Financial management post-Covid

With schools returning and the dust settling, how can the SBM bring the budget back on track? In this article, Matt Bromley reminds us of the importance of the 3Ps and considers what lessons might be learnt from the lockdowns.

Summary points

• Through prudence, planning and prioritisation, the SBM can begin to bring the school finances back to good health.

• Any remaining catch-up premium might need to be merged with other funding streams.

• Look at ways of adapting your normal practices based upon the knowledge you gained from the use of remote learning and management.

Three years ago, in this magazine, I offered some generic advice on managing school finances. My advice centred on what I’ve come to call my 3Ps: prudence; planning; and prioritisation.

Here’s a brief recap of what those 3Ps meant in practice before I bring us up to date by proffering advice on getting school finances back to good health following the Covid-19 pandemic.

The 3Ps

Prudence

Being prudent is about achieving value for money for the public purse. Therefore, I think it’s important that school business managers consider every expense carefully. The SBM, and ultimately the principal, are accountable for their school’s fiscal decisions and should be confident that any spending they sanction is necessary and represents value and quality.

To achieve prudence in practice, schools need effective processes and procedures in place for contracting, tendering and purchasing. Schools should also have systems in place for producing regular monitoring reports which show their current financial position, their future position (budget forecast) and any potential risks to financial health.

Such reports should be shared regularly, not only with the principal and senior team, but also with governors and, where applicable, trustees. Reports should be clear and focused and enable accountable bodies to support and challenge the school’s fiscal decisions.

Planning

SBMs should have a clear, strategic financial plan which should be linked to the school improvement plan. This is a two-way process: all the actions on the school improvement plan should, in turn, be costed and appear on the financial plan.

Although some costs will always be unforeseen, such as those incurred during the Covid-19 pandemic, and although there should always be a contingency plan and some flexibility in the budget, the majority of spending can and should be planned in advance.

By planning ahead, schools can ensure that their spending will have a long-term impact. Accordingly, looking ahead and predicting the future is a vital skill for SBMs. I’d suggest a three-year plan.

Schools should also have an asset management plan to keep track of their valuable resources – their capital investments – and to ensure that those assets are kept serviced and safe. Such plans should, of course, take account of depreciation.

Prioritisation

When planning the budget, it is important that SBMs prioritise their spending, not just on achieving value for money, but also according to the impact such spending will have on pupils’ learning. It is also important that spending is prioritised according to what will have the biggest impact and what will improve most young people’s lives.

Sometimes, this is not a case of prioritising spending by cutting the costs of activities not directly related to pupils’ learning, but of deciding, of all the impactful actions that could be taken to further pupils’ learning, which will be the most impactful. Schools cannot do everything, after all.

Balancing the books post-Covid

The last twelve months have been tough in all manner of ways, including in terms of balancing the books.

Although the government has injected £1 billion of funding into the system to support children and young people to catch up from lost learning, most – if not all – of this money is likely already to have been swallowed up by the added costs of keeping schools open for the most vulnerable pupils and the children of key workers. For example, schools have had to shoulder the costs of PPE, extra cleaning and, in many cases, of providing technology to staff and pupils to aid online learning.

However, if any of that money does remain, then schools have flexibility to use it in a way they believe will help pupils to catch up and help them balance the books.

So, let us take a look at the catch-up premium first, then consider how this might be used alongside other pots of money to help schools build back better. I wrote in more detail about the catch-up premium in the previous edition of SBM Magazine so will not do so again here. Thus, suffice to say that the £1bn catch-up fund is divided into two as follows:

• a one-off universal £650 million catch-up premium for the 2020/21 academic year to ensure that schools have the support they need to help all pupils make up for lost teaching time

• a £350 million National Tutoring Programme (NTP) to provide additional, targeted support for those children and young people who need the most help.

Schools’ allocations of the funding have been calculated on a per-pupil basis, providing each mainstream school with a total of £80 for each pupil in years Reception through to 11. By way of illustration, a typical primary school of 200 pupils will receive £16,000 while a typical secondary school of 1000 pupils will receive £80,000.

If you find your catch-up premium has dwindled significantly to cover the costs of staying open, my suggestion would be to combine what remains of it with other streams, including the pupil premium grant, in order to ensure that it has greater impact on pupils. The catch-up premium is, after all, flexible funding and can be used for any purpose so long as your school can evidence the fact it has helped children to ‘catch up’ and access the curriculum.

As it’s likely that some of the pupils in greatest need of catch-up support will already be in receipt of the pupil premium or be identified as having additional needs, it is, I think, perfectly acceptable to combine the monies and the strategies. Not only will this ensure that support is properly funded, but it will also help schools to evidence the impact of spend and reduce the bureaucratic burden in terms of reporting.

Another way to help restore your school finances to good health might be to learn some lessons from the lockdown experience.

Lessons from lockdown

‘Post-traumatic growth theory’ research highlights the potential for positive growth and development as a consequence of trauma and challenging experiences. The notion of post-traumatic growth theory is echoed by ‘Build back better’, an approach to post-disaster recovery aimed at increasing the resilience of nations and communities to future disasters and shocks that was adopted by the UN Member States as one of four priorities for disaster risk reduction in the Sendai Framework.

The concept of building back better has its roots in the improvement of land use, spatial planning, and construction standards through the recovery process, but it has since been broadened to represent a wider opportunity, not just to restore what was damaged or lost to the impact of disasters, but to build greater resilience in recovery by systematically addressing the root causes of vulnerability.

So, what can schools learn from the coronavirus crisis about the ways in which they operate, and how might this help to recover our finances?

Virtual meetings

I would suggest we continue to embrace the idea of virtual meetings after the pandemic, because online videoconferences not only allow colleagues to attend meetings more flexibly and with less disruption to their other duties, including teaching, but they can also save money by reducing the not-insignificant costs of travel and covering lessons.

Online professional development

Online professional development can similarly help cut costs by reducing the amount of travel colleagues need to do in order to attend training courses and conferences, as well as the cost of overnight accommodation. Online CPD is also a means of allowing staff to access more tailored training and to do so at a time and pace that suits their needs.

Flexible working

Historically, schools have not welcomed part-time workers and thus not provided for the needs of working parents. But the lockdown has also shown us how technology can be used to allow more flexible working, including job-shares. Although part-time staff are no less costly – and job-shares can represent an increase in expenditure due to additional on-costs – allowing more flexible working patterns could help schools to retain high-quality staff and thus cut the huge costs of recruitment and training. High levels of staff attrition are very costly in all manner of ways, so doing all we can to retain our staff will pay dividends.

Strategy

Whatever SBMs do to restore our schools’ financial health, we need to take a strategic approach to budgeting if our schools’ long-term goals and financial sustainability are to be achieved. This, I would argue, starts with a clear vision, followed by an understanding of how the role of finance can help support school leaders and teachers.

In terms of vision, remember that the role of finance is to enable the delivery of educational objectives in an efficient and effective way. In short, and to conclude, school finance is no longer a back-office accounting service, but a business partnership whereby the SBM must work alongside teachers and middle and senior leaders in order to support their decision-making.