Strategic Budgeting for Charter Schools. Accounting, Finance, SPSS

Strategic Budgeting for Charter Schools
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Abstract
At a time when education reform is a significant concern, effective initiatives must be designed not only to enhance student achievement but also to enable school administrators to maximize the use of current resources. While schools are ideally required to utilize efficient information systems in developing data-driven budgets that couple up of school expenditures with relevant educational outcomes, this is not common in many charter schools. Instead, the school budget models that have been created in recent decades are targeted on meeting priorities conflicting to those of the modern education system. With that in mind, a more deliberate and strategic approach to school budgeting and policies and tools are required to help academic institutions make effective and efficient spending decisions. Strategic budgeting aims at developing a plan that supports a long-term vision for the future of an organization. This paper analyzes the process of preparing, amending, and improving budgets in charter schools. This project's primary intent is to prove that it is possible to develop a budget with a plan that supports a long-term vision of charter schools.
Strategic Budgeting for Charter Schools
Introduction
Budgeting is an essential dimensional tool of financial management and accounting in all entities, including schools. It is a process whereby potential revenue and expenditure are determined to streamline the spending procedure. It is mainly executed to enable tracking and monitoring of both the expenditure and revenue. Adopting a school budget requires that the administrators and the governing body make confident decisions that culminate in matching the available resources with the school's needs. As such, a reasonable budget will require a strategic planning process (Hawkesworth & Klepsvik, 2013).
A budget refers to an itemized listing of the amount of the overall estimated revenue that a school expects to receive and a list of the amount of all estimated expenses and costs that will be incurred in a specified period. School budgets can also be defined as financial plans of expected funds and the expenditure required to attain their educational objectives. The nature of the correlation between strategy and budgeting varies from one school to another, and the level of formalized planning also differs (Cools, Stouthuysen & Van den Abbeele, 2017). Nevertheless, generally, many budgets have loose coupling between budget expenditures and strategic objectives.
In most cases, the principal or instructional leader is charged with the prime role of preparing a budget. Such budgets are developed based on resolutions approved by the school’s board, the management committee, and other relevant stakeholders. Evidence in many charter schools remains uncertain, especially in terms of how resource allocation generates results. Research on school finances shows that budgets can be more effective if decisions are made locally and consider the institution’s and community's needs (Blass & Bleikh, 2018). Instead, this document is designed to compel school leaders to take a broader approach to school budgeting that includes: setting goals, financial management analysis; build consensus on how it works effectively; selecting the appropriate budget model; and tracking costs.
Charter schools can develop innovative models primarily because their charter agreements permit the exchange of bureaucratic constraints for operational autonomy. Having fiscal independence allows these schools to have a more remarkable ability to manage their budget, operations, and growth strategy. Streamlining the budgeting process in schools with strategic planning provides a tactical approach for utilizing resources.
Common types of budgets in schools
The two types of budgets standard in schools are current budgets and long-term budgets. The two are classified based on the time covered. Other types of budgets include the traditional budget and school program budgets.
Current budget
Charter schools receive grants from the state and district for a year for carrying out most of their activities. The funding from these sources is the largest part of the school's revenue in a year. The current budget comprises the income available and the expenditure anticipated in the current fiscal year (Goldstein, 2012). It can be prepared as the original budget or developed from temporary budget adjustments.
Long-term Budget
Institutions are established to attain particular objectives. To accomplish them, a school should plan well in advance and continue to work each year to achieve these objectives. Such plans outlined the possible sources of income and expected heads of expenditure for longer than one year. In most cases, long-term school budgets cover five years. However, budgeting plans can also be prepared for ten years or more. The long-term budget offers a priority and perspective for the current budget to be prepared.
School program budget
There are times when a charter school may prepare a budget for specific programs. These budgets are created for a particular reason and can act as a guideline for implementing a project or initiative. For instance, when a school plans to organize a sporting competition, it will be required to lay down all the expected income in sponsorship and fees. The expenses needed for the event also need to be planned (Wampler, 2012). A school program budget is prepared for a specific purpose and acts as a guide for executing the project.
