How to plan your school budget

Where do you stand with your budget?

The number of schools with budgets in the red has quadrupled in four years according to research carried out by The Education Policy Institute as reported by the BBC. An average local authority secondary school is said to have debts of £483,000 despite the Department for Education (DfE) stating 90% of all state schools are in surplus. With these contradicting figures in the public domain, one thing that is a common denominator in affecting these, is how budgets are managed.

Making the right decisions

Whilst there are widespread funding shortfalls in the sector, which can be to blame for a lot of school deficits, the management and allocation of existing funds can be used to aid this problem. A spokesperson for the DFE has said the education secretary is determined to work with the sector to help schools reduce the £10bn, which is currently being spent on non-staffing costs, to ensure every pound is spent as effectively as possible to give children a great education.

You can help the financial position of your school by strategically forward planning in the right way to alleviate pressures from governors, department heads and even parents.

Back to basics

Your budget is essentially made from your income and expenditure; as long as your expenditure is not more than your income, you’ll be safely in budget.

The majority of schools, academies and multi-academy trusts’ income is from government grants or funding from the local authority, and with this income having been cut over previous years, it is as precious as ever when allocating it. Standing at around 75-80%, we’re all aware that staff costs take up the most amount of school’s budgets, leaving most with 20-25% of budget left to play with.

Stretching this amount to cover department resources, facilities and maintenance is a tricky job to say the least, however by splitting non-staffing expenditure into two further categories, your financial position can be made much clearer. Within non-staffing expenditure there are:

o   Educational expenditure (e.g. departmental budgets, exam costs)

o   Non-educational expenditure (e.g. office equipment, support contracts)

Know your budgets are accurate

Before planning the nitty gritty spending of your funds, you need to be sure that your data from previous years are accurate to ensure your future figures are correct. So, what data do you need for your budgets to be as accurate as possible?

• Budgets from previous years

This way you can compare which figures you estimated accurately, and which costs went over-budget so to not make the same mistake twice. Our Education specialist, Martin Holyoak, firmly stands by this step, commenting “By using last year’s “no-staff pay” expenditure to budget, you avoid flat line budgeting and can make more accurate predictions. This also ensures that your cashflow is not out of budget.”

• Pupil numbers of other schools (from census or local authority data)

o   The size of other schools can impact your numbers

• Staff costs

o   Having these to hand for previous periods will enable you to see where you stuck to forecasts and where more budget may need to be allocated, for example within certain departments or supply teacher fees.

• Exam results

o   You can ensure each department is getting the budget allocation they need based on your exam results, some may need more attention and investment than others.

You should also be aware of additional costs such as insurance and maintenance

Planning for your future

Get the most out of your planning by creating 3-5-year forecasts; this way if you notice deficits within the first year, amends can be made in budgets for the years to follow to counteract and pacify for the future. You can make small, strategic changes over longer periods of time by creating these forecasts which not only futureproof your institution but give you greater control over funds so sudden cuts are a thing of the past.

Set out your objectives

Budgets aren’t set in stone, and neither are your objectives, however it’s important to set out what you are trying to achieve. This can span from student values and school facilities to exam results and a more efficient institution. You must pair your objectives with the resources you need to obtain these, and the subsequent expenditure required to meet them. Martin also believes this is crucial when planning your budget; by combining your objectives with your spend, you have greater control and sight over what expenditure is necessary and what is impromptu. He says, “If you avoid erratic spending patterns, such as unplanned large spending as opposed to expenditure that is little and often, you can keep better track of your expenditure and predict for the future”.

Embrace technological change

You now know the basics of planning an effective budget, all that’s left is to find a way to consolidate this information into one place which can be easily updated and stored for current and future reference. This is where technology is your best friend.

With effective budgeting software, like IRIS Financials’ budgeting tool IRIS Financial Planner, you can review your previous budgets, extract and import data from your financial management system, plan for the year(s) ahead, and create insightful reports showcasing key information.

Learn more about our education management software and discover the power to control every aspect of your budget.