The Optimus blog

The blog that inspires leaders in the UK education sector

The Optimus blog

The blog that inspires leaders in the UK education sector

Nickii Messer

Why aren't more schools business savvy?

It is disheartening that so many schools continue to make poor financial decisions at the expense of their pupils' life chances. If they are to stay solvent, SBMs must spend strategically!

To prove that I am such a hard-nosed business lady, my friends like to recall the time that, when held up and robbed at gun point, alone in Egypt, I demanded a receipt for my stolen money. My robbers did indeed give me the receipt.

It is a true story, but not one I wish to repeat! If only more school business managers and their schools could adopt a similarly hard-nosed approach to financial affairs.

Fair funding?

Most schools are to all intents and purposes multi-million pound businesses. They need to be run by people with the edge and savvy to reflect those budgets.

However, with the alarming headlines about school funding cuts of recent weeks, I feel downhearted and frustrated that this just isn’t sufficiently the case.

I’m not so greatly frustrated by the press citing a recent NAHT survey, which found that the number of schools facing deficit have more than doubled.

I'm far less worried by further headlines declaring that ‘72% [of head teachers] fear budgets will be unsustainable by 2019’ (although it worries me that so many apparently don’t yet know if they will be sustainable or not). 

I’m frustrated because it is apparently big news that 71% of heads are balancing budgets by ‘making cuts or using reserves’. We are in recession, however the government chooses to spin it. Everyone, from industries to people at home, will be making cuts, dipping into reserves and spending more cautiously in order to stay solvent. Why is it surprising that schools are too? Surely there are more important messages here.

In any case, isn’t there an ethical dimension to schools holding reserves? When I was involved in training chairs of governors in budget management, we would often get to the subject of ‘carry forwards’.

In one session, a governor proudly announced that his (not overly large) school had a carry forward now approaching £500,000. ‘We really do struggle to spend it’, he laughed. A governor from another local authority then quietly stood up and told the first governor that ‘your school has my school’s money’. I couldn’t think of a better reason to review the fairness of school funding.

Heads up, not in the sand

Business decisions should be made with your head up. SBMs need to be constantly listening and digesting. They need to accept that worst case scenarios may happen.

Last year I met with a group of headteachers and the finance representative from their LA. I had worked with each of them for a period of time, and warned them that the funding review would have a negative impact on their schools. The LA ‘expert’ told me I was mistaken; that it would be politically suicidal to make cuts.

Business decisions should be made with your head up

Lo and behold, those very same cuts have now been announced. It is incredibly frustrating that these schools, on the advice of their LA, had buried their heads in the sand. 

I cannot understand why so many schools continue to indulge such relaxed attitudes to business responsibilities, and I worry that the aforementioned funding headlines will encourage them to make poor financial decisions. Spending is too often determined by what schools ‘have always done’ rather than by ideas and actions that are:

  • sustainable
  • clearly prioritised and costed
  • forward thinking.

Using pivot tables can allow an infinite number of comparison charts and combinations of expenditure areas with cost per pupil, or percentage of budget, or base cost.

Download our template to get started!

How do we improve?

The first step to improvement is to recognise what must be fixed. If schools do not recognise that sound financial and budgetary management is as vital for the life chances of our pupils as is recruiting and developing good teachers, they will never be able to afford the best teachers in the first place!

Even if multi-academy trusts are not necessarily the answer, they are an answer. LA support is fast disappearing, and keeping schools solvent and compliant is becoming an increasingly complex and expensive task. Why not share executive business decisions and financial efficiencies?  Marks and Spencer have shops of different sizes throughout the country. Imagine that every single shop employed its own chairman and a full board of directors, so that it could make its staffing, purchasing and retail decisions independently. Obviously this would not be cost-effective. Schools may not be selling knickers and socks, but our outturn is infinitely more valuable.

Schools are complex businesses, and as such they need suitably empowered school business leaders. It is frustrating when schools give a position to someone who doesn’t have the experience or expertise to rigorously manage the complex business functions, or is suppressed from doing so.

Schools are complex businesses, and as such they need suitably empowered school business leaders

Human resource management is equally essential. With so much of our expenditure tied up in staff, we need to ensure that everyone is working to the best of their ability. Everyone must be supported, trained and performance managed. None of this need be draconian, indeed it shouldn’t. Nevertheless, proactive staff management is important and often understated.

SBMs must think creatively, accepting that what may once have worked well might never be affordable again. Our relationship with budgets needs to change in tandem. The school and budget planning cycles have to be integrated and planning decisions made to reflect affordability. We need to be held accountable for making the best possible choices. 

Only having done everything possible to make effective, sustainable business decisions can we all stand together and say we will no longer accept funding cuts.

We can stand together and demand more investment.

We can stand together and demand that the government invests properly and fairly in education, so that we may spend efficiently for the benefit of all young people.

We must take these stands sooner rather than later.

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