Measure Twice; Cut Once
Tony Wold, Ed.D.
Educational Leader with over 30 years of experience as a CBO, in HR & Labor Negotiations, Student Assessment & Curriculum, and Technology Innovations, especially in the EdTech SaaS arena.
Every good carpenter has followed this mantra, “measure twice; cut once,” and most will measure more than two times before they begin a project.?The craftsman will first draw a rough sketch of their plan.?This is to be the guiding document that they will use to then refine their creation.?Through multiple iterations they will define the attributes, calculate the appropriate measurements while they create a second, and depending upon the complexity of the product, a third drawing.?Master craftsmen have used this process for centuries and they do so behind the scenes to the consumer who only see the final product and not the design process which is critical to making furniture that can last the generations, and not the year or two that mass marketed units seem to have as a lifespan.
As we head into the Thanksgiving break, almost all Chief Business Officials are hard at work preparing their district’s First Interim report.?The First Interim is the first reporting of how the actual expenditures are trending compared to the budget based upon the first 4 months of the school year (July 1 – October 31).?With the completion of the First Interim report the CBO now must shift their work to building the budget for the next year.?Much of this, in California, is predicated on statutory dates and reports such as:
Just as a master craftsman does much of their detail work “behind the curtain,” the CBO is doing the same with their Multi-Year Budget Projection (MYP) and constantly revising it.?The challenge is that CBOs do not get the luxury of working “behind the curtain.”?Every dollar that is spent by a school district comes from taxpayer funds.??
Those funds may be sales tax, property tax, income tax, parcel tax, or special use tax; but in the end the public has an interest in both the academic outcomes of students and the uses of funds.?The move for transparency has required school districts to provide more and more financial reporting.?
Unfortunately, for many CBOs this push toward transparency has created confusion, duress, and outright conflict.?When the public see variances and changes in budgets the overarching perceptions becomes “mismanagement” and the rhetoric quickly moves negative.?The master craftsman has the luxury of using an eraser and moving from one drawing to another.?Their greatest works often look nothing like what they started with.?There are a couple certainties regarding school district budgets that all stakeholders must remember:
1.????The district budget report is only accurate one day in the year!
a.????This is the Unaudited Actuals report that is presented by September 15th for the previous year.?It is an after-the-fact view of what happened.
b.???Ending fund balances reflect the variances of what happened versus what was expected to happen.
2.????By the time the CBO prints a budget report for the First Interim the actual budget has changed!
a.????The budget changes any time there is an alternation of either a revenue, or expenditure projection.?
b.???An employee vacancy can quickly change expenditures and create unexpected carryover, just as a flooded classroom from a rainstorm can create an overspending line in the budget requiring a transfer within the internal accounts.
c.????There are not ‘hidden funds” in the budget.?If one expenditure line increases above budget somewhere else in the budget the expenditure line must be reduced.
3.????Budgets reflect the priorities of the district and all revenue and expense projections that are known at the time of publication!
a.????The more clarity the district has in priorities (often reflected in the LCAP) provide direction for what actions will be required if there is an increase (or decrease) in the budget during the year.
b.???The more detailed the MYP the better to identify areas that provide variances in the budget year over year.
?As we sit down for a nice day of Football and food later in November (and again in December), please think about the Chief Business Officer who likely will be working on finalizing the First Interim over that weekend.?As an educational leader this time is also a time to be thankful that we hopefully have a talented individual in the CBO chair, but also to look at how much the budget has varied from projection as of the First Interim.?
Together, the Cabinet team should review critical indicators on the budget to make sure that the foundation is set for budget development the next year.?If the budget varied too much in the current year, do not be afraid to stand up and declare that the data shows that new trends are impacting the budget and the plan will be to identify the key elements of the MYP, to ensure that the proper assumptions are included in that MYP.
Top 10 considerations for building a solid MYP
1. Are all step and column, and statutory compensation increases included in the budget? >??Ensure your position control system is fully reconciled and accurate
>??Calculate appropriate costs for positions that are vacant to ensure no surprises when filling - §?Never budget at step 1 of the position
>??Update the cost of 1% for each bargaining unit - §?include all statutory benefits
2. For Average Daily Attendance (ADA) states is your current year ADA following the projection or are there adjustments needed?? For Annual Daily Membership (ADM) states is the enrollment trend following the projections or are adjustments required? >??Remember that an ADA change will impact the MYP in all out-years of the budget - §?This can reduce or increase revenue in each of those years
>??For declining enrollment/ADA districts the trend must also be incorporated - §?This creates a reduction in revenue in the second and subsequent years of the MYP
>??Before the pandemic the Median ADA in California was 95.82%; - §?In a review of “first look” data of over 1 million students in California and across the nation the current 2022-2023 “new normal” has many districts within a range of 90-93.5%!
