Is your academy’s financial cupboard looking bare?
Many academies are on the edge of a financial chasm. Whilst the Department for Education may have a protected budget we all know that this represents a cut in real terms. We also know costs are increasing, such as National Insurance and the national living wage. So here are a few practical ideas to help deal with the challenges that lay ahead.
As with everything in schools, strategic business planning requires the highest standards of professionalism and skills. An experienced and qualified business manager will more than pay for themselves, even in a primary school. Outstanding strategic financial planning involves the whole school. Ensure your senior leaders in these areas are working together effectively: Curriculum planning and timetabling; staffing and HR; and finance and property.
Be proportionate in your actions. Remember typically around 80% of income is pupil related and about 75% of costs are staff related (teaching, support and administrative). So these areas need to be where you mainly focus – there cannot be any sacred cows. Consider benchmarking using Education Funding Agency or other published school performance data. But beware comparability and making false conclusions – try to identify a local peer school that you can talk to openly, where detailed benchmarking can be done. Beware the often illusionary multi-academy trust economy.
Do everything to maximise pupil numbers and hence income. A full school requires high quality marketing and promotion – this needn’t be costly. Identify other valuable resources and expertise you have and exploit that in a commercial manner. But watch profitability.
Staff are the biggest cost in schools, and teaching staff form the largest proportion. So consider radical changes in how the school operates; this is not necessarily at odds with excellence in teaching and learning.
If restructuring, it is better to do one major exercise rather than a series of smaller cuts that can damage morale. Minimise variable staff costs such as supply cover. Consider alternatives such as covering internally or sharing cover with other schools.
With other costs adopt a robust view and freeze if possible. Review all contracts, but start with the largest first. Beware the costs of fraud and deception – in difficult times even normally reasonable people can act inappropriately or criminally. Schools cannot afford to experience deliberate or inadvertent deception.
All schools should be preparing 3-5 year strategic financial forecasts and be monitoring trends over recent years, so necessary actions can be taken before it is too late. The EFA Efficiency Toolkit is a useful resource and set of reminders. But it does not replace good strategic business management. If you don’t have those skills you may need to get external support from professional advisers who know how schools operate and that have a proven track record of providing practical support.
As auditors and financial advisers we can support your strategic and financial planning. For further information, please contact us.