The traditional budget
A traditional budget does not accentuate on purpose to be accomplished but on generating revenue and expenses on different heads. Most schools prepare budgets and plans delineating the income and expenditure for the current year, about the previous year, and these are commonly referred to as traditional budgets. Although this budget does not deviate from the previous budget, where income and expenditure remain the same, price hikes must be adjusted under each head.
Funding in charter schools
Charter schools in the U.S. receive funding from the state and the district, and the amount disbursed to a school depends on the number of students attending. This amounts to about 80% of the revenue in these schools. Other sources may include revenue generated from school activities, miscellaneous grants, and revenues from the national lunch program. These funds are meant for staff salaries and benefits, maintenance and improvement of the school facilities, contingency, sports activities, purchase of instructional material and other equipment, and student services, among other things (DeAngelis & Barnard, 2020).
Expenditure
Major expenses in a charter school can include
Instructional expenses: These include textbooks and other study materials, assessment materials, classroom supplies, and education software, among others. A school can also include expenses for hiring instructional consultants.
School services: They can include transport expenses as well as money spent on food and meals
Operational expenses: Funds spent on the internet, telephone, office supplies, and operational specialists such as I.T., accounting, and legal fall under this category.
Commonly budgeted items in schools
Salaries and benefits: Documented lists of all the staff, salaries, and benefits
Study materials: Itemized listings indicating textbook titles, quantity, and cost of planned purchases.
Instructional equipment: Lists of planned purchases and their estimated costs.
Professional development: A list of the training and conferences that are planned, the number of people expected to attend, along with related costs.
Advertising and marketing: Determine the planned activities and their associated costs.
Special education expenses: A compiled list of planned services and items required to facilitate special education and the relevant costs.
Extra duty stipends: A list indicating the projects, the employees involved, and the amount of any anticipated extra pay.
Athletics: Lists of anticipated athletic expenses, including uniforms, field and gym rentals, payments for trainers or coaches, and entry fees, among other things.
Technology: Items in this list may include the cost of acquiring software, hardware components, annual licenses, and the internet.
Other items like school insurance and other requirements
School Budgeting Process
The process of creating a budget can include both school-based budgets and non-school-based budgets.
Review previous budgets
Reviewing past budgets' performance can help you determine whether they were accurate, areas with overspends, and overspends and sections that require adjustments. Such data is essential in shaping an efficient budget and improves its effectiveness and accuracy. Analyzing the cost base can provide a basis on which to create a budget and serve as a prompt to review expenditure. Institutional leaders can also benchmark similar schools to understand how their spending compares and put it into context. Additionally, such evaluations provide an opportunity to identify improvements and cost-saving initiatives.
The budgeting process demands that educational planners and administrators adopt a structural model for effective planning, management, and control. Such a budgeting process can be time-consuming because it requires a comprehensive and systematic analysis of all estimated income and expenditure within a specified period. Also, all expenditure and revenue must be presented item by item in the right sections. The procedure involves determining how the available income will be allocated in a manner that minimizes misuse, friction, under-utilization, duplication, and reduces complaints.
Budgeting process
Preparing a budget is a complex process that requires both individual and group effort. It is worth noting that the process of preparing budgets in charter schools differs depending on the institution’s stage in the life cycle. For instance, a school in its early phase of existence will need to maximize its flexibility when creating a budget. Such budgets need to include a high enrollment estimate, a middle projection, and a high estimate to allow for the necessary adjustments based on the actual figures (Cottrell, 2014). Schools in later phases can use their historical data as a guide. In this case, the school heads first came up with a policy addressing the following questions:
1 Who is responsible for the budgeting process?
2 Who will draw the budget?
3 Who will be consulted in drafting the budget?
4 When should the budgeting process commence?
5 Who is responsible for approving the budget?
6 How will the budget be controlled and monitored?
Budget planning
The next stage of the budgeting process is comprehensive planning. It involves defining objectives and goals for administration and support services and developing essential programs to help attain them. The budget cycle ought to be initiated early enough. Comprehensive planning is a crucial stage in the school budgeting process. The process involves defining the objectives and goals for administration and support services and developing essential programs to attain them. The budget cycle ought to be initiated early enough.
The team involved in the process can include the following:
* The school board of trustees
* A financial expert
* Principals
* Staff representatives
The school administration is responsible for:
* Determining what a project requires and assessing the requirements of both teachers and students in teaching and learning.
