With billions of dollars in federal pandemic aid swirling around school districts—not to mention their own multimillion- or billion-dollar local budgets—many school-level and district leaders are not prepared to do the heavy lifting when it comes to school finance.
But with principals, especially, putting their primary focus on instructional leadership, does that even matter?
School finance expert, Marguerite Roza, the director of the Edunomics Lab at Georgetown University, thinks that both school and district leaders should have that knowledge.
There’s still debate over how deep educator-preparation programs should go into school finance. Principals are expected to be more focused on instruction and instruction-related tasks that help teachers improve.
But Roza says that school leaders’ financial knowledge can help them not only become better stewards of public money, but also make decisions that would bolster their students’ education.
“If you look at the job of a principal—they are in a building, they supervise, often, in the neighborhood of $5 [million] to $20 million worth of public investment in children, and those investments also take the form of staffing,” Roza said.
“They know a lot about what kids need, what is and isn’t working in that staff. They should then turn around and tell the district, ‘No, this isn’t working, we can’t do this again, or this has to change.’ ”
An Edunomics Lab survey of education leadership programs, which prepare principals, superintendents, and other district-level administrators, from 30 top universities, released in February, found that while more than half—54 percent—covered things like revenue structures and compliance issues, the majority left their graduates with huge knowledge gaps in key financial areas they’re likely to wrestle with in the real world.
Building financial literacy
Fewer than half covered how to read financial documents, such as budgets; understand cost-benefit analyses; create and manage the district’s or school’s budgets; how allocation and spending formulas work and how spending decisions intersect with equity, according to the survey.
In fact, fewer than a quarter of the programs covered how district allocations work, and just 15 percent delved into budget cuts and calculating tradeoffs, according to the survey.
The data were based on course descriptions, syllabi, and curriculum reviewed for the preparation programs. At least one of the universities included in the review and that scored high used the school finance programs offered by Edunomics Lab.
Edunomics looked at whether eight finance-related areas appeared in course syllabus and curriculum. They included topics such as the connection between finance and equity and understanding cost drivers like labor and benefits.
And when the programs covered finance, it wasn’t always in the way that was most helpful to educators.
For example, they tended to focus on revenues—the money districts and schools receive from the state and other sources— over which school and district leaders often have little control, and not necessarily “the decisions about how to spend it once it gets to districts,” Roza said.
“It’s kind of interesting when really what they need to know is the part that relates to their job,” she said.
The problem, Roza said, is that many principals do not know how much the staff is costing them or that they can make better staffing decisions to meet their individual school’s needs if they understood the financial calculations behind it.
A principal who understands spending decisions, for example, can mount a more robust case to district officials for a counselor to work with disengaged students if that’s an emergent issue at their school.
“They are the stewards at that building over those millions of dollars and to not have them have that skill and be fluent in that and be able to participate in those conversations, it’s like they are operating behind a curtain,” she said. “We are not passing information back and forth.”
Roza thinks this needs to change.
Organizations such the AASA, the School Superintendents Association, and some big districts like Dallas have created opportunities for school and district leaders to deepen their financial knowledge.
States can also invest in building financial literacy among K-12 leaders by requiring traditional university-based preparation programs to include a base body of financial knowledge as part of their programs, Roza said.
Professional development programs such as the Texas-based Holdsworth Center offer school and district leaders a chance to gain a deeper understanding of finance among other leadership qualities outside of the traditional-preparation environment.
“If we build that financial fluency early on, I think people will just pick up and learn more along the way as well,” Roza said. “I don’t care if they get the training through us or somebody else, but I do think we need to put more emphasis on financial skill building.”