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Government Finance Officers Association

Smarter School Spending:Best Practices in Budgeting for

School Districts

October 2016

Presenters Matt Bubness– Senior Manager,

Government Finance Officers Association

Paul Soma –Superintendent of Schools, Traverse City Area Public Schools

Donald Sovey, CPA, CFO –President and CEO, School and Municipal Advisory Services

2

Observations from the FieldSchool and Municipal Advisory – Donald Sovey

Rapid turnover of top school leadership: Since 2010, superintendency turnover has exceeded 53% for traditional districts

3

Observations from the FieldSchool and Municipal Advisory – Donald Sovey

Employment market for business officials: CFO positions have been difficult to fill due to non-competitive salaries, increased employee benefit costs, and a lack of applicants from CPA firms

4

Observations from the FieldSchool and Municipal Advisory – Donald Sovey

Business and Budgeting proceduresColleges and universities provide only

minimal, if any, budget process instruction to accounting students

Most districts have poorly documented business systems and business office turnover has resulted in additional process challenges

5

Observations from the FieldSchool and Municipal Advisory – Donald

Sovey

Superintendent / Business

partnership more important than ever:

Good business management is

critical to the success of the

superintendent and district

6

What you need to know

School and Municipal Advisory – Donald Sovey

GFOA is the leader in the industry

Michigan schools need collaborative, research-based budgeting tools

In Michigan, Traverse City Area Public and St. Johns Public Schools are progressing in the Smarter School Spending process

7

Traverse City Area Public Schools

Enrollment 10,000

14 12 elementary schools

2 middle schools

2 traditional high schools

1 alternative high school

37% free and reduced lunch

S8

Smarter School Spending

Goals for Presentation:

• Share 2 Practical Examples:

1. Building Closing Process

Demonstrates how educational priorities

drive budget.

2. Curriculum Selection Process

Demonstrates action research methodology

using quantitative and qualitative measures

to calculate A-ROI.

S9

Budgeting: Traditional vs Smarter

School Spending

Baseline Requirements (for either

approach):

• Deep understanding of school finance

• Solid business office

• Effective and efficient finance & budget

system (confidence)

• Solid relationship and partnership with

external audit firm

S10

Budgeting: Traditional vs Smarter

School Spending

Traditional Model

• Focus on scarce resources

• How much do we have to spend?

• How much will be left at the end of the year?

• Make the cuts.

S11

Budgeting: Traditional vs Smarter

School Spending

Smarter School Spending (Strategic

Financial Planning)

• Why do we exist?

• What are our educational priorities?

• How do we fund them?

• Academic Return on Investment (A-ROI)

S12

Budgeting: Traditional vs Smarter

School Spending

Evolution of thinking and language used

to manage educational organization.

• Budget is not “separate from” delivery of

educational priorities.

• Rather, it is an integral, intentional support

driven by educational priorities

• Thus, educational priorities drive the budget.

• The budget is no longer the driving force.

S13

S14

Traverse City Area Public SchoolsStrategic Financial Planning

Low Enrollment elementary buildings

Analysis & Recommendation To

Board of EducationJanuary 25, 2016

S15

Introduction

Why do we exist?

We exist to educate Education improves the quality of life for all

A launching pad A place to find passion A life-line

Board Vision: Every learner will reach his or her potential in an engaging, inspiring, and challenging environment

About the District

Nearly 10,000 students

300 square mile boundary area

19 schools, 6 support buildings

2,000,000 square feet of space

A total budget of over $100 million

$370 million in assets

Millage rate 3.1 mils (State average 5.4 mils)

2nd largest employer in northern Michigan

S16

Difficult Climate/Multi-year Plan

S17

S18

Financial Decisions

Low Cost, Low Tax School District

Lowest foundation amount

646th out of 829 in Total Revenues

818th out of 829 in Central Administration Expense/Pupil

3.1 mil debt levy vs. 5.4 mil state average

Balanced budget 1st time since 2007

Ten straight years receiving Certificate of Excellence in Financial Reporting

S19

Traverse City Area Public Schools

Strategic Financial Planning

Update

District Advisory Council

December 8, 2015

S20

Current and Future States

S21

Executive Team Playbook 2015-16

S22

Supporting Instructional Priorities

S23

Reference Sheet:

