Feature

Budgeting Based on Results

A superintendent’s use of a return-on-investment model contributes to more effective annual spending choices by KELT L. COOPER

While responding to a series of prepared interview questions from seven individuals whom I hoped would pronounce me their choice as the next superintendent, the board of education asks the inevitable and predictable question: “If you had to cut the budget, Mr. Cooper, what would you cut first?”

I look at each of them and smile. “That’s not the question you want to ask me,” I respond. “You should ask how I develop a budget immune from budget cuts.”
And with that, I walk them through a process that shifts the fiscal thinking of an educational organization.

Kelt CooperKelt Cooper, superintendent in Del Rio, Texas, studied the return on investment in making spending choices. Photo by Jennifer Kellin



Eye-Opening Exercise
With more than 20 years in school administration, mostly as a superintendent, these are the most austere and troubling fiscal times I can recall. Yet I find comfort in a process that works best in these hard moments while maintaining or improving the quality of programs for students.

Every program in a school or school district has, or once had, a purpose. The purpose was most likely promoted, argued and debated among school constituencies — parents, teachers, administrators and school board members — before it was eventually approved. This process occurs year after year, budget after budget. Over time, we wind up with more and more distinct programs and ever-larger budgets. In itself, this is not necessarily a negative development — unless the programs fail to produce the returns that are promised.

In one 6,300-student district in southern Arizona, I met with each principal to review all stipend positions when I came on board as the new superintendent. It was quite the eye-opener. I noticed a sizable stipend for the Quilting Club at a high school. My mother-in-law quilted, so I was intrigued.

“Wow! We have a quilting club?” I asked

“Yes,” replied the principal

“Cool. How many students participate?” I asked.

“None this year. We haven’t been able to find a sponsor.”

“How many participated last year?” I inquired.

“None,” he said. “Same problem.”

“When was the last time we had a sponsor and participating students?” I finally asked.

“Eight years ago,” he responded.

Eight years ago! And every year a sizable stipend was budgeted only to roll over to the principal’s student activity account. Little incentive existed for a principal to openly disclose a program failure — just one example of a systemic breakdown to review program effectiveness.

Alternative Budgeting
One major problem in developing school district budgets immune to cuts is the model administrators traditionally use — an expenditure model. The simplicity of this model is seductive enough: What were the revenues and expenditures last year? What are the expected revenues and expenditures this year? A few adjustments here and there and you have a budget. Unfortunately, in-depth analysis of program quality is addressed in this method only when expenditures exceed revenues, leading to budget reductions.

An alternative method that truly addresses budget development and program effectiveness employs the basic principles of the return-on-investment model and zero-based budgeting. The advantages of this approach are manifold:

•  It requires predicted outcomes to be established and empirical means of assessing effectiveness;

•  It provides a “returns” method for determining budget priorities;

•  It provides the information necessary for deciding whether to maintain programs, build programs, eliminate programs or introduce new ones;

•  It ultimately leads to a more strategic simplification of effort while increasing student and program success; and

•  It forces those involved in the budget development to evaluate whether such programs and activities are truly fortifying student achievement.

Unjustified Expense
Most school districts receive some federal assistance. That assistance comes with a host of requirements. Compliance may be satisfied in various ways, yet without a satisfactory method of program review, such as return on investment, some activities may contribute absolutely nothing to advancing student learning or personal growth.

For example, I was invited to attend a district-sponsored parent involvement Saturday program that had been approved on the federal application. It was an activity the district had conducted for several years. I was new to the district and eager to learn more.

The daylong event cost $12,000 to $15,000 directly, not including the time and energy of teachers, staff and administrators. The program was held at the community’s civic center. Invitations were extended to all parents in our school district, as well as parents and staff from schools throughout the region; yet the event attracted only about 15 local parents, hardly justifying the major expense to present information about our schools. The same information is shared at open house night and orientation at the beginning of each school year.

While the daylong program met a compliance indicator under the federal guidelines, how much better that $12,000 to $15,000 could have been used for something like home visits by our staff.

Investment Goals
Shifting from a strict expenditure model to one that employs the basic principles of return on investment, or ROI, and zero-based budgeting is not easy. It takes time and requires considerable effort to establish predicted returns, a means to empirically assess returns and a new philosophy that more is not necessarily better.

Several steps are involved in using a return on investment model:

•  Develop a district philosophy that requires justification for every program and any expected returns, and a means to meas-ure returns. You’ve heard the saying, “If it is worth doing at all, it is worth doing exceptionally well.” On the flip side, if it is not worth doing exceptionally well, it is not worth doing at all.

