What are the best practices for using variance analysis to save costs in education?

1 Define your objectives and standards

Before you can conduct a variance analysis, you need to have a clear and realistic budget that reflects your educational objectives and standards. You should align your budget with your mission, vision, and values, and consider the needs and expectations of your stakeholders, such as students, parents, teachers, administrators, and funders. You should also establish measurable and attainable standards for your inputs, outputs, and outcomes, such as student enrollment, attendance, retention, graduation, achievement, satisfaction, and employability. These standards will serve as the basis for comparing your actual results with your budgeted targets.

2 Classify and analyze your variances

Once you have collected and verified your actual data, you can compare it with your budgeted data, and calculate the variances for each line item or category. You should classify your variances as favorable or unfavorable, depending on whether they increase or decrease your net income or surplus. You should also analyze your variances by their sources and types, such as price, quantity, volume, efficiency, mix, or yield. This will help you identify the factors that contribute to your variances, such as changes in prices, costs, demand, supply, quality, productivity, or performance.

3 Report and communicate your findings

After you have classified and analyzed your variances, you should prepare a comprehensive and concise report that summarizes your findings and recommendations. You should highlight the significant and material variances that require further investigation or action, and explain their causes and consequences. You should also provide suggestions for corrective or preventive measures, such as adjusting your budget, revising your standards, improving your processes, or enhancing your resources. You should communicate your report to the relevant and responsible parties, such as your board, management, staff, or funders, and solicit their feedback and support.

4 Monitor and evaluate your progress

Finally, you should monitor and evaluate your progress and performance on a regular basis, and update your variance analysis accordingly. You should track the changes in your actual and budgeted data, and measure the impact of your actions and interventions. You should also review and revise your objectives and standards, and ensure that they are still relevant and realistic. You should use your variance analysis as a learning and improvement opportunity, and not as a blame or praise game. You should celebrate your successes, acknowledge your challenges, and seek continuous improvement.

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?