‘School leaders must take decisive and immediate action to prevent going into the red’
We now know when the national funding formula will take effect, but with its likely impact still unclear, it's more vital than ever that schools plan ahead, says Howard Jackson…
It goes without saying that the last couple of years have signalled a significant amount of change for the education sector.
With Teresa May’s recent cabinet reshuffle, it remains to be seen what changes the new education secretary Justine Greening will bring about. This change in personnel is just the latest in a long string of announcements which have left school leaders in doubt over what the future holds – something which was particularly apparent in March, when the government declared its plans for academisation and then back-pedalled on this decision just weeks later.
Amidst the turmoil, one of the major concerns of school and academy leaders have is how these many changes are likely to affect schools’ finances. Despite the government assuring schools and academies that the amount of funding they receive per pupil will not change until 2019/2020, many still have reservations and are reporting rising costs and inflationary pressures.
Funding uncertainty
A major problem when it comes to a schools’ finances is the continuing unpredictability surrounding funding, as many schools are struggling to plan ahead beyond the next 12 months. For example, in March 2016 the then education secretary Nicky Morgan promised an end to unfairness in the school funding system with the introduction of the National Funding Formula (NFF). However, at present it is uncertain whether schools will actually be better off.
With some predicted to suffer from a drop in income, all school leaders will have to be vigilant to ensure that in these circumstances they are able to find ways to manage the budget. Failure to do so could lead them to potentially fall into deficit.
To try to identify the key budgetary issues facing schools and academies, HCSS Education recently conducted its own research and asked school and academy leaders a series of questions about their financial planning, funding and the current strategies they have in place to prevent falling into deficit.
When asked about funding, 93 per cent of schools and academies felt that funding was decreasing and over a third (35 per cent) reported suffering a budget deficit over the past three years. The financial uncertainty has also quite understandably left 51 per cent of schools feeling ‘very concerned’ about their future. But what can be done to ensure schools are doing everything they can to manage the available budget?
Immediate action
What schools must understand is that whether they stand to lose out or not from the introduction of the NFF, this is not the time to get complacent. School leaders need to take decisive and immediate action to prevent going into the red. Our research found that one of the main ways that schools and academies can generate savings and additional income is through much tighter controls over procurement and expenditure over things such as equipment and educational materials. But often it is difficult to accurately calculate where these vital savings can be made.
To try to prepare for the future as best as possible, it is recommended that school leaders forecast effectively to make sure they are continually reviewing the budget and constantly looking ahead. Working to five-year projections can help to prevent possible deficits and help by ensuring that potential future cuts are carefully factored into the overarching financial strategy.
To accurately measure all inputs and outputs and to eliminate any human error, it is recommended that schools invest in a specialist financial management system. Whilst there are many products on the market, the most effective choice for a school would be one tailored specifically to the education sector such as HCSS Education’s innovative new accounting software. This will help to simplify financial operations and give schools the ability to plan effectively for the future, in the short medium and long term.
With a brand new education secretary and limited clarity when it comes to school funding, it is understandable that many school leaders have major concerns as to what the future holds. However, what schools mustn’t do in this situation is panic. Mobilising now, and ensuring there is a robust plan in place if funding is cut, could help prevent schools falling into deficit.
Howard Jackson is the founder and head of education at finance specialist HCSS Education; for more information, visit www.hcsseducation.co.uk or follow @HCSSEducation
