The budget is a chief responsibility of the Finance Committee, and budgetary activity is ongoing. Oversight of the current budget is simultaneous with development and approval of the next year’s budget. This duty alone calls for members with specific skills and backgrounds.
For example, most of the budget (about 80%) concerns personnel and related costs; the rest is devoted largely to areas associated with plant operation. This is clearly a case for having Personnel Committee and the Buildings and Grounds Committee members also serve on the Finance Committee. These links can provide perspective on deliberations in these other committees. Consider also a similar tie with the Development Committee, to include discussions of funds raised.
Note that the Board President, School Head, and Business Manager act as ex officio members for the Finance Committee. Other members include the Treasurer and an individual without specific external relationships. This person may even be a non-Trustee who has been asked to serve on the Finance Committee because of a combination of strengths important to committee deliberations.
The Finance Committee itself should contain no more than seven regular members, of whom perhaps five are Trustees. Trustees must dominate this committee; these decisions are too important to the school’s daily operation to be left to those who are not fully accountable.
Form the Finance Committee with several characteristics in mind, understanding that members should contribute in more than one area.
- One member should have some legal background.
- Clout and high-level access to the financial community are needed.
- Business acumen should exist throughout the committee.
- An executive orientation should pervade. In other words, most of the members should have top managerial perspectives. The Finance Committee should not become overly attentive to details; the bottom line is the target. The owner of a chain of local gift shops who has a broad view of finances, for example, might be a better member than the owner of a single hardware store who focuses on line items.
- One member should be focused on the bottom line as it relates to the school’s mission. Such a member should constantly ask how the financial status of the school affects students. If you have a Trustee who has been named to the Board because he or she cares deeply for children, consider naming this person to the Finance Committee. Even if the person lacks the financial know-how of other Trustees, the service he or she will do as a reminder of what the school is all about will be invaluable.
Make sure the Board receives adequate summaries and reports about the Financial Committee's work. If these conditions are met—and if the Finance Committee Chair presents matters in a “digestible” manner—then committee recommendations will usually be accepted without debate or delay.
Additional ISM resources:
The Source for Trustees Vol. 13 No. 7 Reports To and From the Finance Committee
The Source for Trustees Vol. 10 No. 5 Develop a Financial Contingency Plan
Additional ISM resources for Gold Consortium members:
I&P Vol. 39 No. 5 Board Committee Structure and Function
