Of the many hats that principals wear, one key role is that of financial manager. While revenues for funding public education have increased significantly in recent decades, the number of students served, the responsibilities schools are expected to meet, and the costs of education have also risen dramatically.

What does it take to successfully manage school finances? The educational leadership program at Winthrop University in Rock Hill, SC, recently identified five steps principals need to take to effectively manage school finances.

1. Be Accountable

Principals must give focused attention to managing school financial issues. With multiple demands for principals’ time, it is easy to think, “I will get to it later.” Principals should manage school finances like they are operating a big business—because they are. Like business leaders, effective principals must monitor daily receipts, purchases, payroll, expenditures, and fundraising events. They should meet regularly with the school’s financial bookkeeper to methodically review end-of-month statements of receipts and disbursements and budget status reports. They should check for compliance with appropriate budget codes and monitor year-to-date spending. And principals should never sign financial documents without reviewing them carefully.

2. Align Your Budget

The adage, “Plan the work and work the plan,” applies to school finances. At the beginning of each year, principals should require a written budget for each program (i.e., instruction, supplies, equipment, technology, athletics, band, chorus, clubs, and so on) that identifies revenue sources, spending projections, and monitoring efforts. Short- and long-term needs should be identified, along with the appropriate budget codes to use when spending for each program. Spending must align with the school’s priorities; keep in mind that you will have multiple demands and limited resources. When budgets are prepared, require written rationale for how funding requests help meet school goals.

3. Generate Additional Financial Support

Principals should not settle for the resources they are given; they must seek additional funding opportunities—such as grants—and look for fundraising activities. Start locally, reaching out to the community for support. Proactively build relationships with booster clubs, parent-teacher organizations, and area businesses to garner support for fundraising activities. Clearly communicate school needs and improvement initiatives, and share specific ways that these groups can assist. The payoffs can be significant. Sometimes a school is able to install its first computer network thanks to the significant generosity of a local benefactor; in another example, a school was able to make major renovations to athletic fields with the support of booster organizations. Today, there are many websites with information about formal grant opportunities, including www.grants.gov. Finally, some principals have worked with their communities to establish an educational foundation, a nonprofit organization chartered for the purpose of supporting the school.

4. Hire, Train, and Support Good Bookkeepers

Principals cannot succeed without top-flight bookkeepers. Select an individual who has a thorough knowledge of school budgets, and let this person spend time focused solely on finances. Respect the bookkeeper’s role by asking for her or his opinion, but do not abdicate the responsibility for finances to this individual. Provide cross training with other staff members so that vital tasks performed by the bookkeeper can be completed during times when she or he is absent. Finally, monitor every facet of the bookkeeper’s work. There are times when a principal’s lack of oversight has resulted in embarrassing financial gaffes, including fraud.

Support is also needed from district officials. Proactively establish relationships with district officials who can assist with budget decisions and processes. Get to know the district’s budget officer as well as officials who handle payroll, accounts payable, purchasing, accounting, and other specialized programs. This support network can provide direction and advice.

5. Develop World-Class SOPs

Establish and consistently monitor standard operating procedures (SOPs) to ensure accuracy and honesty when handling and accounting for funds, especially when the exchange of cash takes place. Ticket sales at extracurricular events and school fundraisers provide opportunities for mishandling of money. Use numbered tickets for events that charge admission to verify that money received aligns with the number of tickets sold, and always have more than one person count money for deposit. Finally, develop procedures for depositing funds in the bank on a daily basis. Having clear procedures and keeping little money in the school building minimizes the likelihood of mistakes.

Making the Most of Funds

The amount of funding provided to schools and the demands placed on school leaders have increased significantly in recent decades. For the past 15 years, “insufficient financial support” has been the top response to the Phi Delta Kappa/Gallup Poll question, “What do you think are the biggest problems that face the public schools of your community?” Effective fiscal management is vital for helping schools meet higher expectations, garner community support, and maintain ethical and accurate stewardship of public dollars. As schools compete for limited resources in this era of high-stakes accountability, the principal’s financial leadership will be more important than ever.

Walter Hart is a clinical assistant professor and program coordinator in the Educational Leadership Department at UNC Charlotte. Sherry Hoyle is an assistant professor and Mary Martin is an associate professor in the Department of Counseling, Learning, and Educational Studies at Winthrop University in Rock Hill, SC.

Sidebar: Advice for New Principals

Financial issues can be particularly challenging for principals who have been assigned to a new school, regardless of their experience. These individuals do not have background knowledge about the new school’s financial status or familiarity with its budget processes. Some basic steps can build financial familiarity very quickly.

  • First, review financial audit letters from the previous three years, checking for any improprieties that are noted.
  • Review the past 12 months of receipts and disbursements from bank reconciliation reports.
  • Identify trends related to large accounts, such as student pictures, student clubs, and athletics.
  • Look for major disbursements and deposits.
  • Finally, review any budget documents from the previous year, noting spending priorities and any irregularities between the budget and actual disbursements.

To Learn More …
Check out the 49th annual “PDK Poll of the Public’s Attitudes Toward the Public Schools” at pdkpoll.org/results.