General Fund Revenues & Expenses

S24

S25

List of Savings Opportunities

Category # Opportunity

1 Can the district free up funds from general education transportation?

2 Can the district free up funds from energy expenditures?

3 Can the district free up funds from maintenance services?

4 Can the district free up funds from custodial services?

5 Can the district free up funds from food services?

6 Can the district free up funds from classroom and other instructional technology?

7 Can the district address mild special needs differently?

8 Can the district free up funds from paraprofessional positions?

9 Can the district free up funds by increasing the impact of intervention teaching positions?

10 Can the district free up funds from special education teaching positions?

11 Can the district free up funds from speech and language therapist positions?

12 Can the district increase the impact of Title I spending?

13 Can the district free up funds by reducing reliance on out-of-district special education placements?

14 Can the district free up funds by reducing its reliance on alternative schools for students with behavioral challenges?

15 Can the district increase state and federal funding by maximizing free and reduced-priced meals enrollment?

16 Can the district increase federal Medicaid reimbursement for health-related student services?

17 Can the district free up funds from professional development expenditures?

18 Can the district provide more professional development opportunities for core teachers at little or no additional cost?

19 Can the district increase the impact of the coaching model at little to no additional cost?

20 Can the district free up funds from instructional coaching positions?

Rethinking service delivery

models for students who

struggle

Reducing operational costs

Boosting the impact and cost-

effectiveness of professional

development for teachers

Maximizing revenue

Return to Instructions

S26

How long will it take

to complete?

The Screening Tools are intended to be completed in a relatively short period of time. It should take

districts approximately half a day to complete all 31 Screening Tools, provided the right people are in the

room.

Who should be

involved?

A wide group of district leaders should work to complete the Screening Tools together or as smaller

content-specific teams. Teams should include all relevant department heads and well as their "second-in-

commands," who have a detailed knowledge of current practices. For example, a Screening Tool that aims

to assess, "Can the district increase state and federal funding by maximizing free and reduced-priced meals

enrollment?" would likely require the head of federal programs, the Title I point person, and the head of

food services to help complete the tool.

Note on Scoring

After completing the Screening Tools, districts will have a score for each opportunity. The score indicates

whether or not districts should consider exploring the opportunity further using the Sizing Tools and other

analyses. It is not worth completing the Sizing Tool for any opportunity that scores fewer than 50 points.

Sizing up to 15 of the highest-scoring opportunities should be ample work to identify the highest-leverage

opportunities.

Screening Tools Score Key

0-49 points: Not worth exploring

50-74 points: Might be worth exploring further

75-199 points: Worth exploring - small potential opportunity

200-299 points: Worth exploring - significant potential opportunity

300-399 points: Worth exploring - large potential opportunity

400 + points: Worth exploring - very large potential opportunity

Screening Tools

To use special features of this tool, select Enable Content and Allow Macros

You may also use the buttons on the top and left to access those same features

S27

SCREENING TOOL 1

Can the district free up funds from general education transportation?

Question Answers Points Score

Yes, 10% or more of all students 20

No, or less than 10% of all students 0

Yes 30

No 0

Yes 30

No 0

Yes 0

No 50

Yes 20

No 0

Yes 0

No 20

Yes, in proportion to the overall budget 0

Yes, in greater proportion than the overall budget 40

No, or in smaller proportion than the overall budget 0

Do not know 40

Yes 20

No 0

Yes 0

No 30

Yes 0

No 50

Do not know 50

80

Instructions: Answer the questions below about the district. For each one, there is a drop-down menu in the gray-shaded cell to its right. Please select

the score that corresponds to the points for your answer choice. The scores will automatically sum at the bottom to give your total points.

Providing transportation for students is often very costly. Some districts have reduced spending on transportation by switching to lower-cost providers,

making routing more efficient, and/or better utilizing their fleet of buses.

Note: This opportunity includes general education transportation, and does not include special education transportation

Do most buses make more than one run in the morning and

more than one run in the afternoon? 0

Does the district utilize routing software to create new bus

routes each year?0

Has the district created new school assignment policies for

students in the past five years?20

Has the district changed transportation providers in the

past 5 years?0

Does the district transport students to charter schools

and/or parochial schools?0

Does the district transport many general education

students in grades 7-12 in school buses?30

Does the district transport general education students who

are not mandated under state law?30

Total points

Has spending on transportation increased in the past 3

years?0

Do most buses have monitors?0

Can the district easily and accurately produce

transportation reports that include duration of each run

and the number of students on each run in the morning

and afternoon on any given day and are these reports used

to adjust routes or stops?

