1. Leading efficient and effective schools
Primary and secondary

2. Purpose of the day
To develop governors’:
ability to meet their responsibilities for efficiency and value for money (Governance handbook, Section 12.1)
knowledge and understanding of the materials and tools available to support schools
awareness of the ‘efficiency review tool’ and how to use it in their schools
Notes
Briefly outline each of the points on the slide.
The workshop should be positioned as supporting governors with meeting the requirements of SFVS and the financial reporting requirements for academies. Where there is a clear direct link to a specific SFVS standard this is referenced in the PowerPoint notes. The workshop as a whole will help governors to achieve the objectives of SFVS 17 – ‘the improved use of resources’.
Refer to Governors’ Handbook, 2014, Section 12.1 and the expectations of governors with regard to efficiencies and value for money.

3. Programme Setting the scene
Tools to improve financial health and efficiency
Strategic financial planning over 3-5 years
Managing the business of schools
Staffing matters
Effective procurement
Protecting the public purse
Establishing an efficiency culture
Moving to action
Notes
Use this slide to:
welcome participants to the event
outline the domestic arrangements for the venue – toilet facilities, dining arrangements, fire alarms and safety notices
outline the programme
discuss any protocols: for example, disclosure of confidential information that governors may have about their school’s finances; not to make reference to individual staff in their schools, and so on
use an ice-breaker activity if required
Possible ice-breakers
In pairs discuss: ‘What you hope to get out of the session?’; or ‘How I feel about my responsibility for the school’s finances’.
After taking feedback, use this as an opportunity to emphasise that the group will have mixed experience of financial leadership, and that some individuals may be more confident than others. To allow for this we hope that the more experienced will help the less experienced as we progress through the programme.

4. What do we know about our most efficient schools?
Notes:
The key evidence underpinning the suggestions put forward in the workshop is the DfE’s (2013) ‘Review of efficiency in the schools system’. The workshop draws extensively on its findings because it is the most recent report but the Review should be placed in context; it is the latest in a number of reports that have investigated efficiencies within the schools system and also draws upon earlier research. There is substantial evidence to support its findings and recommendations. Point out at the outset that whilst maintained schools and academies are governed by different financial regulations and controls the principles, processes and practices outlined in the workshop are generic and may be applied to both sectors.
Discussion:
Before showing the next slide invite the group to put forward their understanding of an ‘efficient school’ and record on a flip chart. Use this as an opportunity to get participants talking; could be organized as paired or table group discussions.

5. Review of efficiency in the schools system 2013: key findings
The most efficient schools:
1. Deploy the workforce effectively, with a focus on developing high quality teachers
2. Make use of evidence to determine the right mix of teaching and education support staff
3. Employ or have access to a skilled school business manager who takes on a leadership role
4. Make good use of financial benchmarking information, to inform the school’s own spending decisions
5. Make use of school clusters, sharing expertise, experience and data, as well as accessing economies of scale when making shared purchases
6. Manage down back office costs and running costs
7. Have in place a strong governing body and leadership team that challenges the school’s spending
Notes
There are many definitions of Efficiency. It is not the purpose of the workshop to get into lengthy debate over terminology…..the definition on the slide is accessible and should avoid digressions.
If appropriate you may wish to draw attention to the 3Es model often used by the Audit Commission. Its value is that it emphasizes that buying things at a lower price, economy (which is a good thing, assuming this is not at the expense of quality), does not necessarily lead to increased efficiency because so much depends upon how resources are used. This could be displayed on a flip chart.
Economy: Minimising the costs of resources used for a good, service or activity. E.g. Are school supplies purchased at the best available price?
Efficiency: The relationship between outputs and the resources used to produce them. E.g. Do the school’s timetable arrangements make best use of teachers?
Effectiveness: The extent to which objectives have been achieved. To what extent has the deployment of staff raised attainment?
NB: The Workshop is not about ‘saving money’ (although this is a feature)…..the workshop is about efficiency. Ensure that this message is understood by delegates.
Notes:
These findings are from the review in The findings will still be relevant.

6. Similar schools…..similar spending …. different levels of attainment
with similar average total expenditure per pupil (range £4,000 -£4,800 per pupil)
Notes
Use the slide in conjunction with Resource 1a.
This chart shows maintained primary schools with similar characteristics, cohorts and overall expenditure. The 20th, 50th and 80th percentiles for attainment are highlighted (see green triangles).
This is a very important chart and it is essential that governors fully understand the conclusions drawn from the data:
‘Even having controlled for the most important factors that characterise groups of schools, we see that similar schools with similar levels of funding exhibit significant variations in attainment.’
(Review of Efficiency, p13)

7. Responsibilities for efficiency strategies?
Governance
Senior Educational Leaders
Business Leader
Notes (supports SFVS 3) It is will be useful to clarify from the outset the respective roles and responsibilities. Nb: Acknowledge that the responsibilities of governors for financial leadership will vary according to the school’s organisational status e.g. the requirement for academies to have a Responsible Officer. Whilst these contextual differences mean that the legal responsibilities are different the general message that governors should have a strategic perspective on the school’s approach to efficiency should be valid across all contexts.
Governors role is strategic: Setting the direction; challenging existing practice; checking that appropriate systems and processes are in place…….’to know but not to do’.
Senior educational leaders: Provide strategic advice to governors; translate strategic initiatives into operational practices; promote an efficiency culture throughout the school community
Business leader (nb: we have used this term to avoid the presumption that the school will have an SBM): the school’s business leader is the person who takes the major responsibility for leading and managing the school’s finances).
Use this slide to ask governors about some of the challenges they face in carrying out their strategic role, how easy it is to distinguish between strategic and operational etc?. Nb: Some governors may point out, correctly, that ensuring the efficient use of resources is everyone’s responsibility – which is true. However, the focus of this slide is on who is leading and driving the strategies.

8. Tools to help improve school financial health and efficiency
How do we know how efficient our school is?
What materials and tools are available to help?

9. Tools to help improve school financial health and efficiency.
In January 2016, we launched the School Financial Health and Efficiency collection at: which includes:
Introduction to schools financial efficiency
Business cycle and budget planning
Financial review and self-assessment
Financial management and efficient resourcing
Guidance for governors
Commercial and procurement
Sharing best practice
Financial health checks
Other useful links
Review
Investigate
Resolve
This material will be added to and further developed over time.

