Strategic Financial
Planning
Val Andrew
ASCL Business
Management Specialist
May 2014
val.andrew@ascl.org.uk
CPC – May 2014
AIMS
• A straightforward approach to strategic financial planning
which links to staff deployment and curriculum planning
• To make suggestions to facilitate discussions of strategic
financial planning within the senior leadership team and with
the governing body

val.andrew@ascl.org.uk
CPC – May 2014
A common language ……
val.andrew@ascl.org.uk
CPC – May 2014
val.andrew@ascl.org.uk
CPC – May 2014
It is about team work
Team work ~The actions of a group working together
towards a common goal
The skill that allows common people to achieve uncommon
results

val.andrew@ascl.org.uk
CPC – May 2014
Why is financial awareness important?
 Declining funding pre-16
(MFG -1.5%)
 Declining funding post-16
(around 12.5% reduction
between 2011-2014, and
further cuts in the
pipeline)
 Rising costs (inflationary
pressures on non-pay
expenditure, and pay
inflation)
 Greater financial freedom,
but also greater financial
accountability
val.andrew@ascl.org.uk
CPC – May 2014
Benefits of financial awareness?
 Common understanding
that making any
commitment has a
financial implication
 Common understanding
that quality improvement
cannot be driven just by
increasing resources
 A 3-5 year financial strategy to  Managing expectations!
ensure drastic changes are
identified and planned
for/avoided
val.andrew@ascl.org.uk
CPC – May 2014
Factors in our control:You cannot continue to perpetuate the past
• Which means a step change in management thinking is
required
• Sometimes called:-
A paradigm shift
val.andrew@ascl.org.uk
CPC – May 2014
The paradigm shift –
is the link between the curriculum and the money…..
• No!
• Yes


