Finance Training for Governors Hannah Ball School 7th February 2019 Welcome

Aims School Finance & Governance To improve governors’ understanding of school finance, and the governing body’s role relating to strategic planning, monitoring expenditure and ensuring best value.

Our core governance 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 body 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. 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: New national funding formula – 90.7% of funding allocated from basic per-pupil funding + 4 additional needs factors: - deprivation including where the pupils live in terms of IDACI index (income deprivation affecting children) - low prior attainment (EYFS -> KS1 and KS1 -> KS2) EAL (for pupils entering UK state education inside last 3 years) Pupil mobility The remaining allocation is predominantly school-led funding (including a lump sum for all schools) plus a bit of area weighting. During transitional arrangements, LAs must allocate at least 80% of the delegated schools’ block funding through pupil-led factors. Biggest influencing factor is head-count (number on roll) AWPU (age-weighted pupil unit) + additional needs funding School census data informs budget for next financial year

National changes to budgets New national funding formula… but …there are transitional arrangements in place until at least end of 2020/21. During this period local authorities will continue to allocate budget share to their schools and academies. Pupil Premium Grant & Universal School Meals funding are unaffected by the new formula.

Typical school expenditure breakdown

The governing body’s monitoring role Maintained schools: it’s up to the governing body to decide how to monitor the budget. Where there is a finance/resources committee it should have delegated powers, with terms of reference. What does your governing body delegate to your resources committee? When did the governing body last review the resources committee’s terms of reference?

Monitoring the budget How does your resources committee monitor the school’s expenditure against the budget plan…. over time ?

Monitoring the budget Are your meetings scheduled to receive current ‘year-to-date’ expenditure reports? Are reports in a format which work well for governor monitoring over time including forecasting? Who else do you (or could you) receive reports from? How do you ensure the educational priorities of the school are being addressed through the budget?

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

Evidence of budget monitoring How does your resources committee document its monitoring activity? And how does it report back to the governing body?

Reporting on your monitoring Minutes of resources committee meetings The headlines (ie progress towards meeting key priorities) reported at FGB (triangulation) Copies of reports shared with FGB, eg - the disadvantaged pupils’ strategy report (impact of Pupil Premium grant expenditure) - SENCO reports (impact of SEND expenditure) Are there any next steps, from the resulting FGB discussion, to take forward?

Budget Planning The governing body is responsible for producing and ratifying the annual budget plan (the resources committee recommends… and the FGB ratifies) Are your resources committee meetings scheduled to fit in with the budget planning cycle? 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 governors consider during budget planning?

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

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

Questions to ask during budget planning Are resources (including staffing) 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 have any risks been identified? How can better value for money be achieved from the budget? .

Ensuring Financial Compliance What role do you think governors have in ensuring the school operates with financial 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? .

Making best use of funds (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 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 weaknesses. 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. ‘What’s good practice’ - guidance and advice. What to do if things are not right in your school.

Section A: Governing Body and School Staff 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 body 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 body. 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? Clive.Haines@achievingforchildren.org.uk Rebecca.Walker@achievingforchildren.org.uk