Developing the Next School Budget
What approach will your school be taking this year?
by John Vegt, SCSBC Director of Finance ◊
The annual budgeting process will soon start again for all schools. How will the team responsible for the budget approach the process this year? What will be some of the key performance indicators you will be looking for? How does your school budget compare to the ‘best practices’ among other SCSBC schools?
Since approximately seventy-five percent of all operational budget expenses relate to teaching and support staff costs, it is crucial that the linkage between student enrollment and staffing receives proportionate attention. This requires that a conservative detailed enrollment analysis is completed as a first step in the budgeting process. Each family, each student, each special needs student, each grade, each international/first nations student, each preschool and kindergarten student, each likely tuition assistance applicant, each discount, each transportation fee, each registration fee together with the updated tuition schedule must be calculated in detail. It also requires that a listing of each staff member, with their corresponding level on the new salary schedule and every payroll benefit be determined in detail.
However, it is the relationship between expected student enrollment and staff employment which must be examined most carefully. In fact, a principal / superintendent’s careful analysis of this aspect of the budget may be one of their most significant contributions to the budgeting process.
The SCSBC Budget Template calculates the required staff needed for the classes and courses based on enrolled students. The required staffing is then compared to the actual staffing. If the actual staff is either more or less than the required staff, the administration should immediately determine hiring or downsizing of staff. It should be noted that this calculation is a guideline for determining appropriate staff levels. Each school will have unique staffing needs that may vary from this calculation. This exercise should be completed very early in the new year, preferably in January.
The actual gap between SCSBC teacher compensation and public school compensation has been increasing within recent years. At minimum, SCSBC schools are encouraged to pay at levels recommended in the current SCSBC Compensation Report, and perhaps even higher in regional areas with housing, transportation and living costs higher than the provincial average.
Best practice suggests that all provincial government grants and student tuition fees should fund one hundred percent of the operating cost of your school’s budget. If this is not the case, tuition fees are likely too low.
There is significant management value in keeping track of departmental expenses. These expenses should include those for preschool, elementary, middle and secondary departments, transportation, information technology, development, facilities, debt and capital costs, special needs and administration. The SCSBC Budget Template provides a budget process for this. Equally important to the budgeting process is to document detailed assumptions and to include stakeholders such as principals, treasurers, and various committees of the school in the process.
Over the last four years, the combined financial picture of SCSBC schools has gone from an operating surplus of $4.2 million in 2007 to a shortfall of $1.3 million in 2010. This represents an overall cumulative downward shift of $5.5 million. As a general observation, tuition fees have not kept up with the increase in expenses, and staffing efficiencies based on changing enrollment are not being achieved. Schools are often far too slow to make the necessary reduction in staffing and administrative costs when school enrolment decreases. In addition, a decrease in fundraising revenues and planned giving visits has been noted in some of our schools.
A review of other SCSBC school benchmarks should assist in determining whether any of your benchmarks need to be reviewed as part of the budgeting process. Please contact the SCSBC Director of Finance for further information regarding benchmark comparisons between your school and other SCSBC schools.
Financial stewardship ought to be a core value of our schools. Having this value in place will ensure continued fair and equitable compensation for staff, appropriate and affordable tuition fees for parents, and responsible fiscal and budgetary policies for school boards.