6 Tips for Managing School Finances in a Shifting Economy
January 10, 2024 by Shauna Seaver
With inflation hitting a 40-year high in June of 2022, and above-average prices sticking around into 2024, conversations about keeping costs under control were common at the recent Association of School Business Officials (ASBO) International Conference in National Harbor, Maryland. Districts see the impact of inflation on everything from the cost of fuel used to keep school buildings warm, to everyday supplies for administrative offices, to classroom learning tools. In the face of these budget challenges, school finance professionals feel the pressure to control spending and streamline processes.
In a panel discussion hosted by Tyler Technologies, school business officials from Epping School District in New Hampshire and Ottawa Area Intermediate School District (OAISD) in Michigan presented their best practices and creative approaches for managing finances during difficult economic times. Read on to explore the six tips they shared with ASBO Conference attendees.
1. Establish alternative revenue streams to complement traditional funding
In any school’s annual budget, it’s common to find programs designed to be self-funded. At Epping School District, one example of this is the food service program. Christine Vayda, business administrator at the district, described two of their alternative methods to raise funds to make up for negative school lunch balances.
First, the district opened a student-run coffee shop where the profits go directly to the food service program, as well as funding student activities. “Our food service program’s coffee shop will not only provide some extra revenue to the school district, but it also provides an opportunity for the kids to get real-life work experience and deal with money and finances,” said Vayda. She joked that it may even help their patrons avoid the higher costs of hitting a drive-thru on their way into school.
Another initiative, made possible with ESSER funding, was the purchase of two vending machines. “One of them has yogurts, salads, and granola bars and is used largely by our student athletes because it offers a meal option for them. And that money, again, goes directly to the food service program. As a self-funded program where we often see student service debt, this is one way we can get some extra money to cover those costs,” said Vayda.
2. Look to your community for opportunities to save money and programs that fill funding gaps
The end of federal pandemic relief programs, such as free breakfast and lunch, spurred districts to find new ways to continue providing these programs for students. Chris Lamer, chief financial officer at OAISD, reminded the ASBO audience that school breakfast and lunch are sometimes the only, or the most nutritious, meals a student eats each school day. Before this program became state-funded in Michigan, Lamer described a local non-profit who stepped in. “They would pack a backpack full of food and place it in a student’s locker. It’s done discreetly so other kids don’t see who has and who doesn’t have, so to say. It got nutrition to the kids and to their families so they could focus better on their schoolwork,” he said.
OAISD also found a sense of community in unexpected places, namely with the neighboring districts they typically compete with for student enrollment. “The 11 local school districts in Ottawa County got together weekly over videocall during the pandemic. We talked about things we were struggling with, and through those discussions there were times when one district would express a need — tablets, for example. They couldn’t find a source to order from, and another district would say ‘we’ve got a bunch of those on the shelf’. They got those tablets into the hands of the kids so that online learning could happen in their district,” Lamer said. He described how this collaboration brought a change in their competitive outlook, and reinforced their commitment to doing what was best for the students.
Both panelists discussed the time savings they’ve gained from cooperative purchasing programs, but Vayda also spoke of her district’s cooperation with the town to qualify for better pricing for needed supplies. “We needed a new copier lease this year, and instead of entering the lease contract ourselves we joined the town to order a larger volume and get better pricing. We’ve been able to do the same thing for propane,” she said.
3. Invest in projects with long-term savings potential
When it comes to using ESSER funds or grants in ways that won’t increase district budgets in future years, a large investment today can result in significant long-term savings. At Epping School District, Vayda has been focused on these forward-looking projects. “In three of our buildings, we completely switched over to LED fixtures and lightbulbs. The cost of the program upfront is obviously big, but over time it will help us save. The amount of electricity we’re using now compared to last year has been pretty amazing to watch,” she said. Vayda’s district has seen similar benefits from switching their heating system from oil to propane boilers that are more energy-efficient and offer a lower cost per gallon.
4. Prioritize spending on projects that benefit the most students, faculty, and staff
Districts nationwide are struggling with employee retention, and the costs of turnover are significant — from recruiting and onboarding expenses to loss of productivity and institutional knowledge. With this in mind, OAISD has put an emphasis on making sure their staff feel valued and are well-compensated. Overall, Lamer described a relatively low attrition rate at his district but noted difficulty retaining special education aides. “They have a really tough job,” he said, “and we were able to significantly bring up their wage scale to be very competitive with what they would see in similar positions elsewhere.” Lamer also described a bonus structure to incentivize them to stay with the district’s special ed program for a full year. In the long term, they estimate that savings from employee longevity will outweigh the cost of the increased wages.
During union negotiations at OAISD, Lamer heard calls for hourly employees to receive paychecks more frequently. “We’re currently on a semi-monthly payroll, which can make it difficult for some employees to meet their personal financial needs. We're looking into converting that group to a weekly payroll so we can get the money in their hands quicker, but also showing that we're listening and valuing them,” said Lamer. He attributed OAISD’s high retention rate to good relationships with their unions and the negotiation of fair contracts over the years.
5. Leverage employee self-service tools to reduce the burden on your finance and HR teams
Some of the initiatives described above take time and energy to launch and operate — two vital resources that school business offices might find it difficult to spare. Software that enables employee self-service can save time in day-to-day operations and reduce costs. At Epping School District, Vayda spent much of her first year as business administrator making HR processes paperless. “We got the HR portal up and running last year and that’s been a huge cost savings for us not only from the efficiencies but the use of time from our HR staff and secretaries, they don’t have to chase the paper around.” Empowering employees to request time off, access W-2s, and enroll in benefits through the portal has significantly streamlined HR processes at the district.
Lamer seconded the impact of self-service tools on more efficient operations. OAISD’s purchase card program allows staff members to reconcile their own statements, attach receipts, enter account numbers, and submit their expenses for electronic approval. Lamer said, “It’s made our lives easier in the business office. It’s also allowed each of the departments to manage their budgets and their operations better.”
6. Automate key processes to increase operational efficiency
To save time and reduce costs, software tools can automate processes and provide transparency of district finances. Describing efficiencies in her district’s accounts payable department, Vayda said, “AP automation has been a huge time and cost saver. We’re no longer sending out checks via mail, no more postage, no more check stock, it’s all going out in a streamlined process to our vendors.”
Both Vayda and Lamer also use Tyler software tools to manage their budgets, and specifically mentioned the value of attaching notes to budget items to provide transparency and jog their memories throughout the school year. “We’re budgeting 14 months in advance, so having those notes throughout the year is a helpful reminder for exactly what we put money aside for. It’s a lot easier than digging through a file and trying to remember,” said Vayda. At OAISD, adding notes to the budget helps keep one-time expenditures in check. “It can be really easy to have that creep of dollars spent to purchase some new equipment, and then it just rolls forward year after year into your budget. Having those notes in the budgeting tools makes it easy to flag that one-time expense and makes managing the budget process so much better,” said Lamer.
Finance management solutions for any district
When considering how these approaches to managing finances might apply to various districts, it’s helpful to understand the contrasts between the budgets at Epping School District and OAISD, in addition to the differences in how their funding works. OAISD’s budget is more than five times that of Epping’s, and Epping School District’s budget must be approved by taxpayers each year. Despite these differences, each district has identified and implemented initiatives that have helped them navigate the shifting economy. And while our goal was for the ASBO audience to leave the session with new ideas, Vayda and Lamer were also able to find inspiration in each other’s approaches.