10. Guidance and support
The collection encourages a 3-step approach to improvement:
reviewing efficiency – based on an efficiency metric that indicates how schools’ efficiency compares to similar schools
investigating spend – including a benchmarking report card to encourage comparisons between similar schools; and a top-ten questions list for governing bodies
taking action – supported by connections to similar schools; case studies; and video guides (e.g. on collaborative procurement and financial planning)
In January 2016 , the Government, working with the national head teacher, governor and school business manager associations, is providing support to help schools learn more about becoming more efficient. A new collection on GOV.UK has brought together financial health and efficiency information in one place for schools to access. This is available at The material includes tools, guidance and videos to support schools, including specific guidance for governors.
•The collection encourages schools to improve their efficiency and financial health in three main ways:
•To review their level of efficiency – a new Efficiency Metric provides schools with an indication of their relative efficiency compared to similar schools
•To investigate their levels of spend – a new list of top ten governor checks provides guidance as to the types of questions governing bodies might want to ask, and a new Benchmarking Report Card has been sent directly to schools to encourage them to undertake more and regular benchmarking comparisons.
•To resolve any issues emerging from this assessment – we are encouraging schools to contact the other schools listed in the metric and report card to learn from best practice. New videos on collaborative procurement and setting 3-5 budgets build on existing materials in providing guidance for schools to become more efficient.

11. Guidance and support Over the summer we launched further support:
financial health checks – to help schools identify if they would benefit from an external financial review and find a suitable supplier
further case studies and videos – as schools have told us they find real life examples most useful
cloud guidance – to help schools understand some of the key areas to think through when considering moving their ICT to the cloud
Self-assessment and comparison with other schools can be powerful. But some schools may want to ask an external organisation to help them for example to review their current financial position, to identify issues and to help them to take appropriate action to address them.
To help schools identify organisations who can help, we have developed a financial health checks structure and a directory of suppliers that can provide an external financial review.
These checks covering a wide number of areas including reviewing plans and forecasts as well as the skills and structures at your school. Some suppliers will be able to provide their services for a low cost or no cost. Other suppliers may charge more for their services. You can read more and find the directory through the School Financial Health and Efficiency Webpages on Gov.UK or by searching for “schools financial health checks”.
We also have a collection of case studies that show real life examples of how schools have improved their financial management and efficiency.
Guidance for schools on how schools can move services to the cloud and the benefits and risks of doing so.

12. How efficient is my school?
The efficiency metric
Input- School revenue funding
Output- Value Added score
Comparison with similar schools
Provides a decile ranking indication of a school’s relative efficiency
In January 2016, the Department introduced an efficiency metric.
It takes a school’s value added score (a measure of the progress students make between different stages of education) and the amount of funding that a school receives.
The metric then compares the results with 49 similar schools. The schools are identified as similar in terms of their level of deprivation (EVER 6 FSM) and Special Educational needs.
These are the two factors which have been proven to impact most on pupil attainment.
The results should provide the school with an indication of the scope to become more efficient. The metric also provides information and contact details for similar schools. It would be good practice to contact higher ranked schools to discover what can be learned from their practices to help your school to become more efficient.
Explanation of VA-
Notes to trainer- the metric tool is a large excel tool and may take a little time to download.
Link to the metric website
Link to the metric tool

13. Efficiency Metric (cont’d)
The efficiency metric provides a simple indication of a school’s efficiency
It should prompt conversations at and between schools about if, why and how similar schools are achieving more with the funding they receive
The metric does not provide answers in isolation
It is not an accountability measure, nor an indication of financial health.
The metric is not a statement on a school’s performance. It is a tool to help schools to question and review their own efficiency and to provide a greater focus on the importance of the efficient use of budgets.
It should prompt heads, governors and school business managers to ask themselves if, why and how similar schools are achieving more with the money they receive and encouraging them to use their judgement to identify and contact a number of these similar schools, to learn from each other, e.g. improved processes, aggregation of activity, staff deployment, and better value for money in procurement
It’s really about scope for improvement – how much room there is to squeeze more value out of the funding
It is not to be used by the Department to hold schools to account, rather it is a tool to inform and help schools and prompt further investigation.
The metric does not take into account all schools’ circumstances. The metric does not take into consideration spending or existing surpluses/deficits e.g. a school could be in the top decile by overspending. Further investigation is needed e.g. benchmarking.

14. Better benchmarking
How does your spending on teachers compare with similar schools?
How does your spending on goods and services compare with similar schools?
Notes: (supports SFVS 12)

15. Benchmarking Benchmarking report card (BRC)
Sent to mainstream schools from January 2016
Provides highlights of school spending compared with similar schools (including one local school)
The BRC is a prompt for further discussion and investigation
Schools can also use benchmarking to assess their spending against similar schools.
Lots of you will already be sold on the benefits of benchmarking, and in 2016 we introduced a benchmarking report card to prompt more schools to undertake regular benchmarking and to encourage more governors to get involved in the process.
The benchmarking report card was sent to mainstream schools and provides highlights of schools’ spending compared with similar schools including one similar local school. The report card was produced to provide governing bodies, heads and SBMs with a short summary of benchmarking information.
We have anonymised the schools in this example, but on a real example you will be able to see the names of the schools, where they are and how similar they are to your school.
The benchmarking report card identifies a couple of areas for each school on where it may want to start investigation in to spending. The report card is a prompt for further discussion and investigation.
In the example- the school is clearly spending a higher proportion of it’s budget on catering and on supply staff than similar schools, particularly the local school.
There may be very good reasons for this, but the benchmarking report card should prompt schools to ask themselves:
why are we spending more than similar schools,
are there barriers to us spending less and
are there ways that we can remove these barriers?
The schools on the benchmarking report card have been identified as similar to your schools based on Free School Meals and SEN indicators. If you don’t consider the schools as similar to your school or if there are additional characteristics which are important to your school; you can identify other schools by using the DFE’s online benchmarking websites.

