Download the Education Finance Guide to Understanding ESSA today. Get the Ed Finance Guide to ESSA! »

Centralized vs. Decentralized Budgeting: Methods to Advance Resource Equity

Learn the differences between centralized and decentralized budgeting and their effects on resource equity at the school level.

Ask any district administrator, CFO, or Superintendent to name the top challenges impacting their district, there's a good chance “improving resource equity” is top of mind. Seeing as how there are various ways to address equity (using academic achievements as a measure, graduation rates, suspension rates, or teaching staff), have you considered how your budgeting method may be affecting your district's ability to improve and advance resource equity? Let’s delve into the perks and pitfalls of two common budgeting methods- centralized and decentralized budgeting.

Centralized budgeting in school districts leaves the majority, if not all, of the budgetary decisions to an individual or small group of administrators in a district. For many, this method proves effective as it helps the district control costs, efficiency, and overall operations. Centralized districts create and implement specific processes that often detail what can be bought, how it needs to be requested, and how it gets billed to better manage spending and budget tracking.

However, for many school districts with increasingly diverse populations, a centralized budgeting process may result in a ‘one-size-fits-all’ approach to spending that fails to address the unique needs and challenges across schools and communities. For these districts, a decentralized budgeting model can improve resource equity and empower principals to make decisions about the resources that best fit the needs of their students and school community.

Decentralized budgeting empowers principals and other department leaders to make decisions about how to best allocate resources to meet school and district goals. Contrary to the centralized method where decision-making is in the hands of a few, decentralized budgeting spreads the decision-making to managers at various levels within a school district. Empowering budget owners in this manner can motivate and engage staff to make informed, data-driven decisions to best support the district’s overall goals and improve student achievement.

When budget owners are allowed to work with central office to develop the budget and execute it, owners develop a deeper understanding and respect for the trade-offs and constraints they must adhere to and typically make better decisions to get the biggest bang for their buck.

Giving budget owners at the school-level the autonomy to allocate funding in the manner the school deems necessary, allows schools to implement high-quality teaching and learning initiatives, and develop school improvement plans that can exponentially improve student achievement. Empowered principals facilitate change and often establish teacher-led decision making teams, which can also incentivize school staff to feel increased pride and ownership in their individual roles.

Need help motivating your budget owners to own their budgets? We’ve got proven tips and tricks that you can implement today.

Through decentralized budgeting, budget owners can quickly modify and adjust programs and initiatives that aren’t yielding the expected results and shift monies into programs that work. One study revealed that districts that implemented decentralized budgeting found that “empowered principals radically alter[ed] the staffing of their schools…hiring more classroom teachers.” Research has also shown that reducing student class sizes can have a direct effect on student performance and overall staff morale.

See decentralized budgeting in action as you follow along in a day of the life of one principal given autonomy over her school’s budget.

Decentralized budgeting is a progressive idea that will take real work and commitment from all involved to implement. But the effort may be worth it if your district’s current methods aren’t getting the results you’d like to see.

Need more information on the perks and pitfalls of decentralized budgeting? Register for our webinar on the “Democratization of Financial Data.”