Citizens of a school district expect efficiency in the operation of their schools, and they expect their board and administrators to stand accountable for use of the district’s money. The community expects that its board will exercise the proper level of oversight to protect public assets and manage the school district effectively.
There is more to a board’s role in fiscal management than oversight responsibilities. It is up to a board to set priorities that are reflected in the budget. How a district allocates its resources will determine how likely it is that it will realize its goals. In fact, how a district uses its resources sends a message to staff and constituents as to how serious a board is about its goals. The old adage about “putting your money where your mouth is” may be a tired one, but it applies directly in this area.
In this chapter, you’ll learn the nuts and bolts of the educational finance structure. At the end of the chapter, read about the benefits of strong communication between your board and your auditor. You’ll also learn 10 pitfalls to avoid when developing your budget.
The Board’s Responsibility
In a business enterprise, making money is the prime objective. The service, product or commodity is used as a means to this end. In public schools, however, the profit motive does not play a role. The principal responsibility of a board is to deliver a well-rounded education to district students. A board has the responsibility to manage district financial resources wisely for this purpose. If a board is to fulfill its primary responsibility, it may also need to take steps to secure adequate resources to finance the needed instruction in the district.
Top 10 Things You Can Do Wrong in Developing Your Budget
- Forget to hold the public hearings required by law.
- Use a fund balance you don’t really have.
- Use a one-time only revenue more than once.
- Overlook something that is small now but will be big next year.
- Overestimate revenue.
- Underestimate cost increases.
- Adopt a budget without an adequate contingency.
- Forget to certify your mill levy to the county by the deadline.
- Fail to adopt the budget.
- Use an enrollment forecast from anyone who doesn’t have to live with the adjustments if the forecast is too high.
Sources: Ken Hoover, former chief operating officer, Jefferson County Schools; Glenn Gustafson, chief financial officer and deputy superintendent, Colorado Springs District 11
Community support for adequate financing of education programs often requires a board to exert leadership in promoting understanding of the district’s needs. Because the state and federal governments are also involved in financing schools, boards must also communicate the needs of their schools to state and federal lawmakers.
Often school boards feel they have little control over budget decisions. Fundamental operating costs are long established and difficult to alter. Community groups, employee organizations and others have learned to exert political influence on the budget process. When money is tight, people defend their turf and protect their programs from cuts. When money is available for growth or improvement, the same people want a piece of the new resources as well. School boards often find themselves caught in the middle of these political tugs-of-war.
It is natural to want to be responsible to constituents, but school boards that have established clear goals and priorities based on input from all the stakeholders will focus on making spending decisions that support the shared vision. Guidance from the National School Boards Association’s “Key Work of School Boards Guidebook” ©2015 underscores the importance of aligning the board’s vision for improved student achievement with available resources.
Sources of Revenue
The revenue in school district general funds comes from several sources. State revenues now account for approximately 62 percent of the total general fund operating revenues of Colorado school districts. Approximately 38 percent of school districts’ general fund revenues comes from local sources. Local property taxes account for the major portion of the local revenues, with specific ownership taxes, delinquent taxes, penalties and interest and other local revenue comprising the remainder. The federal contribution to school finance is approximately 11 percent of school districts’ total operating revenues, but most of the federal money flows to school districts through the state.
State aid, allocated annually through the Public School Finance Act, is the primary source of state revenue for school districts. Most of the remaining state revenue funds categorical programs, which include special education, career and technical education, English language proficiency, gifted education and transportation.
Federal revenue is generally provided for specific programs. Examples of these programs include vocational education, special education, compensation for the impact of federal facilities in the district and funding that provides assistance to districts for at-risk students. Use of federal revenues is strictly regulated by federal law.