Introduction to Schools Finance for Governors David Blakesley - Finance Manager Carol Palmer - Principal Finance Officer

Overview Basics of funding and budget setting; Monitoring the budget; and, The role of Governors.

Annual Budget Setting (1) Budgeting is essential to good financial management. Enables timely decisions to be taken (e.g staffing changes if required) Sets out how resources are allocated. Enables monitoring expenditure in year. Should be based on realistic estimates of expenditure and income. Look at opening balance and closing balance Link to School Development Plan Ensure the school obtains value for money

Annual Budget Setting (2) Base on realistic estimates of expenditure & income (last year budget and changes). Staffing costs (70% - 80% total budget): Accurate staffing projections (spreadsheet)? Need to revisit staffing (under/over staffed)? Other Expenditure: What do school spend on resources? On-going, planned & one off costs? Reschedule work if necessary? Income: Latest allocations or estimates used? Included all known income sources?

Sources of School Funding Dedicated Schools Grant (DSG) - Schools Block (formula funding) DSG - Early Years Block DSG - High Needs Block EFA (6 th Form funding) - specific grant to special & secondary only Pupil Premium Grant UIFSM-Universal Infant Free School Meals grant Additional grants – PE & Sport Premium Allocation Other Income Other grants (e.g. Lottery, DFC) Income from Facilities and Services Contributions to visits/Donations School Funds

Questions to ask… Is the schools annual budget: Realistic & affordable (balanced, surplus/deficit)? Approved by governors on timely basis? Consistent with long term plans? Is the schools annual budget sustainable? Sustainable = Budget<Funding + Reserves Unsustainable = Budget>Funding + Reserves Future savings clearly identified and planned for

Medium Term Budget Medium term budget includes all financial issues but in less detail than the annual budget Sustainable plan across 4 years? Planning for future - examples: Balancing deficit on annual budget Increase/decrease in pupil numbers (funding) Future project (saving)

Why Budget Monitoring is Important? Good financial management Enables realistic year-end forecasts to be made Essential to monitor budgets (termly) to ensure you are alerted to any differences to plan and able to re-adjust future spending plans as required.

Monitoring Reports Head Teacher should produce regular budget monitoring reports, showing income and expenditure against budget. FMS reports for Headteachers and Governors LA - monthly reports sent to Chair of Governors (budget share & summary) LA - monthly reports sent to schools (budget share, summary, transaction) Monitoring report produced to identify significant variances Governors Challenge - Guide to Monitoring Budgets

Balances – Surplus/Deficits High surplus balances are classed as above 5% for Secondary schools & above 8% for Primary/Special/PRUs (% of all Block funding) Above 12% surplus schools have to provide evidence of intention to spend to Schools Forum but no mandatory claw back scheme in force For deficit balances a plan is needed to clear the deficit For larger deficit balances a formal 3 year plan is needed to explain in more detail how this will be achieved:  Primary/Special – more than £30k  Secondary – more than £100k  Or more than 5% of budget share – whichever is the lower