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Affordable Schools: facing the financial challenges Amanda Stevens, Schools HR Business Partner Andrew Minall, Head of Education Financial Services

Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

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Page 1: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Affordable Schools: facing the financial challenges

Amanda Stevens, Schools HR Business Partner

Andrew Minall, Head of Education Financial Services

Page 2: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

An affordable school?

• Context

• The range of financial challenges

• From Affordable Curriculum to Affordable School – our continuing journey

• Our learning and challenges along the way

• Our next steps

Page 3: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Context

• Flat cash settlement from DfE while staff costs rising

• pensions, NI, pay awards, minimum wage, apprenticeship levy

• Staffing costs forms 75%+ of school expenditure

• Financial challenges well publicised:

• Institute for Fiscal Studies (IFS) estimated a five year real terms reduction of between 9% and 12%

• National Audit Office cited 8% cut equating to £3bn “efficiency” savings required

• Added pressure on small schools

Page 4: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Funding context• Hampshire currently one of the lowest funded authorities

• Significant efficiencies therefore already found

• National Funding Formula makes minimal difference

Page 5: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

The local challenge• Balances are forecast to continue to drop in the next three years.

• Currently only a small number of schools are in deficit but by 2019/20, many more schools are forecasting a deficit.

• Small(er) schools particularly hit but all schools are being increasingly impacted.

• No easy answers or easy routes to additional funding but through early action and sharing of approaches and ideas, collective solutions can be found.

• Recognition that schools are in different situations therefore whilst action will be required for most, solutions need to be tailored to individual circumstance.

• Difficult compromises required

Page 6: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Autumn 2015 – an affordable curriculum

• Secondary financial pressures begin to emerge

• Recognition for wider school improvement solution bringing together key services

• Creation of an affordable curriculum working party which included secondary school headteachers

• Focus on small secondary schools

• Challenge - broad and balanced curriculum within financial resources available

• Output was a theoretical model paper intended to stimulate debate

Page 7: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Learning and challenges at this stage

• Not just about curriculum

• Curriculum is almost the easiest element

• Not many school leaders were ready to engage

• This is challenging for LA officers who have been headteachers in

time where budgets are not as constrained

• Training offer associated with this isn’t viable

• Needed to cover primary as well as secondary

Page 8: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Our next step – Affordable Schools group

• Move from exploring curriculum to whole school solutions

• Extension to other phases

• Two pronged approach – Universal – need to get ahead of the curve

– Targeted – significant challenge required

• Given our size, a need to ‘rate’ the financial health of our schools to assist prioritisation of activity

• Broader activity required– New headteachers

– Recruitment

– Research – the Hampshire way of doing things isn’t replicated everywhere

– Exploring gaps in guidance – pay and sharing of staff in particular

Page 9: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

What we’ve been doing:

• Risk assessment – financial and non-financial

• Financial ratings - all schools rated and currently now reviewing ratings

• Discussion with senior leadership in Children’s Services and in corporate organisation – corporate risks

• Escalation path for intervention

• Comparison tool and blind dating

• Headteacher meetings/conferences

• Governor briefings

• Local proactive groups in most districts

• Triumvirate induction for new secondary headteachers

• Focus still on challenging leadership with their thinking

• Ensuring our staff (school improvement, finance and HR) are all on message

Page 10: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Non-financial risk factors

School size/PANOrganisational change

(e.g. growing/new schools)

GeographySize of school

(total pupil numbers)

CompetitionPoor results (impact on NOR, leadership costs,

etc.)Leadership changes

Pupil demographics (e.g. declining NOR,

change in cohort)

Loss making activities (not core business, e.g. community activities)

Unstable number on roll

Expensive leadership/staff

structure

High/low turnover (staff and governors)

Page 11: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

The range of financial challenges: potential indicators and actions

• No deficit OR forecast deficit in year 2/3

• Efficiency savings sought

Arising budget pressures

Noted budget pressures

Significant budget pressures

Budget crisis

Potential pressures • Forecast deficit in year 1/2

• Significant in year budget pressure / change

• Some loss of hours or posts likely

• In deficit (first year)• Unexpected deficit

OR• forecast deficit not

addressed• Likely staff re-

organisation and/or loss of posts or hours required

• In deficit with no recovery plan

• Accumulating in year deficits

• Insufficiency of actions / traction

• Entrenched views• Deflection away

from pressures• Poor financial

planning• Skills issues• Complex staff re-

organisation and/or reduction required to avoid budget crisis

• In deficit with no obvious way of recovery

• Significant accumulating deficit

• Requires fundamental rethink of school model

• Continued inadequate action / traction

• Entrenched views• Deflection away

from pressures• Poor financial

planning• Skills issues• Viability risk

Page 12: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Wider Affordable Schools Plan

