When the going gets tough, the tough get going. It’s one of those well known phrases, isn’t it? Although more usually applied to marine commandos than those in school leadership teams, it is, I would suggest, also relevant to us now with the need, in the current financial situation, to make some tough decisions.
I would put this phrase together with one of the messages I have always remembered from a management course more years ago than I care to remember; it was that you shouldn’t make decisions because they are easy: you make them because they are right. ‘Soft’ and ‘easy’ targets may well not be the most appropriate areas in which to reduce budgets. As resources are reduced, the pressure is on to make sure we get value for money and allocate our funding to obtain the best possible outcomes for young people. So how can we best achieve this?
In our strategic financial planning courses, we stress how important it is to have the whole of the leadership team involved. It is essential that all in the team understand the financial implications of the decisions that are being made. In large secondary schools there is a strong case for all subject leaders also developing an understanding of the key principles involved. Frequently, those involved in the planning of the curriculum are unaware that they are responsible for deploying around 60 per cent of the school’s budget, and are not always aware of the financial implications of the curriculum and staffing allocation decisions they are making. All too often, school finance was the domain of the business manager or the head. Other members of the leadership team were focused on other areas: principally, the raising of standards.
Over the past 12 years this focus on raising student achievement was supported by an increase in funding. All involved, including governing bodies, have responded with enthusiasm and imagination from which a new paradigm has emerged: it is that a visionary curriculum is developed and the school then jumps through whatever financial hoops it has to in order to make it happen. This may well be one of the causes for nearly 2,000 schools (9.1 per cent of all schools in England) having a deficit at the end of the 2009-10 financial year. Having all the leadership team involved in the financial planning aspects of the school means that everyone can contribute to the discussions and experience indicates that the more ‘heads’ there are working to get solutions to the problems, the better the outcomes will be.
Not everyone can be involved in the detail of the budget so it is useful for strategic purposes to group the budgets into a limited number of broad headings. These headings will vary depending on the type of school but will be based on the CFR (Consistent Financial Reporting) headings grouped thus:
- teaching staff
- support staff (can be usefully split into administrative, technical support and teaching assistants)
- premises
- learning resources
- supplies and services.
By first looking at those costs that are effectively fixed (such as utilities and exam fees), it is possible to then to identify how much of the budget is left to allocate and where the flexibilities may lie. The school priorities and areas identified in the improvement plan need to be costed so that they can be fed into the planning process. The critical area, however, will be examining the number of teaching staff required to teach the curriculum. In order to examine this area in strategic terms, there are a number of key factors to consider. I would suggest for most schools these are:
- average teaching staff cost (ATC) – the average cost of all teaching staff (including the headteacher) in the school
- pupil to teaching staff ratio (PTR) – the total number of pupils in the school divided by the total number of staff in full-time equivalents (FTEs)
- proportion of revenue budget available for teaching staff as a decimal (Tp) – so if the school spent 58 per cent of its budget on teaching staff, the budget proportion would be 0.58
- revenue budget in pounds per pupil (I).