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Last updated on 23 December 2019
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Know what questions to ask school leaders when you're scrutinising the budget, so you cover all angles before passing the budget on to the full governing board for approval.

The Academies Financial Handbook for 2020 will come into effect on 1 September. We'll be updating this article in due course – in the meantime you can find our summary of the changes here.

These questions are based on the Department for Education’s (DfE’s) top 10 planning checks for governors, and advice from our associate education expert Julie Cordiner.

How to use this

Finance committee: ask your headteacher/school business manager (SBM) these questions so you can be sure you've scrutinised the proposed budget in detail before the full governing board votes to approve it. 

Not everyone on the finance committee needs to be an expert. However, you're expected to ask questions, listen, and make sure the headteacher's/SBM's responses match what you know is happening in your school. 

If you don’t have a finance committee: you're likely to be putting questions to the headteacher/SBM after they've presented the budget to you. Use these questions alongside our other list of broader questions.

Understand where these questions fit in the budget approval process for maintained schoolssingle academies and multi-academy trusts

General questions

Budget assumptions

You need to make sure that the budget proposal is based on realistic assumptions. Ask:

  • Has the budget been compiled with reference to all the available and up-to-date information? (E.g. on pupil numbers)
  • What assumptions did you make when compiling the budget (e.g. in terms of staff numbers) and what are they based on?
  • Are your assumptions on the number, cost and deployment of staff robust enough to handle variations in projected pupil numbers?
  • How realistic is the proposed budget?
    • I.e. how does the proposed spending and income compare with the current year’s projected final results and the outturn for the previous year?
  • Do your assumptions on future funding reflect changes in the projected per pupil funding you'll receive?
    • E.g. your local authority’s (LA's) plans for the schools block funding formula and the impact of the implementation of the national funding formula
  • Does our financial strategy include valid assumptions on:
    • Leadership salaries
    • Pay awards and associated grants
    • Salary increments
    • Teaching and learning responsibility payments
    • Other allowances?
  • Are your assumptions on non-pay inflation reasonable?
    • E.g. in terms of general inflation levels and for things like exam fees and IT services
  • Do we have sufficient funding to deliver the curriculum in terms of staff costs and numbers?

Taking risks into consideration

  • Does the budget take into account any risks? 
    • What are they? (E.g. poor budget management, or the availability and allocation of funding)
  • How robust is the budget against different scenarios?
    • E.g. does the budget factor in teaching and support costs increasing, public sector work pay increases, or the impact of a 1 per cent teacher uplift?
  • What's the size of our contingency?
  • What's our projected surplus/deficit?

Compliance

  • Does the proposed budget comply with the requirements of the LA’s Scheme for Financing Schools/Academies Accounts Direction?
  • Does the format of the budget (in terms of how information is recorded) mirror how your school has to report it to the LA/Education and Skills Funding Agency (ESFA)?
  • Do you use a budget planning system to support forward financial planning, ensuring accuracy of information and efficient use of time?

Income generation

  • Does the school have an income generation strategy, and is it well implemented to seize every opportunity to raise additional income?
  • Do you build a suitably cautious and achievable level of income into the medium-term budget forecasts?

School improvement initiatives

  • Have you incorporated any new initiatives or changes in provision into the budget?
  • Have you prioritised, costed and linked school improvement initiatives to the budget?
  • Did you calculate the costs for new initiatives before committing to them?
  • Have all areas of the budget been examined to identify potential savings, either to resolve a deficit or to redirect money into educational priorities?

Contracts

  • Have you re-tendered/reviewed all contracts due for renewal, and made sure there's value for money?
  • Are there any regular payments for services that are an invoice-only contract?
    • All goods and services should be included on a contracts list, including single items and routine purchases such as stationery. Ask school leaders if all suppliers are on a contracts list and if they review the list for value for money

Benchmarking 

  • Have you benchmarked pay costs against those of similar schools?
  • Have you explored any significant variations? Does the school need to do anything to get the figures in line with those of similar schools? 
    • If you're the finance expert on the committee, you might want to use the DfE’s benchmarking service to make your own judgement, and go a little deeper into the figures. But remember to remain strategic

For more questions to ask about benchmarking comparisons on staff pay, average teacher cost, pupil-to-teacher ratio, the leadership team, and spend per pupil for non-pay expenditure, see the relevant sections in the DfE’s planning checks here.

