Financial Challenges – we need to remain optimistic

06/01/2017 17:15:54 | with 2 comments

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Author: Emma Knights, Chief Executive of the National Governors' Association

 

Happy New Year.

Let’s start 2017 in optimistic fashion.  Optimism is such an important part of achieving change, but it can be difficult to sustain in the face of difficult challenges.  I am often asked to speak to local governor conferences about the challenges facing governing boards and I worry that I may just leave the audience downhearted by the scale and complexity of the task of governing: getting that balance right between realism and encouragement is a real art.  Leaving people upbeat is so important, and yet it can’t be all warm fluffy words.  Where does optimism stop and naivety start?  

Governing boards have some real hard-nosed challenges, some of which become harder by the year.  One of those is balancing the school or trust’s budget.

I arrived back in the office to find a response to the letter we wrote to the Chancellor just before he made his autumn statement in November.  Yes, of course we know the national funding formula (NFF) has been published in the meantime: as Department for Education officials are well aware given we are very engaged members of their school and academy funding group. Our first reaction to the NFF is that it is rather disappointing, and for a variety of reasons it is not going to solve the problem, that we raised with the Chancellor, of schools in the lowest funded authorities.  It appears that not every school will receive a sufficient amount for each of its pupils. We will continue to analyse the effects, sharing intelligence with partner organisations, such as the National Association of School Business Managers.

The organisations who speak for school leaders, including business leaders, are saying the same thing as we are: there simply is no longer enough money in the total pot to sustain adequately all schools in England.  So how do we approach this predicament in an optimistic fashion?  We need practical action and we need to evidence that claim well.

First, we need to make absolutely sure that schools are making the best of what they have received.  We know that not every school has been making full use of financial benchmarking. Our members can find more information here, but also the DfE is funding NGA and its other eight governance licensees to provide free workshop to governors on financial efficiency: for more information, e-mail leading.governance@nga.org.uk Let’s not look a gift horse in the mouth.

Secondly, we need to organise and collect stories.  Whingeing will not do.  We are hearing much talk of deficit budgets. This is only a temporary solution if you have reserves which will cover the year’s deficit and a plan to make sure you are not building in a structural deficit.  Maintained schools have the option of negotiating a licenced deficit with the local authority, but I can’t imagine there is much spare cash, and this will still involve the governing body in having a plan for future years. The concept of a licenced deficit does not appear in the Academies Financial Handbook: unless trusts have adequate reserves, their boards must set a balanced budget.   As charities, academy trusts must be a “going concern”, and it should go without saying that trustees need to aware of their legal duties.

But whether you are setting a deficit budget in the short-term or working to ensure a balanced one, it would help make the case for more funding for state schools in England if you would share those predicaments with NGA or other organisations lobbying on your behalf.  We know these are very delicate issues, and we will not use your story without your permission.  We won’t identify the school or trust, but we do need to know the decisions you are having to make and their possible repercussions.  Please email any comments to me (emma.knights@nga.org.uk) with ‘School funding’ in the title.

Lastly we need to influence our elected representatives; I have said on many occasions that the governance community do not lobby their MPs enough on school issues.  This is the time to do it.  Invite your MP to visit the school and talk to them about your funding situation.   Please do let us know how you get on.  We are also involved in parliamentary work and we can build on your conversations.

We cannot let the funding situation escalate into a crisis.  Let’s act now and act together. Here’s to better news in 2017.

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