I met Jess Gartner on an EdTech tour of Baltimore’s inner harbor in May of 2013. She mentioned that she had just founded Allovue, a finance app for school and district leaders. I expressed my enthusiasm for this wonky topic as a former superintendent and finance instructor.

Based on her resume, Gartner may appear to be an unlikely founder of the EdFinTech sector (see diagram below). After earning a Political Science degree from Penn, she taught middle school language arts and social studies for three years. Six months at ABS Capital Partners inspired her to attack a big problem that appeared to lack investment and insight.

After ABS, she spent six months at Betamore organizing the learning agenda. In turn, Gartner (middle in pic below) soaked up everything she could about running a tech startup.

Putting Your Money Where Your Mouth Is

Allovue estimates that more than half of districts are not yet accounting school-level actual expenditures, making it very difficult to compare costs across schools. How much do we spend on literacy instruction? How much do we spend at Dewey Elementary? Many districts can’t answer simple questions like these because they don’t do school-level cost-accounting. They may dump all salaries into one line item or allocate average rather than actual salaries. Most district finance and HR systems don’t talk to each other, so it’s challenging to get an accurate accounting of actual costs at the school level, especially since personnel costs make up the majority of school budgets.

A second problem is that many school district budget managers, often coming from an instructional background, could use some training in financial management. The first step in an Allovue partnership is a diagnostic survey and it almost always shows big gaps (like knowing the difference between budgeted versus actual expenditures).

A third problem is that school districts treat budgeting as an annual event rather than a process of continually aligning resources with priorities to improve their return on investment (ROI).

To attack these problems, Gartner launched Allovue. Their first product, Balance, helps K-12 administrators budget, manage and evaluate spending.

“We’ve been doing a lot of work with districts on recording school-level actual expenditures,” said Gartner, “accounting for dollars based on the location of student benefit so a fiscal equity analysis across schools will be accurate.”

The feds recognized the utility of accurately accounting for costs and baked it into the reauthorization of the Elementary and Secondary Education Act (called ESSA). The goal of the new law is actual per pupil expenditures recorded at the school level. Each state is rolling out the law on their own timeline.

“Our goal has been to move districts away from budgeting as a once-a-year activity and enable them to think of it as a continuous process of resource allocation,” said Gartner. “We promote strategic budgeting, effective management and consistent evaluation, with a focus on the equity and effectiveness of resources,” added Jess.

The first step is often helping a district build a chart of accounts that will support good decision making. This allows districts to make “account level allocations based on way you intend to spend the money,” said Gartner.

This also requires differentiating between purchasing authority and the benefit of resources (e.g., student computers may be purchased by IT but schools get the benefit).

Once a clean chart of accounts is in place, a little training drives consistent accounting across account segments, which provides the district with rich data about how and where money is being spent. With Allovue tools and training, a district can determine their strategic priorities and track the cost and results of programs by school.

Allovue isn’t a quick fix. “You can’t flip a switch and do ROI analysis,” said Gartner. First you clean up the books, then training, then improved allocation, and then you start to see results. Indianapolis Public Schools has been a customer for two years and has been working with Allovue to move towards student-based budgeting and increase principal autonomy over budgets and spending.

Gartner raised $6.9 million in three rounds from eight investors including Rethink Education who led the last round. She’s got a few new products in mind focused on evaluating the equity and effectiveness of resources.

It’s a blessing and a curse to be the first competitor in a new space–there’s nothing to compare to. Some district leaders assume they’re an accounting system (which they are not). Sales (and especially implementation) require support from both district superintendents and finance offices.

It’s challenging being a pioneer but Gartner is convinced that budget managers in education need the right training and tools. So they’ll keep adding district partners, cleaning up accounting messes and helping people make better decisions for students.

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