0

A Student Learning Challenge

Good progress on reading goals

Not as good on math goals

S28

Making a Smart Investment

Curriculum is a big

investment, but benefits

are not entirely certain

S29

The Traditional Approach

“The traditional way of

selecting a curriculum is

like buying a house based

on the blueprint…”

-Megan Crandall, TCAPS Board

Vice President

S30

Channel Your Inner Scientist

TCAPS pilot tested 3 curriculums

• Research proven curriculums

• Full year pilot

• Several schools serve as test sites

• Others continue old curriculum

• Results compared using multiple measures

S31

Results so Far

S32

Significant gains realized to this point…

Stakeholder Engagement

S33

Teacher satisfaction 4 is high

S34

S35

“It’s crazy exciting what these

kids & teachers are doing. It

will blow your mind!”Jessie Houghton, Principal

“I knew all kids could learn,

but I never expected this!”Ann Chouinard, Teacher

Making a Smart Investment

“The traditional way of selecting a curriculum is

like buying a house based on the blueprint…

…selecting a curriculum with

a pilot is like doing a walk-

though before you buy.”

-Megan Crandall,

TCAPS Board Vice President

S36

Making a Smart Investment

TCAPS used academic return on

investment to help make the choice

S37

Changing the conversation

“For the first time in my board tenure, I feel that decisions have been rooted in objective information”

Megan Crandall, Board Vice President

“The process brought a great deal of credibility to this decision due to its transparency and use of objective data. Perhaps most importantly, it established a framework for future decision-making”

• Paul Soma, Superintendent

S38

Beyond the Pilot

Best indicators of a successful process

• TCAPS will repeat it for the English curriculum

• Extending the philosophy to other areas via a

strategic financial plan

S39

Interesting Outcomes…

CPA as Superintendent

More concerned with student

achievement than fund balance

• Qualitative

• Quantitative measures

Risk taking based on needs of student

• Blair example

S40

Interesting Outcomes..

Focus on what is important

• Has improved relationships with teachersoSupplies

oContract

oWhat’s important.

• Has enhanced community dialog about value/objectives of schools (A-ROI)

• Alignment throughout all levels of the organization

• Creation of entrepreneurial spirit.

S41

About Smarter School Spending

S42

S43

Smarter School Spending

Best Practices in School Budgeting

Project Development

Best Practices in School Budgeting developed by GFOA in conjunction with the Smarter School Spending websitewith input of several districts and other experts• Best Practice documents and Resource Center available at

http://gfoa.org/pk-12-budget

Smarter School Spending developed in partnership with four districts working closely with consultants on their budget process (http://smarterschoolspending.org/)

Award for Best Practices in School Budgeting is a new GFOA budget award based on the Best Practices in School Budgeting

Alliance for Excellence in School Budgeting is an early adopter group of two waves of approximately 30 districts each formed by GFOA to aide in implementing the new Best Practices

Alliance 1.0 Members

AZ Amphitheater Public Schools NJ Elizabeth Public Schools

Hayward Unified School District NY Rochester City School District

Pomona Unified School District OH Bexley City School District

Santa Ana Unified School District Columbus City Schools

Tracy Unified School District Dayton City School District

CO Boulder Valley School District OR Beaverton School District

Moffat County School District North Bend School District

FL Lake County Schools Portland Public Schools (OR)

Miami-Dade County Public Schools Tigard-Tualatin School District

GA Fulton County School System Willamette Education Service District

IL St. Charles Community Unit School District 303 PA Upper Moreland School District

