5 Expert Tips for K-12 Budgeting in 2021-2022

With budgeting season for the 2021-2022 school year upon us, many K-12 districts are still balancing funding disruptions from the COVID-19 pandemic while also budgeting for expected annual costs. Because budgeting can be overwhelming—even in a normal year—we wanted to share five pieces of key advice we’ve heard recently from top experts about preparing your budgets for next year. Read on to learn their tips and dive deeper into their stories.

Like many districts, school closures and the switch to hybrid learning made budgeting extremely challenging for Mt. Diablo Unified School District.

According to Dr. Lisa Gonzales, Chief Business Officer at the district, the pandemic made it difficult to know what to expect in the 2020-2021 school year. “Normally, we have a pretty good idea of what school is going to look like,” Gonzales says. “This year, enrollment’s been challenged, with some districts down around 3.5 percent, on average. There’s so much volatility in our planning cycle this year beyond what we’ve ever seen in the past.”

Gonzales and her team got creative at the beginning of the pandemic, looking in specific places to find ways to move around money to fund new areas. “I’ve got lists of exactly what we can do to try to support student learning and to maintain some of our programs with those funds,” she says.

They did this in a few ways. One was by centralizing enrollment to fill open classrooms without having to open new ones depending on location. They also looked at in-class materials and supplies. They adjusted what kinds of food were being offered for school lunches—eliminating non-pandemic friendly options like the salad bar.

With the cost savings, Mt. Diablo was able to offer more free and reduced lunches to students who hadn’t needed the service before. “We know in our local communities with unemployment being so much higher, and certainly with more closures in the service industry right now … that there are a lot of businesses not having their employees come into work,” Gonzales says. After schools closed last spring, they reached out to families who had previously not qualified to see if they now needed the assistance.

With so many different variables to plan for, it may sometimes feel like CFOs need to boil the ocean. But for districts like Mt. Diablo USD in California and Denton ISD in Texas, their leaders focused budget conversations on their key finance metrics of enrollment and attendance, respectively.

“One of the biggest challenges we’ve had coming into [the 2020] school year pre-pandemic was the fact that more than 50% of the school districts in California were [seeing] declining enrollment,” Gonzales says. “So, when you take a look at declining enrollment, and you try to make sure that your salaries are competitive, you certainly want to be as careful and prudent with your budgets as possible.”

Mt. Diablo looked at previous enrollment declines like during the Great Recession of 2008-2009 to predict how quickly and how much enrollment may jump back over the next few years.

“We’re constantly in a prepare-react mode,” Gonzales says. “We try to be proactive, but sometimes, whatever comes our direction, we’ve got to shift pretty darn quickly.”

Denton ISD budgeted based on a lower amount of state funding but a higher amount of federal funding due to stimulus legislation.

“[Texas] cut some of our state funding and replaced it with some of the stimulus money,” says district CFO Dr. Scott Niven. “So, we didn’t lose money, but we didn’t gain money for some of the extra expenditures. So, it’s been a little bit of a juggle to try to make all that work.”

Niven says that rather than being funded per enrolled student, the state awards funding based on actual attendance.

“We have lost some of our enrollment with COVID-19, and parents have made other choices, especially in some of the lower grades,” Niven says. “So even though we’re a fast-growth district, we’ve had to take a little bit of a step back with our enrollment projections as a result of that.”

Denton also makes sure to include risk as part of their budget discussions, so decision makers understand the impacts that their decisions have on outcomes.

“Sometimes [stakeholders] don’t really recognize that the way they’re making decisions impacts the end game,” Niven says. “I’m trying to make sure that they have good data … and help them understand the impact of their decisions financially.”

Niven says that, ultimately, finance leaders need to view budget decisions from the perspective of how they will impact students.

“We’ve got to focus on what is going to impact the students the most,” he says. “And sometimes, we can sit back and look at our numbers and make them look good, but is it truly impacting the students based on the current environment? I think that’s something we as CFOs have to step up and make sure we do.”

Tulsa Public Schools approached the 2021-2022 school year with a zero-based budget. They got alignment on the critical items they felt needed to be focused on instead of picking programs and trying to cut them or implementing across-the-board cuts.

To address existing structural deficits and enrollment issues, Tulsa had already begun a spending audit in Fall 2019. Throughout the pandemic, they were able to leverage those practices and routines to confront the new challenges they were suddenly facing—and will face for years to come.

