Changing the way we approach budgeting

At last night’s meeting, I asked that we change the way the district approaches the budgeting process to provide the board with updated information on a more regular basis.

The district has followed the historical approach Ohio school districts take of approving the current year’s appropriation and 5-year forecast in September.  However, while this has worked for many years, we are now in a period of extreme financial pressure and I don’t believe the “old approach” will continue to work.

I have talked before about needing to see financial data before making financial decisions that have a large impact and/or affect multiple years.  At the August meeting, I asked the board to delay the vote on administrative raises until we had this year’s appropriation and the 5-year forecast in hand.  My request was not focused on the vote on administrator raises per se – instead, I was questioning the attitude and process of making financial decisions before updated information is available.

Updated Forecasts

There are two parts to the change I feel is needed.  The first is our attitude toward the 5-year forecast.  This is the first time in the past decade the administration has rejected the original 5-year forecast and come to the board recommending cuts up front.  It is a relief we are now using the forecast as it’s designed:  as a planning tool to get ahead of what will come if we continue spending as outlined.

This is an excellent first step. However, the board still has to make the leap to using the forecast on an ongoing basis.  Typically, the forecast is generated in September and not looked at again until the following September.  When funding and expenses are stable, this is fine; but things now are changing rapidly.

With ongoing, unexpected cuts, as well as unplanned increased expenses for things such as possible all-day kindergarten, it’s no longer appropriate to see the forecast as a static document.  When a significant change happens, the board and administration need to see what that change does, not only to the current year, but as it compounds over the years.

While this is not something the board votes on, there appears to be general agreement that updating the forecast when major changes occur makes sense.

Budget Timing

The other area I feel we need to consider changing is when we develop the current year’s budget, or appropriation.  Right now, it is not finished until the prior year is closed out.  The current year then becomes the base of the new 5-year forecast.  However, while this does ensure the forecast is as accurate as a forecast can be, it also means we are not approving the current year’s expenditures until the year is almost ¼ gone.

This year, the difference in expenses between last year’s forecast for FY 2010-11 (July 2010 – June 2011) and this year’s “ideal” budget was over $1.1 million.  This was over and above any personnel raises, which were already included.

This is a lot of money – and I believe the board needs to see numbers like these much earlier.  Businesses typically have their budgets finished several months before the fiscal year ends.  While there are some unique challenges with a school district, I do feel an earlier look at where we feel we are going will only help us manage the financial picture in the long run.

3 Responses to “Changing the way we approach budgeting”

  1. Cathy Barney Says:

    Andrea –

    Yes! I totally agree. Government needs to view expenses the way the rest of us do personally: on an ongoing basis, not once or twice a year. You are absolutely right that the forecast should not be static. It must be accurate and updated when there is change.

    I was concerned when I read about the projected deficit this week. Especially in light of all the hoopla over how much was saved on the high school, yet instead of hanging on to that, it was spent on other projects. Perhaps a more-frequent viewing of finances would have had a different effect. I know many (not you) would use the “well-we-have-to-spend-within-that-budget/area-and-use-it-or-lose-it” response.

    Like much of America, we’ve taken a personal financial hit and our answer is to spend less. Not more and hope something or someone will bail us out. [For example, we annually up our health-insurance deductible and have dropped co-pays to maintain a premium we can afford. District employees may have to pick up more of their own tab] At this point, I can’t say I’d support a levy as George Lucas suggested in this week’s Advertiser.

    The higher price tag on school fees as well as providing our own supplies jumped incredibly this year. I can’t believe we were charged $2 for a paper folder in elementary school. And Lucas suggested, perhaps, students could supply their own smart phones. That’s not a world I inhabit, nor do I choose to.

    I have been thinking about drafting a letter to the editor because I see the biggest lesson the district is teaching students is consumerism: spend, spend, spend. And I don’t just mean budgetwise. That’s so heavily promoted at school with Market Day, $40 junior-high yearbooks, carnivals, constant fundraisers, twice-a-year books fairs students must attend on school time, etc.

    Thank you for asking the harder questions and holding the board accountable. It’s going to take a local district to stand up to the unfunded mandates AND unions in meshing receipts with expenses to tip the balance in favor of what is best for the community and develop integrity. Those are much better lessons to be teaching.

    — Cathy Barney

  2. Larry Deel Says:

    I agree with just about everything Ms. Barney wrote. That theme holding taxpayer funded entities to the same standards as us regular folk has been gaining momentum all over.

    I did not have much faith in the statements made about not coming back to the community for another levy for five years. At least I think that is the way I remember Debbie Marques putting it.

    I do understand how and why the bond money was redirected and glad some of was. Although I was against that bond levy, I was happy that some other projects besides the high school were able to be done.

  3. Joe Ross Says:

    Andrea — Thank you for your fiscal insight. Your observations are objective and appropriate. It’s absurd to think we would risk making financial decisions without all of the information. It’s also absurd that we are approving the budget so long AFTER spending for the school year has already occurred. Making what appears to be the “right” decision based on the “wrong information” is akin to simply making the wrong decision. As my dad used to say. . . “Never enough time to do it right the first time, but always time to do it over again!”

    The current Board has been doing a great job managin the district’s finances. Keep up the good work. You are building credibility around the community. But “missing the Marque” on Debbie’s comment that the district won’t come back for an operating levy before its time (5 years?) is really important to that credibility. Continue to tighten the purse strings to hit that mark. Make the tough choices. You’re all doing a great job!

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