IA Des Moines Public Schools TX DeSoto Independent School District

KY Fayette County Public Schools Wylie Independent School District

LA DeSoto Parish School System VA Goochland County Public Schools

MD Howard County Public School System Hanover County Public Schools

MI St. Johns Public Schools WA Bellevue School District

Traverse City Area Public Schools WI School District of Fort Atkinson

NE Beatrice Public Schools

CA

Alliance 2.0 Members

CA Education for Change OH Lakota Local School District

San Francisco Unified School District Springfield City School District

CO Eagle County School District RE50J Toledo Public Schools

Jeffco Public Schools Trotwood-Madison School District

FL School District of Palm Beach County OR Hillsboro School District 1J

Volusia County Schools RI Bristol Warren Regional School District

GA Atlanta Public Schools SC Greenville County Schools

ID Nampa School District TX Fort Worth Independent School District

IL River Trails School District 26 Lamar Consolidated Independent School District

Rockford Public School District 205 WA Auburn School District

Thornton Township High School District 205 Central Kitsap School District Organization

MA Cambridge Public Schools North Mason School District

MI Glen Lake Community Schools Olympic Educational Service District 114

Troy School District Pasco School District

Wayne-Westland Community Schools Shoreline School District No. 412

MT Billings School District WI Milwaukee Public Schools

NE Omaha Public Schools School District of Menomonee Falls

NV Carson City School District

Implementing the Best Practices

Not meant as an outright replacement of

your existing budget process

Framework to integrate current efforts to

help move the bar forward

Way to help identify areas that may need

improvement

S47

Focus on 5 major

areas:1. Plan and Prepare

2. Set Instructional

Priorities

3. Pay for Priorities

4. Implement Plan

5. Ensure

Sustainability

Best Practices in School

Budgeting

S49

Best Practices in School Budgeting

1. Plan and Prepare

1. Plan and Prepare

A. Establish a Partnership between the

Finance and Instructional Leaders

B. Develop Principles and Policies to Guide

the Budget Process

C. Analyze Current Levels of Student

Learning

D. Identify Communications Strategy

S50

Establish a Partnership between the

Finance and Instructional Leaders

Collaboration

• Collaboration between the Instructional and Financial

leadership of a district is key to the Best Practices in

School Budgeting

• Aligning the district’s scarce resources to programs that

have the greatest impact cannot be effectively or

efficiently done with the district working in silos…

S51

Develop Principles and Policies to

Guide the Budget Process

Principles

• Focus on Students

• Data

• Long-Term

• Transparency

S52

Develop Principles and Policies to

Guide the Budget Process

Policies:

• General Fund Reserve

• Definition of a Balanced Budget

• Asset Maintenance & Replacement

• Several others

S53

Why Develop?

Principles and policies help to frame and

set the stage for the budget process and

its outcomes

S54

Budget

Analyze Current Levels of

Student Learning Collecting Performance Data

• Develop a well-rounded perspective on student performance

• Ensure data is: o Relevant

o Consistent

o Can be disaggregated

Measuring Student Performance • Comparison against a standard of proficiency

• Relative improvement

• Changes over multiple years

S55

High Level Data Example

S56

4-Year Graduation R ate 77.5% 64.3% 77.2% 64.2% 80% 68% 80% 68% 85% 75%

5-Year C ompletion R ate 86.1% 77.5% 89% 84% 89% 81% 91% 85% 96% 94%

C ompleting 3+ More C ollege C ourses 49.8% 33.7% 52% 36% 55% 40%

Post-Secondary Enrollment 72.4% 60.2% 75% 62% 75% 64% 77% 66% 81% 73%

Kinder Assessment Participation 97.3% 96.5% 95% 95%

3rd Grade R eading Proficiency 79.9% 66.3% 74.5% 59.7% 75.7% 61.8% 85% 75%

5th Grade Math Proficiency 74.6% 58.9% 70.4% 55.2% 72.2% 55.3% 82% 70%

6th Grade Not C hronically Absent 89.6% 85.3% 92.2% 88.7% 91.0% 87.4% 92% 89% 94% 92%

8th Grade Math Proficiency 78.5% 63.6% 73.1% 56.8% 75.6% 58.4% 84% 74%

9th Grade C redits Earned 80% 66% 77.8% 63.7% 79.5% 65.5% 85% 75% 89% 82%

9th Grade Not C hronically Absent 83.0% 75.0% 86.1% 79.1% 88.9% 83.1% 88% 82% 91% 87%

College and Career Ready: Are students completing high school ready for college or career?

