Faced with declining enrollment, the elimination of ESSER funds and the unwillingness of many state legislatures to backstop these losses, school districts across the country are making hard choices. Many are eliminating positions, reducing programs and even closing schools. While public debates have focused on contentious issues like book bans, gender identity and DEI programs, a quieter but more pervasive threat looms: financial challenges.
In district after district, journalists, bloggers, unions, parents and whistleblowers are using FOIA requests to uncover and share financial information that, while technically legal, may appear unwise or improper. This heightened scrutiny often embarrasses school boards and strains relationships between the board and the superintendent.
Superintendents, as the leaders of their districts, have sought to inform the public of budgeting and other key operational data, but this time feels different. Stakeholders are demanding more than understanding, they want participation. Superintendents must take proactive steps to foster a culture of financial transparency, shared accountability and public trust.
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As positions are reduced and schools close, the community deserves to know how every dollar is spent and how priorities are being set. This article examines the challenges of increased scrutiny, proposes concrete improvements to contracting and procurement practices and suggests cultural changes that can support better oversight.
Financial landscape: Increased scrutiny in action
The financial stakes in public education have never been higher as revenue cools. According to the National Association of State Budget Officers, most states forecasted revenues in fiscal 2025 to continue to flatten or moderate due to the effects of recent tax cuts, the unwinding of federal stimulus programs, modest economic growth and easing inflation.
Districts are under pressure to do more with less, and with increased attention to every financial decision, seemingly small choices can become public scandals if not handled transparently. Contracts below competitive bidding thresholds, for example, can come under fire if awarded without proper documentation or clear rationale.
Robert Morales, a former chief financial officer for Fulton County Schools and a current advisor to districts, notes, “Finance is the one area where everything is public. Knowing that made me a better person.”
While fiscal malfeasance is rare, even minor missteps in transparency can lead to state oversight, superintendent turnover or damaging press coverage. In many districts, we’re seeing the rise of deficit budgets—where gaps between revenue and expenditures are assumed to be offset by unfilled positions or savings elsewhere.
This works until increased pension costs or unexpected revenue drops create a crisis. Declining birthrates and enrollment almost certainly amount to revenue reduction and more fiscal shortfalls on the horizon.
Avoiding the appearance of wrongful contracting
Nearly every district allows the superintendent and other executives to issue contracts below a fixed amount, often around $50,000, with just a signature and no formal procurement process. While this flexibility is essential for responding to pressing needs, a lack of transparency can invite accusations of favoritism.
Here are six recommendations for improving transparency while maintaining flexibility:
- Detail every contract: Even for smaller contracts, ensure detailed titles, deliverables and justifications for vendor selection. Avoid open-ended coaching or consulting contracts without clear outcomes. Superintendents should publicly post all contract awards, providing clear explanations for why a vendor was selected.
- Consolidate vendors: Instead of using many different vendors for smaller contracts, reduce the appearance of favoritism by consolidating services with a few trusted, competitively chosen vendors. Consider using “comprehensive service agreements”—master agreements that consolidate several subcontractors under one contract.
- Solicit multiple quotes: Even for contracts under formal bidding thresholds, solicit quotes from at least three vendors to ensure fair pricing and avoid the perception of no-bid favoritism.
- Involve the board early: Superintendents should inform their boards about discretionary contracts, particularly those that might raise public concerns. While board action may not be required, written documentation of the decision-making process should be shared regularly.
- Provide regular updates on discretionary spending: Implement a system for tracking and reviewing how funds are allocated and updating the board regularly on smaller contracts and discretionary spending. Embed vendor accountability into the bid itself by requiring vendors to include specific key performance indicators (KPIs) that reduce the data burden on the system.
- Track and report ‘learning on investment’: In a previous article we introduced the concept of “learning on investment,” the amount of student learning gain per dollar invested. Calculating “LOI” before reinvesting demonstrates fiscal responsibility.
Improving board accountability
Surprisingly, some school boards show limited interest in fiscal oversight, despite it being one of their most critical governance roles. As Morales observes, “Some districts don’t even want to hear about finance. When they do, they focus on individual transactions, not the big picture.” This reactive approach often leaves superintendents vulnerable when financial problems inevitably arise.
To strengthen financial governance, we recommend the following:
- Create a finance subcommittee: A finance subcommittee should meet regularly with the CFO to review budget targets, contracting practices and spending patterns.
- Publicly discuss financial information monthly: Whether or not a subcommittee exists, boards should publicly review and discuss financial updates at every meeting to foster transparency and understanding.
- Audit small contracts: Boards should conduct regular internal audits of small contracts to check for patterns of favoritism or non-compliance with district policies.
Engaging the community
One of the biggest mistakes districts make is waiting until a crisis occurs to engage the public. Proactive communication is key to maintaining trust, especially as districts make tough financial decisions.
Develop a proactive communication strategy that includes regular updates to the public on budget decisions. Continue the practice of fulfilling the ESSER requirement by providing easy access to financial information on your web page, including visuals of how money is spent. Tap into the expertise of your federal funding administrators who have processes to fulfill family engagement on the planning and use of funding, per the compliance requirements and just plain good leadership.
Many families, citizens and policymakers don’t engage until they’re directly affected by a school closure or program cut. Superintendents and senior leaders should hold public forums and provide regular reports to the community that explain the district’s budget constraints and how spending priorities are being set. This not only keeps the community informed but also invites them into the decision-making process.
By engaging stakeholders early and openly, you build a stronger connection with the community. Informed communities are less likely to turn to FOIA requests or public complaints when they feel included in the process. By being transparent from the start, districts can reduce the likelihood of misunderstandings or accusations of mismanagement.
Leading with integrity
The current climate of fiscal scrutiny presents superintendents with an opportunity to lead by example. It is certainly easier and quicker to take full advantage of the flexibility the board has delegated to you, but as scrutiny increases there may be consequences for a lack of transparency. By improving contracting and procurement practices, and engaging the community, district leaders can navigate these financial challenges with integrity and accountability.