We display this motto in every school, building and department in our district with its 10,400 students, 1,400 staff and 13 school sites. This statement provides the baseline for controlling school budgets because it establishes a philosophical justification for expectations on investments.

In our school district, we place value on our music program. We have supported music throughout the elementary schools, including the creation of keyboard/piano labs in each building. We justify the expansion because in order to increase participation and competitive success in the upper grades, we need to start instrumental instruction at younger ages.

We monitor site scheduling to ensure exposure and participation, require three performances from each campus annually, conduct one districtwide combination performance, and track matriculation between grade-level participation. We reaped immediate benefits in the short term: more frequent and better quality musical perform-ances. Our long-term expected benefits will be increased participation and success in music competition at the secondary school levels.

•  Treat the district or school as if it were funded out of your own pocket. Many of us who work in public education are products of public education. When we entered the profession as teachers, we learned how to submit purchase orders and the basics of requisitioning, and perhaps served on site committees that developed annual budget requests.

As administrators, we develop an understanding of the system’s methods of budgeting and devise interesting schemes to maximize site resources. We learned the system and adapted to it. However, most schools, using an expenditure model, also allow for redundancy of programs while permitting more on top of more.

Annual budgets should be seen as unique opportunities to present a business plan that is efficient and cost-effective and delivers the greatest return on the investment. This is essentially zero-based budgeting. In our business, the returns are high student academic achievement and success in cocurricular and extracurricular activities.

When I work alongside building and department administrators, I frequently pose this question: “If you were to start a school funded entirely from your own pocket, your retirement account, would you staff it the same? Would you require the same programs? Would you include all of the ‘this and that’s’”? Now we apply those questions to every budget request.

An example of necessity versus luxury turned up in two Class 5A districts in Texas (the largest under Texas’s system of organizing athletic conferences by student enrollment) where I was superintendent. Both districts had an inordinate number of paraprofessionals (instructional aides), especially at the elementary levels. Universal appreciation exists for the efforts of paraprofessionals in certain areas, such as special education (when students’ needs are more extensive), physical education (where large numbers of students require additional supervision) and perhaps early childhood education (where little ones are learning the basics of group engagement). However, put to the test of whether the investment in paraprofessionals results in higher student academic achievement, these luxuries were unsupportable and no longer budgeted.

I have seen administrators rethink staffing patterns, paraprofessional requests and other expenditures when challenged to consider it this way. Likewise, I have seen principals better able to support such requests because they are backed up with empirical evidence of return.

The latter is exemplified by a principal who initiated a reading program designed to increase student reading scores and the number of students participating in an affiliated after-school reading program. After two years, overall reading scores increased, as did the number of students participating in the affiliated after-school program. The principal was able to provide empirical evidence that the returns on the investment were met and that such a program was justified for continuance.

•  Review every program in the district. Principals and directors must work with the superintendent to identify all programs, their purpose and intended returns. I have made it abundantly clear to principals that I am fine with doing less, as long as what we do is performed at a higher level.

Over the decades, teachers, principals and superintendents have been pushed to do more and more. State and federal accountability measures have not only elevated the pressure for student achievement but have created a monstrosity of reporting. At the local level, we cannot do much about that. But we can do more about reducing the amount of superfluous programs and activities we continue to engage in by eliminating programs no longer providing returns.

•  Recognize that your school or district does not have to do what other districts and schools do. Every community is different. It is fine to be different. One district may support a varsity swimming and diving team and be prepared to do it well by building a pool, hiring coaches and funding it adequately. Another school district may invest in the instrumental music program or its football team.

Too often, school districts fail to recognize that unless they are prepared to do something exceptionally well, they create marginal or inferior programs that fail to serve students. It is extremely important that districts understand what it takes to make a program successful. To simply begin a program without fully gauging the costs and system investment is to ensure program failure and/or costly surprises down the line. Focusing on what is true and dear to the district and school helps ensure high levels of success and reduces poor investment decisions.

Building Immunity
Program evaluation should be an integral part of the budget development process. Every program in a school or district should have a stated expected return and be meas-ured empirically rather than through anecdotal support.

Zero-based budgeting is much like annual sunsets for programs. Each year, every program should be justified on the basis of the returns. Budget decisions, based on the basic principles of ROI, help determine program viability.

Ultimately, school districts employing such a method will see substantial reduction in certain budget areas, greater emphasis on effective programs and the simplification of all aspects of administering schools. In addition, they are far more likely to have a budget immune from cutbacks approaching budget development with this method than when revenues come in short and every existing program and activity is being defended anecdotally.

Kelt Cooper is superintendent of the San Felipe-Del Rio Consolidated Independent School District in Del Rio, Texas. E-mail: Kelt.Cooper@sfdr-cisd.org