9th graders

of 2008-09

Traditionally

Underserve

d# 9th graders

of 2009-10

Traditionally

Underserve

d# 9th graders

of 2010-11

Traditionally

Underserve

d# 9th graders

of 2011-12

Traditionally

Underserve

d#

9th graders

of 2014-

15**

Traditionally

Underserve

d#

Progression: Are students making sufficient progress toward college and career Assessment?

A ll

2011-12

Traditionally

Underserve

d#

A ll

2012-13

Traditionally

Underserve

d#

A ll

2013-14*

Traditionally

Underserve

d#

Goal for A ll

2014-15

Traditionally

Underserve

d#

4-Y ear Goal

(2017-18)**

Traditionally

Underserve

d#

• Beaverton School District’s College and Career Ready to help frame district’s progress in key area

Identify Communications

Strategy

Communication Strategy Components:

• Process overview

• Explanation of decisions

• Stakeholder engagement

Implement Communication Strategy

• Identify the messengers

• Identify target audience and tailor messages

• Select communication channels

• Gather feedback and adjust

S57

S58

Best Practices in School Budgeting

2. Set Instructional Priorities

2. Set Instructional Priorities

A. Develop Goals

B. Identify Root Cause of Gap between

Goal and Current State

C. Research and Develop Potential

Instructional Priorities

D. Evaluate Choices between Instructional

Priorities

S59

Develop Goals

SMARTER Framework:

• Specific - precise outcome or result

• Measureable - verifiable, ideally quantifiable

• Achievable - grounded in reality

• Relevant - focused on student achievement

• Time-bound - short and long-term objectives

• Exciting - reach for ambitious improvement

• Resourced - finances aligned with goals

S60

Major Goal: Immediate Investment in Struggling Students

Sub-Goal: ELL Students. Fund programs aimed at closing the achievement gap of English Language Learner (ELL) students

What is the need? LCS spends less on ELL students than comparison districts. The LCS ELL population is growing steadily as the student achievement rates continue to be low

Specific - Adds Precision to the Major Goal

Relevant – says why this goal matters

Example: Lake County Schools,

Florida

S61

Example: Lake County Schools,

FloridaWhat will the District do?

Determine programming options

Compare options by potential A-ROI

Select highest return option(s)

What will it cost?

What gains does the district expect?

Year 1 Year 2 Year 3

$1.9 million $2 million $2 million

Measure Proj. ’15

Act. ’15

Goal ’16

Goal’17

Goal‘18

Goal’19

ELL Grad. Rate 70% 57% 70% 80% 90% 95%

AchievableClear path

laid out

Resourced – Est. cost for budget

Measureable, Time-bound, & Exciting

S62

Identify Root Cause of Gap between

Goal and Current State

Rationale for Root Cause Analysis

• Move beyond addressing symptom level solutions

• Find underlying true cause of issue

• Results may be surprising

• Process should involve different perspectives –not only to assist analysis - but also develop a broad base of support to implement solutions

Root cause analysis can start from scratch –but may be helpful to examine ‘likely suspect’ categories

S63

Example: 5 Whys

A Root Cause Analysis on Special Education Beaverton

Q. Why are so few 8th graders who receive special education not meeting State standards? A. They are not prepared to meet the standards.

Q. Why are they not prepared to meet the standards? A. They lack access to appropriate instruction in grade level content.

Q. Why are they not participating in general education classes, where they can get instruction in grade level content? A. The general education teacher may not have the tools or skills to address behavioral needs and scaffold instruction.

Q. Why do general education teachers feel unprepared to instruct students who receive special education services? A. Professional development for general education teachers may not support how to instruct students with varied learning and behavioral needs.

Q. Why doesn’t professional development support these skills? A. The budget for professional development to support special education students is provided exclusively by the special education department, which only trains special education teachers.

! Solution: We need to change the budget so that professional development for helping special education students goes to all teachers, not just special education teachers.

Research & Develop Potential

Instructional Priorities

What is an Instructional Priority?

