Budget Advice for Newcomers to Superintendency

School Administrator, Nov, 1996 by Sandra L. Graczyk, Clark Godshall

Most educators come to their first superintendency with strong backgrounds in curriculum and instruction but little experience in budgeting and finance. Yet according to AASA's 1992 Study of the American School Superintendency, superintendents cite school financing as their greatest challenge.

How then can a new superintendent avoid career-damaging, financial disasters? Certainly, relying on a well-trained and experienced school business administrator helps. However in many small school districts where beginning superintendents are likely to begin their careers, no administrative position is dedicated to business operations. Even in districts with a school business officer, the superintendent must provide fiscal oversight.

Move Cautiously

New superintendents can use several techniques to avoid budgeting pitfalls:

* Maintain the existing budget process and format far at least one complete fiscal year.

Neophytes often want to make their mark early in their tenure, but by waiting and studying the current process, the new superintendent can fully understand both the strengths and the weaknesses of the budget and be better able to implement meaningful changes.

When those changes are made, the superintendent should choose the budget development process that's appropriate for the district. For example, decentralized and cooperative budgeting may be in vogue today. However, a top-down, centralized approach may be the most appropriate, especially in a district with fiscal problems.

* Keep current on state aid formulas.

Regardless of the level of previous experience in school business, the new superintendent is expected to explain state aid formulas to the board of education and the public. The superintendent should concentrate on the forms of aid that can make a significant difference in maximizing revenues. For example, the superintendent may wish to improve student attendance, even though it is not a problem. This could generate state aid increases under certain formulas, while pursuing a sound instructional practice.

The superintendent also should ensure that all possible state aid has been claimed. Some areas to check include state aid claims for all categorical aids, open building projects and short-term debt service, and aids with retroactive claim periods, such as Medicare reimbursement.

The new superintendent must understand the myth of significantly increasing state aid revenues. Some aid formulas are driven by property or income wealth, over which there is little control. To spend a great deal of time attempting to increase these state aid revenues will be inefficient and ineffective.

Promises Fulfilled

* Avoid unrealistic fiscal promises.

The new superintendent is handcuffed by a lack of intimate knowledge about the current budget. Knowing where the surpluses and the tight spots are comes only from creating a budget, not inheriting one. Nevertheless, the new superintendent will be bombarded with political pressures to change the budget process or lower the tax levy.

Even before making instructional changes, the new superintendent should ensure that sufficient funds exist. If not, the superintendent may be, at best, unable to fulfill promises. At worst, the budget may be overspent.

* Review all collective bargaining agreements to determine their budget impact.

This includes not only salaries and benefits, but also terms and conditions of employment, such as leave provisions and limitations on class size.

* Increase the tax rate at an even rate each year.

An extremely low budget and a small tax rate increase one year may get the budget passed and make the new superintendent a hero, but it can result in a much higher tax increase in future years, leading to budget defeats, political fallout, and perhaps the non-renewal of the superintendent's contract. It is far better to accustom the community to a small, consistent tax increase each year to help ensure district financial health.

* Retain the maximum amount of unappropriated fund balance allowed by law.

Fund balance, if managed properly, can be a tool to smooth tax rate increases. Furthermore, the unappropriated fund balance provides the district with ready cash during times of revenue drought. This can minimize the district's need for short-term borrowing and its associated expense.

Being new in the district, the superintendent may face community pressure to maintain a small unappropriated fund balance and to assign a greater amount to the budget to reduce taxes. Yet this practice will reduce drastically the future fund balance, forcing tax increases.

Extra Money

* Underbudget revenues and overestimate expenditures when creating next year's budget.

This conservative budgeting practice allows the school district to weather unexpected fiscal crises beyond its control, such as a reduction in state aid or lowered interest rates. Underbugeing revenues also can create a surplus, which the new superintendent can use to build the fund balance.

Overestimating expenditures provides a little extra spending money to cover unforeseen events, like mechanical system breakdowns or the need for additional teachers. In many states, the district's expenditures cannot legally exceed the budgeted amount, so the prudent superintendent will budget a little more than is needed.