I grew up watching my mom budget our family finances. I learned a lot from her example. She taught me to prioritize greatest needs first, eliminate purchases that are no longer relevant or necessary, and make your money do what you need it to do. In other words, we are the boss of money. Money should never dictate our lives.
Budgeting experts like Dave Ramsey teach us how to handle our personal finances in a responsible manner. If you have followed Dave for a while, you have probably developed excellent budgeting skills, and you most likely have paid off debt and found ways to meet your personal financial goals. It feels great to inch closer and closer to those goals, and then one day scratch them off the list.
If you are a federal programs director (FPD) for a school system, a chief financial officer (CFO), an instructional leader, or even an involved stakeholder, you should be treating the school system finances with the same approach. The school system’s money should be working toward meeting agreed-upon outcomes. The money should not be bossing school leaders around.
When was the last time you deeply analyzed the expenses encumbered by your federal funding? If you are scratching your head and trying to recall, the answer is NOW! For many of you, it is time to start budgeting next year’s grant funds. For others, you may have already completed that process. Regardless of where you are in the budgeting process for the next fiscal year, it is always the right time to deeply reflect upon the ways we spend our federal funds. This can feel like an overwhelming task, but it is manageable. Here are five easy steps to ensure you are using your federal funds responsibly and efficiently. Keep reading for a complimentary budgeting resource developed by our team of former federal program directors.
Step 1: Analyze a Year-End Summary Report
Your friends in accounting can give you a detailed report of every dollar that was spent from any of your federal funds from the previous fiscal year. If you want to make your federal funds work for you, then you have to look at every expenditure. Consider creating a spreadsheet similar to something linked here. Specifically, you want to look at expenses charged to your district federal funds. (School allocations are also important, but you are already analyzing those expenditures through the school improvement plan writing process and bi-annual budget revisions.) You’ll start by simply listing each line item and the cost, and then identifying the current funding source for the item. The provided spreadsheet has a “C” in the drop-down menu to make this easier for you. This is a tedious task, but the juice is worth the squeeze. You can have someone help you with this because it is a simplistic data entry task.
Step 2: Identify and Eliminate the Shockers
Shockers in our personal finances tend to be services for which we are automatically charged on a monthly or annual basis, and we really forgot about them. An example of a shocker in personal finances might be something like a monthly charge on your credit card for a grocery delivery service. You signed up for one free delivery, then you forgot to cancel the subscription, you moved to an entirely new town, and you have been paying a monthly fee for years for something you will never use. In education, it will look a little different. It might be that you are paying a monthly fee for a translation service for a student who is no longer in your district. When we are budgeting at a high-dollar amount, it is very easy to overlook small line items that are no longer necessary. Look for the shockers and eliminate those expenses. In step 2, we are not determining the value of the outcome of line items. Instead, we are only eliminating expenditures that are no longer applicable.
Step 3: Locate and Eliminate Duplicates
This step may seem silly to you, but sometimes there are duplicate services in large budgets. In step 3, categorize your line items and then compare line items within categories. Categories might include materials/supplies, personnel, fringe benefits, subscriptions, transportation, and so forth. If, for example, you have 75 line items in the “Materials and Supplies” category, look for two or more line items for the same order. It is possible that someone is responsible for ordering the beginning of the fiscal year office supplies in July, and someone else is assigned the same responsibility in August. If both individuals do their job, then you have an office with an abundance of office supplies, and a budget line item that is totally unnecessary. Smaller charges under $750.00 may seem too insignificant to analyze, but it is an abundance of these “smaller” charges that can sometimes lead to cutting really important line items down the road. If two line items are seemingly serving the exact same purpose, then gather more information. Ask questions and seek to understand the reason behind this anomaly. You might find it is necessary to keep things the way they are, or you might find areas where you can reallocate funds.
Step 4: Braid Funds
Some of your states allow braiding of funds, and others may not. If you are in a state that allows braiding federal funds, then this is a fun and easy step. (If your state does not allow braiding of funds, skip this step and go directly to step 5.) Look at each of the line items and denote all the different ways you can pay for each item. In step 1, you identified the current funding source in the linked spreadsheet. In step 4, identify other possible funding sources with a “P” from the drop-down menu. To make money work for you, you have to be able to piece together the budget in the most effective and efficient manner. It is like playing chess. If you know where and how all the pieces can move, you can ensure that there is no waste. Keep it simple in step 4. Just check off the possible funding sources and then move on to step 5.
Step 5: Gather a Team and Finalize your Budget
Now that you have completed steps 1-4, it is time to get others involved. Gather your key players and talk about the most expensive line items. In step 2 you eliminated the shockers and in step 3 you eliminated the duplicates. By now you should only have items listed that your district uses regularly and deems important. Start moving the metaphorical chess pieces around to build an efficient budget. Always remember to Supplement, not supplant your local funds with Federal dollars. Ensure that when you move line items to a different funding source, the items are included in the new grant, they are allowable and allocable, and they are necessary (2 CFR).
Budgeting school funds is an important responsibility. All eyes are on you and your spending patterns. In our personal finances we hold ourselves accountable; however, when we budget tax-payer funds the accountability is far-reaching. If we treat these funds like our own, and we concentrate on making fiscally responsible decisions, then there is nothing to fear. Our team of educational experts at 806 Technologies have all been in your shoes. We have written several blogs that you might find helpful as you deeply dive into your federal funds budget. If you enjoyed this blog, consider reading more here.
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