Effective Practices : Finances


Budget Development and Connection to the Strategic Plan
Finances Section 1

download this form


1. Who are the key individuals/committees involved in the budgeting process (e.g. business manager, finance committee, treasurer, Board, College, administrator, etc.) at your school? Describe the role each key person/group plays in creating the budget. Attach position descriptions/committee mandates where applicable.
2. What are the primary steps in the development of the school’s operating budget?
3. When in the school year does each of the key steps in the development of the operating budget take place? Does this timing serve the school well, or would you like to see it timed differently?
4. How does the school ensure that the budget is developed in a way that supports the school’s strategic plan and other stated priorities?
5. The biggest line item in a school budget is tuition income, and the associated tuition assistance line. What philosophical and practical guidelines does your school use to ensure that these critical issues are properly set? (Attach copies of your school’s tuition assistance policy if available.)
6. Does your school plan a budget and track expenditures for each educational department and operating committee in the school? For example does the math department have a budget that is separate from eurythmy? If so, are department heads expected to both plan their department budgets and then administer them accordingly? If no, why not?
7. Does your school create monthly operating statements at the departmental level? Who receives copies of this information and why?
8. What are the key elements of the school’s philosophy in relation to its creation of an operating budget?
9. What about your school’s budget development and expense control process is particularly effective?
10. If there were something you could change with regard to your budget planning and expense management process, what would it be and why?

FIN 1-1

Who are the key individuals/committees involved in the budgeting process (e.g. business manager, finance committee, treasurer, Board, College, administrator, etc.) at your school? Describe the role each key person/group plays in creating the budget. Attach position descriptions/committee mandates where applicable.
In most Waldorf schools surveyed the budget development process is guided by the Business Manager. He meets with other key players (typically the pedagogical leadership group, the treasurer and/or finance committee, and the administrator) to review the budget process and set key dates and expectations for the year. The business manager collects information and interacts with department and committee heads to build a picture of the needs for the coming year. One school, a smaller school which only recently became a full member, reported that the budget process is managed by the treasurer. This is typical for younger, smaller schools that often do not have a fully developed business office or a business manager that has the ability to manage this project in addition to his ongoing responsibilities. As schools continue to grow the responsibility for managing the budget creation process is slowly moved away from being the responsibility of a volunteer and into the hands of a paid staff member.

The typical budget of a Waldorf school is 80% payroll and related expense. This means that the school’s personnel committee and Human Resources Director have a key role in the creation of the biggest line items of the budget.

The Board of Trustees has an opportunity early on in the budget process to note any priorities or important goals for the year. In December the Board sets the tuition for the coming year, and then at the end of the process it is the Board of Trustees that has final authority to approve the budget. It is interesting and important to note that the Board has little involvement with the budget process during the time that it is being developed. Again, this is a reflection of the maturity of the schools surveyed for this study. Often times we see the Board of younger schools being far more heavily involved in the budgeting process. This is often needed in situations where the business office is not yet fully developed with adequate and competent staff, but Board members who are involved in this work in younger schools must remember that they are doing this work as an interim measure until the business office can be fully developed.

FIN 1-2

What are the primary steps in the development of the school’s operating budget?
A first step in the budget development process is for the key players to meet and agree on the budgeting process, key dates and expectations for the year.

Following this a request is made of the Board of Trustees and the College or other pedagogical leadership group to state their priorities and expectations for the year. With this information in hand a request is made by the Business Manager of all committees and departments asking for their budget requests for the coming year. These requests include all supplies, operating costs, capital expenses if needed, and any requests for additions to staff. In smaller schools and those that have a less organized pedagogical department structure this information is prepared by the College of Teachers or other pedagogical leadership body.

These pedagogical department requests are forwarded to the College for review and prioritization. The College of Teachers (or other pedagogical leadership body at the school) will provide to the Business Manager a prioritized list of items that were requested but not included or under-funded in the prior year’s budget. This list will also include new items for which funding is requested.

While the department heads, the College and the Personnel Committee are working on their respective pieces of the budget, the Business Manager begins to build a top down budget that makes some very broad assumptions about the following year’s performance. Information on projected enrollment is received from the Enrollment Director, and any significant proposed changes to the salary structure, benefits or capital expenditures are factored in. This broad brush budget is used by the Board of Trustees to set tuition levels for the coming year. Tuition rates must be set in mid-year so the re-enrollment process can begin; a school cannot wait for all the details of the budget to be finalized before setting tuition.

