Managing public school district budgets.

• Author: Wilson, Daniel
• Position: Best Practices - Reprint

The recovery from the most recent recession has been much slower than the historic recovery cycle, taking much longer than most experts predicted. The reality for Ohio's next biennial budget is that K-12 public education funding cannot be sustained at the current levels. The most recent local property tax passage rates resulted in approximately 36 percent of new money requests passing and 8 percent of no tax increase renewals failing. Clearly, local taxpayers are not able or willing to replace reduced state funding, so local school districts must focus on actively managing expenses.

In fact, the current economic climate may provide once-in-a-lifetime opportunities to fundamentally restructure the budgets for K-12 public education. This is suggested in the emerging discussions about revisions to Ohio's collective bargaining laws, an increasing number of local districts delaying or freezing salary schedule step increases, increasing discussions of consolidation of the smallest school districts, increasing sharing of administrative and operational expenses, and a growing body of research on the rationality and effectiveness of the current teacher salary schedule structure.

MAKING THE MOST OF LIMITED OPTIONS

Local school districts are bound by the Ohio Constitutional provisions requiring balanced budgets and prohibiting local growth in property tax revenue. The only local school district options to a reduction of state revenue are to reduce expenses, raise new local revenue, or a combination of both.

The most effective and most difficult option is to reduce expenses. Many local efforts are focused on non-personnel expenses which represent only 15 percent or so of the operating budget. Reducing the use of photocopier paper or office supplies might lower spending, but the impact on the total operating budget is negligible. The management strategies that produce the most budgetary impact are those that focus on the largest expenses: salaries, employee benefits, special education expenses, and the number of classrooms in operation. A fundamental business principle is that you can manage only what you measure. An effective management strategy is to break down these four major expense categories into individual subcategories, as shown below, allowing individual and specific expense reductions to be developed and implemented.

Salaries, Require the development of five-year staffing budgets as a part of the current five-year forecasts. The staffing...