Fiscal Leadership

Fiscal Leadership

04/06/2015  |  By Lee Jenkins, Ph.D.

The fiscal assets of a school system must be managed:  cash flow, accounts payable, accounts receivable, bond repayment, and so on. In my book, From Systems Thinking to Systemic Action, I list four finance questions in rank order of importance. The first two are management of money and the last two have to do with money leadership. That is the proper sequence; first of all the school system has to pay its bills. Management includes making sure the finance office and personnel office records match. This article, however, is not about managing the finances; it is about fiscal leadership.

Fiscal Leadership

What is fiscal leadership? It is a continuous record, year after year after year, of less expenditure that does not positively impact student safety or student learning. One example is spending more money on music instruments and less money emptying the dumpsters. Leadership is required to make these gradual adjustments in expenditures. The teaching staff will see leaders who continually add funds to the instructional budget and subtract funds from accounts that add no value to learning.

Step One : Three Categories of Expenses

Step one in reducing costs from a continuous strategic improvement perspective is dividing every expense into one of three categories: First, the expenditure does not assist with student safety or student learning. Second, the expenditure may assist with learning or safety, but if so, it is indirect support. Third, the expenditure is a direct support for student learning and/or safety.  An example from the first category is legal expenses, an example from the second is electricity and an example from the third category is teacher salaries.

The various state accounting codes are far too broad for this purpose; they work fine for fiscal management, but are useless for fiscal leadership.

Reducing costs is a never ending job requiring the creativity of all support staff and many, many certificated staff members.The concept is to reduce any expenses that do not impact student learning or safety. The focus in finance is cost reduction that can be as little as one penny less per student on attorneys. The people actually see savings per pupil in non-academic expenditures. 

Step Two: Cost Per Student

Step two in finance leadership is calculating the cost per pupil for all district expenditures in the first two categories. This will include those that do not add to learning or safety and those that indirectly impact learning. Cost per student is what makes finance leadership possible. Enrollments and budgets change from year to year; so actual dollars are not an ideal metric for gauging improvement. However, cost per student can accurately measure expenditures year after year. Cost per student has two other significant advantages over raw numbers.

First, the accounting department can manage district finances with spreadsheets full of large numbers. However, fiscal leadership requires the intelligence and commitment of large numbers of people. Everybody understands cost per student, but few can work with the large numbers of a district’s total finances. All react the same, when they discover that the district spent more money per student emptying the dumpsters than per student on library books.

Second, districts of varying sizes can compare notes and learn from each other. This takes away the problem of trying to learn from a school system that is three times smaller or larger. Cost per student is the common denominator of school finance.

Step Three: Spreadsheet(s)

Step three in finance leadership is placing all the cost per pupil records on two pages — one for each of the two categories of expenses that do not directly impact student learning.

Continuous Strategic Improvement for Finance and Operations

The strategic aspect of Continuous Strategic Improvement is the same in finance as with instruction and personnel — determine the problem, then the root causes of the problem and then select one of the root causes for a countermeasure as a hypothesis. What do we think, if carried out successfully, will reduce costs per student without harming learning or safety? If the problem is overtime for payroll staff, and if one root cause of this expense is payroll errors, then a countermeasure will be a hypothesis for reducing payroll errors. If the problem is maintenance expenses are not improving learning or safety, and one root cause is replacing broken windows, a further study will be necessary to determine why there are so many broken windows. It might be discovered that one cause of broken windows is lawnmowers kicking up rocks. A countermeasure is then written to counter the broken window costs.

Every employee must be involved in reducing costs that do not add to learning or safety. Why everyone? Every employee can provide ideas for reducing costs that do not add to learning or safety.

Long-Term View

The purchasing department needs direction from senior executives that long-term savings is more important than quick savings.The cost of maintenance has to be figured into the total cost.  A $300 pair of shoes that lasts 10 years is a better buy than a $95 pair of shoes that lasts 2 years. Costs per pupil, year after year, gives employees a long-term view of finance.

Two practices must be in place for employees to embrace cost savings:

1. Nobody loses their job because of these savings — a different job maybe, but not “no job”

2.Employees must see the benefits to students because of their efforts. The landscaping staff can deliver the new trombone to the band that was purchased with window replacement savings. The kitchen staff can deliver new equipment to the Family Consumer Science staff that was purchased with savings in workers compensation insurance claims by having safer shoes in the kitchen — spilled soup is slippery.

Everybody assists in savings and everybody knows when their countermeasure worked. 

The finance department becomes tenacious in regards to reducing what used to be called fixed costs. Expenditures are not fixed and can always be reduced. Leadership does not replace good management of resources, but does bring the finance office much closer to the learning process. Remember, reducing costs a few cents per student each year in 25 to 50 different categories amounts to a lot of money over the years. 

(In the summer of 2015, Lee Jenkins’ next book entitled, Optimize Your School: It’s a Matter of Strategy will be published by Corwin. Michael Fullan is the author of the foreword. He writes that education has three wastes: student enthusiasm, money and time. He points out that nothing is without waste, except creation. If people made it, there is waste, which means we can work to reduce the waste knowing we will never be perfect. One of the book’s chapters is on finance and this article summarizes much of the writing.)

Lee Jenkins is a former public school educator from California having served as teacher, principal and superintendent. He now resides in Scottsdale, Arizona where he works full-time with his consulting firm, From LtoJ Consulting Group, Inc., He can be reached [email protected] His best selling book is entitled “Permission to Forget: And Nine Root Causes of America’s Frustration with Education.”
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