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Schools Can Strech Their Budgets With Asset Management
It’s an issue facing many school districts across the country: How to make up for budget shortfalls that could cut into the educational opportunities of our students? Funding for education is often one of the first victims when there is a budget crisis, and even a return to normalcy after the recent recession hasn’t meant much: Most U.S. states are funding K-12 schools
less than they were before the recession, according to the Center on Budget and Policy Priorities.
In response, school business officials must find creative ways to stretch what dollars they do have to cover everything from professional development to creating a comprehensive curriculum. Unfortunately, it’s not uncommon for “free” or inexpensive resources utilized by teachers and schools end up costing more than bargained for in the long run.
As noted by
Education Week, the Association of School Business Officials International recently met to discuss strategic finance planning and how supposedly free digital resources can spiral out of control. One district involved in the discussions has budgeted over $13 million in 2015-16 to both ancillary services and technology integration. In order to not exceed their limits, schools in this district will likely look to avoid outsized printing costs that result from downloading and distributing digital curriculum materials.
Indeed, knowing exactly how much a resource will cost you, both up front and over the course of its “useful life," is extremely important when deciding to invest. In this regard, schools operate much like small businesses, which must purchase long-term pieces of property in order to generate inventory (and thus, income). Schools don’t produce monetary income, of course, but something equally valuable, if not more so. Overseeing and tracking these properties is what’s known as
asset management, an oft-overlooked aspect of running a business (or school) that can mean the difference between success and failure.
Assets, in this case referring to fixed assets, include things like buildings, computer equipment, software and vehicles. They are (usually) tangible pieces of property that are bought with the intention of keeping them for at least a year, not quickly selling them in order to turn a profit, but instead using them to produce other things that can be sold. For schools, computers and printers are good examples of fixed assets.
While many schools recognize the importance of asset management, the perks of automated management software (as opposed to using a manual system to keeping track of all purchases) are not obvious to all. Even small business owners
rarely value investing in internal tools like asset management systems over more obvious (and often more costly and less effective) methods of revenue growth.
By integrating a barcode-based management system, yes barcodes, (which have been used in retail since the 1970s) are an integral part of some of the most efficient, cloud-based and mobile-friendly tracking systems utilized today, schools can realize numerous benefits such as:
Being Able to Locate Expensive Assets
One of the most basic perks of a centralized computer database for your assets is that it helps keep track of where everything is. Particularly in a school setting, where the budget may not allow for every teacher, administrator or official to have consistent their own assets (i.e., everyone must share a limited number of computers or vehicles), it’s important to know who checked out an asset last, when they checked it back in, and at which location both events took place. This way, when it’s time to check out the asset again, there will be no ambiguity about its location (which is often a consequence of relying on a manual system).
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Always Knowing the Status of Investments with Asset Management
Assets, like most purchases, tend to break down over time. This is known as depreciation, and a quality asset management system can schedule and remind schools of regular reviews or needed maintenance. If a computer breaks and the last person to use it forgets to write down or alert others of this development, the next teacher (who may have needed that computer to present a project or otherwise conduct class) will be out of luck. Spreadsheets and manual calculations are notoriously error-prone; this all-too-common issue is avoided by instituting regular, automated upkeep.
Staying on Top of Necessary Accounting and Tax Issues
Depreciation doesn’t just come in the form of broken machinery: It also refers to the process of the asset losing its value on the books. An asset remains on the books and in tax returns for years, until the its value has been used fully and it can be disposed (and hopefully replaced). The cost of the asset must be allocated over those years, and many different
depreciation methods can be used to decide how this is done (including straight line, declining balance and sum of the years digits). While schools may not have the same tax burdens as regular small businesses, maintaining regulatory compliance keeps them eligible for federal and state grants, among other needed sources of money.
Removing Ghost Assets from the Equation
Teachers can ill afford relying on the use of assets that don’t actually exist. Ghost assets are fixed assets that can’t be accounted for because they are physically missing (despite appearing on the general ledger) or they have been rendered unusable. They often appear as the result of unrecorded trade-ins or when parts of working machines are used to fix broken ones. Issues with ghost assets are all but eliminated when using automated tracking software.
Making Audits Less Time-Consuming
It’s common for schools, much like businesses, to undergo a
physical inventory of fixed assets at least once a year. During this audit, many different types of changes must be recorded, including (but not limited to): additions, location changes within departments, transfers of responsibility, equipment placed in surplus and equipment listed as lost or stolen. This annual audit (and any follow-up changes throughout the year) is much more time- and cost-efficient with the help of digital records that can be updated on the fly.
Closing budget gaps can be a heartrending process, as important programs are cut and departments are shuttered. It can also be difficult for teachers and officials to see all the potential financial implications of using “free” resources. Quality asset management software is
known to save money: For those who don’t use it already, perhaps consider starting there before stretching teachers and programs too thin to be effective.
How would utilizing a proper asset management system help your school save money by keeping track of expensive equipment?
