The role of a school’s financial leader is to make informed decisions that meet the needs of children and young people and are aligned with available resources. This is a huge challenge.
If you are tasked with leading strategic financial planning it can feel a bit like a constant fight for survival – always balancing the demands of financial sustainability with the strategic aims and success of the organisation.
Which strategies will support you in your leadership role, develop a culture of shared responsibility across the organisation, and help to pin down the “known unknowns” in budget planning?
One thing is clear – this is not a task that any one individual can do alone, it is a team game. As a leader of strategic financial planning there are a few ground rules and a range of tactics that you can use to give your organisation the best chance of thriving and not merely surviving.
Ground rules
1, Understand why strategic financial planning is important and communicate that to your team
A strategic view allows the leadership team to project a range of efficiencies for the future using the best information available at the time. Strategic financial planning is all about managing risk in a way that maximises opportunity while at the same time mitigating financial vulnerability. What is more, the process of strategic financial planning ensures that key financial information is not limited to one or two people in the organisation as this can present real risks.
2, Agree a team approach to strategic financial planning
There isn’t a single correct approach, but generally speaking there are three key drivers in strategic financial planning.
- The financial imperative to set a balanced budget.
- Ofsted and accountability measures.
- Stakeholder expectations.
Adopting an approach that is curriculum-led will allow consideration of all the above. Successful strategic financial planning requires contributions from both curriculum and finance teams. The approach must commit to educational success and financial security.
It is rather stating the obvious to say that a curriculum framework that meets the needs of your pupils will be at the heart of your decision-making, but nevertheless it is probably worth making the point for the purposes of transparency and a clear direction of travel.
Embedding an integrated curriculum and financial planning approach (which I wrote about in SecEd back in 2019) will support strategic financial planning, but it is not a panacea for financial security; it will deliver necessary metrics and inform decisions, but it cannot tell you what to do!
Those decisions must remain the responsibility of leaders who are best placed to properly understand organisational context and how to navigate an effective route to success.
3, Start with the end in view
To maximise the probability of success, start with the end in view. Key questions to consider in determining what that end view will look like are:
- What are the outcomes that will be most important for strategic success?
- Given that these outcomes will be our priorities, where should resources go?
- How can we test these resource allocation strategies quickly and efficiently?
4, Look backwards and forwards
Use data to highlight trends and use trends to drive strategy. Consider all available relevant data on organisational performance, across both curriculum and finance. The two are inextricably linked but are too often considered in silos. An unfortunate consequence of the silo approach is time wasted in adversarial conversations about what can or cannot be achieved.
The antidote to this is working together using information that is both useful and necessary to curriculum and finance leads and using a language that everyone can understand. One way of doing this is to simply consider the link between curriculum and funding. Ask yourselves:
- How many teachers do you need to deliver the curriculum the school would like, both now and over the next three years?
- How many teachers can the school afford now and over the next three years?
These considerations are two sides of the same coin and if you can’t afford the number of teachers then you need to discuss what the options might be.
5, Don’t forget about total cost of ownership
The total cost of ownership – or TCO – is the overall cost of a product or service throughout its life cycle. These costs must be adequately accounted for in your budget in future years. A well planned but tight budget can easily be derailed by the omission of on-going maintenance or licensing costs associated to a one-off capital investment in previous years.
6, Scenario plan using an options appraisal approach
Medium and long-term scenario-planning allows your organisation to be proactive and in control rather than reactive. Dealing with problems caused by poor financial planning is time-consuming, results in diverting senior leaders away from focusing on teaching and learning, and is often expensive.
Accept that there are always things that you don’t know. You can only use the best information that is available to you, and for the rest you will need to make sensible assumptions. Assumptions should be evidenced and revisited regularly as more information is confirmed.
Setting assumptions cannot be the responsibility of one person. This is both unfair and unrealistic. You will need expertise and experience from all aspects of school life to arrive at and agree well-articulated assumptions.
A medium or long-term strategic plan will include a number of different options or scenarios. Use an options appraisal process to test out each one. Your context will determine the full set of success criteria, but as a rule of thumb each scenario should at least deliver the following:
- Sustainable curriculum (enough teachers).
- Effective contact and non-contact time (must include staff wellbeing as a consideration).
- Sufficient support staff and curriculum resources.
- Safe and well-maintained buildings.
Tactics
There are also a few tactics that you can employ to help ensure you stay on course.
1, Build the governance meeting schedule around the budget planning cycle and accounting submission deadlines
The budget planning cycle must work so that it supports the governing board to fulfil its financial accountability responsibilities. There are also a number of financial compliance deadlines that must be met across the funding year. Encourage governing boards to set a meeting schedule that works to constructively support this work rather than constrain it.
2, Apply the acid test to all expenditure decisions
Every line of expenditure must directly or indirectly support teaching and learning and/or compliance. If not, the follow-up question must be: “Why are we doing this?”
3, Keep curriculum and finance leads talking to each other
Regular stress tests of the current budget and viability of scenarios will require knowledge of the financial position, staff deployment, and curriculum viability. A good working relationship between staff in these roles creates synergy and mitigates common barriers to financial sustainability, including poor internal controls and a lack of regular scrutiny of key performance indicators, sustaining a curriculum against the odds and expenditure on non-essentials.
4, Don’t sweat the small stuff
Work with your business manager and finance team. Your role is to lead and not do the leg-work. Instead, have regular time-limited monitoring meetings to run through a previously agreed set of key performance indicators that provide you with the information you need at an appropriate level of detail.
Final thoughts
The disciplined allocation of resources and continuous monitoring and review of financial strategies will enable your school to thrive in an uncertain landscape. Know the ground rules of strategic financial planning and set a course for financial sustainability.
- Julia Harnden is a funding specialist at the Association of School and College Leaders. Read her previous articles for SecEd via www.sec-ed.co.uk/authors/julia-harnden/
Further information & resources
- Harnden: Integrated curriculum financial planning, SecEd, 2019: www.sec-ed.co.uk/content/best-practice/integrated-curriculum-financial-planning