The Business Manager will continue to refine the budget throughout the year as additional data is finalized. A budget will be developed that meets the approval of the College and, in some schools the finance or budget committee as well. Late in the spring (or even in early summer at some schools) the budget will be presented to the Board of Trustees for approval.

FIN 1-3

When in the school year does each of the key steps in the development of the operating budget take place? Does this timing serve the school well, or would you like to see it timed differently?
There is a fair amount of variation in the timing of the various stages of the budget in schools. Most schools begin the budgeting process soon after school begins in September. Information is requested from pedagogical departments and committees early in October, and a top down budget is prepared in November so the Board can set tuition levels in December. Decisions about additional staffing are typically made in early in the new year so that by February the search work for new employees can begin. Detailed budget planning goes on through the spring as the enrollment picture for the coming year crystallizes, and budgets are typically finalized late in spring or early in the summer.

FIN 1-4

How does the school ensure that the budget is developed in a way that supports the school’s strategic plan and other stated priorities?
In many schools the summer is the time for an annual leadership retreat. The Board of Trustees, often in partnership with the College of Teachers, spends a few days each year looking back over the accomplishments and challenges of the last year and looking ahead to the future. This retreat may be focused on creating a new strategic plan for the school or updating a current one, but the resulting shared picture of the school is one that illuminates the budgeting process that kicks off in September. Schools find that having a clear picture of where they are going makes the difficult choices of how to best allocate limited funds much easier.

Another common practice is for the College of Teachers or other pedagogical leadership group in the school to submit a prioritized list of additional expenses it recommends for inclusion in the budget. As mentioned above, the Business Manager often receives both a prioritized list and a written statement of the College’s expectations and priorities for the coming year.

Some schools report that they have begun using a five year budget that is consciously designed to support the various elements of the strategic plan. This approach allows a school to consciously evaluate various elements of the plan and make conscious changes to achieve those strategies. This longer horizon also allows more conscious planning on capital funding for major projects, as these fundraising efforts often take place over several years.

FIN 1-5

The biggest line item in a school budget is tuition income, and the associated tuition assistance line. What philosophical and practical guidelines does your school use to ensure that these critical issues are properly set? (Attach copies of your school’s tuition assistance policy if available.)
Most schools report taking a fairly practical approach to tuition setting. They review the tuition at other private schools in the area, look realistically at what it will cost to offer the program of instruction desired for the students and set tuition levels accordingly. Philosophically speaking the schools try to balance the needs of their school with the resources that are in their community.

Schools approach tuition assistance in a variety of ways. Several of them have a very specific amount budgeted for tuition assistance, typically 7 or 8% of gross tuition. These schools also place a cap on the amount of assistance that can be provided to any one family, typically 50 to 60% of tuition. This approach allows schools to maximize enrollment by making tuition affordable for the maximum number of families. (See: Tuition Assistance Policy Statements)

One school mentioned that its strategic planning work showed that the school had set tuition too low, and the school embarked on a conscious program to increase tuition significantly each year for several years. At the same time they chose to increase tuition assistance funding at a higher rate, insuring that the school achieved the revenue needed to support its operations while offering price protection to those families already in need of tuition assistance.

Other schools report that they do not budget separate numbers for gross tuition, tuition assistance, and net tuition. Instead they plan a net tuition number and give grants to those who apply based on need. This approach works well in schools that are well established and have fairly predictable patterns in this area, but it does leave even these schools vulnerable to years where a recession or other financial hardships in the community may require an unusually high level of assistance from the school. Schools that use this approach noted that creating a separate line for tuition assistance leads some members of the community to believe that money has been given away that the school could have captured. Their approach is to work with each family receiving aid to ensure that the school is receiving the maximum amount each family can reasonably pay.

Another area that affects the net tuition line is tuition remission. Remission is frequently a hot topic in schools with some members of the community feeling that remission should be offered on a needs basis rather than as a defined benefit. Some schools provide full remission to full time employees, while others cap it at 80% of tuition. Those who cap remission do so with the understanding that employees have a greater appreciation of those benefits in which they have a financial investment. Some schools provide partial remission for part time employees, while others limit it to full time members of the staff and faculty.

FIN 1-6

Does your school plan a budget and track expenditures for each educational department and operating committee in the school? For example does the math department have a budget that is separate from eurythmy? If so, are department heads expected to both plan their department budgets and then administer them accordingly? If no, why not?
Most of the schools track expenditures by department and committee, and those that do not report that this is due to limitations in their accounting systems.

