The process of the annual funding cycle for schools and the relatively late announcement of new year budgets means that the production of spending plans is often carried out quite late in the day, sometimes with annual budgets not being completed or approved until a school is two or three months into the new financial year. Clearly, this situation works directly against any notion of long-term strategic planning, especially when it is considered that many staffing and premises changes take place at the start of the academic year in September, which is halfway through the financial year.

This disparity between ideal and real financial planning practice is acknowledged in the government’s 2004 Five Year Strategy for Children and Learners (

The strategy introduced a commitment to ‘guaranteed three-year budgets’ for schools from 2006, together with a minimum funding guarantee percentage increase per student year on year, with the aim of supporting and improving long-term planning and stability. Whilst it should never be forgotten that estimated future budgets can only ever be indicative, their formal introduction is nevertheless a step in the right direction in terms of planning ahead.

However much confidence (or not) you may have in indicative future budgets, there is of course nothing at all to stop you estimating future expenditure and doing so one or two years in advance will not only make the budgeting process less of a rushed experience in future years, it will also alert you to any potential future funding shortfalls or other causes for concern. If you have time, the best point at which to do this is when you are already working on the spending plan and have all the information to hand – so, for example, you would extend your 2007-08 budget work to include estimates for 2008-09 and 2009-10.

There are software products available which can support you in this process, especially in relation to staff payscale increments. One of the most popular of these is the five-year financial planning software available from HCSS education ( for around £250. Whether you use specific software or prefer to stick to your own spreadsheets, however, it is important to bear in mind that advance projections are estimates only. You must make sure that you keep track of any assumptions that you have made in relation to student numbers, for example, or inflation – and that you also update your estimates for any staffing changes or significant planned purchases. If you decide to obtain some equipment on a three-year lease, for example, then you will need to make sure that the lease costs are rolled forward into the expenditure budgets for future years.

If you get into the habit of longer-term financial forecasting, then the rushed budget-setting process can become more and more a thing of the past. As more information becomes available and as you get closer to the start of the new financial year you can update and refine your projections to form a final spending plan which you can then match initially against the indicative new year budget and then the actual version, as soon as it becomes available.

Especially if you use financial planning software or linked spreadsheets, establishing long-term planning practices can also allow you to undertake sensitivity analysis in particularly volatile areas of income or expenditure. Thus you can quickly assess the ongoing impact across three to five years of an additional member of staff, a drop in student numbers or an increase in teacher sickness absence. This can then inform and enhance the information that you provide to the headteacher and the governing body, and thus provide a firmer basis for financial decision-making processes.

Increase SLT financial understanding

In many schools, financial management issues remain the sole preserve of the business manager, the headteacher and the governing body. Other members of the leadership team tend to avoid the subject of money wherever possible. In part, this is probably because they find it quite dull – after all, most SLT members work in schools because they are interested in education rather than budgets. In addition, however, it is very likely that many leadership team members tend to shy away from finance because they feel that they lack knowledge and understanding of the topic.

It is difficult to justify, however, how anyone can expect to reach leadership level in an organisation without engaging with finance in some way. Like it or not, the effective allocation of finite resources is a key aspect of the management of any organisation, and in the public sector the responsibility is perhaps most acute because the accountability is to the public purse. In schools, this has been recognised nationally by the inclusion of a module in the National Professional Qualification for Headship (NPQH) which covers the strategic management of resources.

There are three clear reasons for involving leadership team members in aspects of financial management. Firstly, all leadership decisions will have an impact upon financial and/or other resources, and the people making the decisions need to be fully aware of these. Secondly, any leadership team member who wishes to progress to headship will need to demonstrate knowledge and experience of the effective management of school finances at a strategic level. Finally, it is well known that people are more likely to subscribe and adhere to management decisions and plans if they have had some involvement in their creation. Thus the encouragement of leadership team contributions to financial issues will slowly transform the perception of a spending plan as an irrelevant imposition, towards an understanding that it is a management tool and a structure within which everybody needs to work.

Overall, the key to achieving SLT engagement is to keep pushing the concept of finance and resources allocation and management as an integrated aspect of whole-school leadership. Again and again, you will need to stress the facts, however unpalatable, that first, all decisions have resources implications, and second, the allocation of resources to one area means that they cannot be allocated to another. This doesn’t mean, however, that every time a new educational initiative is discussed at SLT meetings that you immediately launch into an anguished rant about how it will cost too much. That may be what you feel like doing (it’s certainly what I often feel like doing), and you may quite conceivably be entirely right, but it won’t change the minds of any of the people from teaching backgrounds around the table, and it won’t help them value your judgement. Instead, I would suggest the following more subtle strategies:

Gain your headteacher’s support in gradually introducing financial issues as regular and appropriate leadership team agenda items.