16. Benchmarking: how much are you spending compared with other similar schools?
Data for a non-London primary (blue) with high FSM; compared with statistical neighbours.
(Source DfE Benchmarking Website)
Notes
Use the Benchmarking data on the slide to illustrate the type of data available from the DfE/Audit Commission Benchmarking website. Access the website (link on slide) and briefly show the type of information that may be generated. Stress the importance of making comparisons with similar schools (statistical neighbours).
Activity: moved from side 27
Divide into groups of 3. Distribute Resource 2: Benchmarking Activity. Allow groups 5 minutes to complete the task on the sheet.
Ask the groups to feedback then hold a plenary to cover the following:
A key message is that benchmarking does not answer questions – it raises areas for exploration. As such it is a very useful tool for governors – they can use it to ask questions such as ‘Why is our spending on x lower/higher than similar schools?’ and so on.
Point out that their school will be above average on some benchmarking tables and below average on others. They should avoid moving to simple conclusions e.g. ‘we seem to be spending a lot on ‘y’ so we must be inefficient; equally they should be prepared the school’s leadership if the explanations they are given for particular levels of expenditure appear to lack substance etc. Ask them to consider:
Is it better to be above or below average on these charts?
Is it better to be below average on particular charts (e.g. energy) and above average on others (e.g. expenditure on teaching staff)?
New- In January each school was ed a benchmarking report card, which should have been shared with Governors. If you haven’t seen it –ask your school. This provides highlights of a schools spending compared with similar schools.

17. Financial Health
How do we know if our school/trust is financially healthy?
What materials and tools are available to help?

18. Setting a 3-5 year budget
Governors should work with the school to set strategic financial plan, which would include a 3-5 year budget.
Same process as setting a one year budget
Should start from a blank page
Consider school improvement priorities
Estimate pupil numbers
Consider curriculum needs
Consider premises needs
Will any capital programmes affect the budget?
How will external factors impact your income or costs?
Visit the Schools financial health and efficiency web page
Watch the videos
Use the top 10 planning checks for governors
Use the benchmarking tool
Use the metric tool
Setting a 3-5 year budget is very similar to setting a one year budget but looking further ahead.
Budgeting is not a costing exercise it is the whole process starting with planning and decision making and as such sits firmly within the strategic leadership of the school and is driven by the school improvement plan. The school business manager will be responsible for most of the costings but the decisions and strategy come first in the process.
3-5 year budgets are not static and should be updated as more information becomes available so that decisions can be made earlier rather than later.
Start with a blank page and build the budget based on your improvement priorities. Our instinct is to start with last years budget and adapt. However this approach limits how we think and challenge the status quo.
Do you know how much each school improvement initiative costs? It is good practice to fully cost and prioritise all initiatives within the improvement plan including the staffing cost. Decisions based on cost versus potential impact on outcomes for your pupils are then easier to make.
Staffing accounts for around 70-80% of a school’s expenditure and pupil number estimates are key to getting your staffing at the right level for future years. Forecasting pupil numbers for the next 3-5 years is not easy especially for infants schools where pupil may not even be born yet. So it is worth thinking about the method you use and whether or not it is working. Do you monitor how accurate your forecasts were in the previous year and do you have strategies for improving your method of forecasting if needed?
Do you need to change the curriculum, either due to government policy or due to changing demands. For example a GCSE option may no longer be popular or cost effective.
How do you allocate curriculum budgets – have you considered a bid process. If you use a formula for this purpose is it still fit for purpose.
Are you planning any capital projects – will you need to fund some of the project from your revenue budget
Review the premises maintenance schedule for non-annual costs – these can have a big impact in the year they are due.
Are there any external factors that may have an impact on your school in the next 3-5 years such as LA housing plans and government funding policy.
If you are balancing your budget each year, efficiencies can release resources to where they are most needed and help you raise standards. If you are struggling to balance your budget efficiencies will help you continue to raise standards for less.
Benchmarking is vital to understanding your school finances and identifying potential areas for efficiencies. •if benchmarking indicates a relatively high spend on a particular expenditure line do you know why?
•are the reasons unavoidable or are further efficiencies possible? You can identify similar schools that appear to get more for less using the tool and we encourage you to find out how.
The top 10 planning checks for governors can be used by business managers and the rest of the leadership team in the budget setting process. NEXT SLIDE
Schools financial health and efficiency web page:

19. Visibility Academy Income & Expenditure Budget
Year 1
Pupil Numbers
1080
Teaching staff FTE 85
INCOME
Funding EFA
6,250,000
Other Income
125,000
Total INCOME
6,375,000
EXPENDITURE
Staffing COSTS
Teaching Staff
3,840,000
Other Staff
950,000
Non Pay COSTS
1,365,478
Total EXPENDITURE
6,155,478
Operating Surplus/(Deficit)
219,522
Cumulative Retained Earnings
319,522
Year 2
1057 83
6,120,000
126,000
6,246,000
3,905,000
1,042,000
1,364,238
6,311,238
-65,238
254,284
Year 3
1060 83
6,130,000
135,000
6,265,000
4,020,000
1,050,000
1,500,000
6,570,000
-305,000
-50,716
Year 4
Year 5
1060 83
6,200,000
135,000
6,335,000
4,050,000
4,060,000
1,065,000
1,075,000
1,400,000
1,430,000
6,515,000
6,565,000
-180,000
-230,000
-230,716
-460,716
Looking at an example of multi year budgets prepared in year 1.
Year 1 – A healthy in -year surplus which is added to the reserves brought forward
Year 2 - This school appears to have anticipated a drop in pupil numbers and planned a small reduction in teaching staff from 85 to 83. Their full costings in the second year indicate a relative small in year deficit and the school can look at savings to achieve an in-year balanced budget. So in year 2 they have a tight budget but reserves brought forward can be used to avoid a cumulative deficit.
Year 3 - If this budget is rolled forward into year three with static pupil number and staffing numbers this could be the picture. The increase in staff costs could be due to staff moving up the pay scale, inflation, an external factor or some other factor. This school also has a significant non staff cost increase in year 3.
Years 4 & 5 - Non-pay costs are back down near year 1 levels but the cumulative deficit continues to increase.
In this case if the school had only prepared a one or even a two year budget they may not have seen the potential trouble ahead.