• Strategy for overcoming identified problems

and achieving stated goals

Research on Proven Effective Practices

Clearly Articulate Intent

• Limit number of priorities

• Don’t be overly specific with implementation

details – a next step

S65

S66

Evaluate Choices between

Instructional Priorities

Identify the Options

Describe Options

Making the Consequences of Choices

Concrete

Public Engagement

S67

S68

Best Practices in School Budgeting

3. Pay for Priorities

3. Pay for Priorities

A. Applying Cost Analysis to the Budget

Process

B. Evaluate & Prioritize Use of Resources to

Enact the Instructional Priorities

S69

Apply Cost Analysis to the

Budget Staffing Analysis

• Analyze staff by school site

• Also group staff by major functions or programs they support

• Identify a clear analytical question to be answered

Cost of Service Analysis• Per unit costs

• Cost per outcome

• Relative cost per outcome

• Academic return on investment (A-ROI)

S70

Relative Cost Per Outcome

S71

Great! Replicateresults here.

What happened here?

Academic Return On Investment

(A-ROI)

Basic formula:

S72

((Learning increase) x (Number of students helped))

Dollars Spent

A-ROI Example

S73

Architecture Engineering

Students Enrolled 80 125

Certificates Granted 64 62

% Receiving Certificates 80% 50%

Cost of program:

Teacher Salary plus Benefits 75,000$ 75,000$

Supplies, etc. 13,000$ 25,000$

Total 88,000$ 100,000$

Cost per child 1,100.00$ 800.00$

AROI 0.0007273 0.0006200

Basic example showing CTE courses with outcomes in

terms of certificate completion

Evaluate & Prioritize Expenditures to

Enact the Instructional Priorities

Preparing to Evaluate and Prioritize

Expenditures

Finding Resources to Pay for the

Instructional Priorities

Weighing Trade-Offs

Overcoming Constraints on Change

S74

S75

Best Practices in School Budgeting

4. Implement Plan

4. Implement Plan

A. Develop a Strategic Financial Plan

B. Develop a Plan of Action

C. Allocate Resources to Individual School

Sites

D. Develop Budget Presentation

S76

Adopt Strategic Financial Plan

Financial in nature – but needs to provide

greater picture

Goals and strategies of organization

inform financial future – not just external

factors

Prepare for future as best as possible –

as opposed to react to foreseeable events

S77

Lake County’s Strategic Plan

S78

Develop a Plan of Action

Taking the steps to ensure Instructional Priorities are successful

The following elements should be included in the Plan of Action:

• Instructional Priorities

• How the Priorities will be funded

• Actions intended to implement and fund Priorities

• Sponsorship structure

• Sources of evidence that action is occurring

• Process for review and adjustment

S79

Allocate Resources to Individual

School Sites

Districts, particularly those with multiple schools sites, need to have a clear and transparent method for allocating resources to each school site

GFOA does not advocate a specific method between staffing ratio and Weighted Student Funding methods, but ensure:• Use of current enrollment

• Supported by solid rationale

• Transparent

S80

Develop Budget Presentation

Fundamental Organization of the Budget:

• The Challenges

• Goals – remember SMARTER framework

• Strategies and programs

• Financial Plan

• Risks to long-range financial sustainability

Telling the district’s story

Use as a communication device

S81

S82

Best Practices in School Budgeting

5. Ensure Sustainability

5. Ensure Sustainability

A. Put the Strategies into Practice and

Evaluate Results

• Monitor Strategy Implementation

• Evaluate Interim Results throughout the Year

S83

Early Wins

Beatrice Public Schools, Nebraska

Newer to project, joined little over a year ago

But still have early wins:• View budget and budget process differently now

– group project, not in isolation

• Examine budget together as whole as opposed to each piece of the pie

• Solid strategic plan -

ready to develop

a strategic financial plan

S84

‘It’s a Beautiful Thing’

Wylie Independent School District, Texas

Entire leadership team developed a

budget aligned with district goals

• Board far more engaged

• Resources used strategically

Budget process described as a ‘beautiful

thing’ by head of academics

Realignment of Resources

Beaverton School District, Oregon• Below average graduation rates

• Persistent achievement gap

Coming back from the Great Recession, pressure to restore what had been cut

Instead focused on limited set of interventions

Results• 4-year graduation rates now at an all-time high

• Highest community satisfaction scores since 2005

S86

Contact Information

Matt Bubness

mbubness@gfoa.org

(312) 578-2267

Paul Somasomapa@tcaps.net

(231) 933-1725

Donald Sovey, CPA, CFO donsovey@gmail.com

(517) 231-0563 87