Understanding school finance

Author : Al Kingsley @AlKingsley_edu

Sometimes the complexities of schools finance can be a real challenge for governors and trustees to understand.

As a general rule in a standalone LA school, the governing body will likely have a finance committee where expenditure and budgets will be discussed. In a MAT this is likely handled by Trustees and devolved away from the local governing body. Either way, it’s important to understand the finance of a school.

This summary provides a brief example for a fictitious primary school as to where funding comes from and where the typical costs are derived.

First up is where the schools fund comes from, this is typically broken down into 4 categories, Delegated, Devolved, Capital and Revenue funding.

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For a typical school, the likely breakdown of this revenue will look much like this, with the vast majority of the income being the Revenue funding from the LA,  which is the statutory funding per child ( AWPU), alongside Pupil Premium, Sports Premium, MENA and Free schools meal funding ( FSM)

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This provides a simple explanation as to what each of the funding types relates to.

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To offset that revenue are all of the operational costs of a school, with approximately 75% of a schools costs being linked to staff costs.

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The DfE provide a really useful schools financial benchmarking resource which allows you to pull up your schools data and compare to other schools in your area.

https://schools-financial-benchmarking.service.gov.uk/

You can compare all aspects of your expenditure against statistically similar schools to see where your costs might vary.

Teaching staff

Schools currently receive a very small budget for capital costs each year, and in the case of a medium size Primary school, this is likely to be in the range of £15 ( 2018). For one-off projects revenue can be moved to a schools capital budget ( with LA approval) but once there cannot be moved back again.

Its worth also being mindful, should you be in the fortunate position to have a surplus for the year, that a school will only be allowed to carry forward a maximum amount of revenue, typically between 7 – 9% depending on the school-type and LA policy.

Finally, things governors should be aware of  and that should shape the discussion on finance and where available funds are targetted.:

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There are plenty of other variables to consider, but to keep it simple the above is a high-level summary of basic school finances.

 

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