It’s vital that school business managers avoid inadvertently leaving gaps between the school’s budget and its development plan. This ebulletin flags up ways to avoid these gaps and keep your budget in line with the school’s development needs.

As we are all aware, the objective of a school is to improve the quality of the educational outcomes for our students, and to do this we need money and resources. With a new government now in situ it is vital to ensure that we plan for the future and ensure that our resources are sustainable, especially with the uncertainty as to what cuts (or day I say increases!) the government will make to the education budget. At the moment it is not looking too promising.

So how can we do this? Some senior SBMs are probably asking why I am asking this question, but I am still amazed at how many schools do not link their budget to the school development plan and forecast for at least the next three years. For this article I will be looking at school improvement planning and the processes required to link the budget to the school development plan (SDP). This is not as easy as it sounds, as all schools are different, especially with the formation of academies, trust and foundation schools, extended school clusters, special schools and children’s centers. But basically the thinking process goes towards the same end; improving standards of attainment for students.

The budget setting process aims to ensure that the resources required match what the school priorities are and that the school can afford it – if this isn’t done then there is a good chance of an unplanned deficit. The process also helps schools to realize whether their expectations are realistic or not and to adjust plans accordingly if necessary.

What I find most difficult is the way that the budget is planned from 1 April each year. Support staff contracts can be processed throughout the year, annual salary increments (when we get them!) are from 1 April. However, teacher contracts and increments begin on 1 September and together with this we can then have different funding streams ending in March or August. Personally I would be happier if the financial year coincided with the academic year but I can understand the difficulties with tax that this would incur.

When do you start the budget planning process?

Budget planning can be started way before your budget is expected; a good time would be in the winter, and some of the factors to be considered should include the following:

Income:

  • pupil numbers (main element of the plan; what are the numbers likely to be in the future?)
  • SSG funding
  • external funding streams
  • lettings
  • extended services income
  • standards funds
  • catering.

Expenditure:

  • staffing
  • operational expenditure, ie rates, utilities etc
  • resources
  • SEN
  • curriculum department spending
  • ICT (taken from the ICT development plan)
  • standards fund expenditure
  • premises/facilities (taken from the premises development plan)
  • school future initiatives
  • catering.

However, with schools already having a well established cycle of self-evaluation (SEF) they will also need to identify and include new key priorities, but in addition, SBMs should be considering how effective their previous plan was:

  • Had all the priorities been completed? If not, why not? What were the ‘blockers’?
  • Did this affect pupils learning?
  • Were all stakeholders included in the planning process? Parents, governors, pupils and the wider community.
  • Can the plan demonstrate that all stakeholders have been involved in the process?

The SDP will usually have short-, medium- and long-term objectives and outcomes, and the skill is to produce a plan that makes a reasonable attempt at forecasting the future, considering the factors listed above. A question that SBMs need to ask above all is whether the plans are sustainable – will the budget support these priorities? Are stakeholders aware of the detrimental implications that a plan can have when all priorities are not considered?

S3.1 FMSiS Guidance: Setting Annual and Multi Year Budgets suggests good practice in setting your budget. The guidance states:

‘An effective budget is the result of a careful examination of what the likely income and expenditure will be in your school. It needs to be done so that you can weigh up whether you have enough funds to pay for the activities that you believe are necessary for the school to carry out its school development plan (SDP). In short, the budget process ensures the budget can be balanced and helps you to ensure resource allocation matches school priorities.’ www.fmsis.gov.uk

Futures planning can sometimes bring misleading financial projections, but where deficit budgets are identified immediate action should be taken – workable strategies can be created if problems are found early enough. In the past, schools have planned budgets before considering the implications of the SDP; this happened because a school’s budget had little money left over after allocating costs to the essential budget headings. I would always advise taking the SDP as your starting point and then looking at the priorities that have been identified in your SEF. This should inform the budget, even when you have limited resources available.

To actually link my budget to the SDP I use the HCSS package, which I mentioned in my last article. There are many other companies that provide such a package. This program provides me with a data template that I can email to all heads of departments, so that they can develop their own subject development plan which can then be uploaded directly into the finance SDP wizard, ensuring that all resources can be planned for and linked into the budget. This is the first year that I have implemented this at the school and it has been a success, with good feedback from heads of departments. Not only do I have the whole-school SDP, but I can separate the priorities for specific subjects, enabling me to identify the impact of the short-, medium- and long-term planning

The next stage of your financial and SDP planning would be to ensure that you are getting value for money with regard to your fixed costs, ie. insurance, contracts, staffing (essential) resources, leases, telephones etc. What SBMs do not want to be doing is cutting costs in other areas when money could have been saved with better negotiating of service contracts. I have just re-negotiated our absence insurance and saved 13k by changing the service provider and having private health insurance included. I am also in the process of changing our energy provider, which has been an interesting experience to say the least! I did take up the offer of the free Value for Money consultancy program, where we received a visit from an experienced education consultant who did a sort of mini audit on our resources, service contracts, staff etc. and it was identified that we did have good value for money procedures in place. Benchmarking with other schools enables you to compare your school’s income and expenditure with that of similar schools. In the past I have contacted other schools to see where they have made savings when I have noticed a considerable difference in expenditure in premises costs.

Our SDP also prioritizes objectives and identifies the potential impact they would have on the students’ attainment. I am sure all schools do this, with priority no.1 being the most important and something that must be completed no matter how bad your budget is. We continually review our SDP and have at times re-prioritized an objective, especially where new funding has been obtained. Sometimes you might come to the conclusion that an objective is either no longer viable or unnecessary – in this case always consider what the impact will be on the school and its improvement planning.

I am sure all schools have their own different processes, but I cannot stress enough the importance of actually linking your budget to the SDP and showing this in your financial statements. These can be used to inform your futures planning and be used to report to governors, SLT, LA and other agencies. With careful monitoring and evaluation, schools can ensure, where budget allows, that they have allocated resources effectively for achieving their objectives.

This e-bulletin issue was first published in May 2010

About the author: Lindsey Lester is School Business Manager at St Martins Catholic School, Leicester

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