bookkeeping policies and regulations;
• Keeping two separate and independently maintained sets of bookkeeping records;
• Cross-training bonded office personnel to perform bookkeeping tasks;
• Using an independent accountant to conduct regular internal and external audits; and
• Reviewing on a regular basis with office staff the detailed expectations for appropriate and ethical book­keeping standards and procedures.

Building a school budget is much more than a managerial task. The budget develop­ment process must serve as a model for improving an organization and ensur­ing instructional success. Many years ago, W.H. Roe wrote in School Business Management what remains relevant today: Effective principals build a school budget that translates campus needs into an improved instructional program that a learning community will proudly adopt and support.

Richard Sorenson is an associate professor in the Department of Educational Leadership and Foundations at the University of Texas at El Paso.

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