Centralized Budgeting Review

In this video we want to briefly go over what it means to have a centralized budget in part of a school district. Essentially in fiscal program resource management, there are different models you can look at. Today we just want to go over, briefly, what it means to have a centralized budget in a school district—both the upside and the downside to that.

When we think about a centralized school budget, the district (the school district itself) pays all the bills for every individual school within the district. They also collect all the revenue from the district, and then once they have collected all the revenue centrally, they then distribute it as they determine.

Generally speaking, they distribute it equally. They don’t want anybody complaining, “Well why did they get more money for this and we didn’t?” You think, well, equal distribution would solve all problems. All the money is brought into a central place. All the bills are paid from that central place, which is efficient and helpful.

You don’t get the accounting nightmares usually associated with it being farmed out to each individual school and all that that entails in terms of accountability and oversight, so it’s all from a centralized location. You’d think that would minimize people squabbling over resources, “Hey their school is in an area that has a higher tax base, ours is in a lower.”

Whereas if the district does it centrally, they can distribute equally everything as it goes around. It helps ensure equal shares of revenue for all in the district. All that sounds like positives, and generally speaking they are, but here’s the downside to all that: individual schools, individual situations, and unique circumstances are difficult to address.

There may be a circumstance where this school, in this particular region, at this particular time might have a very special need, but because it’s centrally done and equally paid out, there’s no way for local ingenuity, and local solutions, and local help to be brought to bear.

It’s all got to come from the central office—and of course that takes time, there’s red tape, all that stuff. It makes it difficult to respond to highly individualistic needs and circumstances. Along with that, you get no local empowerment, no local decisions, no local creativity.

People really want to feel invested in, and a significant part of what’s going on. Basically, if it’s all centralized (and therefore removed from the situation) you don’t get as much participation. Whereas if people feel like their decisions, their activity, what they are doing really has a real impact, that they’re part of what’s going on in their local area, they get involved.

“It’s all being decided far away, you know, why get involved? They’re deciding it up there.” You minimize and remove a lot of individual ingenuity, creativity, problem-solving, decision-making, people who really feel empowered, and involved, and are ready to go.

Which in some ways can make a school a real success and turn around problem situation, so along with the headaches involved in decentralization, you do get an upside in terms of local participation, generally speaking. There are tradeoffs, decentralized versus centralized, pluses and minuses, pros and cons.

That whole idea of equality, of everyone getting an equal share, may not really be the best solution. It may lead to people feeling like, “Well what’s the point? We’re all going to get the equal share, it doesn’t really solve our problems, let’s just give up.” You have to fight different types of problems in centralized budgeting versus decentralized, when we think about these things fiscally.