FIN 1-7

Does your school create monthly operating statements at the departmental level? Who receives copies of this information and why?
Schools that are able to track expenditures by department often produce departmental operating statements so that each department head and committee chair becomes a stakeholder in the school’s financial and strategic plan and execution. Most schools produce this information monthly as a byproduct of their regular month-end closing, while some only report expenditures by department or committee on a quarterly basis. These reports show expenditures for the current period and year to date. In addition to the department heads and committee chairs the administrator, business manager, and leadership team members receive monthly information on the school’s performance. Some schools with active finance committees provide this information to those committee members as well. In some schools Board members receive monthly financial reports, but most Boards find it more helpful to receive a monthly report of variances in a good news/bad news format.

FIN 1-8

What are the key elements of the school’s philosophy in relation to its creation of an operating budget? The schools surveyed for this study offered many good philosophical and practical suggestions for approaching the school’s budget:

Cash is a primary indicator of the school’s financial health and the basis for the budgeting process.

A balanced cash budget was the primary goal for the school for many years. The school is now transitioning to the budgeting of a surplus so as to provide for capital improvements and to build an endowment.

The school’s fundraising efforts must cover tuition assistance. We want financial diversity in our classrooms so we must raise more money from some parents so that school remains economically viable.

The audited financial statement is made available to anyone in the community who requests it.

The school considered whether it wanted to restrict its investment to only socially conscious funds. We decided to make these investments strictly on an economic basis, but this thinking is continually challenged.

Professional management is critical to the smooth running of the school.

We have had recent discussions about what our relationship is to AWSNA and to other Waldorf schools, as this is a significant line item in our budget. We decided that our school has an obligation to other Waldorf schools and must continue to play an active leadership role in the movement. This commitment requires local action between our area Waldorf schools. The ongoing financial support for the work of AWSNA is under discussion.

The school has clear policy on spending authority. These statements protect the school from large inappropriate expenditures and also help to keep committees from spending time discussing expense items that are below their review level.

There is an absolute correlation between operating decisions and the budget numbers, and all management decisions are financially evaluated prior to approval and adoption.

The school does not have an endowment that allows spending in excess of current year’s income. Therefore, by policy, the school must make operating decisions that result in a no deficit budget. This approach is fully supported by the Faculty, Board and the community. Accordingly:

  • Expense plans are always based upon our current resources, not future expectations;
  • Expense “Investments” for operating gains are financed out of current savings, not future revenues;
  • The basis for budgeting is based upon current active enrollment applications, not our future expectations.

The school is fond of contingency funding and always has money squirreled away for any unexpected shortfalls.

The school has had surpluses for eight consecutive years.

The school budgets salary increases conservatively, and then offers bonuses at year end if revenue performance is better than planned.

We want an increasing portion of the operating budget to come from the development office.

We want to keep the personnel dollars under 80% of the operating budget so there are adequate resources for other things.

The school plans its budget in a way to ensure that it does not operate at a loss.

The budget is developed in a way that is responsive to program needs and reflects an efficient operation.

The budget is a living dynamic document. It is not a once a year academic exercise, but something that requires ongoing consciousness.

The budget is a give and take process. It requires a lot of thought, and we are forced to make choices as we make decisions about the best way to spend limited funds.

Balance is a key to sound budgeting. There is a need to balance all of the needs of the school with the resources that are available in the community.

The whole notion of cash flow has come into our consciousness in the last few years. A school is well served when it plans its cash flows and utilizes its cash effectively.

Longer range financial planning is important. We want to avoid making decisions that work in the short term but don’t move us toward our longer term picture of what programs and services the school wants to offer.

FIN 1-9

What about your school’s budget development and expense control process is particularly effective?
There is a strong leadership team working on the budget that is able to operate within the school’s financial needs.

Our budgeting process is moving in the right direction in terms of its timing. We still have a ways to go here, but it’s happening much earlier than in years past.

The school does a good job with cash management. The cash flow is planned and tracked. Excess funds are invested so a bit of income is generated for the school.

The school responds promptly to requests for reimbursement. This can be a problem though when other chores need to be interrupted to write a check immediately.

The business manager, the bookkeeper, the chair of school and the finance committee have a good understanding of the plan and where funds are going.

Overall awareness and review of finances, teacher education and savvy on financial matters allow more profound self knowledge to develop. Changes which might potentially result in a deficit are immediately taken up at the operations level to revise expenditures.

Financial dilemmas such as that exemplified by special needs students requiring financial aid, become an occasion for moral reflections by the employees and community to consciously choose the importance and role of principles in our expense and investment decisions.

