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What is Capital Budgeting? Intellis Guide for K-12 School Facility Managers and Educational Administrators

This blog discusses the basics of Capital Planning, Budgeting, and Analysis for K12 School Facility Managers and Educational Administrators. We will explore the importance of careful planning and budgeting for educational institutions and how it can lead to better decision-making and improved student outcomes. So, if you're interested in learning more about these critical topics, read on!

What is Capital Budgeting? Intellis Guide for K-12 School Facility Managers and Educational Administrators

Preparing and presenting a funding proposal is not easy. That's why we put together this guide to break down the basics so you can dazzle the school board and other key stakeholders with your financial expertise and secure approval for your school's most important capital improvement projects.

What is Capital Budgeting?

Capital budgeting is the term for the planning process used by organizations for evaluating, appraising, and determining which project expenditures and investments are worth pursuing. For K12 school facility managers, this includes investment in new building construction, critical health and safety improvements, physical asset management, and other long-term ventures.

High-dollar expenditures include purchasing fixed assets like land, buildings, new equipment, rebuilding or replacing existing equipment, and research and development.

The large amounts spent on these projects are known as capital expenditures. At its core, Capital Budgeting is a tool for maximizing an organization's future. Because most K12 schools and districts can only manage a limited number of large projects at any given time, Capital Budgeting is an essential tool for optimizing funds.

Typically, a Capital Budgeting plan takes into account:

  • Calculation of each project's potential accounting profit by period.
  • Cash flow by period.
  • The present value of cash flows after time value for money.
  • The number of years it takes for a project's cash flow to pay back the initial cash investment.
  • An assessment of risk and other factors.

Learn how FOUNDATION software makes Capital Budgeting easier for K-12 School Districts.

What is the Goal of Capital Budget Analysis?

In general, the capital budget analysis aims to put numbers into perspective. It provides context to the costs of physical assets against your K12 School or District's overall budgetary limitations and requirements.

This analysis will help you decide which projects to fund and which to defer. It is based on project rankings that are measured against industry benchmarks and each other. If projects pass the benchmark, then they are worth pursuing.

Intelligent software, like FOUNDATION, makes Capital Budget decision-making much easier. For example, our platform includes a system that associates costs with building deficiencies, ranks prioritization of construction projects, and performs in-depth analysis reporting.

These reports are essential in helping K12 facility managers justify to the School District Superintendent and other key financial executives that the projects they want approval for are critical for the long-term health of the K12 School and District.

Watch CEO Steven Warshaw explains how Intellis software transformed capital planning for the nation's largest school district. 

Case Study: The New York Department of Education and the School Construction Authority

For example, we have worked with the New York Department of Education (DoE) and the School Construction Authority (SCA) since 1998 to implement a system for comprehensive costing of the annual school construction budget.

Our solution, FOUNDATION, allows the DoE to generate comprehensive reports based on specific School Construction Authority requirements. Our costing calculation software also enables report generation based on inspection deficiencies.

Listen to Intellis CEO Steven Warshaw discuss the surprising benefits of implementing a continuous inspection cycle. 

Their Five-Year Capital Plan, which regularly encompasses $14 to $16 billion in project planning, requires assessments across the City's 1,700 public schools. After receiving inspections, the agency determines which problems to fix, how much each project will cost, and how long it will take to implement. Before working with Intellis, this process was arduous, inefficient, and often inaccurate.

Deficiencies found through the inspection process (using facility condition assessment software, FOUNDATION.Conditions, also developed by Intellis) are costed and prioritized using the Deficiency Costing Prioritization system. This system allows the DoE and SCA to prioritize the deficiencies of 1,700 public schools using built-in algorithms and reporting.

After implementing our FOUNDATION Solution, the agency produced a more accurate and transparent 5-Year Capital Plan Amendment, which included an increase of over $1 billion for enhanced educational services and better facilities for the City's more than one million students and the teachers and staff who serve them.

Read the complete case study to learn how Intellis software improved the NYC Department of Education's capital budgeting process.

With the help of FOUNDATION, the DoE and SCA have seen an average increase of $1 billion per year in funding. We are proud to continue working with the DoE and SCA to produce these amendments that optimize and enhance the capital planning process. So that K12 facility managers can provide enhanced educational services and better facilities. FOUNDATION helps the DoE and SCA to ensure secure, safe, and modern learning environments for students and teachers!

Our experts are here to help! Schedule a quick demo to learn how to simplify the capital planning process! 

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Looking for a comprehensive guide to Capital Planning, Budgeting, and Analysis for K-12 School Facility Managers and Educational Administrators? Look no further than this informative blog from Intellis! Our guide breaks down the basics of capital budgeting and analysis, providing the tools to make informed decisions about your school's most important capital improvement projects. From evaluating and appraising potential investments to assessing risk and other factors, our guide covers everything you need to know about maximizing the future of your educational institution. Plus, with the help of intelligent software like FOUNDATION, making capital budgeting decisions has never been easier. So, if you're ready to take your school to the next level, read on!