It’s often said that a school district’s priorities can be shown by where they spend their money. This is becoming painfully true as we look at some districts which are able to pivot immediately to remote learning for the COVID-19 crisis, versus others who are tens of thousands of computers short and haven’t invested in any teacher training on digital learning.

As a new CTO, or in the face of a crisis like COVID-19, there are three phases of budgeting: triage, stabilization, and maintenance. The triage phase requires you to look at what are the most immediate needs to keep day-to-day operations running and moving forward. The stabilization phase occurs after triage and as you assess your “ideal state” though your visioning and needs-assessment process. Stabilization is the new purchases and procedures that need to occur to get you from your current state to your “ideal” state. Once you’re in your ideal state, the Maintenance phase is all about keeping your technology program operational and moving forward, while also growing in the directions that it needs to go based on your continuous improvement process.

Total Cost of Ownership

The most important thing to remember when creating a budget is to calculate the total cost of ownership. Even things that are free may have a very high TCO, making them “free like a puppy”. The total cost of ownership is defined as all of your direct costs over the lifecycle of an asset (the item itself, consumables, training, implementation and conversion costs, ongoing subscription costs) plus all of your indirect costs (technical support time, maintenance support for installation; costs such as system administration, security, monitoring, etc.). For example, an LCD projector’s total cost is the cost of the projector itself, plus the cost of the mounting brackets, plus the cost of your maintenance department’s time to install and mount it and run electricity, plus the cost of bulbs over the expected lifespan of a projector, plus the time for training and support, plus any cables and accessories needed. The TCO is obviously, therefore, much higher than the actual cost of the equipment. In the case of the projector, you may find that an LED TV has a lower overall TCO than the projector because of the consumable costs.

Fixed/Recurring Costs vs. One-Time Costs

When making a purchase, there are oftentimes two different ways to purchase: a larger one-time cost or a smaller recurring costs (usually in the form of a subscription model). Best practices on this are purely personal bias. I prefer subscriptions over purchases in most cases. This is because it creates a predictable monthly/yearly cost that’s easy to forecast without having to ask for large sums of money every few years to make new purchases. Also, in my experience, larger costs tend to get deferred or cut whereas recurring purchases are less likely to be scrutinized. Also, a subscription will typically have fewer unexpected costs such as upgrades.

Recurring costs also have the tendency to be managed services, instead of requiring the CTO to install a server and infrastructure on-premises. This often has a lower TCO, as the burden of purchasing servers and maintaining infrastructure is shifted from the technology department to the vendor, and the vendor is responsible for ensuring quality of service delivery. There’s also less technical burden on the technology department.

The one area where this gets controversial is with device purchases. Some districts choose to lease devices instead of purchase them. This does create a stable recurring payment, provides devices for all students at one time, and it does ensure that a district’s refresh cycle is consistent, but it also does mean that there’s a fairly high recurring cost for the district, and that the district will never own devices. Also, many districts that rely on grant funding to start their device initiatives are prevented from leases by the terms of the grant. However, some companies do offer leases with $1 buyouts where they will buy back the devices at the end of the lease as a down payment for the next year’s lease. It can be advantageous in those cases to go with a lease. In the end, each scenario is different and the CTO needs to examine the terms and conditions of a lease and a purchase to determine which is more advantageous based on the financial situation and particulars within the school.

Insurance

As a part of determining your fixed and recurring costs are the costs of maintenance and repairs. Some schools keep a line item for repairs in their budget that they can spend at the last minute. Some schools will charge students for device insurance for laptops, which either is used to purchase an insurance policy or goes into a pool of money for repair costs. Some districts purchase accidental damage protection for laptops and devices. The best method depends on the TCO for your device purchase. Maintenance plans are often advised for large equipment like switches and wi-fi access points. These plans increase the initial cost of the switch, but since switches can run in the tens of thousands of dollars, it is advisable to have maintenance plans instead of an unexpected large expense.

Budgeting

Once you’ve identified all of the components of the budget, it’s time to actually make your yearly budget. Typically this process will begin in the spring of each year once the state releases yearly planning allotments (or for private schools, once cash flow for the next year becomes clear). The first phase in your budget is to identify all of the recurring expenses you have, as these costs are non-negotiable. These include:

• Personnel and staffing for the technology department
• Internet connectivity (for public schools, paid for by the state)
• Telephone services
• Maintenance agreements
• Software subscriptions
• Device leases

The second phase is to identify the costs to keep the equipment you have running. This includes the following:

• Ink, toner, and paper for copy machines
• Projector bulbs
• Required software upgrades
• Replacement parts for computers (and a buffer for unexpected replacements)
• Any data processing or service charges that will be needed
• Any professional learning that will be needed for existing software

The third phase is to identify expansion, as this, while important, is also the first thing to be cut in the event of a financial exigency:

• Computer replacement cycles
• New or expanded computer rollouts
• Other hardware purchases
• Furniture/technology related spaces
• New software, curricular initiatives, and technology programs
• New staff

The fourth phase is your “wish list”, in the event you have extra funds or end-of-year funds or a grant.

Once you have identified the items, you and your finance officer will work together to figure out which budget can handle each item. Some new purchases may be shifted from capital outlay to current expense funding based on other needs, or some costs may be split (for example, a technician who supports CTE labs may have a portion of their salary charged to CTE). It may be determined that you’ll pursue a grant to launch an initiative or hold on another initiative for the following fiscal year. This all gets documented in a spreadsheet for your reference and then loaded in your budget system. Once July 1 rolls around, you’re free to start spending!