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Financial Leadership in Education

Jennifer Falestiny, M.Ed.

IDT Doctoral Candidate – Keiser University

Dr. Steven Roth

March 2, 2019


Being a successful institution comes down to financial leadership within. Without

successful financial management of any business, the business will fail, and that is the same for

an educational institution (Barr & McClellan, 2018). What an educational institution needs more

than a good leader is an executive; someone who understands both the mission and business

aspects of a school. This paper serves as an overview of what it takes to be a successful financial

leader education. Successful educational execuatives must understand where educational

funding comes from, how to maintain focus and discipline in managing an educational budget,

the impact of staffing in financial budgeting, adversity faced in educational funding, and how to

exhibit traits of an executive over a traditional leader.

Educational Funding: Origins and Allocations

The American public school system is one of the largest and oldest businesses in our

country. Exceeding revenues of $788 billion (USDOE, 2018) the United States education system

consumes 4.4% of the country's gross domestic production of funds and close to 5.1% of all

personal income (Odden, & Picus, 2014). Because federal funding revenues only consist of

approximately 10% of individual state budgets, a majority of funding for public education is

mitigated by state and local revenue sources (Odden & Picus, 2014). Federal funds are allocated

to individual states based on the needs and requests of each state.

A majority of federal funds per state comes from the Every Student Succeeds Act

(ESSA), and Title I funding (Odden and Picus, 2014). The ESSA breaks funding into seven

different catagories or titles: Title One - Low Income Students, Title Two - Teachers and

Administrators, Title Three - English Learners, Title Four - After-school programs and charter

schools, Title Five - Rural Schools, Title Six - American Indian Education, and Title Seven -

Schools on Federal Lands ("Intro. ESSA", 2016). Requesting funds and reporting needs falls

under the responsibility of each district in each state. If needed, districts can request additional

federal funding by communicating with state education officials. Other funding revenue federal

programs include: Individuals With Disabilities Education Act (IDEA) - Funding for exceptional

student education, Career and Technical Education Act (CTE)- Professional development for

CTE educators, curriculum development and classroom supplies and equipment, and the

Homeless Assistance Act- extra help for homeless children (Collins, 2017).

As a financial leader of an educational institution, it is important to understand what

additional revenue sources are availible and can be requested by individual schools. For example

the E-Rate funding in compliance with Family Educational Rights and Privacy Act (FERPA) and

the Children’s Internet Protection Act (CIPA) are availible to help provide funding for IT

professional development and privacy tools and software (Jennings, 2019). This funding requires

districts to apply for funding through E-Rate with funding provided through the Federal

Communications Commission (FCC) after a request has been made by a school official in the

district (Jennings, 2019).

As the federal funds are allocated by each state to each school district, each state creates a

unique formula to deliver funds with adequacy and equity in mind. Generally, the state first

determines an unweighted base funding for each student known as an FTE (Full-time

Equivalency). Once the unweighted FTE funding is calculated, additional funding will be added

to students needing additional services (special education, English Language Learners ect.). It is

up to the school administrator to communicate with the district about needed funding for the

coming school year, and it is then up to the district leaders to allocate funding accordingly. In

order to have adequate and equitable funding, the school needs a competent executive managing

the school budget (Barr & McClellan, 2018).

Understanding where funds come from, and understanding the history and trends of

funds, and the ability to accurately predict expected funds is imperative for a successful financial

school executive. School execuatives are encouraged to continually communicate with the

school’s financial staff in anticipating financial changes and creating avenues to mitigate any

financial hardships the school may endure. Being a good executive includes understanding the

funding as the fuel of the school, but also understanding how to maintain focus and discipline

when it comes to staffing and procedures (Collins, 2001).

