Inputs to Strategic Spending
School leaders often ask us about benchmarking for key spending categories – how does our spending on (curriculum) / (food service) / (security services) / etc. compare to other schools? Our breadth of school partnerships allows us to see how similar schools are allocating their dollars, and how much they are spending overall.
We will share our research on benchmarked student expenses in a series of recorded webinars later this week. However, it is important to remember that financial benchmarking is just one consideration for a sound strategic spending decision. In our experience, school leaders should consider six key inputs when making financial decisions for their schools.
School Mission and Vision. How much does this spending category influence the student experience? How does it align with your values as a school? For example, a school whose explicit mission relates to teaching healthy eating may choose to invest more in its food service than a school that does not, and who may make a vended lunch decision based solely on cost and convenience in order to fund investments elsewhere.
Relevant Considerations Aside from Price. What are the other relevant considerations for a vendor decision? Continuing with the food service example, a school would likely prefer a vendor whose food tastes good, who delivers on time, complies with the National School Lunch Program, and provides reasonable portion sizes for its students.
Available Information About Non-Price Considerations. How do you collect and evaluate information about considerations other than price? What is your organization’s process for making this spending decision? To understand a food service vendor’s quality of service, taste and portion sizes, you’d likely want to talk to other schools or organizations whom they’ve served, visit a school where they serve at meal time, or conduct a taste test.
Cost Drivers. Do you know the drivers of prices for this expense category? Total annual spending on food service is a product of the number of meals served, the cost of each meal, and any waste or overage in the meal service process (e.g. over-ordering, or under-ordering and needing emergency food like pizza).
Predictability of Needs. Which parts of this spending are predictable? Which aspects are unpredictable? In food service, the price per meal is generally stated in the contract, and thus, fully predictable. However, knowing how many students are going to eat each meal every day can be challenging to estimate, especially if a school is expanding or student demographics are shifting.
Financial Benchmarking Data. What are other schools spending on this category? *This is what we will provide for DC in our upcoming webinars!* For example, we can share the average prices for each meal for each vendor in DC! This can help schools understand what is generally a reasonable amount to spend.
As your school considers key purchases and vendor decisions, make sure to evaluate all these factors to ensure that you are making a sound decision.
[This post contributed by Shelley Hughes, Finance Team Director.