Trust

Time to Start your 18/19 Budget

If you haven’t already started, now is the time to begin.

I’ve always been a big advocate of a decent three-year budget plan and of the importance of completing revised budgets once or twice a year but completing your new year’s budget early gives time to review and revise where necessary.

You may be asking: why to go to the effort of completing my 18/19 budget early,  if I already have a 3 year budget plan? But the truth is, most schools and academies have some form of budget tool that automatically extrapolates the data across 3 years, unfortunately, in many cases, the subsequent years may get some cursory attention that is focused on the bottom line but not much more. Many academies don’t start looking to complete the next year’s budget until they must - often because there is a looming ESFA deadline.
 

So, A quick and dirty guide to completing your 18/19 budget:

  1. Roll forward your 1718 data

  2. Update your pupil numbers with your October Census data

  3. If you do not have a budget tool that does it for you, update your funding streams to reflect the October Census data (assuming you’re lagged funded)

  4. Update your staffing with your current structure – ensure you’ve done a full payroll reconciliation by staff member

  5. Include all potential increments

  6. Go through all non-staff expenditure line by line

  7. Add or remove the cost of one off expenditure/projects

  8. Review all additional income streams

  9. Update your pension rates (if they’ve changed)

  10. Try not to go into shock in the middle of the office when you see the bottom line! 

  11. Book time with the Principal and relevant stakeholders to go through your initial draft budget

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Getting the foundations right are critical in having a strong and financially stable organisation and this is never more prevalent than in a Trust. With so many financial challenges facing the Education Sector and many Trusts pooling reserves or looking to do so, having next year’s budget much earlier, provides plenty of time to review both the individual budgets and the collated position. It gives time to direct the resources to support those schools where they have been unable to complete a balanced in year budget, to review why and put measures in place, if necessary, to ensure they do. It allows the Trust to strategically plan where reserves may be required and best utilised.

A Trust that doesn’t start looking at the 1819 budgets until the Summer term is left with little to no time to make an impact and can quickly find that their reserves dwindle to nothing or worse. In short, it forces them to be proactive rather than reactive.

So, once you have year end in your rearview mirror and the auditors are no more than a memory, dust off your budgeting skills and get to it, a new year awaits.

 

Author: Director, Tracy Dawson

 

Top 5 to Consider when Setting a School Budget

As well as having to look at the next years’ budget for submission to the ESFA, all academies and trusts should be in the throes of preparing a 3-5 year budget for review with their trustees.  This will give an insight into the impact of rising costs and renewal plans, and if necessary, enable an action plan to be put in place now; before they get into a net deficit position.  So what is there to consider? 
 

1. Self-Generated / Voluntary Income

Frequently mentioned in the media of late, with costs reduced as much as possible the only other way to bridge the gap is to try and increase ‘other income’.  Some examples are as below;

  • Breakfast and After School Club

If this offering is already being made, a review to see if it is profitable may be a good idea.  Whether food can be donated from a local supermarket, the amount charged can be increased, the hours the club is open can be extended to be more appealing to working parents, the ratio of pupils to staff is the most efficient.  If schools within a local area can team up to provide this service economies of scale can be obtained to increase profit margins

  • Lettings Income

Again, the rate for the hire of facilities should be reviewed on an annual basis to ensure that it's covering costs.  Whereas schools let out sports facilities and halls as standard, it may be a requirement to think outside the box and look at hiring out meeting rooms / ICT suites for courses etc to try and increase income, with some academies even advertising their premises as wedding venues to generate a new stream of income

  • Voluntary donations from parents

Some academies do this as standard each year, asking for £10 per child for example.  However this is likely to become more popular, or rates may increase going forward as schools try to deal with budget cuts.  


2. Ultimate Staffing Structure

'£3billion of savings needed by 2019/20' according to the National Audit Office.  With an aim of less than 75% of all expenditure to be spent on staffing, a review of your current structure is inevitable.

The majority of academies we work with already try to minimise staffing costs via natural wastage, replacing posts with cheaper options, and using apprenticeships for cheaper labour.  However even with all of these savings some academies are still not able to balance their 3 year budgets.

It all seems to be bad news lately for the employer regarding staffing costs; national insurance increases, living wage rises, increase in pension contributions, apprenticeship levy, all on top of the normal annual increments!

An alternative radical method of looking at your staffing structure is to start with a blank piece of paper and build your ‘ultimate staffing structure’ from scratch.  This is difficult as it means ignoring people and just looking at roles.

To get this structure in place may result in a high initial outlay of redundancies and a large disruption; however the ongoing savings year on year should outweigh the initial cost, and the benefit to the education delivered to pupils should be worth the upheaval.
 

3. ICT / Premises Renewal Plan

These areas can sometimes can be overlooked; with just the actual costs from last year being used to budget for future years.
To remove any nasty surprises each academy should have a 3-5 year (at minimum) renewal plan for projectors / laptops / ICT suites / Ipad trolleys.  Along with a premises plan based on walk-arounds / planned maintenance / need for improvements.
Also ensure that you run any purchases of ICT hardware and software past your ICT expert to ensure that they are compatible with your network so as not to incur any wasted expenditure.

 

4. Review of Contracts

A review of all bought in services can be enlightening.  The amount schools pay for photocopier contracts in particular can vary by thousands!  Ensure you are always getting at least three quotes for large contracts to ensure best value for money is obtained.

There may also be various services schools purchase that are no longer necessary once they convert to an academy or become part of a Trust, so it is important to have a handle on when notice needs to be given to these companies to ensure that money is not wasted unnecessarily.

 

5. Pupil Premium

Although this needs to be disclosed on the academies’ website, a common error with budget setting is forgetting to ensure that costs are included for the equivalent amount of funding you estimate to get.  Obviously some of the funding can be used to cover staffing; if those staff members are specifically working with pupil premium students.  However other expenditure needs to be accounted for in line with the academies plan to bridge the gap for these students.


Some interesting statistics;

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Author:  Director, Carina Gilbert

 

Meet EduFin's Junior Consultant

Here at EduFin, we are proud to announce the arrival of our first Junior Consultant - Lawrence Brooks. Lawrence joined EduFin in September 2016 after working at two multi-academy trusts using both PS Financials and FMS. 

Since joining, Lawrence has worked for many different Schools and Trusts covering for absence and also data-entry training on the use of PS Financials. In addition to this, he has taken on the mantle of HCSS Accounting; having set-up the security structure, entered all opening balances and supported with bank reconciliations and payment runs.

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On working for EduFin thus far, Lawrence said “The environment has refuelled my hunger for accounting and working alongside fun and informative directors has enhanced my knowledge in all aspects of the academy sector.”

Lawrence, who is working towards his full AAT qualification, is available to support your academy finance team when resources on the ground are caught short. Knowing three pieces of academy accounting software and possessing the ability to hit the ground running makes his skills highly sought after.

Director of Finance and Business Services, Edenham High School said: "Lawrence’s support and expertise on using PSF to its full advantage has been so helpful to our school and the learning we have gained from him is immense on dealing with day to day financial transactions. I would recommend Lawrence to any school that needs support on understanding how to use PSF effectively." 

With depth in ability and a can-do attitude, Lawrence says his main aim is to "support your every requirement without difficulty or the traditional finance jargon”.

Contact us now if you’re interested in hearing more about what our shiny new Junior Consultant can do for you!