School district Chief Financial Officers (CFOs) face mounting financial pressures in 2025. Escalating labor costs, staffing shortages, and the expiration of federal COVID relief funds are driving operating fund balances down—from 26% in 2024 to 24% this year, with further declines expected in 2026, according to Moody's Ratings. Staffing costs now exceed pre-pandemic levels, while districts struggle with teacher shortages, rising contracted service expenses, declining enrollment, and compliance risks tied to contingent labor.
The challenge isn't whether contingent labor is needed—it's how to deploy it strategically for flexibility and cost efficiency without compromising financial stability. This blog examines why contingent labor costs are rising, the transparency gaps that create risk, and how data-driven platforms like HWL's can help CFOs regain control.
The Transparency & Efficiency Problem
Most districts lack real-time visibility into contingent labor effectiveness and spend. CFOs often discover:
- Multiple departments contracting vendors independently, leading to staffing delays
- Rate inconsistencies and billing duplications that can inflate costs
- Lack of performance metrics to assess vendor effectiveness
This fragmented approach leads to budget overruns, audit risks, and strained relationships with administration, unions, and the community.
Why CFOs Need a Data-Driven Approach
A Vendor Management System platform offers CFOs:
Centralized Management & Spend Tracking:
Instead of administration having line-to-line reporting with each vendor; HWL becomes an extension of the district all while allowing real-time visibility into every dollar spent on contingent labor across departments in one dashboard.
Vendor Performance Analytics:
Provides real-time data into key program metrics.
Forecasting Tools:
Predict future staffing needs and associated costs based on historical trends.
Compliance Assurance:
Automated credential tracking reduces legal and audit risks, including IDEA compliance requirements.
Action Steps for CFOs: Transform Your Contingent Labor Strategy
- Audit Current Contingent Labor Spend: Conduct a comprehensive analysis of your workforce challenges and identify hidden costs. Expert advisory services can help you uncover actionable recommendations that drive savings with measurable ROI.
- Engage Cross-Functional Leaders: Collaborate with HR, Operations, and Special Education departments to centralize vendor management. A managed services approach ensures alignment across stakeholders and streamlines decision-making.
- Adopt a Next-Generation VMS Platform: Implement a modern Vendor Management System that provides real-time visibility, compliance tracking, and robust reporting capabilities. The right platform becomes your system of truth for forecasting needs and optimizing spend.
Why This Matters
Contingent labor isn't going away, but uncontrolled spending and compliance risks don't have to be part of the equation. CFOs who embrace data-driven workforce management can protect budgets, ensure compliance, and support district-wide success.
HWL Works offers comprehensive, end-to-end workforce management solutions, helping districts navigate these transitions with proven expertise and technology.
Ready to take control of contingent labor costs?
HWL is committed to supporting school districts nationwide with a no-cost assessment to uncover operational inefficiencies, compliance risks, and cost-saving opportunities. Contact education@hwlworks.com learn more about our education solutions.
Additional Resources:
National Center for Education Statistics (NCES)
Association of School Business Officials International (ASBO)