Nikola Flint from School Financial Success is Director of Corporate Services in a large secondary school, leading on all aspects of school organisation, with a background in accountancy and sixteen years' experience in the school management profession.
In 2016, I created a forecast of my school’s funding using a new technique developed at School Financial Success. Combining professional judgement and known information, including the potential impact of the National Funding Formula (NFF), I was able to predict a range of meaningful funding options through best, middle and worst-case scenarios across a five-year period.
In the worst-case scenario, the picture was not a happy one! This was one of my motivations for my whole school budget review, ensuring financial efficiency, embedding a value for money culture and avoiding a potential financially-driven staff reduction. As a thriving school and one of the top performing schools in England, protecting effective staffing structures and continuing to drive improvement forward is a top priority.
I am sure everyone agrees that there should be more money in the education system. But it is also important to recognise the need for a proactive response to the funding challenge, on an individual school basis. This is where a school budget review comes into play.
Involving deep analysis of pay and non-pay budgets and opportunities for income, the aim of a school budget review is to make savings, either through reducing waste, reducing costs or increasing income. It is an essential school improvement tool, regardless of school status, Ofsted rating or financial position.
School funding reforms are provoking anxiety and uncertainty amongst many schools. A budget review might be the key to surviving, but it is still relevant, even if your school may gain from the changes.
You may be an outstanding school with significant balances, but in austere times, when school funding remains volatile and unpredictable, those balances may soon dwindle. Staffing structures and outstanding performance may not be sustainable. For schools struggling to balance budgets, or in a deficit position, a budget review is even more urgent, ensuring you can get back on track.
The common factor for all schools is responsibility and accountability for large amounts of public money. Financial stewardship and value for money should always be at the top of your agenda. Schools who regularly review their budgets will thrive, whilst others may feel they are surviving at best.
Start by identifying the right budget review leader. If your school has a school business leader, this responsibility may naturally sit with them. After all, they already have in-depth knowledge of the budget and may already be aware of potential areas for change, resulting from financial health and efficiency tools such as financial benchmarking. In a Multi Academy Trust, the Chief Financial Officer may lead the review.
Importantly, the person driving the review must have sufficient capacity. Your budget review will need dedicated time and attention to be successful. It may span up to a year, or more, if done properly and could involve significant behavioural and cultural change.
Perhaps a senior leader will lead your review. This can work well, as a fresh set of eyes can sometimes see areas for improvement more clearly.
The budget review leader will start the process, but your review can only be successful if all staff and even pupils are engaged. For some budget areas, carefully appointed teams may offer support, identifying issues and recommending where and how improvements can be made. If changes require staff, pupils or other stakeholders to behave differently, then cultural change is required. These important groups need to be engaged in the review from the outset to understand and own the objectives.
Where to look?
Some crucial advice is to consider reviewing every area of the budget. There will, no doubt, be areas where you want to focus more heavily, perhaps because you know there is waste, inefficiency or significant capacity for change. But no area of the budget should be ignored. You could do a staged review, prioritising the areas which you think will bring about the biggest savings. If you are unsure which these are, you can carry out some self-assessment activities personalising your review to your school’s situation and context.
Areas of impact
The outcomes will be different for each school depending on your current situation. Changes to staffing structures may be required, to improve the school’s overall performance. Some schools will want to avoid staff reductions, preferring to make changes in non-pay budgets or maximise income opportunities. All of this is possible.
Some changes to processes and procedures can achieve significant savings but won’t be noticed by staff and pupils. These are relatively easy improvements in that they don’t involve cultural change and overall staff buy-in, although they may still be technically complex when involving systems and services.
When improvements require a change in people’s behaviour, effective cultural change management will achieve positive results. When a school has embedded a value for money culture amongst all staff, pupils and other stakeholders, it stands the best chance of financial success in the longer term. Our book also details how best to approach this and stay committed to the change.
Will your review be successful?
By regularly monitoring actual savings against your estimates, you can easily assess how successful your budget review is at each stage. This will help you to steer your ongoing review, providing important reporting information and feedback to stakeholders as part of your cultural change management process.
My personal experience shows it is possible to make annual recurring savings of over £250k (approximately 2.7%), which any school would find useful, whether to clear an existing deficit or invest in improvement strategies supporting the school development plan. It is this personal success which has inspired us, at School Financial Success, to share this expertise. We believe that every pupil has the right to the best education, opportunities and life chances, and we hope that your school can achieve this through a budget review.
To gain some more tips on how to lead a school budget review, including an easy to understand, logical process for carrying out a review, take a look at ‘Leading a School Budget Review’ by School Financial Success, available on Amazon. Alternatively, find out more about the range of solutions and services for academies and multi-academy trusts from Capita SIMS.