It’s budget season. It’s when district financial leaders outline budget outlooks, prioritize strategic goals, scrutinize expenses and evaluate trade-offs for a balanced, student-focused budget that supports academic success.
This budget season is critical due to the end of ESSER funds, declining enrollments, uncertain federal K12 funding, rising costs and looming local and state tax base declines. With many unknowns, many districts are grappling with significant budget challenges and contemplating tough decisions, including staff layoffs and school closures.
As former district CFOs, we know that an annual budget may not be adequate at this current moment. Instead, leaders must embrace a new normal, prioritizing strategic resource flexibility and long-term sustainability for different possible futures.
More from DA: States sue to bring back ESSER spending extensions
We recommend four key future-forward steps to balance immediate district needs with long-term health and sustainability.
1. Examine academic programs, student support services, and district operations
Nearly $900 billion is allocated each year to K12 education. Every dollar should be invested in enhancing learning and promoting academic success.
Financial leaders must assess the return on investment of initiatives, supports and operations—asking what’s working, what it costs and what outcomes it produces. A data-driven approach is essential for evaluating impact and efficiency, analyzing what works and its cost-effectiveness.
ROI analysis should begin with clear goals, strategies, metrics and costs. At Memphis-Shelby County Schools, we integrated academic ROI analyses into our budgeting to determine if key investments led to academic success.
We also used outcome-based contracts to hold our providers accountable for impact. Evaluating ROI helps guarantee effectiveness, efficiency, and outcomes.
2. Introduce new ways of delivering academic excellence and operating differently
Innovation isn’t optional—it is imperative. Districts are continuously evolving so that every student can achieve academic excellence.
Disruptions often push districts to adopt new instructional models, flexible staffing and tech-enabled supports. Moreover, innovation can extend beyond the classroom, such as transportation and scheduling, with tools that analyze capacity and cost-per-student.
For example, refining master schedules can enhance instructional time and improve staffing efficiency without significant layoffs. AI can even streamline operations, freeing funds for direct student investment.
Like innovation prompted during the pandemic, innovation to meet this moment demands a mindset prepared to confront outdated thinking, practices and systems. Importantly, it’s critical to streamline and prioritize innovations to advance coherence, learning, and sustainability.
3. Develop an annual budget with risk, scenarios, and strategic actions
A budget is an annual financial roadmap that districts strive to adhere to. Yet, scenario planning for various risks is critical with looming uncertainty and many unknowns.
Districts should identify potential risks and opportunities, create different scenarios, recommend strategic actions and tradeoffs and assess the appropriate moments to take such action. Scenario planning can allow districts to identify potential upside opportunities, like repurposing underutilized assets or expanding high-demand programs.
It brings strategic clarity and enables more thoughtful, timely decisions amid volatility. It’s a proactive approach that builds resilience and positions districts to act rather than react, ensuring learning remains at the forefront.
4. Create a 3-5 year financial plan for financial health and sustainability
Today’s choices influence future results, which may not be apparent within a year. Districts need to reflect on the lasting impacts and ensure financial sustainability.
Effective long-term financial planning aligns strategic goals with resource allocation and assesses external factors influencing sustainability.
You can start by asking what student success will look like in five years. What are the priorities? Funding opportunities? Trade-offs?
Then, a long-term financial plan can reveal whether initiatives can be sustainable or lead to future deficits, allowing districts to prioritize current strategies and investments with an eye toward future health and sustainability.
Also, transparent long-term financial planning builds trust and alignment with tools like forecasts and visual roadmaps to help stakeholders grasp financial decisions.
Building budget season momentum
All these steps can feel daunting, but starting now—even gradually—can build momentum. In today’s complex environment, districts must evolve, innovate and plan to ensure student success, financial health, and sustainability.
