If you’re involved in your school, nursery or college’s financial management, whether as a head teacher, school bursar, finance manager, school business manager, governor or member of the finance team, you’ll understand the need to effectively manage the budget for long-term financial sustainability.
This is no easy task.
And with recent cuts to the government’s education budget, and changes in funding allocation, managing school funds and alleviating financial issues will only get more challenging.
Research from the National Association of Head Teachers (NAHT) found that many UK schools are reaching a critical financial “breaking point”, with the number in deficit doubling since 2015 and three quarters forced to tap into reserves and instigate spending cuts in order to make ends meet.
Balancing the budget and achieving optimal financial efficiency that doesn’t have a negative impact on education outcomes is a core focus for both established institutions and for those setting up a school.
Schools, nurseries and colleges face financial issues unique to each establishment. However, there are a number of pressures that are universal.
These can include:
- An increase in staffing costs including pay rises and higher employer contributions to national insurance and the teachers’ pension scheme
- Unpredictable employee costs including maternity leave, staff sickness, retirement, recruitment
- Ageing buildings with inefficient energy usage and high maintenance expenses, or unfeasible improvement costs
- Out-of-date procurement agreements and contracts, for example catering, cleaning, insurance, that no longer offer the best value for money
- A lack of purchasing power e.g. smaller schools with less significant budgets and requirements
- Significant rise or fall in pupil numbers, for example if a nearby school changes its admissions policies
- Reducing an existing deficit or maintaining a contingency reserve for emergencies
Finding a Balance
There needs to be a level of flexibility in terms of balancing the necessity of running your nursery, school or college as a business and ensuring the best outcomes for pupils.
Those managing finances have the tricky task of reducing costs and ensuring they can continue paying teacher wages, the most significant outlay of a school’s budget, without failing students in terms of educational attainment.
Ideas to Improve Finances
There are no quick-wins when it comes to maximising your budget, saving money and knowing where to cut costs. Here are ten ideas to consider to help make your school funds go further or to factor into planning when setting up a school.
1. Finance Best Practice
Ensure you’re optimising your school funds by reviewing your budgeting methods and how you plan finances. Proactively update inefficient practices and put measures in place to prevent you getting bogged down in irrelevant numbers.
Analyse the performance of past years’ budgets and identify:
- areas of over-spend and under-spend
- fluctuations in pupil numbers
- poor exam results to spot subjects that might need investment to make improvements
- staffing requirements and any updates in pay scales
- other resources that require a money allocation
Plot in future funding and other income streams and plan ahead for different scenarios. For example, if you expect a rise or fall in pupil numbers. Forecast future budgets and input into spreadsheets to ensure that proposed expenditure doesn’t exceed proposed income.
The aim is to be in the black, however, you also don’t want a large surplus.
Investing now in finance best-practice training for relevant staff will have long-term benefits with regards to effectively managing your budget in the future. Or perhaps you have reached a point where hiring dedicated talent with the applicable experience and first-hand knowledge to manage the budgeting and finances is now appropriate.
And if you collect regular payments from parents for school fees or after school clubs, then setting up Direct Debit services to automatically process payments will save finance administration time and help improve your cashflow.
Money can be saved in your procurement processes. Ideally reassess large contracts at least annually and beware of auto-renew agreements which might not provide the best cost savings, as well as lengthy tie-in periods.
When looking to renew contracts, it’s considered best practice to obtain three quotes to compare. Spending time researching suppliers initially will provide good value for money in the long-run.
Negotiate the best deals and value-adds and make sure that services are perfectly meeting your school’s needs and are fit for purpose.
You might be tempted to buy in bulk, however this doesn’t always offer the best value as requirements change and technology evolves.
You can boost your buying power by teaming up with other schools or buying groups when negotiating large agreements. Achieving these economies of scale can substantially reduce overheads.
Ideas and information sharing between schools in geographically close clusters can enhance your financial efficiency. Learn from other establishments similar to yours that have improved performance or saved sizeable sums on paying teacher wages and put this knowledge into practice.
There is also the opportunity to share resources and assets across other nurseries, schools and colleges. This could include sharing staff, equipment, furniture, buildings or minibuses.
Benchmark your budget against other nurseries, schools and colleges in a similar area and of a similar size to your own. This can help you to quickly identify where you’re overspending compared to the average or where you can implement cost savings.
The Department for Education has useful comparison tools, financial benchmarking metrics and health checks.
5. Efficient Staffing and Timetabling
Reviewing your staffing structure can enable you to make cost savings. Ensuring you’re deploying staff efficiently, evaluating skills gaps, and pupil to teacher ratios as well as staff absences and supply choices can all significantly help.
Reducing spare capacity, considering if “like-for-like” recruitment to fill vacancies is the best decision and investing in staff through training are all ways to reduce spending. Another possibility is to outsource staff with specialist skills to other schools for additional income.
Examine your timetabling to ensure it’s using staff to full capacity, presents the best room usage, is offering financially viable courses and a coherent curriculum. Employ a timetabling consultant to overhaul your timetable and devise the most cost- and time-effective option.
The initial outlay to bring in an expert will be quickly recouped.
6. Sustainable Practices
An initial investment in energy saving technology will benefit your finances in the long term. For example, by fitting light sensors that switch off lights when the room or hallway is empty, upgrading insulation, fitting new energy-efficient windows with double glazing or installing solar panels.
Money can be saved and wastage reduced by switching all paper communications, and the necessary printing machines and supplies, to emails and text messages to staff, pupils and parents.
7. Fundraising Activities
School funds can be topped up with creative fundraising events and activities. For example, allowing pupils to come to school on one day in their own clothes in return for donating classroom essentials. Hosting school fairs that appeal to the wider community as well as selling items to parents such as hoodies with the pupil’s name and photographs all bolster reserves.
There are also opportunities to use crowdfunding websites to encourage donations for specific undertakings. For example, a new play area, library or ICT hardware.
8. Hire out School Assets
Hiring out the school buildings, facilities, equipment and spaces such as car parks can inject much-needed cash.
The school hall can be used as a venue to host one-off events such as weddings or birthday parties, or regular group meetings including exercise classes or church groups. You could partner with a car boot organiser to utilise the car park for a weekend sale and take a cut of the entry fee. And the school’s playing fields could be hired out to local sports teams for practice or tournaments.
Catering facilities and IT equipment could also be loaned for a small fee.
9. Maximise Existing Resources
Save money by making better use of the resources you already have. Undertake a full-scale appraisal of current systems, equipment, resources to ensure that nothing is being under-used or has been forgotten about in a cupboard. Identify ways to reuse or repurpose equipment or share resources across departments.
Clear accountability will ensure that money is being spent wisely. Monitoring expenses and tracking spending will pinpoint unintentional outflows and allow you to clear bottlenecks and plug inefficiencies.
10. Recruit Volunteers
Make full use of your PTA by finding volunteer parents with relevant skills and a willingness to help. For example, parents might have a background in finance, procurement, marketing and project management or they might be able to support teaching staff.
You can also utilise your staff network to find suitable volunteers as well as reaching out to local volunteer groups. Using volunteers to take on tasks for free will help release money for paying teacher wages.
Proactive Problem-solving to Ease Financial Issues
The Department of Education estimates that mainstream schools will have to find savings of £3 billion by 2019-20 to counteract cumulative cost pressures. Financial issues will continue to impact nurseries, schools and colleges across the country.
Implementing cost-saving measures now will help alleviate the stress, whether you’re managing the budget of an established educational organisation or setting up a school.
Proactively addressing financial planning will help you to get the balance right between running a business and doing the best for your pupils.