Budgets and Future-Focused Schools

I met with one of my top staff people a few weeks back. Dr. Linda Lucey is Executive Director of Program Design at the International Center for Leadership in Education. Among other things, she’s responsible for bringing to life our keynote event, the annual Model Schools Conference. Smart? Very!  She knows just about everything and everyone, and I wanted to get her thoughts on zero-based budgeting, a concept long-practiced in the private sector: How does it work in public education?

“What do you think?” I asked.
After a long pause, she replied. “What is zero-based budgeting?”

A Different Approach
Exactly. Zero-based budgeting is an alien concept to most educators.
Under zero-based budgeting, an organization assumes a base budget of zero dollars and must justify each program and dollar requested – rather than justifying only those new funds that exceed the prior year’s budget base.

Using this approach, an organization builds a budget based on future needs, not past results. It provides the budgeting strategy to develop a growth mindset.

Are there drawbacks? A few:
·       Because staff salary costs carry over from year to year, a zero-based model might be impractical.
·       Pulling together a district’s budget using this model is incredibly time consuming.
·       Finally, administrators using zero-based budgeting must realize that the validity and reliability of criteria used to budget will vary depending on the team who prepares it.

A Success Story
The 94,000-student Fulton County Schools district in Atlanta might be the model success story for zero-based budgeting in public education. Fulton County is known for its data-driven decision making. Administrators also are skilled in aligning actions with strategic plans. District leaders decided their budget process should match that approach.
         
So, in 2013, the district adopted a “modified zero-based” budgeting model. Fulton adopted a template used by the Government Finance Officers Association called “Budgeting for Outcomes.” It requires a budget be developed from the bottom up, starting with a base amount, while accounting for priorities based on need.
         
“We budget by thinking about long-term goals,” says  Chief Financial Officer Robert Morales of Atlanta Public Schools. “Budget planning should start with goals and objectives first and align with strategic plans,” says Fulton County Schools Budget Director Marvin Dereef. “Then we decide what resources we need to apply."

“With incremental budgeting, people forget why an item was there in the first place, or one-time events get rolled over. We need resources in exactly the right place instead of sitting around unused somewhere.”
         
The bottom line? In fiscal year 2014, the district saved $17 million, gave everyone a 3 percent raise, maintained healthy reserves, and avoided going to taxpayers for a millage increase. Not a bad start!
         
What’s important about this approach is that it forces educators to focus first and foremost on student outcomes. Students should always come first – but rarely do.

Zero-based budgeting insists on it.


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