Top 10 Considerations for Building a Solid Multi-Year Projection
Doing a budget is never fun. It is always time-consuming, confusing, and takes a lot of organization. However, CBOs are tasked with this challenge every year when building their Multi-Year Budget Projection (MYP) for their school districts. The top ten list below is a starting point for all educational leaders to begin the conversation.
1. Are all step and column, and statutory compensation increases included in the budget?
Ensure your position control system is fully reconciled and accurate
Calculate appropriate costs for positions that are vacant to ensure no surprises when filling
Never budget at step 1 of the position
Update the cost of 1% for each bargaining unit
Include all statutory benefits
2. For Average Daily Attendance (ADA) states is your current year ADA following the projection or are there adjustments needed? For Annual Daily Membership (ADM) states is the enrollment trend following the projections or are adjustments required.
Remember that an ADA change will impact the MYP in all out-years of the budget
This can reduce or increase revenue in each of those years
For declining enrollment/ADA districts the trend must also be incorporated
This creates a reduction in revenue in the second and subsequent years of the MYP
Before the pandemic the Median ADA in California was 95.82%;
In a review of “first look” data of over 1 million students in California and across the nation the current 2022-2023 “new normal” has many districts within a range of 90-93.5%!
3. Have all required benefit categories been accounted for in the MYP? Including:
Property, Liability & Workers' Compensation, and Unemployment Insurance rates
Retiree contributions (in California this is STRS and PERS)
Increases in required services such as electricity, water, gasoline, and necessary commodities (paper, technology, toilet paper, etc.)
4. Have critical services been placed behind the budget firewall?
The firewall ensures these services are untouchable
If cuts are required, those cuts would exclude these services that are essential. Some examples of expenses that belong behind the firewall are on this list
Infrastructure and refresh of student and staff devices
When the budget falls and reductions are necessary, these costs almost always go up!
External Audit Services
Necessary data systems include each of the following, at a minimum:
Student Information System (SIS)
Management Information System (MIS / ERP)
Business and HR data and recruitment
Learning Management System (LMS)
We learned this is essential clearly in March 2020
Facilities Management System (FMS)
Traditional SACs and school accounting do not cross fiscal years, but school construction projects do
Attendance Management System (AMS)
Student attendance is the gateway to student achievement
Districts that do not focus on attendance will feel the cost in both academic performance and finances later
Business and Student Data Analytics
SIS and MIS systems are designed to input and store data and do not connect with each other
Having the ability to quickly review data to make informed decisions is essential
Substitute Management System
In the current state of vacancies and employee shortages, this is an essential tool
Special Education Management System
With the contribution from the general fund crossing over one-third of many districts’ budgets proper management of services from IEPs is critical
Other critical systems such as the following should also be included:
Work order tracking
Student assessment analysis
Online curriculum options
Fixed asset inventory
Website and public information delivery
Home to school communications
Electronic forms and workflow
5. Incorporates a Facilities Master Plan
Identifies and estimates costs for the required maintenance of all facilities
Failure to follow a plan on deferred maintenance becomes a “pay me now or pay me more later” issue
Corporate America also struggles with this issue.
For each operating site there should be a schedule created:
Fields and Grounds
Parking lots and Asphalt
Vehicle and end-of-life equipment replacement
6. Incorporates a long-term demographic projection
Includes enrollment trends which include at least 10 years of future projections
This should be updated yearly
In declining enrollment districts, the cost of declining enrollment should be calculated and identified as “cost” in the MYP
7. The MYP Aligns with the LCAP
Priorities that have been listed along with identifying full costs of implementation of new programs.
This plan is written to outline the necessary strategies to improve student learning outcomes.
As a CBO, involvement in the planning is essential and keeps the focus where it belongs on student achievement
As a best practice, I have found successful organizations have the compliance/State and Federal programs team as part of the Business Office
While it may be assumed that this is an Educational Services function, the reality is that the CBO spends a significant amount of time working with auditors and addressing Federal Program Monitoring
Following this best practice, CBOs can be more thoroughly involved in supporting academics
8. Appropriately includes the cost of education for special needs students.
This includes staffing and support contracts.
The increases in low incident cases create a long-term increase in costs
This trend needs to be included in MYP
9. The projected cost of living increases and state increases in revenue are conservative
These are updated immediately if current events change scenarios for upcoming years:
The common guidance from the County Offices is the best practice to align to when each Dartboard is updated.
School Services of California uses this guidance to produce the budget Dartboard in California that provides guidance for these critical calculations
10. Addresses deficit spending
Identifies required changes in the budget as one-time funding decreases to ensure that the costs are eliminated along with the funds.
Chief Business Officials should operate like how a master craftsman has for centuries when completing the MYP. Managing a budget requires constant revisions (especially with the transparency requirement), patience, and communication with each stakeholder group.