Focus and Discipline

A successful executive understands that if you hire a staff that maintains the same level

of focus and discipline as his or her respected leader, then the company will run on its own

(Arthur, 2018). Great successful execuatives are also able to determine where individuals in a

company will thrive, understand when to let someone go who may not have the companies focus

and drive in mind, and how to hire successful and driven individuals (Collins, 2001). In times of

financial struggle, Barr & McClellan (2018) suggest that the executive and financial leaders

maintain a transparent and open communication with the staff members in order to maintain

focus and understand the scope of what the institution might be dealing with. In having the staff

understand that funds are being cut or that changes need to be made, it is more likely that the

staff will be receptive and maintain discipline and work towards a common goal to help in

positive change (Collins, 2001).


In addition to individual focus and discipline in an educational setting, it is important that

the executive understands where to focus financial funds in an institution. According to Collins

(2001), a successful executive understands what portions of the company need the most focus

and allocate a lot of funding to these areas. Respectively, the executive is also able to maintain

discipline in identifying areas that are not needing focus or funding and either minimize funding

or eliminate funding all together. It is suggested that administration be transparent with staff

about financial budgets so that the staff can work towards a common goal; because when it

comes to financial educational budgets, the largest expense are salaries and benefits, and these

are generally the first avenues to take a financial hit (Barr & McClellan, 2018).

Impact of Staffing and Budget Development

Educational budgets fluctuate from year-to-year, and when faced with decrease in

funding, educational leaders are given the task to balance and maintain budgets (Leachman,

Masterson, & Figueroa, 2017). Researchers suggests that when faced with budgetary cuts

educational leaders should eliminate cost in ways that do not directly interfere with the student or

the student’s quality of learning (Barr & McClellan, 2017). In eliminating funding in an

educational budget, the staffing is generally analyzed first as salaries and benefits consume a

large portion of the budget (Odden & Picus, 2014). Based on the national averages of class size

student to teacher ratios, Odden and Picus (2014) developed formulations based on the national

class-size average of student to teacher rations.

After extensive research, Odden and Picus (2014) were able to calculate a formula to

determine the appropriate staffing ratios per FTE. Based on their findings, the average

elementary school requires: 26 core teachers (with an average class size of 17), 5.2

specials/enrichment teachers, 1 full-time tutor (for every 100 students below grade level

average), 1 ESOL (English to Students of Other Languages) teacher for every 100 ELL (English

Language Learners), 3 Exceptional Education Teachers (ESE) and 1.5 ESE teachers, and enough

substitutes to cover 20% of the full-time educational staff. For supportive staff, they recommend

5 student support staff (guidance counselors, parent support, outreach support), 1 nurse, 2 non-

instructional aids, 1 librarian, 1 principal, no vice principal, and 2 full-time secretaries (Odden &

Picus, 2014).

According to their averages, Odden and Picus suggest that a large percentage of public

schools in the United States are overstaffed in executive positions, and in turn consuming a large

percentage of educational budgets. Odden and Picus state that there are “few if any

comprehensive school designs include assistant or vice principal positions” (Odden & Picus,

2014, p.107), and yet a majority of US schools have a principal and vice principal (NCES. b.,

2017). It is recommended for schools with under 500 students to have only one principal as the

executive officer. In cases of larger schools, it is recommended to divide the school into

subgroups with separate principals. It is however important to make sure one of the principals is

considered as the “super-ordinate” principal in charge for final decision making (Odden & Picus,

2014, p.107). This strategic option will potentially eliminate excessive amounts of leadership

positions consuming high amounts of education funding in school and district budgets.

Eliminating an unnecessary school official could save an individual school $90-95,000 (NCES

b., 2017).

Staffing is a foundational factor in determining the success of a company (Collins,

2011). Hiring the wrong people is unfair to the right people in the company and hanging on to

the wrong people is equally unfair to the right people driving the company forward. As a

financial executive educational leader, it is important to understand the appropriate staffing


needed in the school, make sure those needs are being met, and act accordingly. Because staffing

takes up a majority of an educational budget, it is vital that the executive of the school

understands where staffing is needed and where staffing may be over compensating.

