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Quality on a tight budget: the challenge for academy leaders

Budgets are shrinking but it's no excuse for lowering standards. Tilden Watson has advice for academy leaders

Posted by Hannah Vickers | May 24, 2017 | Law, finance, HR

By Tilden Watson – Head of Education, Zurich Municipal 

It goes without saying that the rapid academisation of the UK school system in recent years has brought about massive changes to the education sector. The latest statistics from the Department for Education show that there are some 6,087 academy schools in England, with a further 1,238 currently in the pipeline to convert. 

There are no signs that this process will slow down anytime soon. For the schools that have become academies, the changes have been revolutionary, with the leadership of the school taking on vastly increased powers and responsibility in terms of budget and business management.

The importance of managing finances efficiently is only likely to increase in the coming years

Such radical change does not come without risks attached, and this is especially the case for leadership teams with little prior experience in business or budget management. The Government’s planned changes to the national funding formula is likely to place unprecedented pressure on academy heads to run their schools more efficiently, whilst continuing to deliver high-quality education for their students. The importance of managing finances efficiently is therefore only likely to increase in the coming years. Indeed, former Ofsted Chief, Sir Michael Wilshaw has recently warned school leaders that it is their responsibility to tighten belts with the onset of these changes. 

Leadership teams have unprecedented freedom over spending decisions. On top of the regular per pupil funding, powers and responsibility over staff pay and the funding of additional services such as special needs support, requires complex budget management, applying new pressures to allocate funding appropriately. For instance, they can choose to save money by cutting the length of the school day or reducing the number of teachers. But, any such changes designed to bolster the school’s viability as a forward-looking business must always be balanced with the need to provide a high-quality education to its pupils. 

This is precisely why many academy leaders are looking to raise income and balance their school’s books through more innovative funding streams. 

For example, one common means by which academies are seeking to raise additional income is through the sharing of their facilities with the general public. Indeed, many institutions have high-quality sport and recreation facilities located on their premises in areas where there is a shortage of such facilities for local community. Playing fields, tennis courts and swimming pools are in high demand and academies are increasingly seeing the business value in allowing the local sports clubs, community groups and members of the public to use their facilities.

The need to think more commercially has opened up academies to new threats and previously unknown risks. For example, recognising income and expenditure with designated accounting periods has proved challenging for some academies, whilst failure to recognise the tax implications of additional income has even left others vulnerable to allegations of fraud.

On a separate note, it’s vital that academy leaders work with their insurers to make sure they are covered for any additional activity taking place on their premises and that necessary risk assessments have been carried out before any activity takes place. For example, an accident in a rugby match on a school field could cost the institution dearly if it does not have the appropriate cover. 

Academies face a tough funding outlook and the pressure only looks set to increase over the coming years. Many leaders have found success in carefully balancing budget considerations with the need to provide quality education, and by identifying new and innovative funding streams. But it is up to all academy heads to continually work to understand any new financial or strategic risks that might arise, and work with their partners to make sure they are prepared in the event that something goes wrong.  

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