“I think a lot of the situations we were facing then are similar and just exacerbated at this point,” says Caitlin Richard, Tulsa’s Director of Grants and Special Programs. “We’ve learned a lot of tricks for how we’re going to navigate this next set of challenges over the coming years.”

Richard says focusing on long-term solutions has helped Tulsa prioritize where to make budget cuts. “We didn’t predict for COVID-19, but now when we’re thinking in the future, we’re thinking five to 10 years out, and what we need to be backward mapping from,” she says. “We want to make our budgeting process an exercise of what we prioritize and what we invest in, not just a cutting exercise. But I think sometimes we have a tendency to say, ‘Here are all the things we’re going to have to cut’ and make it more deficit-oriented, but actually we want to start with, ‘Here’s what we care about most, here’s what we’re investing in. So, here’s what it means we’re going to stop doing.’”

When forecasting budgets, Richard thinks about what data she needs to use in three clusters. “One is around just forecasting,” she says. “We’re talking about around our enrollment and finances. One is around community input and the data we’re getting from them. Another is making sure that we’re able to understand the resource implications of all of our district strategies and initiatives.”

Tulsa used this approach when looking at the impacts of the last year, including savings from empty classrooms to unpredictable enrollment numbers and keeping fixed costs in mind.

Tulsa also had tough conversations with the community about what budget cuts to make and how they would prefer the district spend money. They held open workshops to share their budget process and priorities with parents and other community stakeholders.  This helped get wider feedback on priorities as well as support for hard budget decisions.

“The data we gathered is that Tulsans were at least willing to reduce or cared the most about teacher compensation, class sizes, and Social and Emotional Learning,” Richard says. “We also learned that the things they were most willing to give up were around district office efficiencies. Things about changing transportation or bell times, building utilization, and also some pieces around teacher professional development. [Those were] the things that the community was most willing to give up in order to prioritize some of those other factors.”

Richard says the community meetings helped the district promote programs that may not always appear to directly impact student success, like teacher PD and central office expenses.

“It presented an opportunity to actually share more about what some of those initiatives were with the community that I think are important, even if it isn’t about budget cutting,” she says. “To let people know the types of things that we’re investing in our schools and how that might support their students, even if not directly.”

Denton ISD openly shares program data with each superintendent, even if it wasn’t their program, so they would understand the bigger impact of budget choices. Niven says having strong collaboration with his superintendents was critical in making budgeting decisions for 2021-2022.

“You’ve got to be a partner with your superintendent and a partner with the other stakeholders in your district,” he says. “Now I know that you want to make sure all the numbers are absolutely correct, but what you can’t allow to happen is your superintendent to sit out there with no information because they’re trying to make decisions on a daily basis. You can’t allow them to do that flying blind.”

Niven says making superintendents and other stakeholders partners in budgetary decisions helps solve challenges the finance department alone can’t.

“Sometimes we have to take a hard look and make changes that, normally, we wouldn’t want to make given a static environment,” he says. “But since we don’t have that, obviously, we’ve got to get out of the box, and we’ve got to think about that.”

Denton also worked with each superintendent to get student data and identify what results needed to be improved. This student data helped drive a collaborative discussion on where to focus funding next year.

“They’re focused on student results, and they’re always focused on their people and their teachers and making sure they have what they need,” Niven says. “So, if you can relate this back to how we can take care of both parties, the students and the staff, it will go a long way to them believing that finance is not just worried about the numbers.”

Niven says it’s important to start conversations on a level playing field and not approach budget conversations from a negative perspective. His ultimate goal is to help stakeholders understand how money can be best spent toward improved student outcomes.

“Normally, the superintendent or the district superintendent, they start thinking about, ‘Okay, is there a way we could take this money and utilize it for student outcomes that are better placed?’” he says. “Sometimes, in a school district setting, the business operation is much more of a ‘no’ all the time. Start thinking about how you’re presenting it as how we can get to ‘yes.’ And what I mean by ‘yes’ is taking care of the students, taking care of the staff, and keeping us financially healthy all at the same time.”

When making budget decisions, Niven says he looks at student data in regard to attendance and also asks his superintendents what student data is most important to them so he can help them evaluate their program effectiveness.

“The question is, what are they concerned about? And then you, as the financial or data people, how can you link this together to give them information about whether they are producing the results they want?” he says.

“If you can give them information as to how they’re producing results, based on what their outcome they want … then they become much more receptive to your discussions.”