Staffing questions

  • What are the overall staff costs as a percentage of total income?
    • More than 80% is considered high
  • If teaching costs are relatively high, is this due to the number of teachers or a relatively high proportion of highly paid staff?
  • Have you examined how efficient the deployment of staff is, through using the DfE's integrated curriculum and financial planning process? 
  • Are staff deployed effectively to deliver the planned curriculum? Is it affordable? How are you using support staff?
    • Senior leaders should have a curriculum plan and a balanced staffing plan that delivers the curriculum and is affordable. It should show that leaders are deploying staff effectively (making the most of e.g. teaching assistants), but that staff aren’t over-committed (as leaders need to have regard for staff well-being)
  • What is the teacher contact ratio? 
    • I.e. what percentage of their work time do staff spend on teaching compared with other activities such as planning, preparing and assessing?
  • How would changes to the teacher contact ratio impact the overall budget?
    • E.g. if teachers have less time teaching pupils, what would be the cost of cover staff? 
  • Are teaching staff taking on roles that support staff could do?
  • How does our school compare against the Association of School and College Leaders' (ASCL's) notional average of 78% contact time for secondary schools? What's the reason for any difference?
    • This number should be slightly higher for primary schools. Bear in mind that senior leaders may have less contact time than other teachers
  • Have you used the DfE's School Workforce Planning Guidance to support decisions on changes to staffing?

Pupil questions

Pupil numbers and mobility

  • Are the pupil number projections realistic?
    • Do the projections include features such as pupil mobility, the impact of decisions by neighbouring schools on admissions (e.g. other schools expanding), and exclusions (such as returning pupils or those excluded from other schools)?
  • Does the budget take into account potential changes in pupil characteristics, e.g. free school meal eligibility (particularly for pupil premium), low prior attainment and mobile pupils?
  • How might costs change at different pupil numbers? Such as:
    • Fixed costs that won’t change (e.g. head teacher, business leader, and some admin)
    • Marginal costs that will change in direct proportion to pupil numbers (e.g. educational resources, meals, and IT equipment)
    • Stepped costs that won't change until there's a need for extra or fewer groups/classes
  • What would happen if we get more/fewer pupils?

Pupil premium

  • Is our school publishing the required information about the use of pupil premium?
  • How is our school using the pupil premium?
  • Can we see a breakdown of how it’s used?
    • This will include costs such as class trips and how teaching assistants are used
  • How do we know it’s effective? What difference is it making to the attainment gap?
    • If it’s effective, there would be a narrowing of the attainment gap without causing non-pupil premium pupils to do worse
    • Ask for practical examples of how it’s used effectively

Refresh your pupil premium funding knowledge with our one-page summary

Special educational needs and disabilities (SEND)

  • Do you know how much funding our school will receive for SEND?
  • How are you spending the notional SEND budget and the top-up funding?
    • Use our article to catch up on the different parts of SEND funding
  • Is it making a difference? How do you know?

Class size

  • What are the average class sizes by Key Stage, and by options at KS4 and KS5?
  • What class sizes does our school aim to achieve – and what is the educational reason for this?
  • Are there any small classes where the per pupil funding doesn't cover the cost of delivery?
    • This can be especially important at KS 4 and KS5 where class sizes for some subjects may fall
  • Do you know the maximum average class size that the school can operate at within the context of pupil admissions, the structure of the building, the numbers in different year groups and the need for intervention strategies?

Variations in the budget

Look at any changes between last year’s budget and this year’s. For any significant changes, you’re looking for detailed, rational explanations from your leaders.

Ask:

  • Why has this figure changed significantly?
  • What is the reason for this change compared to last year?
  • Where is the saving or additional cost coming from?
  • How are we making sure this is reasonable?
  • Are we happy there are changes in funding that are going to help the welfare of children?

Deficit questions

Your school mustn't set a deficit budget without approval from the LA or ESFA for a licensed deficit.

Ask:

  • Has the school reported the deficit to the LA/ESFA?
  • Do we have a recovery plan?

You should be given the recovery plan so you can assess how realistic it is. Ask:

  • What are the chances for achieving this in the timescale?
  • What are the weak points?
  • What assumptions have been made about future staffing/pupil numbers?
  • Will the recovery plan have risks involved in terms of school standards?
  • Would savings lead to a worse quality of provision? Will it affect results?
  • Have you thought about increasing income generation? 

For further information on licensed deficits, see the Academies Financial Handbook (page 20), Schemes for Financing Local Authority Maintained Schools (section 6.9), and the Schools Financial Value Standard checklist guidance (explanation under question 9).

Sources

Julie Cordiner is an independent consultant specialising in school funding and education finance. She advises schools and local authorities on managing their budgets and achieving value for money.

 

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