Budgeting for development

Tracy Doyle maps out a way to align the budget process with the school improvement plan

Since the advent of school development planning, there has been an increasing emphasis on realistic plans, which are costed and feed into the school’s budgeting process. This is an aspect that is emphasised within the Ofsted process, and is a requirement of the new Financial Management Toolkit, yet the exact mechanism is poorly defined. Do you recognise any of these scenarios?

• Sitting with your calculator totting up the resource elements of your school’s school improvement plan (SIP), flicking exhaustedly through the pages of a long and unwieldy word processed document.

• Scrabbling around to find the funds to appoint a new post from September, to deliver a new subject, aware that a vacancy was filled in April, in a curriculum area which is overstaffed and not a development priority.

• The premises committee leaps upon the devolved formula capital allocation and pours it into some bright scheme, without reference to any longterm view of the site’s development and how it fits into the overall vision.

• A teacher comes to you clutching a copy of the SIP, having highlighted something like ‘Each department has its own copying facilities…’ when you have no idea at all how that can be accommodated within the budget already agreed.

• The LEA is eyeing up a rather unexpected balance left at the year end and warning you they expect to see evidence of its purpose, or else it might be clawed back.

• You are offered the possibility of a capital grant but can’t quickly think up a good scheme or idea to justify the funding.

• Receiving an updated SIP in June, and realising there are major cost implications that can’t be met from the budget that has already been agreed.

All of these scenarios are sadly familiar in schools and a reflection of how the budget planning process in many cases is still divorced from development planning. In these schools, the SIP is impossible to accurately cost; and in any case, agreed too late to really impact upon financial planning for any given year. Yet everywhere you look, there is talk of linking budget planning to the development plan. It’s a bit of a buzz-phrase, but concrete ideas of how to do it seem rather thin on the ground.

The link between spending and development

Why do we need to review the way our schools link spending plans to development? The starting point is the Ofsted framework, specifically the management of finance to achieve educational priorities. It is vital to see the school’s budget and its staff as the key resources to underpin the school’s vision. One of the characteristics of a successful school as identified by Ofsted (1994) is to ‘…understand the importance of value for money and that financial management achieves efficiency as well as effectiveness.’ The Audit Commission and the new schools’ financial standard both expect to see school budgets linked with development plans. This should ensure that the resources available to the school are targeted efficiently and effectively at maintaining the quality of education provided and improving standards. The financial standard includes the following requirements:

‘The school development plan should set out the educational priorities in sufficient detail to provide the basis for developing the annual budget.’ ‘Budget planning processes [should] ensure there is a clear, identifiable link between the [budget] …and the requirements of the school development plan over the next three years.’

Multi-year planning and budget timetables

 These are the prerequisites:

• The school needs to have a multiyear development plan, with sufficient ‘fleshing out’ of activities in years two and three.

• The school needs to have a multiyear budget plan.

• The school’s bursar or business manager needs to be integrated into the development planning process.

• The annual timetable needs to allow for the budget setting process to follow on from the development plan. This may not be as simple as it sounds – most schools agree a SIP covering academic years, and it is finalised in the early summer, for the following academic year. This is after the setting of the annual budget, and it may be difficult to accommodate all requirements from the SIP.

• The SIP should preferably be agreed in the spring term, to inform the budget, which will then span two years of the development plan.

Looking ahead

The budget allocates resources for future needs, and needs to look ahead. Don’t base the future on the past. An overreliance on historic budgeting is restrictive and backward-looking. It is tempting to set aside funding for items such as furniture, IT purchases and minor building improvements based on the preceding year. But could these budgets be set to zero and then built up from the requirements of the development plan?

The main resource – staff

The school’s most expensive asset is its staff. Schools should be asking themselves a whole series of questions in relation to staffing:

• Are we getting value for money?

• Does our spending follow the priorities from the SIP?

• Does the school regularly check that the staffing establishment is in line with the school development plan? 

• Has the school identified a shadow staffing structure, which fits the deployment of staff to meet the objectives?

• Are actions being taken towards achieving it?

• Is there a clear staff development policy and plan, based on a sound performance management system, covering all staff and consistent with the SIP and curriculum needs?

• Does the development plan identify strategic investment for professional development, and are these funds used to underpin the school’ development plan?

• additional resources needed for staff development and are these expenses subsequently embedded in the base budget? An example is the setting up of a staff induction programme –the SIP will identify the costs of this for year one, but from then onwards it would be integrated into the school’s Inset budget.

 Capital spending and asset management

Capital spending is a strategic investment, and determines the way the school will develop for many years into the future. Again a series of questions can usefully be posed:

• Is capital funding used to support the key priorities –suitability, sufficiency, replacement and safety?

• Is there an up-to-date asset management plan that clearly identifies expected costs to maintain the fabric of the building, while also picking out from the SIP key areas of development needed to meet the objectives?

• Has consideration been given in the eyars following capital development, to maintain and resource any new facilities? Converting a disused school keeper’ house for use as a learning centre, for instance, is likely to mean increased costs for rates, heating and lighting and maintenance.

Departmental development plans

• Do the departments have individual development plans that flow from the overall SIP?

• Do they have costed priorities, to inform the spending of capitation budgets, or to back up a bid for central funding or use of standards grants?  

Format and integration

The format used for development planning should allow for proper costings. Most SIPs are laid out using Word, when it may be better to use Excel. The budget plan should refer to the key strategic developments to be funded that year. A badly costed SIP will have major limitations.

Having a linked spreadsheet with a subheading for each category (support staff, capital, etc) broken down in years will allow the bursar or business manager to cost out items in detail, using formulas and notes as needed, then to summarise the totals per year for transfer to the main SIP with brief budget codes. Using a layout like this makes it straightforward to take the sub-totals for each heading (2006/7 capital, for example) and to add the cost directly into the main budget plan, or to earmark existing funds.

If your school already uses the HCSS budget planning software to produce a three- or five-year budget plan, you may be interested to hear that after Easter 2007, the company plans to issue new software which will help schools to produce a development plan based on the Every Child Matters agenda and see how the strategy stacks up in financial terms. The SIP is automatically linked to the HCSS financial planning software. The resource requirements of the SIP are entered into the relevant academic year/term and the software feeds them into the financial plan in the relevant financial year.

The school can plan in academic years and the resources are recognised in the relevant financial year. All figures are highlighted in the financial software if they have been created from the SIP available reports and will include a full analysis of the costs of the SIP. This software looks very exciting and a good starting point if your current planning systems do not allow easy linking.

Balances accounted for and projects ready to go

Having a properly fleshed out and costed development plan means that any balances you are accumulating for future years can be justified and explained to the local authority, governors and parents. Any unexpected windfalls or savings can be used to bring forward priorities from the development plan. You might decide to go ahead with a planned library refurbishment, for instance, in March 2007 rather than the summer 2007 laid out in the SIP.

Mapping out the future

Medium-term budget planning and school development planning are interlinked. A school that has begun to grasp this fact will have a multi-year budget which provides the funds to underpin the school’s development plan. The school will see the allocation of its resources, both financial and human, as the key to achieving its strategic aims.

The targets that have been set will be achievable in the time frame given, because the resources will be there in the  relevant financial year. And the bursar or business manager will no longer be asked to do the impossible – finding resources for unexpected demands!

Further information

www.audit-commission.gov.uk

www.fmsis.info/g3_guidetoachievingthestandard.pdf

www.hcsseducation.co.uk

Tracy Doyle is bursar at George Mitchell School, a community school in East London.

Case study: Walthamstow School for Girls 

Helen Chamberlain, school business manager, Walthamstow School for Girls