Demystify finance. Explain that spending plans are really little more than rather complicated shopping lists, often made up of estimates and best guesses. Provide a written glossary of financial terms – or, if you’re feeling brave, present it as a pub-quiz style starter activity at an SLT meeting. This kind of thing will help the warier team members feel more comfortable with the area of finance, and may even convince them that it can be fun!

Present the spending plan in draft form to the leadership team early in the new year. Run through the key expenditure areas; highlight the costs of any curriculum changes in terms of staffing and other expenditure; explain the most volatile cost headings; share the outcomes of any sensitivity analyses you may have carried out; ask for feedback and suggestions. With luck, what you will find is that rather than being a dry presentation about money, the agenda item will lead to a detailed and productive discussion about the way the school organises itself on strategic and operational levels.

Present in-year financial updates, including any variances and projected final out-turns. This will help to ensure that SLT members are aware of the current financial position and that this will inform any future decision making. Rather than just handing out spreadsheets covered in numbers, use PowerPoint slides with key bullet points, graphs and charts wherever possible. If you do need to present a spreadsheet, make sure that there are headings on each column and take the time to explain what each column and row of figures stands for.

When presenting financial information, always focus initially on the strategic whole-school outcomes that it links to. For example, rather than simply saying ‘we’ve spent too much on vocational learning and we have to cut back’, highlight how this cost centre relates to developments in social inclusion and the 14-19 agenda. Identify and explain the reasons for any overspends (rising provider prices? more students opting for subjects than originally anticipated?) and suggest a range of courses of action (assess alternative providers? deliver on-site? increase budget at the expense of traditional curriculum?) for discussion. If possible, suggested options should have at least rough outline costs attached to them, as this will further encourage the integration of financial information in the decision-making process.

If your school is lucky enough to be financially sound at present, explain to SLT members the implications of a deficit budget. If you hold a bank account and cheque book, detail how ordering and paying for goods and services will become more bureaucratic and long-winded without one (most LAs will not allow schools in deficit to hold a bank account). Explain the implications of having to draft financial recovery plans for submission to the local authority. At the most extreme level, give examples of schools in severe financial difficulties who have had their delegated powers taken away from them. In all of these cases, the issue for the leadership team will be a reduction in their capacity to make decisions and thus ultimately their leadership, their autonomy and their contribution to school improvement.

Encourage a best value approach (see above) to all decisions, looking at challenging assumptions and comparing alternatives before coming to a decision. Be proactive in developing a brainstorming approach to issues, focusing on desired outcomes rather than individual methods or tools. This will often involve a bit of initial stepping back, as non-financial managers often take a default ‘one problem-one solution’ approach. Thus a deputy headteacher may say in a meeting that he feels that staff are suffering from low morale and he would like to send them all on a week’s holiday to Barbados. However much you want to, don’t leap in the air, burst into tears or threaten to resign. Instead, leap towards a whiteboard or flipchart with a marker pen in  your hand, write ‘RAISING STAFF MORALE’ in big letters at the top and invite the meeting to spend ten minutes coming up with (hopefully cheaper) suggestions which will achieve the same, or maybe even an improved, outcome.

Ensure all SLT members have at least one budget area for which they are responsible. Meet with them during the drafting of the spending plan to ascertain their plans for their cost centre(s) and work with them to allocate reasonable budgets to those plans. Hold update meetings throughout the year to monitor progress against the original plan. Be very clear that whilst you may be the finance manager, they are the individuals who make the decisions on those particular budgets and are thus accountable for their performance.

Develop your spreadsheet skills

Finally, if you find yourself with a few spare moments in between putting the catering service out to tender, forecasting staffing expenditure for the next 20 years and facilitating SLT brainstorming, then there is always the option of spending a bit of time with the Microsoft Excel Help files and tutorials. Depending upon your current levels of expertise, areas to look at could include:

Charts and graphs – great for displaying data in an accessible way, and very easy to produce using the wizard.

Custom lists and lookup tables – handy for groups or lists that you use regularly, such as cost centres, staff names, etc

Functions – a wide range of mathematical, statistical adn logical processes made simpler by using the Function Wizard. Logical functions (IF statements, for exampe) can be very useful when considering a range of scenarios or when calculating expenditure, such as employer NI contributions, which are based on thresholds.

Pivot tables – not as complicated as they look, and very good for summarising data in different ways

Macros – a way to save time by automating tasks that you carry out repeatedly by ‘recording’ and ‘playing back’ a sequence of commands.

Ruth Bradbury is assistant headteacher (resources) at Westhoughton School in Bolton.