How to Plan & Manage your School’s Budget effectively?
While budgeting is a common phrase used in all sectors including organizations, states and countries, a budget for schools is not practiced rigorously in most of the schools. Schools usually follow instructions from the government who funds the schools partially or completely. Or they simply follow the patterns of the past academic years without planning a budget. One major difference of schools’ budget from other organizations is that the majority of a school budget expenditure(80%+) will be on personnel and benefits while for other organizations it will be less than 50%. This brings a challenge to school because they have less than 20% of the budget available for other innovations and improvements. And this expenditure will be tightly controlled by policies and instructions from government and other governing bodies.
What is a budget? Why schools need it?
A budget translated the vision and missions of school to annual plans by mapping the resources against the yearly goals and comparing the income and expense trends of past, present and future. By creating and maintaining a budget for multiple years, the school leadership can understand the spending and income patterns to plan for the present academic year properly and achieve the goals.
A well planned budget helps the school by giving control on the way it spends money. It forecasts and track how the money is being spent and saved by being intentional about each transaction. It also makes you aware of how the money is being spent and the value derived from each of those transactions. The process of creating a budget gives a birds eye view to the leadership about the academic year ahead. It avoids the confusion and chaos while involved in day to day operations and expenses. Creating and following a budget will help the schools to generate profit or to create surplus from the funds available to the school.
Top 9 proven tips for better school budgeting:
Following are ten proven tips used by schools across the globe for creating and managing an effective budget.
Academic goals should drive budget
Before setting a budget, the school leadership must sit together and decide what are the academic goals of the present year and coming years. The primary goal of a school is to impart quality education to its students. All activities and programs in a school must be conducted with this aim. This aim should be the vision of the school. So the school leadership will have to decide how to track the progress and achievement of academic goals. After this, the leadership team can start preparing the budget and each of the expenses in the budget can be mapped towards the academic goals of the budgeted year.
Budget decisions should be driven by data
All budget decision to be made after looking at the data for past years. If the school is preparing a budget for the first time, they must first spend quality time in consolidating the expenditure data for past years. Once these are explored, cleaned up and converted into presentable form, the school leadership can start the budget process for the present year.
Expect & welcome disagreements during planning stage
There will be disagreements during budget planning stage between the different leaders in the allocations of budget amount. Remember that these disagreements are part of the process and must be welcomed. Including diverse inputs in the discussion phase will help the leaders set a realistic budget and can foresee into the future conflicts and challenges during execution phase. Based on these observations better planning can be done to achieve academic goals.
Prioritize programs with proven cost-effectiveness and value for money
When-ever the budget allocation is being done for particular programs, always look for value for money and cost-effectiveness. With an organization like school, the budget is always very limited and as noted in the introduction only a small portion of this budget will be available for innovations in operations. So the school can’t experiment on new initiatives. Always look for data and proof of cost-effectiveness.
Help teachers understand financial accountability
This is a critical step that most of the school leadership misses during budget planning. The budget will be prepared by the finance head and school owner along with principal. But the execution of the programs have to be done by the teachers who may not understand the basic principles of budgeting. So it is always preferred to give training and coaching to the teachers and other faculty on budgeting and tips for executing programs within the planned budget.
Be assertive once budget is frozen
Once all the disagreements during the budget planning stage is over and a budget is prepared, it is time to set aside the disagreements and start working as per the plan finalized. So the leader should be very assertive in any program requirements that comes outside the planned budget. If proper training is given and the practice is conducted for multiple years, this approach will be understood and appreciated by all stake-holders.
Expect & manage adjustments throughout year
Even while being assertive to the change requests in the budget, the leaders should be aware that all budgets require adjustments throughout the year. So set up a system and process to make deviations in the frozen budget and follow this process rigorously.
Expect two or three years if you are starting fresh
If you are starting a budgeting practice for the first time in the school’s history, have your expectations right. You can’t expect the budgeting process to work properly in the first year. Even while following strict practices expect a two or three year time period for the budget process to be integrated to the culture of your school operations.
Use a budgeting application
Nowadays everything is digital. So you should use a software for budgeting process too. There are plenty of software available for this need. Both free as well as paid tool. Look for a tool that is used in schools similar to yours with training and support available in your location. Consult your accountant before finalizing the tool.
For a budget to work properly, you must be extremely transparent in the operations to the leaders who participated with you in the budget planning and finalization. This helps in the purpose of budget and motivating the team in participating for the academic goals of the institution.
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