* Initiating and managing an evaluation of program needs concerning scheduling and staffing.
* Finding community views and opinions regarding school needs.
* Commending a budget that distributes resources in a manner best suited to realizing the school improvement plan.
* Supporting the statistics of a school-based budget with a plan for school improvement.
* Sources of funds for the school budget
Inviting staff representatives and financial experts to input the budgeting process allows schools to create a clear roadmap for the institution's development. The school budget plays a significant role in this growth and success. The development process is affected by several aspects, such as the time required to draw and adopt a budget, the school's organizational structure, and the level of centralization in budget creation. The planning stage of the budget compilation is crucial to its success, and, therefore, you must come up with a timeline that takes all factors into account.
Increasing efficiency in school budgeting requires establishing ambitious goals and developing a budget with elements that support those goals. This will allow the relevant parties to analyze the budget to determine whether resource allocations hinder or support those goals and then act accordingly.
Once you have gathered your past data and carried out the benchmarking, the next step is to consider your resources, staffing, and other essential needs for the specified period. The planning stage is not a one-step process. Thus, you must develop a model comprising a range of revenue and cost schemes, based on the most vital data. To be accurate enough in your planning, you should consider information such as:
1 Variations in funding
2 Number of students in the school and their characteristics
3 Staffing profiles and salary increments
4 Changes in prices
5 Procurement and maintenance needs
6 Longer-term development plans in different areas like premises, asset management, staff, and technology
7 Local authority requirements and plans
8 State government’s reports
Real Cost of Priorities
In this step, you will need to pay more attention to current revenue and expenditures. It would be best if you calculated all of the dominant factors to determine your school's capacity to achieve its goals. This process involves two essential steps:
Cost analysis involves assessing the cost of different spending programs, ventures, projects, and policies concerning the results. The three stages of a cost analysis of each program are as follows:
* Identifying the benefits of an existing or a proposed program and placing a value on those benefits.
* Calculating the overall costs of the project.
* Comparing the costs and benefits.
Resource evaluation: Evaluation of resources is a time-intensive but critical step to the budgeting process (Heyns, Reilly, Smythe, & Mccarthy, 2011). One method for evaluating resources, proposed by Patrick McEwan, an economist at Wellesley College, is the “ingredients” process. It involves disintegrating the resource calculations by personnel, materials, equipment and facilities, other project inputs, and the essential client inputs.
Resource allocation
Once projects and programs are established, a budget resource is allocated to support them. Budget resource allocation is the preparation phase of the budget. However, allocations cannot be made until plans and projects are established. Past estimates should be included in products to see if actual and estimated returns have yielded positive or negative results. There should also be forecasts based on past experiences and new project requirements, expected projects, expected enrollment trends, and future expectations such as inflation (Horn & Goldstein, 2018). This analysis may require the assistance of staff officers, transport coordinators, food service managers, plant managers, federal project coordinators, and sometimes external consultants. The following are the practice and research-based steps that should be followed when establishing and developing a resource allocation strategy around strategic goals.
1 Building an understanding of the schools’ education community and stakeholders such as the staff, students, parents, and committee members. Several interviews should be conducted to identify and get more clarity regarding the community's values, expectations, priorities, beliefs, and strengths.
2. Identifying the needs, goals, and priorities of all the students by assessing disaggregated data on learner performance outcomes. The schools' environmental and contextual circumstances ought to be considered, which created a foundation for building the goals.
3. An analysis of previous records should be done to track the current resource allocation models and evaluate their efficiency. The results are then used to modify the allocation strategies, ensuring that they are targeted for these charter schools' success.
Implement the Plan
The strategic financial plan is a long-standing map for executing the school’s spending priorities. The plan is carried out through a plan of action. A strategy puts the tactical financial plan into play, translating it into adaptable and immediately actionable steps (Knight, Izquierdo & DeMatthews, 2016). A school’s strategic financial plan should comprise of the following elements:
* Articulates a shared purpose and mission
* Forms a framework and direction that guide essential decisions
* Foundation for fundraising
* Allocates resources to opportunities
* Contains tools and resources for tracking performance
* Display...