Being a school in budget deficit can stem from a number of factors. Join us as we explore them here, as well as potential solutions…
Drop in pupil numbers
One such issue is a drop in pupil numbers. The age-weighted pupil unit (AWPU) is schools’ primary source of revenue.
Therefore, a loss of students will result in not just a lower basic income, but also reductions in areas such as your Pupil Premium and Primary PE and Sport Premium.
Poor financial management
Poor financial management can also play a factor. This may be due to a lack of forecasting or decisions made without consideration of the financial impact.
Change in circumstances
Your school might have experienced a significant change in circumstances, such as a reduction in funding from an LA, MAT or central government.
Staffing changes
Staffing changes, particularly at senior levels, can have a significant impact on budgets. An incoming SBM inheriting a budget from their predecessor, for example, can result in a period of uncertainty, due to their lack of knowledge.
Preventing your school from falling into deficit
The most effective budgets are created through shared ownership. School staff and governors all have a responsibility to consider value for money and best value when using the school budget.
It’s good practice to gather information about your school’s spending from every available source. This might involve asking staff to look at last years’ spend, evaluate its impact and assess how their spend can then change moving into next year and beyond.
Getting your school out of a budget deficit
What if, despite your best efforts, a deficit has either happened or been forecast for the coming years? The first thing to do is share this information.
It might be tempting to try and manage the situation ‘in-house’ without admitting that you have a problem, but that’s a risky strategy.
The old adage ‘A problem shared…’ applies here. It’s not a personal failure, and the sooner all stakeholders are made aware, the easier it will be to get a recovery strategy in place.
Working party
Assemble a working party to look at the school budget. Ensure that this includes both senior and teaching staff, any governors with financial responsibility and representatives from your LA or MAT.
That way, the resulting deficit recovery plan will have broader buy-in and a greater chance of success.
With a working party in place, your key tasks will then include comparing staffing spend against curriculum need and reviewing your existing contracts.
Evaluate how contracts are used and the value for money they deliver. Cancel any you don’t need and start a contracts register.
Use benchmarking data to analyse and measure your spend over time. If you can’t obtain this from your LA or MAT, you can find it using the government’s Schools Financial Benchmarking tool.
Use SWOT (strengths, weaknesses, opportunities, and threats) and gap analysis to scrutinise your financial decisions to date. Provide justifications for any changes in strategy that you might need.
As someone who has been in this situation before – more than once – my advice would be to communicate, share and plan ahead. And above all else, don’t panic!
Sue Birchall is a consultant, speaker, writer and business manager at The Malling School, Kent
