It is that time of year when maintained schools start to think about closedown and the new financial year with academies six months in and looking with an eye to the coming year.
It is true to say that 20-21 was not the year that we expected, planned and budgeted for! We have been faced with additional costs, uncertain budgets and at times, conflicting advice. All of which has made the last year the hardest that I can remember while being in charge of a school budget. The pressures on our operational spend created by staff absence throughout covid has caused many of us a headache and sleepless nights and who wants to talk about the additional costs (which we weren’t all able to reclaim), I certainly don’t.
But, as in all situations, there have been some positives. The upheaval has meant that staff movement reduced for many and main staffing budgets remained fairly stable (excluding supply costs). Depending on your financial situation, there has been the ability to apply for funding for these as well. Although we had the pressures of the additional teacher pay and pension increases, these were in most part covered by additional income, so the largest part of our budget spend was fairly secure. We now have all of the operational needs in place having been through three cycles of lockdown, our ‘new norm’. One would hope that, aside from replacements, we would have all the needs outlined in our various risk assessments and protocols for being in school in place so no large new surprises, although never say never.
Prudent
With that in mind, how do we budget for the year ahead? I would suggest that most of us will be setting a conservative budget which reflects the uncertainties in receiving any additional income such as lettings, fundraising and other external sources of income. As a School Business Leader of many years, I know that we all tend to be prudent. It is easy to be caught out by the myriad of changes that ordinarily happen in a school year without the possibilities that further Covid-19 changes may make. The question is, will we be tempted to be even more prudent than normal? As stated by the author Charles Caleb Colton ‘There is nothing more imprudent than excessive prudence.’
To set our budgets then will take an element of courage but we should be reassured by the controls that we do have and the fact that we all have the majority of our income guaranteed. The fact that maintained schools are limited by the Balance Control Mechanism which restricts the level of funds carried forward at year end tempers our prudence to a degree. While this does not apply to academies, the principle on which it is based recognises that each child is individually funded and as such the monies should be spent for them is an inherent part of our ethos. The need to have reserves to address the unforeseen is part of risk management during the budget setting process.
Certainties
As with all budget setting, we can start with the certainties. For maintained schools, budgets will start to be shared from the end of February onwards and all of the teacher’s pension and pay calculations will hopefully be tied up in the school budget share this year. Academies will hear about their budgets in time for their preparations for the new budget year from September.
Most of us will have a good idea of what our staffing structure will look like for the year ahead. With this representing the majority of our budget spend, we have a firm grasp of the balance remaining for the rest of our overheads and costs. Our operating costs over the past year have shifted focus, the move to online learning will have had an impact on the amount that we have spent on resources. The provision of ICT equipment by the government for our poorest and most vulnerable families as well as the negotiated increased WIFI provision has meant that the high level of spend, which I certainly predicted with my schools at the start of Covid-19, has not been as great for ICT. With another £300,000 pledged to support primary schools as well, we will realise some of the savings that we have made on not purchasing classroom-based resources.
ICFP
For this coming year, the use of tools such as the ICFP will be useful to help us to benchmark our spends and look at historical data on percentage spends and where we have capacity for savings within our budgets. The value of this tool is down to the understanding of the context and knowing how it can support your school’s budgeting and spend, certainly worth attending training before you start. There are free DfE training courses available, not just for finance staff but for senior leadership at https://educationspace.co.uk/SRM/
In the coming year we may have to shift the focus for some of our spending towards support for our school community’s mental health. Lockdown has affected all of us to some degree and the impact on our staff and students has yet to be fully realised. The need to have a product such as a sufficient Employee Assistant package as well as a wellbeing programme in place will be greater. It will take a while to realise the effect the current situation will have on staff attendance, recruitment and retention. How we have managed all of the above will have a significant bearing on this. Using tools such as staff surveys can be invaluable in guiding an appropriate wellbeing offer for your staff. Money well spent!
Our students who are always our focus have had a lot of additional support from our schools during lockdown but this will have to continue afterwards for both education catch up and wellbeing. We are being offered some funding and I would hope this will continue. Lots of new variables.
All in all I think it is fair to say that I, and I am sure many others, will not be using 20/21 when looking at our income and expenditure trends for future budget setting!
Here’s what to do
- Treat 20-21 as a standalone year when budget setting.
- Recognise the initiatives and changes that will endure.
- Have a risk management approach to all financial decisions.
- Take a moment to look at staff retention and wellbeing, an investment here could pay dividends later on.
- Inform your spending - spend in haste, repent at leisure!
Sue Birchall is a consultant, speaker, writer, trainer and business manager at The Malling School, Kent
