Is your board ready for budget season? |
On Board Online • February 11, 2013
By Richard Daddio
First in a five-part series
For most school boards in New York State, a great deal of energy will be devoted during the next few months to preparing a financial plan for the next fiscal year. Here are some tips on handling your budget process in a way that increases the chances you will produce a budget that the voters will approve.
1. Display teamwork. The better your board and superintendent function as a team, the better your chances of devising a budget that will meet with voter approval. It’s not only good governance; it’s the law. The school board has a fiduciary requirement as defined in the Education Law to direct the superintendent to craft a proposed fiscal plan to support the ongoing operation and instructional goals of the district.
2. Solicit input. During the budget development cycle, your board will review and discuss the district’s core values, instructional goals, the impact of unfunded mandates, operational requirements, legal requirements, and the 2 percent tax levy cap. It will also hold public hearings, but don’t rely solely on those forums to get a sense of stakeholders’ sentiments. In your travels, talk with parents, community members, teachers, staff and students to get a sense of what’s important to them and what concerns them.
3. Explain your process. At every meeting, your board should orient the public regarding where you are in your budget development process. It’s important for the community to understand that the development cycle for the fiscal plan was a well-defined, long-term process.
4. Focus on your goals. As your board deliberates on budgetary issues, it should be abundantly clear that the priority of the board is maintaining the fiscal integrity of the district while ensuring a quality educational program. Focusing on goals, not programs, creates more options. When the numbers don’t add up, a responsible board asks, “Is there another way we can accomplish our programmatic goal?”
5. Ask about assumptions. A district’s budget always involves assumptions about both revenues and expenses, which must balance. Ask your school business official to explain those assumptions.
6. Know the lingo. If you don’t know what some of the terms in budget lines mean, ask. This is particularly important regarding reserve funds, because terms have changed in light of an accounting directive called GASB 54. For instance, what used to be called the “unreserved fund balance” has been split into “assigned” and “unassigned” categories. What’s in the “assigned” part will be familiar because it’s just a new name for what had been called the designated or appropriated fund balance. The new subcategory of unassigned will probably be referred to as the “undesignated unreserved fund” and will be restricted to 4 percent of next year’s budget.
7. Explain issues to voters. Your school district is facing a difficult financial environment in which expenses are growing far faster than revenues. Your governance team should be communicating with the public to reinforce and broaden understanding that school finances are strained. Many citizens still don’t understand that their personal tax bill might go up more than 2 percent even when the district budget remains under the 2 percent tax levy cap. (Helpful materials explaining the tax cap are on NYSSBA’s website.) If your board decides to pierce the cap and seek a supermajority vote, be sure you have done an excellent job explaining the rationale.
8. Hone your message. Your governance team should work with your public relations staff (assuming you have one!) to craft no more than five talking points concerning the proposed fiscal plan. These talking points ensure that all board members are speaking on the same important topics. Keeping the message simple and repeating the message using a common unified approach in explaining the proposed fiscal plan reduces misinterpretation of facts.
9. Be unanimous. It’s time for your board to vote. This moment has come after months of preparation, numerous public meetings where the community had the opportunity to comment on the proposed budget, and presentations to other district stakeholders. The adoption should be unanimous; a split vote represents a strong possibility of a defeated budget.
The above certainly doesn’t imply a board member who may have some fiscal concerns can’t express those concerns at the adoption vote. For example, such a trustee could explain that he or she is supporting this proposed fiscal plan because after extensive examination it is in the best interest of both the district and community, even though the plan isn’t perfect and there remain areas that the board and community should address in the future.
A budget defeat serves no one’s interests. Remember, if a budget is defeated twice or if the board of education decides to go directly to a contingency budget, the tax levy for the new fiscal year must be equal to the current tax levy. The imposition of a restricted tax levy most probably will result in a reduction in expenditures requiring additional deliberations that may impact instructional programs.
Following these simple tips, coupled with an articulate presentation of the fiscal plan (proposed spending and anticipated revenue), should provide the community with a clear understanding of the process and the substance of the proposed fiscal plan. School boards that inspire the confidence of the public can win passage of their budgets even when those budgets don’t accomplish everything that the board – or voters – want it to.
Richard Daddio is an instructor of NYSSBA’s Fiscal Oversight Fundamentals classes, which fulfill a state requirement for newly elected board members. He served as assistant superintendent of business and technology services in both the East Williston and Bellmore school districts.