Budgeting Model

Moving beyond the “budget dance”

 in Theory  tagged AROI / Budget Analysis / Budgeting Model by

Here is the link to an article on improving district budgeting that is published in Kappan’s March issue. Abstract The annual budgeting process is a valuable opportunity for districts to systematically examine both resource use and programming and use the findings to inform and drive change to optimize resource use and improve program efficacy that will lead to increased student achievement. Bo Yan and Thomas Aberli discuss three root causes for districts’ inability to accomplish the goals (reliance on problem-driven needs as the dominant factor of budgetary decisions, disconnect between financial management and performance management, as well as human nature). […]

Investment and Operation Expenditures Revisited

 in Theory  tagged Academic Return on Investment / Budgeting Model / Return on Investment by

A few readers wrote to me asking for further clarification on the differences between investment and operation expenditures. For example, should a one-to-one initiative be classified as an operation or investment expenditure. This short post helps answer such questions. After reading Rethink District Budgeting Part I and Part II, it is apparent that all the new “budget dance” moves start with differentiating between operation and investment expenditures. While Table 1 can be readily applied to make the distinction for most expenditures, there are cases where the distinction is not that clear cut. For certain expenditures, people may have genuine differences […]

Rethink District Budgeting – Part II

 in Theory  tagged Budgeting Model by

In previous post, my colleague Dr. Tom Aberli and I discussed three forces that shape and influence district budget decisions: 1) needs-based framework, 2) existing financial management practice, and 3) human nature. In this post, we present how we can build on the existing infrastructure and processes with a new lens and framework to overcome the challenges brought about by those forces. Specifically, we propose to: 1) differentiate between operation and investment expenditures, 2) track expenses on alignment, outcome and improvement, and 3) re-orient how improvement is practiced. Operation vs Investment Expenditures As noted above, needs play a prominent role […]

Rethink District Budgeting – Part I

 in Theory  tagged Budget Decision / Budgeting Model by

In this essay, my colleague Dr. Tom Aberli and I discuss three forces that shape and influence district budget decisions. Next, we present how we can build on the existing infrastructure and processes with a new lens and framework to overcome the challenges brought about by those forces. This is a long essay and will be posted in two installments. In this first post, we discuss the three budgetary forces: 1) needs-based framework, 2) existing financial management practice, and 3) human nature. We welcome and appreciate your critiques and suggestions. Every winter, school and district leaders have the daunting task […]

End-of-cycle (EOC) Review

 in Application / Theory  tagged Budget Decision / Budgeting Model / End-of-cycle by

In this article, I explain what end-of-cycle review is about and how leaders can use the process to better manage program implementation and resource allocations. You might find this discussion on some key concepts of Cycle-based Budgeting helpful as a reference. You can also find an end-of-cycle review summary template with two examples on the CBB Toolkit page. End-of-cycle (EOC) is an opportunity created in cycle-based budgeting (CBB) to routinely scrutinize existing investment items for continuation and/or adjustments. When an item reaches its end of investment cycle, two things must take place. One is that the investment must be reviewed […]

An Idea for Shared Commitment & Ownership

 in Application  tagged Budget Decision / Budgeting Model by

THE CURRENT STATE During the annual budget process, one of the most important questions district leaders wrestle with is what new investments should be made to accomplish the district’s improvement priorities. With a few exceptions, the options generally originate from each individual department. First, department heads propose investments to address issues that are thought to be under their respective responsibilities. Then, the proposals are reviewed and decision are made by the superintendent and chief financial officer, with or without the involvement of the other senior leaders on the superintendent’s cabinet depending on the local context and nature of the proposals. […]

Re-engineer Choice Architecture to Improve Budget Decisions

 in Application / Theory  tagged Behavioral Economics / Budget Decision / Budgeting Model / Choice Architecture by

Each year, district leaders make many decisions about school and district finances. Hidden behind those myriad decisions is a choice architecture, which, explicitly or implicitly, defines and shapes leaders’ decision-making. Learning from behavioral economics, this article offers a new perspective to look at the functions and tasks school business officials (SBOs) perform in relation to the choice architecture and calls for rethinking the role SBOs can and should play in facilitating those decisions. Specifically, three essential components of choice architecture are highlighted: default, anchor, and framing. For each component, prevalent design features and their impact on budgetary decisions are discussed. […]

Ten Key Concepts of Cycle-based Budgeting — Part I

 in Theory  tagged Budget Decision / Budgeting Model by

Cycle-based Budgeting (CBB) is built on ten key concepts, which you will see throughout this web site and in the toolkit. You can use these ten terms to help explain to your colleagues what CBB is about, why it can be helpful, and how to do it.  Due to its length, this post is divided into two parts. In this part, the following five key concepts are presented: Operation Expenditures vs. Investment Expenditures Investment Item Investment Item Owner Investment Cycle Expected Return OPERATION EXPENDITURES VS. INVESTMENT EXPENDITURES Differentiating certain budget items as investments sets the conceptual foundation for approaching those […]

Empower Leaders to Make Strong Budget Decisions by Improving System Deficiencies

 in Theory  tagged Budget Analysis / Budget Decision / Budgeting Model by

This article appears in the January 2018 issue of School Business Affairs, published by the Association of School Business Officials International. Please note that the article was originally written in September of 2017. Click on this link to download the published version.    As stewards of the taxpayer money, district leaders often take most, if not all, of the blame for not using those tax dollars effectively and efficiently to improve student outcomes. What the public does not always recognize and appreciate, however, is how difficult it is for district leaders to make informed budget decisions and how much they […]

Cycle-based Budgeting – A Primer 2

 in Theory  tagged Budgeting Model by

How much money has been spent on literacy, student behaviors, etc. respectively by the district over the past five years and what is the return on each of those investments? How do we help leaders take actions so that money will no longer be wasted on ineffective programs year after year, but reinvested to meet the district’s needs instead? A district’s budget should mirror its strategic vision and goals by funding programs that most support these priorities and meet the greatest needs. Accordingly, an effective budgeting process should be engaged with both allocation of new spending and reallocation of existing […]