Headteacher recruitment,

induction and professional support

Training needs of governors, school

leaders and business managers

Ongoing input into Headteacher

meetings

Benchmark tool output

Supporting critical and bespoke needs

HIAS research into structure and

systems

Approaches for small schools

Developing and promoting guidance

where required

Page 13: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Examples of content that we have

been discussing with schools in the last

18 months

Page 14: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Things to

consider

Senior staff structure

Teaching and non-teaching

staff structures

Curriculum offer

Flexibility around use of

teachers

Use of environment and building

Income generation

Pastoral structures

Phase, Key Stage,

Year Leaders

Classroom support

Budget

Page 15: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Efficiency in schools

“Overall funding for schools and its distribution is obviously important, but how that funding is used in practice is just as vital. Alongside our substantial investment, we are committed to helping schools improve outcomes for pupils and promote social mobility by getting the best value from all of their resources. Effective school leaders know this is a key part of their role – core to school improvement, not an add-on or extra. Parents and taxpayers across the country expect nothing less.”

The national funding formula for schools and high needs policy document - September 2017

Page 16: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Similar schools, similar spending, different levels of attainment

Page 17: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Review of school’s efficiency DfE key findings

The most efficient schools:

• Deploy the workforce effectively, focusing on developing high quality teachers

• Make use of evidence to determine the right mix of teaching and education support staff

• Employ or have access to a skilled school business manager

• Make good use of financial benchmarking information, to inform the school’s own spending decisions

• Make use of school clusters, sharing expertise

• Manage down back office costs and running costs

• Have in place a strong governing body and leadership team that challenges the school’s spending

Page 18: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

• Not just for governors• Use early in budget planning cycle

Is the curriculum efficient?• Leadership team • Scenario planning• Impact of current decisions

www.gov.uk/guidance/schools-financial-efficiency-top-10-planning-checks-for-governors

Top 10 planning checks for governors

18

Page 19: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Importance of Medium Term Planning

• SFVS - Schools must produce a forward projection of their revenue position for at least three years

• Schools can produce financial models using software

• Shows trends

• Impact of pay awards and pay protection

• Pupil number forecasts

• Staffing scenarios

• Income and expenditure data

• SIP costings included

• Early warning mechanism

• Understand surplus/deficit balances

Page 20: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Benchmarking

• New Benchmarking Website

• Public data published by DfE

• CFR (Consistent Financial Reporting)

• School historical data for five years

• Comparative to similar schools or specific

• Raises questions/areas to investigate

• SFVS requirement

https://schools-financial-benchmarking.service.gov.uk/

Page 21: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Hampshire Comparison Tool 2016-17

Phase

average

Selected

school

Comparator

schools

Page 22: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Deployment of teaching staff

Curriculum model and

subject capacity

Leadership team size and tasks

Leadership v TLR

Allowances

• TLRs

• SEN

• R&R

UPR Teachers

Pastoral structures

1265 hours

Page 23: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Deployment of support staff

Use of overtime

EHCP hours v actual

hours in the schools

Term time only weeks

Understand utilisation

and impact

Benchmark (grades

and time)

Page 24: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Employees, workers and contractors

Default position is employment unless nature of their use indicates they should be otherwise

• All staff on permanent, temporary and fixed-term contracts are employees

• They have employment rights that workers don’t have

Workers include genuine casual staff

• Worker have entitlements that contractors don’t have

• BUT risk that usage means they ‘become’ an employee by default

Self-employed contractors are individuals who run their own business

• Aside from Health & Safety protections, their only rights are as per their contract for service with you

• Must undertake the IR35 check as risk that they are seen as workers or employees through nature of your usage

Page 25: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Effective use of employment contracts

Employees

Permanent

Fixed term

Temporary

Also:

• Beware of continuous

service and employment

rights thresholds

• Also consider core and top

up options

• Job-share v part-time

Page 26: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Sharing of staff

One school is the

employer

Most suited to

non-classroom

roles

Limited use for

classroom based roles

Page 27: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Sharing staff: practicalities

Appointment or change process

Performance Management

Line Management v day to day

Development /INSET

Absence reporting

Expenses

ER issues

Page 28: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Where are we now? What next?

• A real mixed picture of school financial health but broadly heading

in one direction

• A number but not all schools being sufficiently proactive

• Broad range of responses from headteachers

• Some fundamental remodelling but many leaders not

understanding the need to remodel rather than restructure

• Governors really struggling

Page 29: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Where are we now? What next?

• Review “escalator” indicators and actions

• Further development of LA officers to enable them to better hold

their areas to account

• Regular reporting to Director of Children’s Services

• Proving viability

• Exploring primary leadership models for small secondaries

Page 30: Affordable Schools: facing the financial challenges...Affordable schools facing a financial challenges - Amanda Stevens and Andrew Minall Author: Amanda Stevens and Andrew Minall Subject:

Questions?