Finance
(Reference: http://nces.ed.gov/pubs2003/tech_schools/chapter2.asp)
Installing and managing technology in schools involves allocating (and reallocating) resources. Educational decision making almost always leads to decisions about resource allocation. In the planning process, budgets can inform the allocation of resources (budgeting as a part of technology planning). Knowing what has been expended supports future planning by comparing prior inputs to expenditures and allows decisions to be made about relative priorities. What to include in expenditures for technology, and how to organize the information.
Awareness of the financial obligations associated with technology implementation and maintenance can go a long way toward ensuring two important management goals. First, budgets must be adequate to reliably support the technology system as designed. Second, a financial plan must include the necessary funding to replace technology components as they become obsolete. The lack of either of these key ingredients in the budgeting process will ultimately result in a technology system that does not function as an effective tool and can actually become a political liability to a school system. School districts would then be forced to deal with a significant decision-making issue in explaining to the community the rationale for the original technology expenditures.
This chapter provides suggestions and resources to assess expenditures for technology. Answering the key questions for this chapter amounts to estimating the annual share of a school or district's Total Cost of Ownership (TCO) for technology. TCO is a concept from the business world that is applied to the lifecycle costs of computing, usually standardized as a ratio of costs per equipment unit, such as a desktop computer (see sidebar "Understanding Total Cost of Ownership" that begins on the facing page for a discussion of its application in schools). The TCO concept can assist educational leaders to understand more clearly the costs required to successfully implement educational technology. A number of TCO support instruments and discussions can be found online: the Consortium for School Networking (CoSN) offers "Taking TCO to the Classroom" (http://www.classroomtco.org); other resources can be found at http://www.iteg.com/tco.htm.
Another important concept is return on investment (ROI). More important in administrative than in instructional applications, ROI analyses usually focus on the amounts of money saved by implementing technological advances or innovations. An example of such analyses can be found in a report to the San Diego City Schools Board recommending adoption of an electronic form (see http://www.sdcs.k12.ca.us/board/reports/2001/br.011127/e1a.pdf).
There are two aspects to the financing of technology (or any entity, for that matter): expenditures and revenues. Revenues would be fairly straightforward to discuss, but are less germane to financial analyses for technology than expenditures. For the present, this chapter restricts its consideration of technology finances to expenditures.
School financial systems are not particularly well configured to identify and present the costs associated with deploying, maintaining, and upgrading technology in schools. Categories used for budgeting in connection with technology planning overlap poorly with the major categories used in school accounting. The end result of these two different approaches is ongoing difficulty in reconciling technology expenditures with school financial reports.
Local and state requirements affect financial reporting practices, arguably more than they do any other area of data collection. The data elements available for analysis, and the way they are treated to produce reports, can vary widely within the bounds of generally accepted accounting principles (GAAP). This applies with particular force to the following aspects of cost accounting: the general allocation of functions to programs; the allocation of costs for equipment purchases and support services; the definition of indirect costs; and the definition of bases for the allocation of indirect costs. Cost assignment and depreciation schedules for equipment are particular issues.
Installing and managing technology in schools involves allocating (and reallocating) resources. Educational decision making almost always leads to decisions about resource allocation. In the planning process, budgets can inform the allocation of resources (budgeting as a part of technology planning). Knowing what has been expended supports future planning by comparing prior inputs to expenditures and allows decisions to be made about relative priorities. What to include in expenditures for technology, and how to organize the information.
Awareness of the financial obligations associated with technology implementation and maintenance can go a long way toward ensuring two important management goals. First, budgets must be adequate to reliably support the technology system as designed. Second, a financial plan must include the necessary funding to replace technology components as they become obsolete. The lack of either of these key ingredients in the budgeting process will ultimately result in a technology system that does not function as an effective tool and can actually become a political liability to a school system. School districts would then be forced to deal with a significant decision-making issue in explaining to the community the rationale for the original technology expenditures.
This chapter provides suggestions and resources to assess expenditures for technology. Answering the key questions for this chapter amounts to estimating the annual share of a school or district's Total Cost of Ownership (TCO) for technology. TCO is a concept from the business world that is applied to the lifecycle costs of computing, usually standardized as a ratio of costs per equipment unit, such as a desktop computer (see sidebar "Understanding Total Cost of Ownership" that begins on the facing page for a discussion of its application in schools). The TCO concept can assist educational leaders to understand more clearly the costs required to successfully implement educational technology. A number of TCO support instruments and discussions can be found online: the Consortium for School Networking (CoSN) offers "Taking TCO to the Classroom" (http://www.classroomtco.org); other resources can be found at http://www.iteg.com/tco.htm.
Another important concept is return on investment (ROI). More important in administrative than in instructional applications, ROI analyses usually focus on the amounts of money saved by implementing technological advances or innovations. An example of such analyses can be found in a report to the San Diego City Schools Board recommending adoption of an electronic form (see http://www.sdcs.k12.ca.us/board/reports/2001/br.011127/e1a.pdf).
There are two aspects to the financing of technology (or any entity, for that matter): expenditures and revenues. Revenues would be fairly straightforward to discuss, but are less germane to financial analyses for technology than expenditures. For the present, this chapter restricts its consideration of technology finances to expenditures.
School financial systems are not particularly well configured to identify and present the costs associated with deploying, maintaining, and upgrading technology in schools. Categories used for budgeting in connection with technology planning overlap poorly with the major categories used in school accounting. The end result of these two different approaches is ongoing difficulty in reconciling technology expenditures with school financial reports.
Local and state requirements affect financial reporting practices, arguably more than they do any other area of data collection. The data elements available for analysis, and the way they are treated to produce reports, can vary widely within the bounds of generally accepted accounting principles (GAAP). This applies with particular force to the following aspects of cost accounting: the general allocation of functions to programs; the allocation of costs for equipment purchases and support services; the definition of indirect costs; and the definition of bases for the allocation of indirect costs. Cost assignment and depreciation schedules for equipment are particular issues.
