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Good financial management key to facing education demands

Paul Leigh, Chief Financial Officer at Focus-Trust, explains how schools can meet the resources challenge in light of recent budgetary constraints

Posted by Julian Owen | December 01, 2017 | Law, finance, HR

On Wednesday 22nd November, the Chancellor of the Exchequer, Philip Hammond, gave his first autumn budget announcement. And whilst with regards to education, this largely focused on a raft of measures aimed at getting Britain fit for a science and technology-based future - including a £600 boost to schools and colleges for every extra sixth-former who takes A-level or core maths – education’s share of public spending is continuing to shrink.

Public sector spending on education will amount to £102 billion in 2018-19, according to data from the Office for Budget Responsibility and HM Treasury.

This represents 12.6% of the predicted £809 billion of public expenditure due to be spent next year, meaning it will be the fifth consecutive year in which education's proportion of public spending has fallen.

Despite the Chancellor honouring the protection of the national schools budget, schools will still have to manage cost pressures from the following:

- Increases in pay costs (eg. Annual pay awards and incremental rises)

- Increases in non-pay inflation (eg. Energy costs)

- Increases in employer pension contributions

- Any changes in funding resulting from the new national funding formula

- Reductions in the education service grant rate and removal of the general funding rate

The full role of finance has to be understood if it is to help meet the challenges schools are facing and the increasing cost pressures mentioned above.

Accounting and compliance are the bread and butter of finance and must be maintained to a high standard regardless of the financial pressures.

Other management accounting activities include resource allocation, budgetary planning and control, analysis of trends and data to bring insight, and decision-making support. These areas are crucial in dealing with financial pressures and future uncertainties, as they help with the management of limited resources at strategic, tactical and operational levels. 

'If you accept that better allocation of resources can improve educational impact, then more money is not necessarily the only answer.'

In the school context, the role of finance is to enable educational objectives to be delivered efficiently and effectively, and providing value for money and delivering efficiency are key elements in managing an organisation, whether there are financial pressures or not. Resource efficiency is good practice and should run through every aspect of school management.

Efficiency releases more resources to frontline activities, such as teaching, books, classroom materials and classroom technology, so it really helps organisations facing budgetary pressures.

It’s important to stay positive in the face of budget pressures and financial challenges, not least because it opens the mind to new opportunities. An efficiency review might open up entirely new ways of doing things.

Resource allocation is about choices and allocating funding to priorities for maximum impact. If you accept that better allocation of resources can improve educational impact, then more money is not necessarily the only answer. And in a time of increasing financial pressures in schools, this can be a liberating insight.

Paul Leigh is a Chartered Accountant and is the Chief Financial Officer at Focus-Trust. He qualified in public practice and has worked in education for a number of years. He is passionate about how the role of finance can support school leaders in delivering higher levels of educational impact.

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