Pros & Cons of Zero-Based Budgeting

Unlike traditional budgeting strategies, zero-based budgeting requires that each individual budget in the district gets built from scratch, forcing decision makers and budget owners to justify their existing and new spending according to district criteria.

Zero-Based Budgeting

In many districts, the budget process begins with a roll-forward of the current budget and is then adjusted for any known changes (employee compensation, benefit and pension rates, planned contract increases). In short, the budget of tomorrow is a product of the budget of today.

Zero-based budgeting (ZBB) allows for greater scrutiny and is often used as an opportunity to reflect on district goals, programs, and needs that require improvement or support.

With ZBB, every expense is justified and every function within an organization is analyzed for its needs and costs. This process can help districts add context and detail to their expenditures and lead to significant improvement in both spending and student achievement.

Pros

• Greatly reduces overspending because considerable thought is put into each request.
• Strengthens site-level participation and brings more stakeholders into the budget process.
• Increases financial transparency and public trust.
• Eliminates outdated allocation methods.
• Draws clearer connections between programmatic spending and its impact on student success.

Challenges

• Requires a considerable amount of staff time, research, and planning (especially for larger districts with thousands of budget items).
• Requires more financial expertise at the school level.
• May create a sense of pressure among leaders to spend less than what's actually needed for students.
• Can result in a greater number of fund-request denials, based on lack of research or "adequate" justification.
  
  

A Rotational Approach

Zero-based budgeting is a proven model that requires a profound level of financial understanding, school board buy-in, and stakeholder support. If the task of building every budget from the ground up every year is just not feasible right now, consider implementing a rotational ZBB process, where budgets are divided into three or four cohorts.

Every three or four years, cohorts can implement a full ZBB process for their designated budget sections. During the "off years," budgets will be planned in a more traditional way.

This rotational approach allows district stakeholders to reap the benefits of a detailed budget review, while significantly reducing the burden of reviewing and prioritizing every line in every budget each year.