As budgets these days tighten and the public’s scrutiny mounts, traditional budgeting, which focuses on costs rather than results, no longer works. When you budget for costs, you get more of them. What many school districts don’t realize is that they need innovation and accountability for results in order to win the local public’s support of their budgets.

Winning back the public support of school budgets lost over the past 40 years is one of the greatest challenges schools face today. Unfortunately, many school districts have been resorting to politically expedient budget and accounting practices that only increase the public’s cynicism and skepticism.

When faced with budget shortfalls many school districts resort to measures such as eyeing the “off budget” funds, pretending that money expected next year will actually come in late the current year, selling off assets or, even worse, borrowing funds. Many school districts have even tried to creatively cut costs at an extremely granular level by unplugging coffee pots, delaying needed maintenance on equipment, cutting back on heating or air conditioning, or even denying basic professional development.

While such actions may send a cost cutting message to the public, they don’t save much money and they kill morale.

There has to be a better way than this to solve the monumental budgeting shortfalls in school districts.

Well, I have good news: there is.

In 2002, faced with state wide budget cuts and a crisis that could potentially cripple the state of Washington, Governor Gary Locke decided it was time to try something different in his state budgeting. He came up with the concept of “Budgeting for Outcomes.” In essence, he wanted to present a budget to the citizens that emphasized value that they could feel and perceive.

The following steps set the core requirements for Budgeting for Outcomes:

1. Set the price of education.
Establish up front what citizens and parents are willing to pay in order to get the results they expect from your district. Establish what percent of their income citizens are willing to pay. As an example, the price of government for the U.S. as a whole, including all federal, state and local governments, has averaged about 36 percent of personal income for the last 50 years. Try and come up with a general percent you can refer to.

2. Set the priorities of education.
Establish the outcomes that matter most to citizens and parents. This can be accomplished by polling citizens and parents, selecting focus groups in the communities, conducting town hall sessions, engaging the local media to attend sessions and inviting website and social media feedback.

3. Set the price of each priority.
Divide your total revenue among the priority outcomes on the basis of their relative value and ask citizens and parents for guidance. One idea is to give them $100 or 100 percent to divide among the priorities, based on their assessment of relative value. Conduct a local poll somehow. The goal is to put a relative value on each result that citizens and parents seek.

4. Develop a purchasing plan for each priority.
Sit down with teams of people in your organization and come up with purchases that affect those desired goals. Qualify the factors that have the most impact for reaching the goals and ask members to start creating the requests from that point. See which purchases deliver the greatest value for the desired outcome.

5. Solicit offers from providers/vendors to deliver the desired results.
Instead of asking your vendors, staff and department heads to add or subtract from last year’s costs, ask them how they can deliver the requested results for the set price.

6. Buy the best and leave the rest.
After all the results are in, move down the list in order of priority until the funds have been exhausted. Then draw a line from that point and all those below the line are out. (For this year, at least.)

7. Negotiate performance agreements with all providers.
Frame your budget as a collection of performance agreements. These should spell out the expected outputs and outcomes, how they will be measured, the consequences for poor performance and the flexibilities granted to help the provider maximize performance. As a result, accountability is built into the budget.

The above idea and method is just a sample, for more great information about Budgeting for Outcomes, the following book is an excellent resource: The Price of Government: Getting the Results We Need in an Age of Permanent Fiscal Crisis, written by David Osborne and Peter Hutchinson (Basic Books, 2004).

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