Dr. Richard Herman, Vice President, Wheat Ridge Ministries

One of the most important roles of a Lutheran school board is the governance of the school’s finances. Congregation members and other stakeholders expect the board to exercise oversight of financial matters in order to assure good stewardship of resources.

Effective school boards avoid two tempting extremes. They do not abdicate responsibility for financial matters. Nor do they try to be involved in “micromanaging” day-to-day financial decisions. Rather, they understand that wise boards know when to take a more “hands off” approach and when to be “hands on.”

Here are some indicators that your school board is keeping a healthy balance regarding its role in managing school finances:

Insisting on regular audits – Many congregations and schools resist audits in order to avoid the time and expense required. Doing so is an invitation to disaster. Regular audits help protect paid and volunteer staff members and help assure stakeholders. Audit processes can also provide helpful recommendations regarding financial procedures and policies.

Insisting on qualified staff – Lutheran school administrators and office staff members handle large amounts of money on a regular basis. To do so safely and effectively requires that they have appropriate knowledge and training. It also means having appropriate numbers of people to provide the checks and balances necessary to ensure proper management.

Equipping board members for financial literacy – Effective boards usually include at least a couple of people who have financial expertise. However, they don’t rely solely on their observations and insights. They know that all board members need to be able to read and interpret financial reports and other financial data. Time is invested in board training to assure that all members of the board are equipped to make informed financial decisions.

Governing through written policy – The best way for a board to express its values and perspectives related to school finance is through written policy statements. Instead of writing policy in reaction to specific issues or problems, effective boards are proactive. They focus first on developing broad, comprehensive policies. They add more specific policies to the degree necessary to ensure that their intentions are clearly understood.

To help maintain a healthy balance, effective boards address three major concerns in their financial policies:

• Desired outcomes – What are the preferred future conditions that will exist if school finances are managed effectively?
• Limitations – What are the boundaries within which the school principal and staff must operate as they pursue the desired financial outcomes?
• Monitoring – What information is needed in order to be assured that outcomes are being pursued and that administrative activity is being carried out within the boundaries established?

When these indicators are present, it is likely that a school board is providing appropriate supervision of school finances while avoiding micromanagement. As a result, the school principal has freedom to make creative decisions within clearly described limitations. The board is able to focus more of its time on strategic thinking. School parents and other supporters of the school ministry are confident that resources are being managed appropriately.

The value of a school board is often overlooked. Often, a board is not appreciated until a time of crisis. Yet, Lutheran school boards across the country continue to be filled with many gifted individuals who are committed to being good stewards of their school’s resources. Thank God for these people! Keep them in your prayers as they serve to His glory and for the sake of the children and families whose lives are touched daily through school ministry!

Richard Herman serves as Vice President of Wheat Ridge Ministries and is the author of ON BOARD, a quarterly publication for Lutheran School boards which is distributed to ELEA members free of charge.

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