June 2009 - Texas Association of School Business Officials

Feature Article
Performance-Based Budgeting:
Making Your School System
More Efficient
By Greg Gibson
Several years ago, I received a phone
call from a board member of a
large, urban Texas school district.
His concern was simple yet direct: “I just
voted for a $500 million budget and I
have no idea what I just passed. There was
way too much data and too little relevant
information about why we are spending
this much.”
All across the country, state legislatures are
slashing budgets for public education. In
Texas, the picture is not quite as bleak as in
California or Florida – at least not yet – but
the need to be efficient in how we provide
education has never been more urgent.
Most school systems respond to anticipated
deficits by implementing percentage
cuts across the board, citing equity as a
way to make sure everyone
shares the burden. But this
approach can be counterproductive
by penalizing
all areas regardless of their
efficiency levels.
Performance-Based Budgeting
is a way to optimally
to identify savings opportunities
- by linking expenditures
to efficiency levels and
performance outcomes.
To date, the focus of state
accountability has been on
student performance, and
rightfully so. Texas has the
FIRST (Financial Integrity
Rating System for Texas)
rating that focuses on financial stability,
but there are very limited measures for
reporting efficiency at the state level. Why
is this? There are several possible reasons:
• The State of Texas does not require
sufficient efficiency/performance
data to be submitted through
Public Education Information
Management System (PEIMS). More
than 80 percent of public education
expenditures relate to staffing in
Texas; however, the state’s Academic
Excellence Indicator System (AEIS)
reports only one staffing ratio – the
pupil-teacher ratio. Because information
on auxiliary staff is not collected
at lower levels, from a data perspective,
it is not possible to distinguish
between a custodian and a maintenance
worker – they are combined
into a single “auxiliary” staffing
category. This does not provide the
level of detail necessary to determine
the efficiency of departmental staffing.
• Accounting systems used by most
districts are transaction-focused
and do not adequately address
performance management. School
systems that are moving toward
tracking performance management
rely on spreadsheets, report
writers, and perhaps a data
warehouse system. However, even
with these tools, performance
data is often left untracked.
• Staff costs are often perceived as
“fixed” costs. Many board members,
superintendents, and even Chief
Financial Officers believe that staff
costs are fixed, and that the only
room for improved efficiency is in
non-payroll areas. Payroll is a fixed
“type” of cost for public schools,
but not fixed in its nature. Staff
levels can be adjusted through
streamlining of processes, increased
use of automation, changes in
work schedules, and simplification
of complex board policies. Even
teacher efficiency can be evaluated
through assessment of student loads,
low enrollment courses, and number
of teacher planning periods.
Each year, public school districts are
required to create a budget for a successful
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