Finance Robbing Peter to pay Paul Jo Seymour says hiding your head in the sand is not an option should your school finances take a turn for the worse 80 | Summer 2014
Finance According to the Academies Financial Handbook from the Educational Funding Agency, school leaders are under obligation to ensure; “…Public money… Spent wisely, honestly and transparently.” As school leaders, we are charged with ensuring that good financial management, both long and short term, is in place. What to do you do if it goes wrong? You arrive on your first day to discover the financial situation is far worse than you thought. What starts as a small overspend becomes an in year deficit. The in year deficit turns into a negative budget. Be brave, look at all the figures you have, take a breath, and then do something about it. Don’t sit and worry, and definitely don’t hide your head in the sand. There are people to help you, so take advantage of their expertise and be proactive. Remember, that although it is a school leader’s responsibility, nowhere does it say you have to do it all on your own! As the newly appointed Head and I had arrived in the school to discover that the school was bankrupt! Salaries couldn’t be paid and there was no money to carry out the improvements that desperately needed to be made. Not only did the school have no money, actually it hadn’t had any money for a long time, at least 20 years. Why and how this had been allowed (and why I wasn’t told) is another story. What was important was what I needed to do about it. Three years down the line, the light at the end of the tunnel is shining very, very brightly; a positive bank balance at the end of this financial year is very nearly possible. At long last we have had months where we have been in credit and it appears that the financial dark ages may soon be over. The Local Authority agreed, after a battle, to give an extra budget share, which was to be reviewed annually and removed as soon as possible. No fairy was going to come along and magic the deficit budget away. Thinking strategically, being transparent, involving governors, and seeking help and advice from those around me was the start. The role of a sound School Business Manager cannot be understated: this invaluable partnership enables clarity, planning and action to take place. Teaching and learning balanced against financial management can be achieved by never missing a week of investigation into the current state of play and taking every opportunity to spare a few pounds here and there as well as those big savings. The stakeholders too supported this journey. Following an Ofsted where all our financial dirty washing was hung out to dry there was initial horror and questions asked about what the governors and I had spent the money on. I had to be careful not to give an emotional and impulsive response; it was a careful, professional truth that had to be told. The result was proactive support of time and effort by parents, pupils and staff, who were able to be enterprising, knew the cost and thought about how we could meet it. This powerful tool, combined with the support of governors, gave a mandate to myself and the School Business Manager to take the situation in hand and enabled us to make vital decisions and remedy years of financial deficit. Look at the people; your greatest cost. Those extra members of staff who are there (historically or newly appointed) to deal with ‘specific’ situations. They might have taken groups, to support another member of staff, those that top up staffing or release people. Everyone is costly, do an audit, look at impact. Be lean but be effective. Check the cash flow. Do you know how much money is in the bank at the end of the month? Do you know how much you need in the bank should a money draining experience occur? What is a ‘money draining’ experience in your school? Is it a few weeks off sick, the unexpected (though you sort of knew it might happen) small leak in a flat roof? How much do you need to patch it? This is not about big things it is about the small things, which add up. Oh dear Mr H is hoarding again! How many pounds are hidden away for a rainy day in classroom cupboards? Having a paint amnesty, with everyone’s supply being put on tables in the hall, revealed excessive bottles of black and no red or orange. Once equitably redistributed and the necessary missing colours bought, the impact was staff knowledge, trust and understanding of the serious situation, and even more importantly the correct tools to do the job. Why did we even have so much black paint? Consider not only what you need, but when you need it too. For us, having sufficient green and purple backing paper for the boards next to focus tables for liturgical seasons is important. We have just had a purple paper crisis before Lent – where did it all go? Having to spend an extra £50 on backing paper disappointed me, and the staff were mortified. Then Mr H made an appearance, ‘Well, it’s in my cupboard. I thought if I kept it, I knew it would be safe and we would have it for when we needed it’. So nearly yet another £50 was spent unnecessarily. It all adds up. How much money do you have banked in the cupboards? I mustn’t take my eye off the ball and I always check the income, how much we are spending and the cash flow figures. My staff also remain cautious in their spending. Knowing the cost of the resources, as well as questioning the value, impact and necessity of the items available in the glossy catalogues has become every day practise to keep the financial demons at bay. Pupils too know the value of good financial management, for example the cost of an educational visit raises the questions, have we got the best value, how can we reduce the cost, can we be enterprising and earn money to enhance the trip. Selling cakes is always popular, but they know how to ensure the best profit and have a target amount in mind. Enterprise week reinforces this knowledge and understanding, as we learn about handling money and profit margins. They even ask if I am available for ‘match funding’! Financial life skills for us all, learnt out of necessity to balance the books. Now I just need to apply it to my own money. Do I really need that new pair of shoes I saw the other day? Well, they do match my handbag! Summer 2014 | 81
Change language