In addition to determining whether there is any “fat” in staff utilization and workload (part three), it’s absolutely essential to examine budget line items to determine if any may be clogged with cholesterol. Diagnosing the line items for cholesterol requires intelligent and aggressive questioning of all administrators and managers, comparing and analyzing past, present and new budget figures, and making comparisons with other like districts.
The place to begin is with salary accounts since they make up three-quarters or more of the budget. Board members must review—with forensic eyes– the employee roster showing current salary, step increases, contractual increases, extra-pay and stipends. It should also indicate who may be retiring or leaving and the estimated replacement salary. When all dollars are totaled, the figure should agree with the proposed budgeted salary account. This kind of analysis is not made by the typical school board.
What must also be included is the cost of benefits—a significant line item–for each employee to see if the total matches the line item for “benefits.” Again, this is not typically done. Benefits are a bit more complicated, but the idea is to match benefit costs with actual employees. One reason it is clogged with cholesterol is because part time employees are provided with full benefits rather than allocated according to time worked. In other words, if someone work 50% of the time, they should be required to pay 50% of the cost of medical insurance; otherwise, it is not fair to full time personnel.
Well, isn’t this how a budget is reviewed? No! The budget book will not show the staff roster and their salaries and benefits; and it would be rare indeed if this information is provided as part of the back-up materials. Incidentally, all of this data is public information, but the average person would not know how to review and analyze the information. For example, noncertified staff can be paid for overtime, but that information would not be shown for specific employees. Instead, overtime is just a general line item with not connection to employees who receive it. Certainly, it’s possible to determine what every employee is actually paid from the prior budget to get some sense of who is paid for overtime and how much does it add to their compensation. There is no extra work involved since this information must appear on their tax W-2 forms.
Inside Education – Part 3 Finance: Do school budgets come fat-free?.