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Finance & resources

Balancing school and trust budgets: three questions every board should ask

While the future remains uncertain, what can you do to help your school or trust secure a balanced budget? 

tools-resources money jar half full

We all know that schools and trusts are facing major financial pressures. Balancing the budget was the number one concern for governors and trustees responding to our 2022 annual survey – no surprise given that we’re up against:

  • a significant decline in real-terms funding, driven by inflation
  • additional support needed for families living in poverty
  • spiraling energy costs
  • no additional funding to cover essential pay increases for teachers and support staff

But it’s not all bad news. The government has announced an extra £2.3bn funding for this academic year and next, as well as capital funding increases. While welcome news, it’s a sobering thought that this restores real-terms funding to levels seen over a decade ago.

While the future remains uncertain, what can you do to help your school or trust secure a balanced budget? Now more than ever, we must ensure that resources are being used in the best possible way to benefit pupils. This means asking the right questions of ourselves and school leaders.

What do we know about our financial position?

Start by clarifying your current position and understanding key risks and opportunities over the short term. Being clear about where you are now will help you to make informed decisions about how to balance the budget.

Make sure you’re looking at the most up-to-date information available. If you’re struggling to interpret financial data, talk to your school business manager or CFO. A simple commentary (free from jargon) explaining the numbers and highlighting significant changes should be part of every budget monitoring report the board receives.

Refer to our budget monitoring guides for maintained school and academy trust governing boards for further advice on what to expect from these crucial reports.

What options do we have to balance the budget?

Discuss what action can be taken to put your school/trust on a financially sustainable footing. While your situation may be challenging, start with the principle that it is possible to do things differently.

Your school business professional will play a key role in supporting these conversations and exploring the feasibility of any options put forward.

Boosting your income may be possible through increasing pupil numbers or generating income through wrap-around-care and premises rentals. Grants and donations could also be an option, particularly for specific areas such as improving your environmental sustainability.

Making the most of existing resources is essential. Integrated curriculum and financial planning (ICFP) is used by many schools to review curriculum aims alongside the resources available and decide how to target spending in the right way.

Now is also a good time to evaluate contracts for goods and services. Governing boards should ask whether contracts still meet the needs of the school/trust and represent good value for money; especially when they’re due for renewal. Ask about staff capacity to undertake procurement and whether your school/trust is making full use of the free DfE get help buying for schools service.

Reducing expenditure is a necessity for most schools and trusts in the current climate. Many boards are having difficult conversations about staffing costs, with a recent NAHT survey suggesting that the majority of schools in England are considering redundancies. It could be that your school/trust needs to re-evaluate your staffing structure, especially if you’re expecting a change in pupil numbers. The DfE’s schools financial benchmarking service can provide a breakdown of spending on different types of staff and a comparison against similar schools.

While staffing accounts for the highest proportion of spending, there are other areas to find savings. Estate management may be a priority for your school/trust, particularly where it could help to reduce energy bills. In December 2022, the government released additional capital funding to improve energy efficiency. The funding works out, on average, as £16,000 per primary school and £42,000 for secondaries, to be spent on improvements such as better heating controls, insulation and energy efficient lighting.

What impact will our plans have on pupils?

When exploring your options, don’t lose sight of your values and vision for the future. Refer to your strategy and development plans to ensure that your most important priorities aren’t at risk due to limited resources.

When evaluating your options, it’s also a good idea to review your risk register and consider whether your school/trust is doing enough to mitigate and plan for identified risks.

And finally, remember, while times are tough, the fundamentals of good financial oversight remain the same. Build financial governance skills into your development plans, starting with good quality induction for new board members. Make the most of support from your school business professional and don’t underestimate the benefit of routine budget monitoring.

New Learning Link e-leaning finance modules 

To support you with the development of financial governance skills, we have developed a brand-new programme of e-learning modules covering the fundamentals of financial governance. Broken into four bitesize units, the Financial governance in schools and trusts programme will provide you and your board with everything you need to know to understand your financial responsibilities, set and monitor the budget, and remain financially efficient. The programme is now available for all Learning Link subscribers.

Looking for help with financial governance?

Ella Colly
Ella Colley

Head of Content

As Head of Content, Ella takes the lead on coordinating content development across the organisation. She also oversees NGA’s Knowledge Centre, ensuring members can find information and guidance on a range of governance topics.