20. Top 10 planning checks for governors
Not just for governors
Use early in budget planning cycle
Is the curriculum efficient?
Leadership team
Scenario planning
Impact of current decisions
Specific guidance aimed at governors is available on the SEFH webpages.
The top 10 is aimed at governors but could be used at others at the school. The guidance includes a number of questions for governors to explore in each of these ten areas.
It should be used early in the budget planning cycle to ensure that resources are being used efficiently.
A number of the top 10 focus on curriculum efficiency. Because most of a schools resources are spent on learning curriculum efficiency is key to getting the most out of your funding. This includes thinking about class sizes, pupil to teacher ratios, contact time and the staffing profile.
Section 6 provides guidance thinking about how much resource is needed for leadership activities. Questions you may ask back in school are: Do you know how the proportion of your budget spent on leadership compares to similar schools? Is the balance between classroom delivery and leadership delivering the best outcomes for your pupils?
Section 7 of the top 10 suggests how to challenge a 3-5 year budget plan:
For example governors will want to see the assumptions which were made to produce the plans. The key assumptions you may want to review include projected pupil numbers, free school meal numbers, likely pupil premium income and staffing projections.
Questions governors and leadership might want to ask include:
•how confident are we that pupil number projections are realistic? If there is uncertainty then boards should be given three scenarios: optimistic, likely, and more cautious with budgets for each. This approach applies to all key assumptions but especially pupil number projections and funding assumptions.
•if the optimistic scenario indicates financial difficulties then a recovery plan is needed now as the situation is likely to be worse than the optimistic scenario
•if the cautious scenario indicates potential financial difficulties do you have contingency plans to overcome them should they arise?
•are there any issues in the medium term that should be addressed now?
•how will current decisions impact medium term budgets?
•what do we need to put in place now to ensure we have the necessary resources in the future? The driving analogy is steering a super tanker- its not easy to change course quickly so plan ahead.

21. Solid foundations How are you managing the business of your school?
Do you have access to appropriate specialist expertise?
Notes
The key message from this section is that it will be very difficult to implement some of the efficiency strategies we discuss later if the school does not have adequate arrangements for its business management function.

22. Financial Expertise
It is essential that a school has an adequate level of financial expertise. Schools need access to staff with a high level of financial management competencies because of the complexity of financial management issues in schools. As Governors and Trustees are responsible for the effective use of funding delegated to the school, it is vitally important that they are confident that the school has access to appropriate financial expertise.
Notes: (supports SFVS 6)
Financial management in schools can be very complex. Schools are often asked to manage multimillion pound budgets. Schools now have both increased autonomy and responsibility for how these budgets are used, and for accounting for this spending.
Most schools will employ these staff themselves but some smaller schools may share staff or buy in services.
Why are financial skills important?
All schools have significant budgets and can exercise flexibility in the way they use them. Schools need access to staff with a high level of financial management competencies because of the complexity of financial management issues in schools. Most schools will employ these staff themselves, but some smaller schools may share staff or buy in services. It is important that skills are updated on a regular basis in line with changing school policies.
What cover is needed when specialist finance staff are absent?
It is very important that school finance systems can continue to operate in the absence of a key member of staff. Larger schools may well employ enough staff with financial skills to be able to ensure that staff know one another’s jobs and the school can manage internal cover. For smaller schools, it may well be necessary to set up other arrangements, such as agreements between neighbouring primary schools, agreements between primary schools and local secondary schools, or (for maintained schools) insurance arrangements to secure expertise from the local authority.
The main areas of expertise to which a school needs access include:
• development of strategic financial plans
• understanding of and ability to operate good financial management practices
• understanding of national and local financial requirements for the school, and the school’s own framework of financial control
• understanding and operation of budget setting and monitoring
• operation, control and monitoring of the financial systems

23. Benefits of employing an SBM
Reduction in SLT workload – focus more time on teaching and learning
Financial gains (PwC study: over 7 year period SBMs generated £306m in savings or income)
Implementing more efficient staffing structures and increasing the use of shared staffing;
Better management and negotiation of contracts;
Taking advantage of bulk purchasing opportunities; and
Improved project management, particularly important in reducing capital costs
The Department has recognised the importance of a SBM and developed a grant for primary schools to assist in the appointment of a cluster based SBM
Notes: (supports SFVS 6)
There have been a number of studies into the benefits gained by employing an SBM. The key benefits are those on the slide.
The evidence to support the claims is drawn from:
National College Impact and Evaluation reports
SBD demonstration projects
McKinsey Group study
Oakleigh Consulting study
We know that 40% of primary schools have access to an appropriately qualified school business manager. We know that for smaller schools resourcing an SBM can be a challenge; we also know that many schools have found ways to access their services, often through some form of cluster arrangement (i.e. 3 or more schools joining together to share the cost of employing an SBM in a strategic role).
In 2014, the School Business Manager Primary Cluster Grant was made available to schools. The grants were open to bids from clusters of primary schools to assist in the appointment of a cluster based school business manager. This role was one of the recommendations from the Department for Education’s Review of Efficiency in Schools, which highlighted the importance of having the expertise of a good school business manager, and how this was a factor associated with efficiency in the most effective schools. Case studies are available at

24. What can SBMs do? Member of SLT Finance HR Manage office Facilities
Manage Contracts
Grounds
Health and safety
Insurances
Sustainability
Energy use
ICT
Manage data
Community links
Report to Governors
Member of SLT
Notes:
In practice SBMs are taking responsibility for virtually any activity which does not require specialist knowledge and understanding of the teaching and learning process.
The slide provides a comprehensive list of the tasks carried out by SBMs. Emphasise that it is improbable that any single SBM would have the time or capability to carry out all of these functions themselves. Nevertheless, in practice many SBMs fulfil over 50% of these functions. Some SBDs may have line management responsibility for all of these functions.
In many schools the SBM is a member of the SLT. This is a powerful model because it ensures that the SBM understands the educational context in which financial decisions are being taken and vice-versa.

25. Leading business in schools
Table discussion
Who is responsible for the business functions of your school?
Does your school employ an SBM?
How are they deployed? Is there scope for enhancing their role?
Could you help other schools in your area?
What are the challenges to appointing an SBM?
How might you overcome them?
What enablers are in place to help you?
Notes:
We know that approximately 60% of primary schools do not have access to an SBM. There are many reasons for this and clearly there are challenges for smaller schools; however there are examples of schools overcoming these challenges – most commonly through the development of cluster arrangements which allow the sharing of the business management function. Use the slide to open a discussion and adopt a solutions focused approach
New- In November 2015, the National Association for School Business Management launched it’s professional standards for school business managers.
These standards are intended to:
Set out the core and specialist areas of competence required to be successful in the school business management professional role;
Assist those currently working in, or aspiring to work in, the school business management profession to perform their role as expertly as possible;
Set out the content of both initial and continuing professional development for those entering or developing their career in the profession;
Provide a framework for the development of qualifications and other professional recognition for school business management professionals.