Parent knowledge of the workings of the school and support for the school’s financial decisions is strong.

In addition to the daily budget management issues, we spend some time on strategic issues. We identify a stakeholder for each of the key projects for the coming year so that real progress is made in each of these areas.

Professional management is a key to strong financial management. An active and experienced volunteer group provides specialized advice and acts as a control. We have systems in place that have worked well over time and the school is on strong financial footing.

The school has a very effective system for tracking expenses as they happen and for comparing expense performance to plan by department.

Every line on the budget is someone’s responsibility. Good monthly departmental tracking makes it possible for budget responsibility to be widely dispersed within the organization. Virtually every employee and key volunteer is responsible for some aspect of the school’s financial performance.

Having a human resources director is a real plus. Her presence allows us to really get our hands around the payroll personnel budget in a timely and effective way. She is administratively minded and can produce this kind of information in a way that is not as easy for the busy faculty members who serve on her Human Resources Committee.

Having the capital budget planned and administered by the Buildings and Grounds committee has been good. This is a strong committee that maintains a high level of consciousness for this aspect of the budget.

FIN 1-10

If there were something you could change with regard to your budget planning and expense management process, what would it be and why?
The schools surveyed for this section of Effective Practices are considered to be among those with the greatest strength in the area of financial management, but this did not stop the schools from planning several improvements to their budget development and expense tracking process:

We have not made budget information, tuition comparisons, and other similar data widely available in the community. As a result we need to do more work to inform parents when substantive changes are being made as they are not kept informed on these issues on an ongoing basis.

A change of our whole accounting reporting system is needed. The system provides information that is actionable for the business manager, but it does not support transparency in our financial matters nor does it make it possible to involve larger numbers of people as active partners in the expense management process.

The timing of various financial decisions could be better coordinated. It is inadequate today, and sometimes efforts are at cross purposes.

The question of whether faculty remission should be needs based must be addressed.

The seniority based salary structure is widely accepted by the faculty and the community. Nevertheless it creates contradictions and is a source of problems. Paying a long time teacher twice as much as a new person is not a real reflection of either teacher’s contribution. It sets up a situation where there is pressure to exchange long time teachers with young blood. We need a structure that compensates more equally across the seniority spectrum, balancing wisdom with energy. Furthermore, we need a system that allows a respectful way for veterans to transition to a lighter teaching load.

Keeping track of receivables and managing those accounts is another key area. It requires transparency and sound practice that is aligned with other areas of the budget from a philosophical perspective. There may be the opportunity to add more institutional rigor in the area of collection and re-enrollment. Currently, dealing with difficult families (including faculty) falls on the business manager. For example, we may be able to add more hard dates, and establish incentives and penalties that are appropriate to bring payment issues to resolution.

Our aging report could also be improved to show historical trends and numbers of accounts rather than just dollars and student accounts that are delinquent. Increased discipline in this area would have a positive impact on the budgeting process. A relatively large amount of prior-year tuition is uncollected until school begins. Furthermore, a relatively small swing in enrollment (i.e. 1-2%) creates a relatively large marginal impact on the budget. Therefore enrollment uncertainty requires flexibility in spending and the budget process.

We are fairly satisfied with our planning and controls and with the fairness with which we share resources; but it would be terrific to be able to hold down tuition while increasing salaries. If anyone discovers a way to do this, we are listening.

A level of middle management in the pedagogical operations of the school would be helpful to the Business Manager in dealing with budget and expense detail. At times it can be hard for the business manager to interact with the 20 plus department heads and assist them with their budget and expense needs.

The school needs to expand the number of stakeholders in the budget and expense control process.

It would be great to have more detailed and informed challenges from the treasurer and the finance committee. It would be great to have more involvement rather than people relying on the business manager to hold the budget creation and administration responsibility alone.

The cash reserves in the school have been depleted, and need to be restored.

In the future the school hopes to involve the bookkeeper more in the budgeting process to improve the interface between the budget and the QuickBooks accounting system. This will allow the creation of more timely reports to all stakeholders. Changes to the accounting system will also facilitate the ease and frequency with which operating statements are produced.

We need to continue to move the budgeting process forward so that we can set tuition levels in December.

The development of a multiyear financial plan that is well tied to the strategic plan would be very helpful, and will help us see clearly how we will phase in the various goals and objectives set for the school.


Home Page | Why Waldorf Works | Waldorf Education | News & Events | AWSNA | Find A School
Global Waldorf | Waldorf Community | Teacher Preparation | Online Store | Contact Us | Site Map | Webmail