val.andrew@ascl.org.uk
Curriculum Vision
Budget reality
process
process
Budget
(compromise?)
Curriculum
compromise
CPC – May 2014
What constitutes a “good
enough view”?
Establish some key elements:•
•
•
•
•
Critical variables
Distinction between essential and desirable expenditure
Rules of thumb
Benchmarking
Best, worst and most likely scenarios
val.andrew@ascl.org.uk
CPC – May 2014
What are the critical variables?
In general useful categories include:Average costs for staff
– Teaching staff
– Education support staff
– Premises Staff
– Administrative staff
Broad expenditure categories such as
– Premises
– Learning resources
– Supplies and services
– Other
val.andrew@ascl.org.uk
CPC – May 2014
How do they compare?
Benchmark your
expenditure
against other
institutions
val.andrew@ascl.org.uk
CPC – May 2014
What is the trick?
Have as few variables as possible
• Use those that really make a difference
• Recognise when it is useful to think in terms of
– Per pupil - e.g. learning resources
– Per school/college - e.g. premises
– Per other things (school, teacher, class etc.)
val.andrew@ascl.org.uk
CPC – May 2014
Essential and desirable
expenditure
Ask questions
•
•
•
•
Is this a Health and Safety issue?
Is this a safeguarding issue?
Could this put us in an Ofsted category?
Are we planning this expenditure because
– we have to do it?
– we would like to do it?
– we have always done it?
– It is part of a strategic plan?
val.andrew@ascl.org.uk
CPC – May 2014
Keep an eye on the student roll
School/college funding depends on student
numbers
• What are our current roll numbers?
• What are our expected intake numbers for the next three
years?
• Can we influence our intake numbers?
• Can we influence our retention of students?
val.andrew@ascl.org.uk
CPC – May 2014
Rules of thumb – what does it
cost to run the school/college?
i. What’s the cost per period?
ii. What are economic class sizes?
iii. What are teacher costs (the largest variable?)
iv. What are the other costs?
val.andrew@ascl.org.uk
CPC – May 2014
Cost per period?
Depends on teachers average contact time, average cost, and the
‘overheads’ of running school – calculations next slides
Economic class sizes?
Depends on the costs above, and the taught hours that students receive
- calculations next slides
Teacher costs (the largest variable?)
Take average cost across all teaching staff, and include the employers
contribution to national insurance and teachers pensions (usually min of
56% of total budget with on-costs)
What are the other costs?
All other staff, premises, equipment /resources – usually 44% of total
budget
val.andrew@ascl.org.uk
CPC – May 2014
11-16 Students
16-19 Students
Teachers
900
250
70 FTE
@ £5,500
@ £4200
£5,000,000
£1,100,000
val.andrew@ascl.org.uk
CPC – May 2014
2013/2014 – A period on the weekly timetable
Pre-16
Approximate figures
School income (13/14)
£5,000,000
Total number of periods on timetable
950 per week
Cost of a period on the timetable
£5,300
val.andrew@ascl.org.uk
CPC – May 2014
2013/2014 – A period on the weekly timetable
Post-16
Approximate figures
School income (14/15) less a very
small contingency/surplus
£1,000,000
Total number of periods on timetable
250 per week
Cost of a period on the timetable
£4,000
val.andrew@ascl.org.uk
CPC – May 2014
A different way of working out what was tenable in
2013/2014?
Approximate figures
Average teacher cost
(this includes all teaching staff, and
employers on-costs)
£46,000
How many teachers do we need to
teach the lessons a post-16 student
attends (say 18)
Teachers teach on average 18
periods, so we need 1 teachers, at a
cost of £46,000
How many post-16 pupils (@ £4200)
each?
11
How many post-16 pupils are needed
to cover all the costs (add 44%)
16
…..and funding for post-16 provision is in significant decline, so future class
sizes must increase to be economic
val.andrew@ascl.org.uk
CPC – May 2014
The big picture means …….
250
PRODUCTION
DEMAND ….
must not
exceed
Arbitrary demand units
200
150
100
the PRODUCTION
CAPACITY……….
OR “Houston, we
have a problem!”
50
0
0
2
4
6
val.andrew@ascl.org.uk
8
10
Arbitrary time units
12
14
16
CPC – May 2014
The equation of life (Sam Ellis)
ATC
PTR 
I  pT
PTR = Pupil to teacher ratio you can afford
ATC = Average teacher cost (salary plus on costs per FTE staff)
I= Revenue funding in pounds per pupil
pT = proportion of revenue funding available for spending on
teachers.
val.andrew@ascl.org.uk
CPC – May 2014
So what can you do?
THESE ARE QUESTIONS NOT SUGGESTIONS!
• Staffing structure/curriculum review - teachers teach (more?)
and support staff support?
• Students have more - supported self study?
• Different delivery options – lecture style post 16?
• Collaboration - sharing staff with other schools? (watch out
for system cost and local politics!)
• Fewer chiefs and more indians?
• Buying resources at Aldi prices and not Waitrose
val.andrew@ascl.org.uk
CPC – May 2014
What else can you do?
MORE QUESTIONS NOT ANSWERS
• Only buy resources that are needed / group purchasing
initiatives?
• Energy savings maximised ?
• Water saving ?
• Study DfE review of efficiency ……(June 2013)
• Is your BM/FD an integral member of leadership ?
• Common language/understanding of financial targets within
leadership ?
• Benchmarking? - I’ll show you mine if you show me yours?
val.andrew@ascl.org.uk
CPC – May 2014
And …..
• Is sponsoring academies, setting up studio schools etc
good business? What about college viability – is this a
serious distraction from the core business?
• Is government funding now so unreliable that colleges
need to focus on employer funded activities?
• Are we seeing a shift in priorities away from the
teaching and learning agenda towards managing the
business?
val.andrew@ascl.org.uk
CPC – May 2014
To summarise then:Effective strategic financial planning considers:•
•
•
•
•
•
•
•
Vision and context
Funding prospects
Development plans
Curriculum plans
Demographic data and forecasts
Contingency plans
Benchmarking expenditure
Procurement principles
val.andrew@ascl.org.uk
CPC – May 2014
Key areas of business risk in
schools
• Governance Risks - governing body lacks skills or
commitment
• Operational Risks - safety, staffing issues
• Financial Risks - dependency on grant, cash flow
• External Risks - demographic trends
• Fraud risks - misuse of public funds/ property
• Compliance with law & regulation - poor knowledge of
requirements
• Horizon scanning – what could impact in 3 – 5 years time?
val.andrew@ascl.org.uk
CPC – May 2014
Whilst the information provided at this event was correct to the
best of the knowledge of the presenters and organisers, neither
ASCL nor Professional Development can accept liability if at a
later date this should prove not to be the case. Nor can they be
held responsible for any errors or any consequences resulting
from its use
val.andrew@ascl.org.uk
CPC – May 2014