Finance Training for Governors School Finance & Governance Monitoring against the Key Priorities Welcome

Aims School Finance & Governance To improve governors’ understanding of school finance, and their role relating to strategic planning, monitoring expenditure and ensuring best value. Schools Financial Value Standards To highlight the requirements of the SFVS (only for maintained schools - but the principles in the SFVS are a useful audit for all governing boards.)

The Core Responsibility is… To oversee the financial performance of the school and make sure it is money well spent.

What does this mean? Schools must be able to evidence – to their stakeholders and to the regulators - that they are spending their funds to achieve the best possible outcomes for the children, and that they are achieving value for money. Every school has a delegated budget, to cover staff costs, running costs, maintenance and equipment. The governing board is responsible for this budget.

The budget - channels of income The School’s Budget Share (Dedicated Schools’ Grant) Allocated by the local authority - for pupils aged 3-16. 16-19 (6th Form) funding is allocated according to a national formula. Other grants Your school may receive funds or grants from the government to support specific initiatives and strategies (e.g. Primary PE and Sport Premium grant) Other income Can be derived from a variety of sources, eg lettings, parental contributions, sponsorship, PTA fundraising

The school’s budget share: Biggest influencing factor is head-count (number on roll) October census data informs budget for next financial year

National changes to budgets New national funding formula from April 2018. Transitional arrangements until 2021 – your local authority will continue to allocate budget share to its schools and academies. Pupil Premium Grant & Universal School Meals funding are unaffected.

Typical school expenditure breakdown

Governing board’s monitoring role Maintained schools: up to the FGB to decide how to monitor. Where there is a finance/resources committee it should have delegated powers (via terms of reference) Academies: “the board must approve a written scheme of delegation of financial powers that maintains robust internal controls” and… “the trust should have a finance committee to which the board delegates financial scrutiny and oversight” (Academies Financial Handbook 2018 paras 2.1.3 and 2.1.4) Overall accountability rests with the FGB / Trust Board.

Monitoring the budget How do you, as governors, monitor your school’s budget over time?

Monitoring the budget Are your meetings aligned to receiving ‘year-to- date’ expenditure reports from the bursar / SBM? Are your meetings scheduled for timely strategic discussion (budget planning, staffing, build works…) Who else do you receive reports from? How do you ensure the educational priorities of the school are being addressed through the budget?

Monitoring the budget How do you do this? Governors need to ensure that resources are spent according to identified school priorities, such as those in the School Development Plan. TRIANGULATION How do you do this?

Evidence of budget monitoring How do you document your monitoring activity? How do you report back to the board?

Reporting on your monitoring Minutes of finance / resources committee meetings The headlines (progress towards meeting key priorities) reported at FGB (triangulation) Copies of reports shared, eg - PP champion/governor (impact of PP grant spend) - SENCO report (impact of SEN expenditure) Are there any next steps, from the resulting FGB discussion, to take forward?

Budget Planning The governing board is responsible for producing and ratifying the annual budget plan (finance committee recommends… FGB ratifies) The budget plan must have a clear link to the key educational priorities of the school (eg staffing and CPD; cost of strategies / interventions) What else should the finance committee / governors consider during budget planning?

Budget Planning Appraising different expenditure options Findings from benchmarking Efficiency considerations. Value from SLAs. Future staffing – upcoming changes and needs Sustainability (3 year plan) .

Factors to consider in the 3 year plan: Likely staff costs Pupil numbers Long term commitments Budget changes Continuous review 3 year plan and school priorities

Questions to ask during budget planning Are resources being allocated in line with key priorities? Does the budget plan identify spending opportunities… and risks? Does the school have sufficient reserves to cover any major changes (eg restructuring) and any risks identified? How can better value for money be achieved from the budget? .

Ensuring Financial Probity What role do you think governors have in ensuring the school operates with probity and makes best use of public funds? .

Protecting public funds Are there any outstanding issues from most recent external / local authority audit? Do all the staff know the whistleblowing procedure? Is there an adequate system for annual audit of the school’s private funds? Is there an appropriate disaster recovery plan? .

Protecting public funds: Academies Academy trusts must establish an [audit] committee. Where the trust has income of <50 million, this can be a combined (eg finance & audit) committee, but… Employees sitting on a combined committee cannot participate when audit matters are discussed (they can still report to the committee for these items). The committee must agree a programme of work to provide assurance on financial controls and risks (including for the constituent academies, if a MAT) Academies Financial Handbook 2018 para 2.9 .

Ensuring best value How robust are our procurement procedures? How well does the school maintain its premises and assets (asset register / disposals procedure)? How well do we collaborate with other schools (sharing best practice / economies of scale) Could we improve the use of any of our resources? .

Schools Financial Value Standard Maintained schools only. 25 questions to be completed – the options are ‘yes’ / ‘in part’ / ‘no’ with comments to be made against each answer, expanding on the school’s current position (including any weakness areas.) Submitted annually to the local authority. Each school’s SFVS is used to inform the LA’s annual DSG CFO’s Assurance Form return to the DfE. Areas for improvement go onto an action list, with each action having ownership and a timescale

SFVS Support Notes Detailed information on what each question means. The SFVS Support Notes document should be consulted when completing the form. Much of the information in the Support Notes could also be used for by academy finance governors for self-evaluation against current best practice. Detailed information on what each question means. ‘What’s good practice’ - guidance and advice. What to do if things are not right in your school.

Contents of the SFVS Section A: Governing Body and School Staff Section B: Setting the Budget Section C: Value for Money Section D: Protecting Public Money Outcome of self-assessment: Section E: Summary of agreed remedial action and timetable for reporting back. .

Section A: Governing Body & School Staff Governing body and staff with adequate financial skills Governing body’s finance committee (or equivalent) Definition of responsibilities of governing body & school staff Monitoring reports of the school’s budget position Business interests of governing body members Access to an adequate level of financial expertise Review of staffing structure Pay decisions reached in accordance with pay policy Use of professional independent advice and Headteacher pay decisions

Section B: Setting the Budget Link with school budget and its plan Clear and demonstrable link between budget and SDP Forward projection of the budget 3 year forward planning Well informed and balanced budget Outturn in line with budget projections

Section C: Value for Money Benchmarking Procedures for purchasing goods and services School balances Maintenance of premises and assets School collaboration with others Improving the use of resources

Section D: Protecting Public Money Outstanding matters from audit reports Guard against fraud Whistleblowing arrangements Accounting systems Arrangements for audit of voluntary funds Continuity or disaster recovery plans

Section E: Outcome of self-assessment Summary of agreed remedial action and timetable for reporting back. Action points, their ownership and the timescale SFVS must be agreed by the FGB and is signed by the chair of governors.

Use it for self-evaluation Suggestion: take one section or a set of questions from the SFVS, and make this the focus of a governing board evaluation of how well the school is operating, in line with the good practice in the guidance notes. Report your findings back to the governing board. How would you go about doing this? .

DfE Resources: School Resource Management website: https://www.gov.uk/government/collections/schools-financial-health-and-efficiency - Getting started: checklist - Review and benchmarking school finance - Planning workforce and curriculum - Advice, training and peer support - Guidance and planning checks for governors https://www.gov.uk/guidance/school-resource-management-top-10-planning-checks-for-governors

Any questions? For school governance support: Rebecca.Walker@achievingforchildren.org.uk