26. NASBM Professional Standards for School Business Managers.
In November 2015 the National Association for School Business Management launched professional standards for SBMs
These are a suite of standards for school business management professionals, comparable to those already available for other staff in schools.
They take a tiered approach to many of the roles and responsibilities that SBMs undertake and set out the standards that should be expected at each tier.
They can be used by head teachers and governors to develop job descriptions and to ensure that schools have the right level of commercial skills and experience.
Notes:
New- In November 2015, the National Association for School Business Management launched it’s professional standards for school business managers.
These standards are intended to:
Set out the core and specialist areas of competence required to be successful in the school business management professional role;
Assist those currently working in, or aspiring to work in, the school business management profession to perform their role as expertly as possible;
Set out the content of both initial and continuing professional development for those entering or developing their career in the profession;
Provide a framework for the development of qualifications and other professional recognition for school business management professionals.

27. Staffing matters This is where most of your budget is spent.
Are you spending enough?
Are you spending wisely?
Notes: (supports SFVS 7)

28. (Review of efficiency in the schools system; DfE; June 2013; p9)
Why staffing matters
Schools spend the majority of their budgets on staff – and over half of this is spent on teachers.
However, staff spend still varies significantly in schools – even when differences in funding levels and school context are accounted for.
School leaders and governors need to carefully consider how they can use their staff most effectively, and whether they’ve got the right mix of staff.
It’s critical to get this right; high quality teaching is the most important school-based factor in raising standards:
‘According to research that measured teaching effectiveness across England, having a good teacher rather than an average teacher for two years is estimated to be worth three grades for pupils taking 9 GCSEs.’
(Review of efficiency in the schools system; DfE; June 2013; p9)
Notes
The message on the slide may seem obvious but it has a host of implications for how school’s spend their income.
Hold a discussion with the group on these issues:
Why do some schools spend more of their budgets on teachers? Do these schools get better results (research suggests they do)? What are these schools spending less on? These are the sorts of questions/discussions governors should be holding with the school’s leadership team.
If we accept the importance of teacher quality consider its implications for the school budget. How much should the school spend on professional development? How should the school use performance-related pay? What is the school’s strategy for retaining its best teachers? What approach does the school take to the use of supply staff – does it use agency staff or its own ‘home-grown’ supply teachers?
Background on variation in schools’ spending on staff:
A recent study by Allen et al, 2012, ‘Understanding school financial decisions’ made the following observations about spending on teachers:
“The results show that there is a very substantial amount of variation in some expenditure decisions taken by schools facing a similar operating environment. This appears to be the case in both primary and secondary phases […] Taking teaching expenditure per pupil (which accounts for close to 60% of total) as an example, variation in this expenditure item translates into a gap of about £1000 per pupil between a school at the bottom quartile (25th percentile) and a school at the top quartile (75th percentile). 60% of this variation can be explained by the structural and demographic characteristics of the school, rising to 70% of variation if we include variation in total income. Nevertheless, this leaves some 30% of the variation in teaching expenditure unexplained or idiosyncratic.” (p 4)

29. Getting the right mix of staff
There is no single ‘right answer’: the staffing structure that is best for a school will depend on its particular circumstances.
Nevertheless, it is important to compare your own schools’ staff spending and staffing structures with those of similar schools – this should inform discussions on whether you’re using staff as effectively as possible.
School leaders and governors should take a strategic approach to decisions on staffing structures, which starts from looking at the staff resource needed to deliver the school’s priorities.
This will involve planning ahead to ensure that you’ve got the right workforce to deliver the curriculum effectively now, and in future – not just rolling forward a staffing structure from one year to the next.
Notes
This slide should support a discussion on the importance of regularly reviewing staffing structure:
Schools will need to ensure that they have the right staffing mix that allows them to deal with recent changes and future developments, such as:
The new curriculum (introduced in 2014)
Changes in pupil numbers – many schools will see significant increases in their numbers on roll.
Changes to National Insurance and pensions contributions – which will increase the costs of employing staff.
Hold a discussion on the following points:
How regularly does your school review its staffing structure?
How can governors best act as a ‘critical friend’ to the school leadership when these decisions are made? What would information would you want to see to ensure that staffing decisions are made on the basis of strategic priorities?
When did they last review the school’s staffing structure and in particular the balance between teachers and teaching assistants?

30. Staffing – key data to look for
Governors should be able to scrutinise data on:
How much your school is spending on teachers and on support staff
The ratio of teachers to support staff
Pupil-teacher ratios (PTRs)
This data is included on the DfE’s benchmarking website which will allow you to compare your school against other similar schools. Governors have access to this data.
In addition, your school should be able to provide you with the following data:
Class sizes
‘Contact-time’/ ‘teacher utilisation ratio’: this is the amount of their working time that a teacher spends teaching in the classroom
The proportion of teachers who progress to a higher salary each year, as a result of performance related pay.
Notes
The benchmarking tools can be accessed here:
Table discussion: invite participants to comment on the information they currently receive and the information they would like to receive on their school’s expenditure on staffing.
Use the following as prompts if required:
How much data on their school’s staffing are governors aware of? Are they aware of the benchmarking tools and the Efficiency Metric published by DfE? Do they think they need to see more data?
The importance of using benchmarking data to inform discussions on staffing structures.
Benchmarking data alone will not provide governors with a solution to become more efficient – but it can help SLTs to identify areas for further investigation and challenge. The benchmarking tools list the comparator schools by name: SLTs may find it helpful to get in touch with schools that they are benchmarked against, to find out more about why they have made different spending decisions and the impacts of these decisions.

