With operational costs rising, the pressure to stretch school budgets is greater than ever. Technology, building maintenance, and supplies are taking a larger bite out of budgets, leaving less for programs. Attracting and retaining teachers and staff often means offering higher salaries, delays in grants and donations can disrupt financial planning, and shifting student numbers create funding instability, impacting staffing and resource decisions.
Although the Federal Reserve’s recent rate cut offers some breathing room, schools should proceed with caution: there’s the potential for lower borrowing costs for capital improvements and potential relief for existing loans, but the uncertainty of rate duration complicates long-term planning, and inflation may still drive up costs.
Yet, amid these challenges lies an opportunity—a chance to transition from relying on temporary funds to adopting long-term financial resilience strategies. With the new year on the horizon, it’s a great time to rethink spend management, build financial strength, and optimize your resources to ensure a sustainable future.
Here are five things to consider:
1. Prioritize spend management
With the expiration of relief programs and tight funding, prioritizing spend management is crucial for sustaining educational quality and ensuring your school’s financial stability. Strategic spending is about making each dollar work harder by directing funds to the areas that matter most. Start by conducting a comprehensive review of current expenses to identify cost-saving opportunities. Look for patterns in spending or services that can be scaled back. By controlling expenditures, schools can not only free up funds to support key programs but also build reserves for unexpected events or economic shifts. Which leads us to…
2. Build reserves
Financial reserves act as a safety net for your school, providing a buffer against unforeseen expenses or economic downturns. While building reserves may seem challenging amid rising costs, setting aside even a small percentage of the budget can make a significant difference over time. Your school can gradually increase reserve funds by reallocating savings from cost-cutting measures or reinvesting unspent budget allocations. Consider setting specific reserve goals each fiscal year to create a habit of saving. Having reserves in place ensures that your school can maintain its operations and avoid drastic cuts during challenging times.
3. Focus on what matters
To maximize impact, align spending with your school’s most important needs and long-term goals. Prioritizing essential programs and projects ensures that funds are directed where they will provide the most value, such as core academic programs, critical facility upgrades, or health and safety initiatives. Identify areas where costs can be reduced without compromising educational quality, such as renegotiating service contracts or eliminating underused resources. Taking a deliberate approach to spending will allow your school to concentrate on investments directly contributing to student success and stability.
4. Enhance budget tracking and strengthen internal controls
Effective budget tracking is key to avoiding overspending and staying within financial limits. Implementing a system for monitoring operational spending against the budget in real-time can help schools catch issues early, allowing for quick adjustments. Consider using software that integrates with your financial management system to provide detailed reporting on expenditures, commitments, and available funds. Regular budget reviews, monthly or quarterly, can also help keep spending on track and ensure that any deviations are promptly addressed.
Internal controls are the policies and procedures put in place to manage spending, ensure compliance, and prevent waste or fraud. Establish clear guidelines for purchasing, expenses, and approval processes to ensure consistency. For example, set thresholds for when competitive bids are required or establish a multi-step approval process for high-value purchases. Regularly review and update these policies to adapt to changing financial conditions or regulatory requirements.
5. Assess technology costs—and use technology to automate
Investing in technology is necessary, but it can also be expensive. Schools should evaluate the total cost of ownership (TCO) for technology assets, considering factors like maintenance, repair, and lifecycle costs. When equipment becomes outdated or inefficient, upgrading or replacing it may be more cost-effective than continual repairs. Or, when repairs offer a better return, schools should choose that route. Performing cost-benefit analyses helps ensure that technology investments support both educational goals and financial sustainability.
As you examine your technology, be sure you are leveraging digital tools and artificial intelligence (AI) to automate routine tasks, such as invoice processing, purchasing, expense tracking, and budget reporting. Automation not only reduces administrative burdens but also improves accuracy and speeds up workflows, allowing staff to focus more on strategic tasks and less on paperwork. Digital tools can provide valuable insights into spending patterns and highlight areas for improvement. For example, AI-driven analytics can forecast future expenses based on historical data, helping schools make informed decisions about budget allocation.
Charting your course for 2025
Focusing on financial stewardship now will position your school for success in the year ahead. By saving strategically and optimizing resources, you can continue to enhance the educational experience for your students.
About the author
With over twenty years of expertise in spend management, Stanton Jandrell, CEO of Fraxion, is dedicated to helping organizations manage and reduce operational spending.
Stanton’s innovative leadership, combined with Fraxion’s purchasing, expense, and accounts payable automation software, is empowering charter, private, public, and independent school leaders to streamline administrative tasks for faculty and staff while reducing operational costs by ~10% on discretionary spending. His proactive approach to spend management emphasizes efficiency, enabling schools to optimize financial processes and focus more on impactful outcomes.
Learn more at Fraxion for Education.