How many people understand advanced financial concepts and processes? What about successfully managing money in large amounts? How about being able to identify trusted sources of financial information and accurately use them to compare and make decisions? At what age do people develop or demonstrate this type of fiscal expertise?
The Consumer Financial Protection Bureau (CFPB) states that these milestones happen in stages sometime between adolescence (age 13) and early adulthood (age 21). Later in adulthood these building blocks develop into mastery and extension of basic financial skills which are demonstrated through critical thinking, application, and competence.
Even though financial skills start developing in adolescence, and we are expected to master them in adulthood, many adults do not have well-developed financial literacy and budgeting skills.
If an individual has minimal personal knowledge of finances and budgeting, it is sure to impact their private money matters. But when an educational leader does not have professional-level expertise in fiscal matters, it will have a negative impact on the institution, faculty, staff, and the students.
Leadership always requires some type of fiscal responsibility whether it be in the role of a club advisor, department chair, or board member. The level of responsibility depends on the role, the profession, and the organization.
Budgeting, financial skills, and financial decision making abilities are vitally important to (successful) school leadership. Accounting, business, and finance departments are key professionals in this work, but so too are the school administrators. The financial health and well-being of a school is a shared responsibility but accountability inevitably is on the leadership.
Now more than ever leaders need to prioritize their school’s financial health as “significant cuts in funding, lower net tuition and increased competition for students” have created a grim prognosis for many higher education institutions (Syntellis, n.d.).
In addition, educational leaders are responsible for student achievement and are subject to audits, external accountability, and intense scrutiny, making the stakes high and the challenges great.
Yet many educators come into administrative positions without the necessary skills to be a financial leader and steward, the two roles required for successful school financial management.
A leader in school finance is one who understands the vision, mission, culture, and goals of the school. An educational leader may come into their position with one or more of these components absent, and in that case they will have to lead the stakeholders in the development of what is missing or what requires strengthening. Once these facets are all in place, the school leader must engage in a collaborative, integrated, and iterative cycle that is informed by the institutional values.
First, educational needs must be evaluated, established, and prioritized with input from stakeholders. From those needs, budget goals should be created, success criteria defined, and then a plan established. This plan must align with, and support the vision, mission, culture, goals, and needs of the school. The school leader must continuously and tirelessly be connecting the budget with the school’s vision, mission, culture, goals, and needs. These connections are developed through communication. It is not enough to design a budget, or even implement a budget. Ongoing communication, throughout the entire process cycle, is essential for budget management and school success. Without ongoing communication, what should be a positive, integrated, and iterative cycle becomes a death spiral instead.
A steward is a fiscal agent who is appointed to manage or supervise the money or property of another, which is the leader’s other role in school finance. The school, system, consortium, community, or state budget (money and property) belongs to the community (large and small), not the administrator. While school leaders must take ownership of school finances it isn’t the same as owning the resources. The role of the educational leader as the financial steward is why the cycle of planning, revising, implementing, and evaluating the budget must be collaborative and include stakeholders. Stewards work for and report to others. As a financial steward, the administrator must communicate to others, but it is equally important to consider and reflect on communication from others. Besides managing the dollars and cents, the financial steward also manages the process and procedures, the development and implementation, and the expectations and accountability. All of which must be done cooperatively, communicated to stakeholders and the community, connected to the organizational identity and values, and clarified continuously on a cyclical basis. Considering what is required to manage financial resources, school finance cannot, and should not, be managed alone by any one administrator or designee. Nor should this responsibility be handed over to someone without the competencies required.
Despite all that financial leadership and stewardship requires, many educational leaders are not prepared for this part of the job. As stated by Sorenson and Goldsmith (2018) “in far too many instances, school leaders possess limited background, experience, or expertise with the budgeting process.” The good news is that these skills can be developed, even by adolescents and young adults, so don’t be discouraged. Despite how you may feel about math, spreadsheets, or money management, you can develop the skills necessary to be a successful financial leader and steward… plus the alternatives are too risky!
Alana Sejdic is a pupil services specialist working to support students leaving the Connecticut Juvenile Justice system. She is also a doctoral candidate at the University of Bridgeport.
References
Sorenson, R. D., & Goldsmith, L. M. (2018). The principal′s guide to school budgeting (Third ed.). Corwin.
Syntellis (n.d.) The future of higher ed depends on moving past financial guesswork. https://www.syntellis.com/blog/future-higher-ed-depends-moving-past-financial-guesswork
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