31. Variation in spending on teachers
Notes
(Note the scale used for the y axis – could give the impression that the differences are larger than they actually are).
‘These examples illustrate that schools in similar circumstances with similar levels of expenditure can make quite different spending decisions and schools with higher overall resources may have more scope to spend some of their money differently. However, overall we have found that high performers, particularly in the secondary phase, tend to spend more of their budget on teaching staff and less on education support staff, compared to poorer performing schools with similar resources. This pattern was replicated in the majority of school groups considered.’ (Review of Efficiency, p 14)
Staff spend should not exceed 80%
Note we are just double checking this slide with policy team re graph and high and low spending
School type: Low FSM, Large, Urban, Non-selective, Medium Prior Attainment

32. Staffing: looking at the evidence
The Education Endowment Foundation (EFF) has collated and summarised evidence on the links between staffing and educational standards:
Support staff:
The number of teaching assistants has grown rapidly over the past decade. 147,000 TAs worked in state-funded schools in 2005, which grew to 255,000 in 2014 (School Workforce Census 2014) – with a current cost of around £4.4bn.
TA numbers have grown far faster than pupil numbers and teaching numbers.
However, the EEF reports that teaching assistants are often deployed in ineffective ways: “The typical deployment and use of TAs, under everyday conditions, is not leading to improvements in academic outcomes” (Making Best Use Of Teaching Assistants, 2015)
Teachers:
The average pupil-teacher ratio (PTR) is currently fairly low compared to historical levels. In 2000 the average PTR was 20 – now, it is just under 18.
However, a low PTR, and low class sizes, are not always the most effective way to raise standards. The EEF has concluded that reducing class size is “low impact for very high cost”: “The evidence does not show particularly large or clear effects, until class size is reduced to under 20 or even below 15.” (EEF Toolkit)
Notes
Use this slide to engage the group in a discussion about spending on, and deployment of, teachers and education support staff. Point out at the outset that this a complex area – however it represents the majority of the school’s expenditure and it is an area that demands the utmost rigour as it is the area where there is the greatest scope for efficiencies
Cover the following points:
Evidence of the impact of effective teachers
Debate over use of teaching assistants – there is an emerging consensus that poor outcomes from expenditure on education support staff is often a result of poor deployment by the school’s leadership (see EEF evidence).
What evaluations has their school carried out into the effectiveness of the school’s deployment of support staff and its value for money?
There may be a trade-off between employing say one additional teacher or 2-3 teaching assistants. How do schools evaluate the relative merits of the options to get the most out of the money available? What evidence is presented to governors?
Has Pupil Premium funding led to the engagement of more teaching assistants or teachers? If so, how is their school measuring impact?
How does their school make decisions about class sizes? How can governors use evidence – such as that collated by the EEF - to inform these decisions?
Background references:
The research on TA deployment is collated and summarised in:
Making the Best Use of Teaching Assistants (EEF, 2015):
On class sizes, see the EEF web-page here:

33. The EEF’s advice on effective use of teaching assistants
TAs should not be used as an informal teaching resource for low attaining pupils
Use TAs to add value to what teachers do, not replace them
Use TAs to help pupils develop independent learning skills and manage their own learning
Ensure TAs are fully prepared for their role in the classroom
Use TAs to deliver high quality one-to-one and small group support using structured interventions
Adopt evidence-based interventions to support TAs in their small group and one-to-one instruction
Ensure explicit connections are made between learning from everyday classroom teaching and structured interventions
Notes
The key message is not that schools should always cut TA numbers – but rather that many schools have significant scope to improve how they use TAs, to get much more from their spending.
‘Schools may wish to review the deployment of their teaching assistants. In particular, where teaching assistants offer more general support, schools may want to consider their impact and how it might be improved, for example through specific training’. Efficiency Review p.14
Lead a discussion on:
Are governors confident that their schools are following the evidence base and the EEF advice when deploying TAs?
If not, how could these principles be used when schools review their use of TAs?
How could governors prompt their SLTs to make use of these principles?

34. Schools’ flexibilities over teachers’ pay
Having the right pay structure is an important part of ensuring that you’re getting the most of our spending on staff.
Reforms in 2013 gave school leaders much greater flexibility over teachers’ pay – both in terms of setting starting salaries, and annual pay increments.
These reforms give SLTs the freedom to set pay policies that are right for their own individual circumstances.
Key considerations for governors:
Does your school’s pay policy enable you to genuinely differentiate and reward good performance – rather than awarding progression increments de facto automatically?
Look carefully at the distribution of your staff across pay grades – given this, are the potential outcomes of the pay policy affordable in the short and medium term? Is there sufficient provision in the budget for pay progression?
Are you making use of the new flexibilities when setting salaries for vacancies?
Notes
The 2013 STPCD (School Teachers’ Pay and Conditions Document) implemented reforms to teachers’ pay arising from the School Teachers’ Review Body’s 21st and 22nd Reports – it removed incremental pay progression for teachers on the main pay range; it required all pay progression to be linked to assessments of performance; it removed statutory pay points for teachers so that schools have greater freedom to determine how much teachers are paid; and it gave schools the freedom to determine how much they pay teachers on appointment – enabling them to set the rate for the job.
All these changes give you scope to use your pay bill more effectively. The reforms have been incorporated into subsequent versions of the STPCD.
It is the head teacher’s role to establish and implement a school’s pay policy; it is the role of governors to sign off the policy, monitor the implementation, assess overall outcomes, ensure fairness and run any subsequent pay appeals. Both the head teacher and governors should make use of benchmarking information to inform decisions on setting their pay policy.
Your school should have considered what type and level of performance it wants to reward and how much. It’s important to take account of what the potential outcomes of your approach could be and whether it’s affordable in practice. Key data for this this is a good understanding of the costs of your current teachers and how many are already on the upper pay range or likely to applying to access it. It is good practice to keep your pay policy under review – the approach you’ve used one year may not be sustainable, or most effective, in future years.
The NGA have put together a course, The Role of Governors in Teachers’ Performance Related Pay which is also being delivered through NCTL licensees; some of you may wish to consider attending one of these workshops. Additionally, many Local Authorities will be able to provide governors with appeals training.

