A neat formula for integrated curriculum financial planning will help schools cope with a hostile funding climate, says Val Andrew
If school business professionals clicked on the Education and Skills Funding Agency’s (ESFA) latest guide to schools revenue funding for 2019-2020 in the hope that it would signal better times for their budgets, they would be disappointed.
The ESFA guide, which sets out the arrangements for distributing education funding through to the 2019-20 funding year, confirms that the current ‘soft formula’ will be extended for another year through to 2021. Local authorities will, therefore, continue to have significant influence over the distribution mechanisms for at least another year.
The headline updates in the guide include:
- increases to the minimum per pupil funding levels to £3,500 for primary pupils and £4,800 for secondary pupils;
- an increase to the funding floor of 1% per pupil compared to 2017-18 baseline levels;
- a further increase of 3% to the gains cap, which means schools can attract gains of up to 6.09% against their 2017-18 baseline levels.
It also contains news of changes to the way LAs receive their funding from the ESFA to fund growth. The changes mean that, in future, this funding will be distributed to LAs on a formula basis linked to actual levels of pupil growth, rather than on a historical spend basis; the way LAs distribute growth funding to schools remains unchanged. This latest guide relates to only three of the four blocks of funding within the Dedicated Schools Grant (DSG) – guidance on the early years block will be published in due course.
What this all means for schools is that budgets will continue to experience unrelenting pressure for the foreseeable future due, in the main, to escalating staffing costs. So, with staff costs amounting to the majority of a school’s spend, it makes absolute sense to operate the most cost-effective curriculum model which meets the needs of pupils, school and budget.
Sustainability is key
Sustainability is key, and having advance warning about when and where the serious pressures might occur helps decision-making around staffing for future years. There is a renewed focus on an integrated curriculum financial planning methodology, with schools being encouraged by the DfE and ESFA to use this to underpin their financial planning processes to help to build financial resilience.
Whilst this financial planning model isn’t new, and is already in use in many schools, there are various myths about the extent to which this method works throughout the sector. There is a need to dispel these myths; it is equally relevant in primary schools, secondary schools and all-through settings and is predicated on the concept of pupil teacher ratio (PTR) which will be different in different settings.
Once schools have worked out their affordable PTR level, and compared this with their actual PTR level, they can use this to inform decisions about staffing levels. In order to calculate PTR effectively schools need to understand these vital indicators:
- Average teacher cost (ATC) – calculated using gross salary plus on-costs for all staff who are employed in the classroom. If you have teaching assistants working exclusively in the classroom, or employ tutors to run intervention groups, then it might be wise to also include their salaries for the purpose of this calculation.
- Amount of usable revenue per pupil available (I) – to calculate this, include ALL income that comes from a sustainable source, such as your pupil premium income and any external income that you regard as reliable – for example, lettings income.
- The proportion of your budget you can afford to spend on teaching (i.e. delivery of the curriculum) (Pτ) – in order to calculate this you need to know exactly what your fixed costs are; these will then help you to identify the proportion you have available to spend on teaching/delivery of curriculum.
Using these key elements you are able to calculate what your school’s affordable PTR is using this equation:-
In order to be able to operate with a balanced budget, and to have a chance of longer term financial resilience, your school needs to be working either at this level or higher. Compare your actual PTR with the affordable rate and this will determine whether or not you have a sustainable staffing model for curriculum delivery.
Why use PTR? Firstly, it is based on a per pupil funding level which underpins the current funding model. Secondly, it also links to curriculum delivery because the opposite side of the equation (see below) uses average class size (ACS) and the contact ratio (c) to also determine PTR.
Once you have all these components you have the basis for a discussion within SLT and your governing body/trust board.
It is possible to extract data from the benchmarking websites in order to compare your school’s PTR levels with other schools of a similar size and phase. The government also occasionally publishes average PTR levels to aid the sector with this comparison.