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Budgeting in Education: How to Make Better Decisions

One of the most labor-intensive projects for a school district is creating a school budget. The educational budget is not just a fiscal planning document, but it is a deliverable of the district’s promises to the community

With the help of a budget, the administrators can set their educational goals for that year. However, you cannot achieve those goals without making the right decisions with your budgeting.

Are you looking for an all-in-one solution to manage your school’s finances? At Edsembli, we have financial management software that works with the needs of the educators.

Unpacking the Four Main Stages of the Budgeting Process

There are several steps in the school budgeting process, and they fall into four broad stages: reviewing, planning, forecasting, and implementation. All stages will feed into the next one. Let’s look at the four main steps in the budgeting process.

#1: Review

When you review the past performance of previous budgets, it can reveal a lot for your school. You can see how accurate were the past budgets or where any overspending occurred. With those questions in mind, you can shape the current school budget and increase the accuracy. 

Don’t forget to look at the cost base as well. It can give you a foundation to build your current budget and be more prompt for expenditure review. By benchmarking with similar schools, you can understand how your school’s spending compares to others. Think of the review stage to help identify areas for cost savings.

 

#2: Planning

After gathering that historical data, consider your staffing, accommodation, and resource needs for the following year. These steps should not be a one-step process. You will need to model a range of cost and income scenarios based on your data. If you want to be accurate, you should consider data, such as:

  • Changes in funding, such as revenue and capital income
  • Number of pupils and their characteristics
  • Class and group sizes
  • Staffing profiles and increments
  • Pay and price increases
  • Procurement and maintenance
  • Longer-term development plans like asset management, premises, staff, and IT/ICT

Related: How HRP Software Empowers Your Most Valuable Assets: Teachers & Staff

 

#3: Forecasting

Use your “best guess” for your budget for a three- to five-year forecast. It can be difficult to predict changes in pupil numbers, staffing costs, and funding. It can be beneficial to get involved in the local community to help with developments that may impact the school. 

Being active in the broader education sector gives you insights into a few factors that could affect you. Use your historical data and knowledge to model a range of cost and income scenarios. All of those factors can make an impact on your budget. These factors can include:

  • Funding over the next three years
  • Changes in pupils and their characteristics
  • Curriculum changes
  • Likely staff profiles
  • Teaching staff salary rises
  • Inflation
  • Aims of the school development plan
  • Longer-term improvement and development aspirations

These “what-if” analyses can help understand trends. You can use them to learn the highest impacts on your budget.

 

#4: Implementation and Evaluation

Once your budget gets approval from the governing body, it is time to implement the budget. You will want to monitor and evaluate the budget too. Reviewing your budget monthly, you should highlight areas of potential risk. With that, you can make your life easier when monitoring budgets. While you might think that the evaluation stage is the final part of the process, it feeds back into the initial step. 

You will have a head start on the following year’s review and forecasting when you have an ongoing evaluation. It is essential to keep a close eye on the budget throughout the year, so you can identify any areas that can be different or efficient. For example, underspent money could be shifted to another area for the following year’s budget.

 

Use a Financial Management System

A financial management system can take all guesswork out of your budget planting. You can maintain more control and visibility of your expense claims. Tangible capital assets can meet regulatory requirements and gain complete control over them. You can give your employees on-demand access to a portal that highlights payroll and other human resources services. 

Best Practices for Your School Budget

Before you can prepare a school budget, you will need to have a solid foundation. These best practices can help you get on the right track for your school’s budget.

#1: Create a Budget Calendar

If you want to develop an educational budget, you need a budget calendar. You will want to build the calendar by working backward. Use the budget calendar to serve as an index for tracking your development process. With a snippet of the budget, you can follow the development process. You should share the budget calendars with the board of education and the administrative team. With that, you can keep everyone aware of the relevant timelines. 

 

#2: Start Early

According to the National Center for Education Statistics, most education budgets are spent on staff salaries. It is essential to be as accurate as possible. You will need to build a staffing roster with all positions, even those new ones. Remember that staffing will never be constant throughout the year since there will be retirements, lateral movements, leaves, terminations, and resignations. 

#3: Broker Projections

One of the most significant expenditures in the benefits category is health insurance. Some districts will provide their own health insurance, but others belong to regional or state joint insurance funds. While forecasting health insurance premiums can be tricky, budget creators might want to use an insurance professional to forecast these costs. 

Related: Better Data, Better Teaching: How a Data-Driven Culture Can Transform Education

 

#4: Rank Line-Items 

Rank line items make the budgeting process more efficient. During the budget development calendar, many stakeholders are making requests. Making cuts is part of the process. When you require budget development stakeholders to enter their requests, you can grant or make any cuts without engaging in a back and forth conversation. 

By prioritizing cuts, you can accommodate your needs without going back to everyone for their input.

 

School Budget Preparation

Now that you know the best practice for your educational budget, you can start the preparation process. Here are a few steps to help you begin. 

#1: Go Over the Previous Year’s Budget

Unless you start your budget from scratch, your budget will likely be a sequel to the previous year. You need to look at the lapsed appropriations of last year’s budget. Any uncommitted budget appropriations will lapse at the year’s end. A quick analysis makes a great place to get pointers to develop your upcoming budget. When you look at last year’s lapsed appropriations, make notes. With that, you can address them for the coming year’s budget. 

#2: Make Assumptions & Predictions

Before starting the deep process, you will have to look at those significant assumptions. As you already know, salaries and budget make up a big portion of the budget. One factor that will impact staffing is enrollment. For that reason, you need to make a few educated guesses regarding your enrollment trends. 

#3: Set Priorities for the Team

The first two steps are important, but they are completed internally. This step will need a team effort. Take this time to allow the superintendent or their administrative team to develop a statement of budgetary properties

These priorities can include additional support for special education students, reducing class size, adding emotional learning to the curriculum, learning aftercare, or raising test scores. All of these factors must be developed outside the business environment. However, the business must keep the admittance to rank priorities, define them, and keep expenditure discussions on track. 

#4: Staff Those Priorities

Another vital part of the budget development process concerns staffing. Once the administrative team sets and ranks their priorities, the development team can assess those staffing needs.   

Related: Empowering Leaders: What Makes An Effective School Leader

#5: Remember Staff Expenses

Getting accurate staffing composition costs can be challenging for any budget development team. If you are within the contract terms for your district’s collective bargaining agreement, the process can be easier for you. By setting contracts, the only unknowns in your budget are retirements, disability, or maternity leaves. 

However, you can experience problems when there are unsettled areas in a collective bargaining agreement. If that is the case, you might have to use different tactics for your budget. 

#6: Decide Who Gets the Bill

Some educational budgets are built by projecting the revenue and then using that to tell the administrative side what they can afford. While that is fine for most districts, you will want administrative teams to identify and rank their priorities first. 

 

#7: Finalize

Now that the expenditures match the revenues, you can share the budget with the administrative team, board, staff members, and the community. As priorities shift, there could be some modifications to the budget. 

Do you need help with managing the budgetary needs of your educational institution? At Edsembli, we can help you get a handle on your financial needs.

Book your demo with an Edsembli education specialist today

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