3. Have all required benefit categories been accounted for in the MYP? Including: >??Retiree contributions (in California this is STRS and PERS)
>??Property, Liability & Workers Compensation, and Unemployment Insurance rates
>??Increases in required services such as electricity, water, gasoline, and necessary commodities (paper, technology, toilet paper, etc.)
4. Have critical services been placed behind the budget firewall? >??The firewall ensures these services are untouchable? - §?If cuts are required, those cuts would exclude these services that are essential.?
Some examples of expenses that belong behind the firewall are among this list >??Transportation
>??Technology - §?Infrastructure - §?and refresh of student and staff devices)
>??Legal costs - §?When the budget falls and reductions are necessary, these costs almost always go up!
>??External Audit Services
>??Necessary data systems for both students and staff, which include each of the following, at a minimum: - §?Student Information System (SIS) - §?Management Information System (MIS / ERP) - §?Learning Management System (LMS) - §?Facilities Management System (construction projects need to cross fiscal years) (FMS) - §?Attendance Management System (AMS)
Attendance is the Gateway to Student Achievement and essential for schools to have increased focus on this essential habit
Districts that do not focus on attendance will feel the cost in both academic performance and finances later s
-???§?Business and Student Data Analytics
SIS and MIS systems are designed to input and store data and do not connect with each othe
Having the ability to quickly review data to make informed decisions is essential
-???§?Substitute Management System
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With the current state of vacancies and employee shortages this is an essential too
-???§?Special Education Management System
With the contribution from the general fund crossing over one-third of many districts’ budgets proper management of services from IEPs is critical
-???§?Other critical systems such as the following should also be included:
5. Incorporates a Facilities Master Plan
> Identifies, and estimated costs for required maintenance of all facilities?
> Failure to follow a plan on deferred maintenance becomes: - § “pay me now or pay me more later” issue - §?Corporate America also struggles with this issue.?
> For each operating site there should be a maintenance schedule created: - §?Roofing - §?Flooring - §?Exterior Painting - §?Fields and Grounds - §?Parking lots and Asphalt - §?Playground equipment - §?Vehicle and end-of-life equipment replacement
6. Incorporates a long-term demographic projection
> Includes enrollment trends which includes at least 10 years of future projections - § The report is used as part of the process of enrollment projections - §?Districts, however should also use common sense and logic of transitory patterns within school communities to finalize projection and have the demographic projection as a validation source
> This should be updated yearly
> In declining enrollment districts, the cost of declining enrollment should be calculated and identified as “cost” in the MYP
7. Ensure that the MYP Aligns to the LCAP Priorities
> All Priorities that have been listed should also identify the full costs of implementation of these new or expanded programs.?
> The LCAP plan is written to outline the necessary strategies to improve student learning outcomes.? - § As a CBO, involvement in the planning and creation of the LCAP is essential and keeps the focus on student outcomes - §?As a best practice I have found successful organizations have the compliance/State and Federal programs team as part of the Business Office? - §?While it may be assumed that this is an Educational Services function, the reality is that the CBO spends a significant amount of time working with auditors and addressing Federal Program Monitoring to the point that these roles overlap more into operations
Following this best practice, CBOs can be more thoroughly involved in supporting academics?
8. Appropriately includes the cost of education for special needs students.?
> This includes staffing, and support contracts, including non-public schools
> Recognizes the increases of low incident cases create a long-term increase in costs with higher staffing ratios and necessary services - §?This trend needs to be included in MYP to include all anticipated costs
> Beaumont Unified School District created the included infographic which illustrates the focus on essential services within Special Education and CBOs need to anticipate and plan to provide all necessary support to ensure appropriate service for these students.
