Governing Body Value for Money Health Check Why would you use it? How does it work? Are you getting the most out of your governors? Do you think your governing body is helping the delivery of Value for Money? This checklist will allow you to review the role of governors in your school against best practice and help you identify areas for improvement. Suggestions on how to make simple improvements to the governing body, as well as how to increase support for governors, are included. Tool created October 2010 – all links to external websites and information cannot be guaranteed after this time.

Governing Body Value for Money Health Check Your Governing Body and Value for Money What is this tool? This tool provides general guidance on the financial role of governors. It focuses on key areas, including: The legal framework Working strategically with your governors Generating income School meals Repairs and maintenance There is also a link to our Governing Body Health Check (a separate Excel tool) which can help you assess the capabilities of your Governors. October 2010

The role of Governors The Legal Framework October 2010 The majority of a maintained school’s budget is generated by central government grants paid to Local Authorities (LAs). Although there is no duty placed on a Local Authority to further contribute to school funding from local taxation, they are free to do so. The main grant that LAs receive to create a school’s budget is called the Dedicated Schools Grant (DSG). The DSG is not paid directly to schools. The Local Authority retains the responsibility for distribution of the funding to individual schools in their local area. School budgets are calculated by the LA using a funding formula. The formula is governed by the School Finance (England) Regulations 2008. The LA also sets the framework for the financial relationship that operates between it and the school. Under this arrangement much of the management responsibility for the running of schools is delegated to governing bodies. Governing bodies may spend their delegated budget for “the purposes of the school”. The general interpretation of this requirement is usually taken to be ‘for the educational benefit of the school’s pupils’. Schools may accumulate savings and carry them forward into a new financial year. However, any deficit balances must also be carried forward. Financial Liability The School Standards and Framework Act (section 50 [3] ) ensures that Governors do not incur any personal liability in respect of anything done in good faith in exercising their power to spend the school’s budget, or in delegating that power to the Head Teacher. An example of an act not done in good faith is fraud. October 2010

Working with your Governors   Governors operate at a strategic level The School Standards & Framework Act - ‘The governing body shall exercise their (sic) functions with a view to fulfilling a largely strategic role in the running of the school’ A strong governance structure acknowledges that the governors’ role is strategic rather than operational Governors must be prepared to challenge custom and practice The checklist below will help you to support your governors and ensure they are working at a strategic, rather than operational, level.   CHECKLIST Have you put in place a sensible committee structure with clear terms of reference and standing orders? Do you understand the skills and experience of your Governors? Do you ensure their skills and experience are used effectively within the governing structure? Do you develop meeting agendas and supporting papers that focus on strategic issues and use hard evidence upon which to base an evaluation of progress? Do your Governors understand what is required of them. Have your Governors attended Governor training? Does your school have a Governors’ induction programme? Do your Governors understand their role and value for money? See Governing Body Health Check Tool on final slide for help with this. You may wish to establish a finance and resources committee for your school. October 2010

The role of Governors Generating Income  Schools are free to raise additional funds through: voluntary contributions from parents or the wider school community; renting out school premises; or running income generating activities.   When considering raising additional funds in the way described above, Governors must ensure that the school budget is not used to subsidise, or in any other way contribute to, the costs of activities that are not for any purposes of the school. October 2010

Repairs and Maintenance The role of Governors   School Meals The LA retains the duty to provide: Free meals to eligible pupils; Paid lunches on request; and to comply with national nutritional standards.   However, the Education Act 1996 has the effect of transferring duties to the governing body when funding is delegated. When the governing body has such duties, it may: Make provision through arrangements it has negotiated; or Buy back into a Local Authority catering service. It is important to note that buying back into the LA catering service does not shift the legal duty of provision back to the LA. Governing bodies with meal responsibilities should ensure that meal providers are: delivering good value for money; providing a nutritionally balanced menu; competent to deal with the various health and safety and other food safety issues that arise in meal provision. Repairs and Maintenance On a day to day basis, these costs will be paid from the school’s revenue budget share, unless the work in question is treated by the LA as being capital expenditure. Usually, the decision as to whether the expenditure will be met from capital or revenue is made in accordance with standard accounting practice, including a ‘de minimis’ limit. Below this limit items should not be treated as capital.  If a decision is disputed by Governors, LA accountants would normally be consulted. October 2010

The role of Governors Financial Management   Financial Management The Secretary of State announced the decision on Monday 15 November 2010 to end the current Financial Management Standard in Schools (FMSiS) with immediate effect and develop a simpler standard as a replacement. The replacement will be a much simpler version concentrating on key points on which governors and heads ought to assure themselves. It will concentrate on demonstrating value for money rather than processes; be developed in conjunction with schools themselves, and be proofed as acceptable and helpful to them before it is introduced; and be usable by Academies and Free schools as well as the maintained sector. Further information You can access further information about the end of the current FMSiS and financial management in schools from the DfE website. October 2010

Governing Body Health Check Tool This practical tool helps you assess the capabilities of your Governors on a set of key areas: Have the Governors developed an agreed vision? Are VfM principles recognised in the SDP? Has a finance and resources committee been set up? The tool asks you to assess whether the key areas are embedded, improving or not in place. Once you have assessed your areas, you are asked to put in place key actions to help progress the governance in the key area. Top Tip! You can access the tool here! October 2010

Where can I get more information?   Governing Body Resources You may find the following websites useful: National Governors Association: http://www.nga.org.uk/ Education Act 2005: http://www.education.gov.uk/schools/adminandfinance/financialmanagement/schoolsrevenuefunding/financeregulations/a0014217/education-act-2005 DfE Leadership & Governance: http://www.education.gov.uk/schools/leadership/governance   October 2010