Board members are ultimately responsible for the financial stability of the school, and part of their due diligence requires them to develop a strategic financial plan and a complementary budget. Trustees must keep tabs on budgetary issues, to ensure the strategic financial plan is progressing. However, actual budgets may not always jibe with the projected budgets developed by the Finance Committee. For this reason, the Business Office should provide frequent reports to the Finance Committee.
Reports from the Business Office to the Board’s Finance Committee should consist of year-to-date analyses of the actual vs. projected budgets, with a comparison of this year’s figures with last year’s. For example, your Business Manager may break down the category “Cocurricular Programs” by activity expenses and revenues. The Finance Committee can then note what has been spent in each area, compared with what had been budgeted. Any notable discrepancies between the actual and projected figures (for example, extra expenditures for the field hockey team) can be explained at this stage (the old team jerseys were ruined in flooding over the summer).
These documents rarely need more than a cursory review by the Finance Committee in a well-managed operation. The Treasurer’s routine question-and-answer sessions with the Business Manager before Board meetings may be all the review required. In any event, questions should be resolved before full-Board meetings, and only significant problems should be brought to the attention of all Trustees.
While the Treasurer should bring his or her copies of the Business Office reports to Board meetings, the Board should not concern itself (or waste time) with line-item information. Financial updates to the Board should be less than a page in length. Members should be able to see the school’s current position in receivables, income, and large categories of expenditures. Compare actual and projected figures in these major categories.
For example, the summary would list the totals spent on and received for all cocurricular activities. The Treasurer would then explain any shortfalls in income or higher than expected expenses (several athletic teams had to buy new uniforms after the summer flooding). This is sufficient to give the full Board an overall picture of the school’s financial status.
Keep in mind the main focus of Board attention is the overall bottom line. Emphasize this point with brief, succinct reports from the Finance Committee.
Additional ISM resources:
ISM Monthly Update for Trustees Vol. 10 No. 5 Develop a Financial Contingency Plan
Additional ISM resources for Gold Consortium members:
I&P Vol. 36 No. 1 Mid-Year Financial Reports and Your Strategic Financial Plan
I&P Vol. 37 No. 8 Strategic Financial Planning and Your School’s Budget: Companion Documents
I&P Vol. 37 No. 9 Managing the Fiscal Realities of Enrollment Changes