35. Staffing –things governing bodies and the senior leadership can do
Use the DfE Top 10 Planning Checks for Governors to prompt SLT discussions on the scope for efficiencies – this includes a number of suggested questions for governors to ask on staff spending.
Review their staffing structure regularly – have you got the right balance between teachers and other staff? How well do your structures match what is needed to deliver your curriculum?
Ensure that these decisions are informed by the evidence – as collated by the EEF
Review their appointments process – have you a good track record of making the right appointments?
Review their use of the Teachers’ Pay Reform – does your pay policy support your strategic aims?
Use the Efficiency Review Tool to develop strategies to achieve efficiencies.
Notes
The DfE ‘planning checklist’ is available at:
Consolidate the messages from this section by suggesting that governors consider the questions on the for their own schools.
Invite the group to comment on the questions on the slide:
Review their staffing structure regularly – in particular, have you got the right balance between teachers and other staff?
Ensure that these decisions are informed by the evidence, as collated by the EEF. See:
Review their teacher utilisation ratio – what proportion of their time do teachers spend on teaching? It can be useful to compare your school with similar schools.
Review their appointments process – have you a good track record of making the right appointments? This may be the best way of reducing inefficiency – appointing the wrong staff results in lower levels of performance (output) and is often very expensive to put right.
Review their use of the Teachers’ Pay Reform – does your pay policy support your strategic aims? Is it sustainable?
Distribute copies of the ‘Efficiency Review Tool’; walk participants through its contents and take questions.
Background to the tool:
‘This tool is designed to help the school’s leadership team carry out a strategic review of the systems, processes and structures in place to secure the most efficient use of those public funds allocated to the school. The tool complements governors’ responsibilities for the completion of SFVS and may be used to provide evidence for some of the standards. Links to SFVs are signposted.’
It is suggested that the tool is completed in stages to ensure that each section is given full consideration. One possible approach would be for the Governors’ Finance Committee (or similar body) to review one/two sections at each of their meetings in an academic year. It may not be necessary to complete all of the sections or respond to each question.
Using the tool
Step One: Gather the information. Each section has a series of questions to be answered and/or information to be gathered. Wherever possible this should be provided to governors in advance of the meeting.
Step Two: Governors and the SLT discuss the information gathered. Does it suggest any areas where efficiencies might be possible?
Step Three: Commit to action. Agree on the strategy for the implementation of agreed actions. Agree process for monitoring implementation of strategy.
Encourage participants to see the tool as a flexible resource which they can use to provide structure to a review or evaluation of the effectiveness of their school’s current practice. They should select from the tool according to their needs.
Once you have provided an overview of the tool refer to Section Two: Staffing and briefly walk them through its contents inviting comments.

36. Better buying Does your school have effective procurement processes?
Does your school use the procurement services available?
Does your school benefit from economies of scale?
Can you increase public procurement knowledge within your school?
Notes: (supports SFVS 13)

37. Procurement of goods and services
Benefits of effective procurement practices:
financial savings that can then be re-invested in your priorities for driving up standards
goods or services purchased are fit for purpose
suppliers deliver (and continue to deliver) as agreed
legal and financial obligations are complied with.
Notes
Introduce the topic of procuring goods and services by:
1. Make a link with the previous benchmarking activity. Benchmarking can be used in two ways for the procurement of goods and services:
a) To compare the school’s overall level of expenditure on a particular good or service with similar schools’ expenditure.
b) To compare the prices of the suppliers of goods and services.
2. Refer back to the earlier discussions about the ‘business management’ function of the school. Effective procurement is a specialist activity which requires dedicated time and particular skills. If possible oversight of procurement processes and practices will be the responsibility of someone with specific expertise.
The benefits of having effective procurement practices are listed on the slide – briefly run through them.
Activity
The purpose of this Activity is to engage governors in thinking about the whole procurement process. Divide the group into ‘3s’ and distribute Resource 3: The Procurement Cycle. Briefly walk the group through the cycle and ask them to discuss the questions on the Resource Sheet.
1. As we see on the next slide the level of risk varies at different stages – governors they will wish to be satisfied that the school’s leadership has effective systems and processes in place to minimise any risks. They should understand where the greatest risks may occur.
2. Governors should also be clear about their involvement in the procurement process. This will be documented in the school’s financial regulations (or similar document).
Governors should ensure that they are involved where it is a legal requirement to do so. This will usually be for medium value purchases for which their approval is required and high value purchases which are subject to tendering requirements. It will be inappropriate for them to become involved in the process for low value purchases.

38. Collaborating with other schools
Table discussion:
Does your school engage in joint procurement activities with other
schools?
What opportunities are there for your school to engage in joint
procurement activities with other schools?
What are the challenges to joint procurement activities with other
Does your school share staff/expertise/training with other
Has your governing body discussed collaborative working? What
conclusions did it come to?
Notes:
Schools should investigate the potential for clustering with other schools in order to secure procurement economies. Ask table groups to discuss the questions on the slide. The purpose of the activity is to encourage governors to give deep consideration to the potential for collaborative working and to suggest solutions to some of the obstacles they may face.
Guidance notes:
It will be helpful if you can supplement this slide with examples from your local area of successful school clusters – even better to invite someone from the cluster to come and talk about their activities.
Encourage participants to be honest about the challenges, but to focus on solutions rather than obstacles.
Nb: The slide is not proposing the schools join hard federations or academy chains. There are lots of models of clustering – some may be very formal others may be quite loose.

39. Use Framework Agreements (where possible)
A framework agreement is an arrangement that a ‘contracting authority’ (e.g. DfE, a local authority or a public sector buying organisation) makes with suppliers of goods, works or services.
Buying goods, works or services through a framework agreement is the easiest and quickest option and should certainly be a preference for low value purchases.
Framework agreements can save time and money, will have already been through a full competitive tender process and have favourable terms and conditions and will ensure that your school is compliant.
They are held by The Crown Commercial Service (CCS), some local authorities and other public sector buying organisations (PSBOs)
Notes:
Framework agreements can save time and money, as well as providing the security of knowing that any contract will meet all statutory requirements. Schools should seriously consider using them whenever possible. The key question is: does the school regularly consider the opportunities they afford? There will be occasions when a Framework Agreement does not meet the school’s needs – if this is the case it is worth raising the issue with the provider to see if the agreement can be amended in the future.
Guidance notes:
Delegates may be unfamiliar with this concept and it may be worth checking this out with the group before deciding how much detail to provide.
The notes below, from the DfE website, provide additional detail:
Before the school begins the purchasing stage, it's worth thinking about whether the purchase could be made through an existing contract or framework agreement held by your local authority, public sector buying organisations (PSBOs) or central government departments.
Suppliers named in an existing contract or framework agreement will have already agreed general terms and conditions with your local authority or PSBO. You can contract with them for your specific purchase (by raising a purchase order) with the assurance that most of the hard work of contracting has been done for you. 
For a framework agreement, the main thing you will need to do at a school level is to carry out a ‘mini-competition’ among the relevant suppliers. This is usually a much quicker and simpler process than setting up a new contract yourself.
Existing contracts and framework agreements:
have already gone through a competitive tendering process – this guarantees best value;
will comply with your local authority’s audit regulations – you won't need to look for competing bids from three suppliers;
have terms and conditions negotiated in advance of your purchase that are favourable to the customer – there's no risk of 'hidden' clauses in your specific contract that might cause problems later;
have an additional advantage; if anything does go wrong during the life of the contract, you'll have the support and assistance from the organisation that negotiated the overall contract or framework agreement.