9. The projected cost of living (COLA) increases in revenue are conservative
> These are updated immediately if current events change scenarios for upcoming years:
> The common guidance from the County Offices is the best practice to align to when each Dartboard is updated.? - §?It is important to recognize that there have been numerous occasions where the statutory COLA was not funded fully creating a deficit factor - §?Deficit factors mean that the State will "owe" the school districts funding and not provide the total amount that was anticipated to address changing costs of good and services
> School Services of California uses this guidance to produce the budget Dartboard in California that provides guidance for these critical calculations
> This is a fine balancing act as there will be pressure to increase services and compensation for employees - §?Being too conservative and a CBO runs the risk of being branded as not supporting education (this is especially when there are large unexpected fund balances) - §?On the converse, a liberal projection that does not occur can end up creating a fiscal crisis in the district, especially if collective bargaining agreements were finalized based upon the projection
For every collective bargaining agreement the district must submit to the County Office of Education an AB 1200 report that demonstrates that the district can afford the costs of the agreement through the entire MYP
Both the CBO and Superintendent are required to sign the agreement as a matter of law and could have professional liability if doing so with knowledge that the agreement may not be affordable
As a best practice, CBOs should maintain a conservative projection, but also adjust appropriately as conditions change this may come in the form of contingency language or fair share agreement with labor partners
90% of school district funds are spent on "things that eat" and it is important to recognize the critical balance within budgeting to be credible and remain in a place where all interested parties agree and accept the financial figures reported in the MYP
10. The MYP addresses deficit spending
> Identifies required changes in the budget as one-time funding decreases to ensure that the costs are eliminated along with the funds.
> A well designed MYP will have a visible representation for what services or personnel are being funded with these one-time funds and have a plan to either discontinue the service or utilize a different funding source within the budget when the current one-time funding is exhausted
> Over the past decade many states, California in particular, have provided significant one-time grants to school districts that could be used for a wide variety of purposes. The magnitude of these funds and the methodology of reporting in SACs format made it very difficult for the board of education, public, and other stakeholders to determine what was one-time and what was not - §?The lack of transparency created the perception that the large fund balances where representative of resources that could be used for ongoing compensation increases - §?As a best practice a complete MYP would have an addendum that outlines exactly how much of the revenue is one-time along with a clear description of exactly what these funds are paying for - §?Over the last couple of years the use of one-time funds has been necessary to be used for employee positions or salary costs. The important element is for the MYP to outline the plan to reduce expenditures when these one-time funds are removed and not commit one-time funding for ongoing expenditures.
Budget Season is beginning, and our professionals are starting their creation process?
Our Chief Business Officials should operate like the master craftsmen have for centuries.?Managing a budget requires constant revisions, now with a transparency requirement, communicated to each stakeholder group.?The top ten list above is a starting point for all educational leaders to begin the conversation.
Doing budgets in this manner is much harder than in other professions.?Interestingly, this budgeting approach would be well served for our for-profit Chief Financial Officers to utilize instead of balancing their budget by adjusting sales goals or downsizing staff.
Building a budget without any control or influence on the revenue received requires a skill set that is very diverse.?Public Education needs to continue to recruit and support talented individuals to take on the CBO role.?If you can communicate well with others, can use data to identify trends, and work with a leadership team to balance priorities against resources available there is a role for you.?It would also help if you could also collaborate with labor union partners, can supervise diverse units including food services, technology, risk management, payroll, accounting, technology, reprographics, maintenance and operations, school safety, compliance reporting, and be able to work with elected public officials.
Having had the good fortune to work in both public and private sector leadership roles it is quite clear that the value of a strong school business professional has not been fully understood. The scope of work that today's CBOs must manage is significant. A Chief Financial Officer in a public corporation focuses solely on the budget, and possibly strategic planning and operations. This is a large job, but the CBO in a school district does all of that, and much more. In fact, the time the average CBO actually spends on the budget in likely less than 10% of their work year. If you know a CBO in a district that has over 30,000 students it is very likely that that person oversees an organization with over 5,000 employees and yearly operational budget of one-half a billion dollars.
This year, I am thankful for the people that are working over the weekend to make sure that the students in their community, and their elected boards of education will have the information necessary to make the right decisions.?Being a CBO is a hard job, one that I was proud to serve in. I will continue to dedicate my time moving forward to support the professional development of as many aspiring CBOs and Business leaders as possible because we need them all.
Happy Thanksgiving and Holidays, and I hope you all take a moment to thank the hard-working staff in the business office for their “behind the curtain work.”
Certified Chief Business Official | Part-time Faculty | Instructional Leader | Inspirational Leader | Goal-Oriented | Collaborative Problem Solver | Equity-Minded Leader
2 年Thank you so much for sharing this.