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Setting the budget – an iterative process

Each school’s budget is the financial expression of the educational aspiration for its pupils. It is firmly embedded within the overall strategic plan and the annual school development plan.

Financial planning is fundamentally linked to pupil outcomes and experience.

Each annual cycle should promote challenging questions to ensure that the budget is set appropriately.

This is a collaborative and iterative process, involving consultation with key members of staff and governors as part of ongoing evaluation, and a significant thread through the school’s annual cycle of improvement.

Within-year management of the school’s finances ensures you get the best from your budget. Every pound counts, and the overall strategic plan ensures that you know your direction of travel in future years and how you are going to get there.

Detailed guidelines are published annually on the technical requirements for setting the school budget, the treatment for each budget line, what allowances to make for on costs, how to deal with rates, etc. Hertfordshire make this available to each maintained school, and the Education Funding Agency to academies. See Understanding your budget.

Different from the very detailed approach to building the actual annual budget, the strategic, thinking part of shaping the budget enables the school to project forward over three years, enabling a rapid response if key factors change.

Each school has developed its own approach to how learning is managed, and schools of different sizes, phases and types bring their own challenges. It is difficult to compare one school accurately with another, but there are key processes that are relevant to all educational organisations.

The video clip is a useful illustration of the back-and-forth, iterative process that is involved when sorting out priority areas and establishing affordability. A headteacher and business manager discuss the need to be ever aware in order to respond to changes and different demands within the year and onwards.

Carley Holliman, Headteacher and Liz Redman, School Business Manager, Brockswood Primary School - Discuss setting the budget each year

If you face a funding shortfall, you will have to consider cutting expenditure through reduction of the overall staffing costs and a combination of better value in the non-staffing element of the budget. See Balancing the budget

Key issues

  • Review the school development plan and evaluate the schools success using RAISEonline, internal progress data, Ofsted and other sources of data that are relevant to your school.
  • Have a detailed analysis of your finance, regular monitoring of the budget should make this readily available to you. Establish if any area is having a negative effect on the overall budget. Linked with the previous point, ensure you know what the impact is of pupil premium funding.
  • What is your budget projection? Have changes such as an increase or decrease in pupil numbers taken place that will affect the amount you receive?
  • Are you predicting a deficit in any of the next three years?
  • If yes, are you clear why? Apart from there not being enough funding to finance your aspirations exactly, what is it that is costing you beyond what you can afford? You do need to be clear about which aspect is affecting you in this way. That may not be the area you trim back, but you do need to have a clear educational rationale as to why you intend to maintain a high spend in a particular area and make cuts in another to support it. See Balancing the budget
  • What is the school intending to achieve over the next academic year, and what are its objectives for subsequent years?
  • What staff teams and resources would ideally be in place to deliver pupil outcomes? This is not necessarily what you have had before – research, expertise, knowledge and vision are key.
  • Have you considered a range of structural ways of making best use of your money? There are a number of examples throughout the toolkit, for example sharing a post holder.
  • Cost the curriculum model plus other costs incurred by the school and compare bottom line against the funding that is available to you. See Curriculum models
  • Move back and forwards between what you currently have, what you aspire to and what you can afford. Prioritise and look for flexibility. If your curriculum model is expensive and you are wedded to it, can you make savings elsewhere? What natural movement in staffing is there that may facilitate this? Assign existing staff to your plan and identify gaps and opportunities. Inevitably more modelling and adjustments will be required.
  • Fundamental to this process is ongoing budget management for contract services such as utilities, reprographics, cleaning, grounds maintenance and catering. This will form part of your cycle of review to ensure you are gaining the best advantage for the school or group of schools. Some schools are able to make very significant savings in these areas, and it is one of the ways in which a great business manager can make a substantial impact. See Other expenditure
  • Think about the best way to present this information to governors, enabling them to understand the school’s priorities and to contribute to a debate at a time when their views are useful.
  • Remember that governors have a responsibility to ratify the budget.
  • Ask for help early on if you would benefit from advice or a discussion with your improvement partner or Financial Services for Schools.
  • Don’t go for broke this year if you see problems ahead of you. Keep looking forward to ensure that what you are doing is part of a sustainable financial continuum.

The following are generic documents which you may find useful for setting out your budgeting, benchmarking and cost review processes.

Benchmarking of Cost Template

Workstream Tracking Sheet

Budget Setting Process Template

Tracy Warner, District School Effectiveness Adviser, Herts for Learning - reflects on the impact of budget constraint on schools

> Working with governors

Contact

Herts for Learning
01438 843263