40. Public procurement information
Question: Does your school regularly use the advice and resources available?
Notes:
It is not the purpose of today to go into detail about the advice the DfE provides on procurement rather it is to raise governors’ awareness, in broad terms, of what is available to them and their schools. Governors will wish to discuss with the school’s leadership if they are aware of the advice and how they are using it.
Refer participants to the ‘Efficiency Review tool’ and walk them through Section One inviting comments.
The procurement training for schools are bite size sessions introducing a simple procurement cycle. These resources will be freely available from GOV.UK. Feedback and requests for new modules welcomed.

41. Protecting the public purse
Does your school have robust systems and processes for the safeguarding and proper use of public funds?
How does your spending on goods and services compare with similar schools?
Notes: (supports SFVS 5,19,20)

42. Safeguards against fraud and theft
‘In the most efficient schools…..their focus on efficiency also creates more robust management systems that reduce the risk of financial irregularities’ (DfE, 2013, p6)
In 2012/13 councils reported 191 cases of fraud in schools, worth £2.3 million. Of these cases, 86 with a value of £1.9 million involved internal fraud. The results suggest that schools may not have the same level of supervisory checks and controls as large organisations…and may therefore face a greater risk of internal fraud.
(‘Protecting the public purse’, 2013, p33)
Notes:
There are two important messages on the slide:
A focus on efficiency is often associated with a strong emphasis on the prevention of fraud – establishing an ‘efficiency culture’ has many positive benefits.
Fraud is an issue for schools as the quote from ‘Protecting the public purse’ illustrates.
Schools are required not only to establish rigorous systems of control but also identify how they intend to guard against malpractice. If poor practice is identified, the school will need to state how it will respond and what actions it will take to rectify the situation.
Discussion: Invite participants to discuss the following questions in table groups (write the questions on a flip chart):
What safeguards are in place in your school?
What discussions have taken place within the governing body during the last year?
Probity – do governors know what funds may and may not be spent on? See section of the Governors Financial Handbook and use this as a basis for discussion.

43. Good practice in fraud prevention
Features of good control systems are:
financial management checks
separation of duties
strictly limited access to systems
spot checks on systems and transactions
investigation of every incident of irregularity
careful pre-employment checks
staff responsibilities made clear
effective whistle-blowing policies
Notes
SFVS Standard 19 is very much aimed at providing evidence of robust systems of control to guard against the fraudulent use of school funds and assets. Governors need to have a high level understanding of the sort of controls they might expect to see. The slide provides a list (taken from the guidance notes to SFVS 19) of internal procedures governors should expect to see in place.
financial management checks, reconciling accounts at the end of each month and keeping an audit trail of documents
separation of duties so that no one member of staff is responsible for both validating and processing a transaction, for example certifying that goods have been received and making the payment for them
strictly limited access to systems for authorising and making payments
spot checks on systems and transactions to help identify new risks and measure the effectiveness of existing controls - it also indicates to staff that fraud prevention is a high priority
investigation and logging of every incident of irregularity, including instances of attempted fraud
careful pre-employment checks on staff who will have financial responsibilities
making staff members’ financial responsibilities clear through written job descriptions and desk instructions
there will always be some potential for fraud but an effective, well-publicised whistle-blowing policy can help to reduce its incidence – this is explored in more detail on the next slide.

44. Whistle-blowing Good practice
The school must have a whistle-blowing policy in place – maintained schools will base this on their LA’s policy.
Staff must have someone trustworthy to report their concerns to.
All staff must be aware of the whistle-blowing policy.
Academy trusts should have whistle-blowing arrangements
Notes:
Lead a discussion on the three points on the slide.
The school must have a whistle-blowing policy in place
All schools should have a whistle-blowing policy in place and governing body minutes should record that they do. For maintained schools, this policy should be based on the local authority policy (which applies to all schools within their remit) and should be tailored as appropriate for the particular school. Note: Schools do not need to develop their own policies.
The school staff must have someone trustworthy to report their concerns to
The governing body should agree one or more members of the school’s staff whom staff can report concerns to. Also, maintained schools should make known to staff one or more people at the local authority whom staff can report concerns to if they feel a need to go outside the school.
All staff must be aware of the whistle-blowing policy
If staff are not currently aware of the whistle-blowing policy, they should be informed about it and it should be made available for all to see. In particular, they should be made aware of the:
protection that is available to all members of staff (including temporary staff and contractors)
areas of malpractice and wrongdoing that are covered
routes available within the school and the local authority for raising concerns
Background information
Statutory guidance for local authorities 2011–12 notes:
‘Whistleblowing’ Schemes should contain a provision requiring authorities to set out in the scheme the procedure to be followed by persons working at a school or school governors who wish to complain about financial management or financial propriety at the school, and how such complaints will be dealt with.

45. Summary

46. What can governors do to create an ‘efficiency culture’?
Make the link between spending decisions and pupil outcomes…. better spending decisions can help to raise attainment
Ensure your school has access to effective financial management skills
Establish efficiency as a norm…….once we become aware that other organisations are more efficient we tend to change our behaviours
Require the use of information…..ensure that your school uses all of the information available to it
Challenge inefficiency…..this may be time-consuming and involve risks but will often bring long term gains
Link to Gillian Allcroft Video
Notes:
Encourage governors to engage in discussion of this topic. What do they see as their role? How can they carry out their responsibilities for the leadership of the school’s finances etc?
For further information on each of the bullets on the slide see pages of ‘Review of efficiency in the schools system’.
Gillian Alcroft video:
Also find link to video on this page:

47. Reviewing efficiency in your school
Three key questions:
Foundations – does the school have access to appropriate business management skills?
Practice – are effective processes, procedures and practices in place to promote efficiency?
Culture – is there an efficiency culture which permeates the whole school community?
Finding the answers:
Conduct an internal review – use the Efficiency Review Tool and the top 10 planning checklist for governors
Investigate what other schools are doing
Support the school to resolve any issues which are a barrier to your schools becoming more financially healthy and efficient.
Notes:
Outline the key points on the slide.
Review
Investigate
Resolve