The Principals’ Corner:

When I was a high school department head, every year when budget deliberations at the school level came around, I was frustrated. The frustration came in two waves. The first was that heads who had overspent their budgets the year before were never held to account. Our principal simply said: “Here’s the money we have to divide up.” It was always less than it should have been because the amount that was overspent was “taken off the top.” That meant that those of us who had been fiscally responsible were disadvantaged. We could have, of course, overspent ourselves but some of us felt, I think justifiably, that this was not the most ethical way to go forward. It meant, though, we had to pay the price for our integrity in matters financial.

The second frustration was that once the remaining funds were divided up, the best I could do was to “top up” existing resources. I could not hope to make wholesale changes because I just didn’t have the funds. There and then I made three promises to myself. If I ever got to be a principal I would:

1. Monitor all budgets closely and remind department heads that they were approaching their spending limits,
2. Allow them to carry over surpluses or deficits into the next year,
3. Find a better way of allocating funds that addressed the “top-up only” conundrum.

With my appointment as high school principal to my first school, I now had to “put my money where my mouth was”. The first two promises were easy to implement. First, I had a great accounts secretary who kept me informed on a monthly basis of the budget situation in each department. Because I met with each department head monthly for a “one-on-one” session, I was able to monitor and discuss an individual department’s financial position each meeting. Second, we had the agreement of the central office to put the carry forwards of the school budget as a whole (deficits or surpluses) over from year to year.

The third one called for a more radical approach which, when finally implemented, was seen by the heads universally as being the best way to go – but only after a prolonged set of discussions covering parts of several heads’ meetings over a three-month period.

When budget discussions started in the spring of my first year as principal, I grabbed my chance. I took the lead in making the proposal. The proposal was that we, as a school, would develop a three-year budgeting process rather than a single-year process and that once in a three-year cycle, every department would receive a large influx of dollars that would allow a department to make major purchases of new resources, not just “top up” what they already had. This was called the “Major Purchase Year Budget”. If a department was not on its “Major Purchase Year Budget” it received what it was called its “Maintenance Budget” which represented the amount the head felt was the minimum needed to run the department for a year. In a three-year cycle, then, each department had two years of Maintenance Budgets and one year of a Major Purchase Budget.

I’ll go into the details of the formula in the blog entry next week, but I did want to tell you what it revealed about decision-making at the school. At first all of the heads were very skeptical of the legitimacy and feasibility of the process. There was a flood of “What if … “ questions as they tried to determine where the snare was.

The truth is, there was no snare. I was just looking at a way of solving the same problems I had as a department head which they were now facing. The problem was that they had all worked in the past for principals who had “played games” with the school budget (the total of which they had never known in the past) and used budget allocation as a power/pressure point.

It took several discussions to convince them that there was no trickery here, that all figures would be revealed and that all commitments would be honoured over the next three years. I had received a promise from my superintendent that he would ensure the next principal (if I were transferred – which I was not) would adhere to the budget for the continuation of the three-year cycle to the end of that cycle.

The scepticism of the department heads is a comment, I think, on how the lack of trust can be so corrosive and so detrimental to effective group decision-making. They took a great deal of convincing about my determination to show all the figures, to allow for autonomy in spending departmental funds, to hold those who overspent individually accountability, to support the department heads who were being fiscally responsible by letting them carry over their surpluses, and to confirm that, when it came time for their “Major Purchase Year Budget” they could be assured that the money would be there for them.

When they agreed in principle, I thought I had it made. But I was wrong. I did not account sufficiently for the degree of entrenchment in the heads about not really getting their fair share – or not trusting :the system.” It would, as I learned, take a lot more convincing on my part.

Wait for “Part 2” next week to see how the initiative began to unfold in reality.

Dr. Dan

Interested in learning more?  Check out out individualized coaching product entitled:  “Budgeting over a 3 year cycle”.