School District Budgeting and Financial Management in the United States

by

Vincent Reitano

• LAST REVIEWED: 26 February 2020
• LAST MODIFIED: 26 February 2020
• DOI: 10.1093/obo/9780199756810-0238

Introduction

In the United States, school districts operate as a type of special purpose local government. Similar to general purpose governments, school districts are funded by own-source and intergovernmental revenues, although there is considerable variation in their revenue mix, contingent in part upon state-funding formulas. Unlike general purpose governments, school districts focus on the provision of public education to facilitate student learning, and therefore, expenditures are primarily relegated to teacher, support staff, and administrator salaries and benefits. Ensuring the provision of public education begins in part with the budget process. The school district budget process can assume different forms from incremental to rational and may involve a range of stakeholders, including elected officials and members of the public. Incremental budgeting begins with the prior-year budget and small upward increments, while alternatives can be based on rational decision-making theories, such as performance budgeting or zero-based budgeting. Despite these different potential budgeting methods, systematic evidence of their implantation in school districts is generally unavailable. As a complement to the budget process, school districts are also involved in financial management, which involves the strategic analysis of financial condition in the pursuit of financial resiliency and sustainability. In particular, school district budgeting and financial management involves strategically planning for and responding to internal and external trends to ensure continued public service provision in the form of public education. As a growing area of research, school district budgeting and financial management encompasses topics such as budget forecasting, financial condition analysis, optimization of fiscal reserves over the business cycle, and debt management, among other topics.

Textbooks

There are many textbooks and guides offering insight into school district budgeting and financial management from a variety of perspectives. For example, a school principal would require a different set of tools to budget for their school relative to a budget director or superintendent managing all of the schools within the school district. An authoritative summary of research on thirty-six major topics of interest on education finance is offered in Ladd and Fiske 2015. Textbooks for current and future school district practitioners covering budgeting include Hartman 1998, Levenson 2012, Odden 2012, and Odden and Picus 2007. Guides specifically catering to the various aspects of financial management school principals engage, such as resource allocation, measuring academic return on investment, and budgetary austerity, include Thompson, et al. 2013 and Sorensen and Goldsmith 2013. For a nuanced guide on specific financial management practices and processes current and future principals will often interact with, such as purchasing cards and audits, see Parker and Mutter 2004. For insight on the related topics of school district accounting and auditing, see Everett, et al. 2003 and Gauthier 2012.

• Everett, R. E., Rayond E. Lows, and Donald R. Johnson. 2003. Financial and managerial accounting for school administrators: Superintendents, school business administrators and principals, 4th ed. Lanham, MD: Scarecrow Education.

  A standard reference text on school district accounting that covers accounting principles and unique aspects of school district accounting.

• Gauthier, Stephen J. 2012. Governmental accounting, auditing, and financial reporting, 4th ed. Chicago: Government Finance Officers Association.

  A critical and authoritative reference text on accounting, auditing, and financial reporting designed for governments including school districts.

• Hartman, William T. 1998. School district budgeting. Lanham, MD: Scarecrow Press.

  A standard reference text covering the school district budget process, budget methods, revenue forecasts and expenditure projections, and budget adjustments, among other key topics.

• Ladd, Helen F., and Edward B. Fiske. 2015. Handbook of research in education finance and policy, 2d ed. New York: Routledge.

  A standard reference with thirty-six contributed chapters from experts on topics such as education finance and achievement and educational markets among many others.

• Levenson, Nathan. 2012. Smarter schools, smarter budgets: How to survive and thrive in tight times. Cambridge, MA: Harvard Education Press.

  Given a new normal in school district budgeting, there are new and unique approaches to optimizing school productivity and academic return on investment. There are also chapters devoted to technology and capital investments specific to school districts.

• Odden, Allan R. 2012. Improving student learning when budgets are tight. Thousand Oaks, CA: Corwin.

  DOI: 10.4135/9781483387703

  A guide for how to address both low-performing schools and high-performing schools in the context of unique state and local institutional and policy contexts, resource allocation questions, and austerity.

• Odden, Allan R., and Lawrence Picus. 2007. School finance: A policy perspective, 4th ed.

  A standard reference textbook considering school finance systems and budgeting with respect to equity, adequacy, allocation, and results.

• Parker, Pam, and Davida Mutter. 2004. School money matters: A handbook for principals. New York: CreateSpace Independent Publishing.

  A handbook with chapters considering many topics principals may encounter that are not typically addressed from a budgetary perspective. Topics range from activity funds, admissions tickets, fundraising, and petty cash accounts to purchasing cards and audits.

• Sorensen, Richard, D., and Lloyd M. Goldsmith. 2013. The principal’s guide to school budgeting, 2d ed. Thousand Oaks, CA: Corwin.

  A critical guide for principals that details ten steps to budgeting success, conceptual considerations, and a model for how to link the budget to school vision and standards and budget strategies. Appendices provide resources and case studies that can be used by principals.

• Thompson, David C., Faith E. Crampton, and Craig R. Wood. 2013. Money and schools, 4th ed. New York: Routledge.

  A guide that considers school budgeting and finance and the values that drive decision making such as accountability and professionalism. Chapters cover key topics such as budget planning, personnel budgeting, instructional costs, student activity costs, and infrastructure, among others.