It was our annual governance survey of 2018 when we first asked the question “What is the biggest single issue you are facing your role?” The response from an overwhelming majority of governors and trustees was “balancing our budget”. Back in 2018, just one in five boards said they could manage the financial pressure they were under without reducing their offer to pupils. A truly shocking statistic that acted as a catalyst for our Funding the Future campaign the following year. The campaign brought together governors and trustees from up and down the country, united by their utter determination to get the message across about the week-to-week challenges they faced to keep their schools and trusts going without enough money.
The campaign goes on (albeit in a less concerted and public way) and NGA continues to call on the government to invest more in our education system and the next generation. However, there is no denying that 2019 was a pivotal moment. Through its spending review the government finally appeared to recognise that school funding was in crisis and respond by giving a cash boost of £7.1 billion covering the period up to 2022-23. This, by the way, was not sufficient to restore per-pupil funding to 2010 levels in real terms, but I will come back to that later.
So are governing boards under less financial pressures than before the government’s cash boost, and has the challenge of balancing the books remained the school governing issue of our time?
The 2020 survey was conducted in the early days of COVID-19 when governing boards were still getting to grips with the unanticipated costs, such as enhanced cleaning and supply cover, and reduced income, such as the letting of facilities, caused by the pandemic. Once again, respondents rated balancing the budget as their top concern and reported areas in which spending was being curtailed to the detriment of pupils. In this context, it was perhaps surprising to see the number of respondents reporting that they were able to balance their budgets in the coming year had also increased. School budgeting is a complex and context driven activity. We could not say whether the increase was a result of the increased funding awarded by the government in 2019, or the measures taken by governing boards to reduce expenditure. Our best estimate was that for most, it was a combination of both.
The results of our 2021 annual governance survey have just been published. This time we thought it reasonable to assume that balancing the budget remained one of, if not the single biggest, challenge for boards. So we decided to ask a different question, to find out how much governing time and attention it was taking up, and focus it was taking away from other areas. The responses showed that regardless of financial context, boards are not allowing the balance sheet to dominate their agendas. In fact, it is quite the opposite. The top three priorities for boards are pupil mental health and wellbeing, managing and improving premises and attracting high quality leaders. Of course it’s all connected – these priorities need to be paid for and a conversation about money is never going to be too far away. However, governing boards have become used to managing within constraints while achieving better outcomes for pupils by managing change well and showing collaboration.
This year’s survey does provide a more positive outlook on school budgets than in the dark days of 2018, but the change can hardly be described as transformative. 72% of respondents to this year’s survey said that their school or trust was able to balance its budget (including 21% reporting a healthy surplus). This compares to the 63% in 2020 and the 49% in 2019. So, on the face of it, school funding appears to be moving in the right direction on to a more sustainable footing - but is it really? 72% of respondents’ boards being able to balance their budgets means that more than one in four are unable to. This tallies with the findings of a survey carried out by the National Association of Headteachers in June and in no way can be described as a cause for celebration.
Another reason for not getting carried away is the fact that many governing boards have achieved their balanced budgets through, to borrow a phrase from the Chancellor, “maxing-out” on their sensible efficiency savings. As a result, they have reduced both their staff and the offer to pupils – so what are they to do next? Add into the mix delayed spending caused by the pandemic and the longer-term picture becomes more dispiriting. Respondents to the survey certainly seem to think this is the case. Less than half (44%) of them said that their school or trust finances were sufficient to deliver their strategic priorities for pupils.
Don’t assume these boards are not managing what they have efficiently; responses to the survey highlight how good financial governance (incorporating activities such as benchmarking, integrated curriculum and financial planning) have become more embedded. What we are seeing here is those who govern knowing what it is discharge their second core function, but anticipating having to make unwanted choices between spending on areas like curriculum enrichment and pastoral support, and avoiding issues such as staffing costs, funding high needs provision and falling rolls, sending them over a financial cliff.
So the conclusion I draw from comparing the results of this year’s survey with previous years, is that right now, governing boards are under less financial pressures than they were in 2018. However, governors and trustees still view the challenge of balancing the books as the issue of their time. Why? Because they recognise that the £7.1 billion given to schools in 2019, alongside the further £4.7 billion announced in the recent budget, does no more than (barely) keep them afloat and return their funding to 2010 levels. It does not match their vision, nor does it recognise the financial realities of running a school or trust in 2021, amidst rising costs and the challenges caused by COVID (compounded by a lack of cash for education recovery). Their longer-term assessment of those governing is telling. They expect to remain in the invidious position they have been in for too long, faced with strategic and moral dilemmas that they should not have to face.