FINANCIAL AGILITY
Navigating budgets in uncertain times
David Feliciano knows the drill. As annual budgets roll around, his time is split between spreadsheets and projections—both of which inevitably shift again and again before the year is out. The exercise is a stark reminder that budgeting in today’s K–12 environment is less about locking in numbers and more about preparing for what may change next.
“It’s an educated guess,” says Feliciano, Superintendent for La Mesa-Spring Valley Schools in San Diego County. “A budget represents a point in time, meaning it is an educated guess, based on what was known at the time.”
The problem is that what’s known rarely stays fixed for long. Part of Feliciano’s daily to-do list is managing a financial reality shaped by forces largely outside district control—each of which makes things more interesting in a state that historically ranks near the bottom nationally in per-pupil funding.
“Our greatest fiscal challenge is the reality that state and federal funding are out of step with rising operational costs, coupled with the cost of delivering on new and expanding state initiatives and underfunded mandates,” Feliciano says. “Unprecedented growth in the area of special education, K–12’s largest underfunded program, has created a budget situation that is simply unsustainable in the long-term.”
The imbalance has forced districts to rely more heavily on one-time state and federal funding just to close annual gaps—a practice that complicates forecasting and strains relationships across the organization. “We are increasingly dependent on one-time funding allocations to make ends meet every year,” Feliciano says. “This approach to state-level funding creates significant challenges for accurate forecasting, which in turn undermines trust with our labor partners and strains the collective bargaining process.”
The growing reliance on one-time dollars has reshaped how districts think about budgeting altogether. While finance leaders have always understood that budgets evolve, the margin for error has narrowed. “A good CBO will be quick to point out that a budget is a living document,” Feliciano says. “But the state’s use of one-time dollars to fund education means our budget projections miss the mark year after year.”
The ripple effects are immediate. Staffing decisions, program investments and salary negotiations often depend on funding that may or may not materialize. This forces districts to plan for multiple outcomes while waiting on late-arriving answers. Forecasting enrollment adds yet another layer of complexity. While La Mesa-Spring Valley uses cohort-survival methodology to predict enrollment, California’s funding is tied to average daily attendance rather than headcount.
“Our greatest fiscal challenge is the reality that state and federal funding are out of step with rising operational costs, coupled with the cost of delivering on new and expanding state initiatives and underfunded mandates.”
— David Feliciano, Superintendent, La Mesa-Spring Valley Schools
“Like everyone else, we have seen big drops in our attendance rates since the pandemic,” Feliciano says. “Given that our student population has remained relatively level, forecasting enrollment is relatively straightforward. Forecasting attendance rates has become increasingly challenging.”
To navigate that uncertainty, La Mesa-Spring Valley shares funding scenarios openly with stakeholders and relies on statewide organizations for fiscal guidance. The goal is not perfect prediction, but informed preparedness. When budgets tighten, financial agility becomes less theoretical and more human. District leaders must decide what to protect, what to scale back and what to let go.
“We’ve identified our base program, which is the absolute minimum needed to operate a school,” Feliciano says. “Next is what we should do if we’re able. And next are the ‘wouldn’t it be great if’ items.”
The intention is to keep cuts as far from classrooms as possible. But the structure of school finance limits those options. In California, staffing costs typically account for 85% to 90% of all expenditures. “When a budget crisis occurs, districts have few options other than to cut people,” Feliciano says. “The impact on morale is unavoidable.”
What districts can control is how those decisions are communicated. For Feliciano, transparency is not just a best practice—it’s foundational. “The worst thing that could happen is for people to be blindsided by cuts. Surprises breed resentment and a feeling of betrayal, which is why fiscal transparency and clarity are critically important.”
In addition, transparency plays a central role in maintaining trust with boards, staff and communities, especially when decisions are difficult. Feliciano says his district operates with public dollars, which are rightfully under public scrutiny. “More than that, our work revolves around shaping the lives of children. The stakes couldn’t be higher.”
Feliciano emphasizes plain-language communication, shared facts and consistent context. Whether working with labor partners or board members, the goal is helping people see the same fiscal reality district leaders see. “When educators believe the fiscal landscape is real, they are willing to roll up their sleeves alongside district leadership. This can’t happen without trust.”
A National Challenge, A Shared Shift
Across the country, K–12 districts are confronting rising fixed costs, enrollment-driven revenue shifts and increasingly unpredictable funding streams. Jessi L. Donner sees this shift clearly. Each is shaped by day-to-day decisions that no longer allow for static assumptions or autopilot budgeting.
“The greatest sources of uncertainty right now are rising fixed costs, particularly health insurance, utilities, and transportation, paired with enrollment-driven revenue fluctuations and unpredictable state and federal funding streams,” says Donner, Assistant Superintendent of Administrative Services for Tonawanda City Schools in New York. “A few years ago, our budgeting process could rely more heavily on historical trends. Today, that approach is no longer sufficient.”
“No budget discussion takes place without knowing how an amount ties to students and teaching. Programs that directly support learning receive the highest level of protection.”
— Jessi L. Donner, Assistant Superintendent/Administrative Services, Tonawanda City Schools
In response, Tonawanda has adopted a more conservative, flexible budgeting philosophy. One-time funds are treated cautiously. Expenditures are monitored closely throughout the year. Five-year averages, both backward and forward, inform decision-making. Scenario-based budgeting has become essential. “By modeling best-case, expected and worst-case scenarios, we are better prepared to make informed decisions quickly if conditions shift,” Donner says.
The work is supported by regular collaboration across departments. For example, Donner meets monthly with each department to forecast trends, revisit assumptions and stay ahead of potential pressure points. The process has become a tool that allows the district to surface issues early rather than react once options narrow. “The process where I regularly revisit assumptions and update projections has been a valuable tool. No surprises.”
When budgets tighten, Donner grounds every conversation in instruction and student needs. Programs that directly support learning receive the highest level of protection. From there, decisions are weighed through the lens of efficiency, sustainability and long-term impact. In some cases, that means rethinking how services are delivered rather than eliminating them outright or phasing changes over time to reduce disruption.
“No budget discussion takes place without knowing how an amount ties to students and teaching,” Donner says.
Transparency remains central, especially when trade-offs are unavoidable. This year, Donner began financial conversations earlier than usual, starting in September to prepare for January budget presentations. “Trust is built through clear, consistent and honest communication. Sharing assumptions, explaining trade-offs and being up front about risks helps keep decisions grounded in long-term stability and student success.”
Donner believes agility depends less on reacting quickly and more on building disciplined financial habits. Strong multi-year planning, healthy reserves and a clear distinction between one-time and recurring funds enables districts to adjust without undermining core priorities. “Ultimately, financial agility isn’t about reacting faster. It’s about planning smarter and building systems that support thoughtful, sustainable decision-making over time.”
In a landscape defined by uncertainty, the most resilient districts are not chasing perfect forecasts. They are planning thoughtfully, communicating honestly and ensuring every financial decision remains anchored to students, staff and trust.
