Best Fiscal Management Practices for Rural Schools

Last Updated: November 01, 2004

Best Fiscal Management Practices for Rural Schools

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By Jerry Johnson and Greg Malhoit

The operation of public schools and efforts to improve them often revolve around three central questions about funding. First, do schools and districts have sufficient or “adequate” funding to offer all children a quality education? Second, are state and local financial resources distributed fairly or “equitably” among school districts and schools? And, finally, are funds for education effectively and efficiently managed?

At the core of these three questions are two generally agreed upon principles: 1) a high quality education is vital to every child and to the well-being of American society as a whole, and 2) financial and material resources are crucial to providing that high-quality education. This paper recognizes the existence of inadequacy and inequity in school funding, particularly for rural schools and districts. While supporting and encouraging efforts to reverse this trend and provide adequate and equitable funding for schools, we also recognize the practical realities of operating within the contexts of today’s schools. It is with that in mind that we offer suggestions here for maximizing the effectiveness and efficiency of existing resource levels.

This policy brief is intended to highlight some of the leading policy issues faced by states, local school districts, policymakers, education leaders, and concerned citizens. State and local policies vary appreciably, and we acknowledge that a definitive statement on how school finances can and should be managed in every setting is beyond the scope of this paper. Rather, the goal is to present general recommendations about best fiscal practices that can be tailored to meet the needs and circumstances of individual states and school districts.

The document is organized into five sections. Following a list of “guiding principles of sound fiscal management systems,” Section II outlines responsibilities and roles in the fiscal management process. This section is organized according to the five major steps in the budgeting process, and emphasizes opportunities for engagement by various constituencies at each step in the process. An integral part of both responsive schooling practices and a sound fiscal management system is active participation by teachers, parents, students, and community members. The roles of school officials, elected or appointed governance bodies, and state departments of education are crucial as well: school officials can and should encourage that active participation and be responsive to it; governance bodies can and should actively seek the insights and concerns of their constituencies; and state departments of education can and should create policy contexts that facilitate this kind of participatory process.

With that in mind, we consider the roles and responsibilities for each of these groups:

• Teachers/parents/students/community members,
• School officials,
• Elected/appointed governance bodies, and
• State departments of education.

The involvement of these multiple groups in the process of fiscal management broadens the perspectives and knowledge base that go into setting priorities and making decisions. It also provides for a system of checks and balances that can ensure that public funds are managed effectively, efficiently, and in accord with priorities developed by the school and community.

Section III considers rural-specific concerns and strategies, and Section IV examines the options available to state policymakers in ensuring sound fiscal management practices at the school and district level. Following the fifth and final section, the conclusion, are appendices offering specific information on budgeting models, a glossary of school finance terms, and resources for obtaining additional information.