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Parent Teacher Organization Budget Process

  • 5 min read
PTA/PTO Budget

Crafting an annual Parent Teacher Organization budget is one of the most important financial aspects of a PTA/PTO, but often gets overlooked.

Budget planning is an essential task that is frequently neglected. So why is it so important? Well, mostly because it is a process that prepares your parent teacher organization with the ability to answer critical questions about what the next school year finances would look like.

  • What are you projecting revenues to be next year?
  • Are you expecting fundraising margins to improve next year?
  • Do you plan to have more PTO events/activities next year?
  • Will expenses increase next year?

These questions (and many others) are typical of any Parent Teacher Organization. Every PTA/PTO, regardless of size, should have the answers to these questions to be able to plan the annual operating budget accordingly.

Having a treasurer as part of your executive team can be an asset in this process.

A Treasurer will have access to and be up-to-date on the most recent financial data pertaining to the organization. These resources can help the organization craft its budget, as well as short and long-term financial goals. Strategic budgeting is a skill that any good treasurer will have in their arsenal. It’s just a matter of working as a team to bring all the relevant information together to plan for the future.

If you are overwhelmed by the budgeting planning, don’t have a treasurer, or don’t know where to begin below are some tips to help you get started:

1. Consult All Committees

The annual budgeting process should not be completed behind closed doors by one member of the PTO .
Instead, all the committees within the organization should be part of the conversation and provide feedback, insights, and expectations for the following fiscal year.

Who should contribute to the conversation? Be sure to loop in:

  • The various fundraising committees : they can assist with realistic revenue assessments
  • The various event organizing committees: they can advise on costs and purchases required for various PTA/PTO events.
  • The teachers & principal: they can discuss expected expenses that comes out of PTA/PTO funds.
  • Any other PTO committees who can add value to the conversation

It is encouraged to incorporate feedback from each committee as the results are much more likely to be accurate. Therefore, project completions are possible for the upcoming fiscal year. Too often, committees that do complete the annual budget planning process estimate an overall percentage increase over the prior year’s actual income – this is something that should be avoided.

2. Estimate Revenues

Expected revenues have a significant influence on costs and it can be very challenging to make projections accurately. Here are some ways to come up with the best estimate:

  • Consider the recent membership growth rate experienced by the organization.
  • Review events which will bring in funds through ticket sales.
  • Review financial information from the previous year’s income statement.
  • Review direct donations from members and businesses.
  • Communicate with your current committee chairpersons to better understand their expected needs of their individual committees.
  • Discuss the expected sales from committees which will do sales of various items.

3. Determine Expenses

Once the expected revenue figures are estimated, the focus can shift towards expenses. Here are some considerations:

  • Some costs relate directly to fundraising revenue.
  • Other expenses are fixed costs for holding events such as rent and certain other services purchased. These expenses may be easier to estimate; however, consideration should be made to review the cots whether they would remain the same or you would need to look around for new vendors.

4. Calculate Cash Flow

While putting together a projected income statement can feel great, it is just as important to calculate the expected cash flow of the organizations. Some expenses start early in the year like back to school events, ice cream social etc.

Learn more: Check out the Finance Manager Video

5. Be Conservative

While it may seem advantageous to show all the stakeholders, parents, teachers & volunteers, that the Parent Teacher Organization budget will meet all the revenue targets, it’s a possibility that results may disappoint. When in doubt, it is a good idea to be more conservative and leave some “slack” in the projections in case fundraising goals are not reached or are delayed.

6. Start Early

Organizations should begin the annual budgeting process before the new school year to allow sufficient time to craft a detailed estimate before the year ends. However, the annual business budget should be monitored and updated on an ongoing basis. For this reason, it’s never too late to get started.

7. Monitor, Evaluate & Reforecast

Once you complete the budgeting process, the biggest mistake you could make is to file it away only to pull it out again at the end of the following year.

A budget should be monitored monthly. Parent Teacher Organization Budget should be edited if circumstances change, like bringing in new fundraising revenue or cancelling events.

Furthermore, budgets should always be compared to actual results to understand why there are differences. Doing this will help monitor spending money throughout the year and help management make important decisions in relation to the organization. Put these tips into action and learn how RunPTO can help with our in-depth guide.

RunPTO Finance module by CloudInfoSystems will help your organization through the annual budgeting process. This would include analyzing the budgeted versus actual results quarterly and helping forecast accordingly.