Budgeting Adversity in Educational Funding

As with all budgeting, there are two ways to solve problems; 1. receive more funding,

and 2. cut spending costs (Barr & McClellan). National funding is anticipated to greatly decrease

when enrollment levels are continuing to increase and this causes adversity when it comes to

budgeting in education (USDOE, 2018). Although most states are making progressive strides

towards lower class sizes, the student to teacher ratio in our elementary and middle schools

nation-wide is still considerably too high (Renter, Frizzell, & Kober, 2017). This poses a

challenge as the most costly expense is staffing salaries and benefits, and that is what school

budgets are needing to add and not eliminate.

Adversity in education also comes down to the equity and adequacy in funding from local

revenue sources. Traditionally, states gave local governments the authority to fund local schools

by levying property taxes. However, districts with higher property taxes were able to provide

more funding per pupil for schools over districts with lower property taxes. State policy makers

seeing this as unequitable attempted to create "equalization formulas" and designed a state aid

structure to essentially distribute larger amounts of funding to districts with small property taxes

and smaller amounts of funding to school districts with higher property taxes. This was also then

found to be unequitable, and created new thinking of school funding and role of funding

adequacy ( Odden, & Picus, 2014). Because of this, there is a high need for a decrease in student

to teacher ratios in these rural and low socio-economic communities across America (Baker,

Farrie & Sciarra, 2018).


Instructional staffing is what is needed in order to lower class sizes and lower student

teacher ratios. As federal funds are expected to decline, mitigating funds will fall to the district

and state levels to make up the difference or cut spending. As a financial leader, it is imperative

to anticipate adversity and have plans in place to address these challenges (Barr & McClellen,

2018). Because there are few to no states that have standards for required or needed staffing

standards, it can be assumed that schools across America are understaffed or overstaffed in

certain school-level and district-level positions, if these positions and ratios are not being

monitored or standardized. A standard of required instructional and support staff should be

determined, monitored, and assessed by educational leaders across the country in order to cut

staffing in ways that are not detrimental to student learning and achievement.

Leadership Strategies in Budget Development

Educational leaders are in a position to shape the future of our nation’s leaders. In

order for an organization to reach its maximum potential: choose personnel wisely, sustain

personnel, and plan strategically (Collins, 2001). As an educational executive, it is important to

find great people with self-motivation to work with. In choosing a staff to help with budget

development, it is important to be strategic in who is being hired. Successful executives place

higher value on character attributes, practical skills, specialized knowledge, work ethic, basic

intelligence, dedication to fulfilling commitments and values over specific industry experiences

(Collins, 2001).

Research shows you have the right people on your team, the problem of motivation and

management disappears. Collins (2001) argues that if you have the right people on your team

who share the same passion, they will be self-motivated to be a part of making a change and

difference. The key to strategic long-term planning for success, starts with a passionate team of

diverse strengths and expertise before planning a direction to take in making significant change.

Once the appropriate team is developed, it is important that the team that is self-

motivated is sustained. Odden & Picus (2014) place a strong emphasis on treating a staff well in

order to get a strong and sustained output from the workers. Going back to eliminating

unnecessary staff, if funds are freed up from unnecessary spending, additional funds can be

added to drive the force of those working for the better good of a company (Collins, 2001). Once

a staff feels appreciate and wants to work for the better good of the company, then they are more

likely to follow the strategic plan for long-term success (Barr & McClellan, 2018).


In conclusion, a successful financial leader in education is an individual who will

view their role similar to that of an executive officer of a buisness. A financial leader of an

educational institution needs to understand where funds are coming from, past trends of revenue

sources, and how to calculate projections and where to mitigate any financial hardships the

school may endure. A financial leader must also understand the importance of staffing and the

adversity of educational funding as it relates to staffing. The financial leader must have the

ability to balance and maintain a budget and understand where to cut and add costs accordingly.

In addition to staffing, it is imperative that the financial leader of an educational institution

understands how to hire a staff that is able to maintain focus and discipline while working

towards a common goal of running one of the largest businesses in the United States. When the

right leadership is in place, and the right staff has been identified, and the workplace conducts

buisness with a level of transparency, the company (or school) will run smoothly and allow for

the education to greater good of the students to be the main driving focus of the organization.


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