Money matters: the governing board’s role in financial planning

Gillian Allcroft, deputy chief executive of the National Governors’ Association (NGA), looks at the role of the governing body in financial planning

Governing boards have three core functions as defined by the Department for Education in its Governance Handbook 2017:

• ensuring clarity of vision, ethos and strategic direction;
• holding executive leaders to account for the educational performance of the organisation and its pupils, and the performance management of staff; and
• overseeing the financial performance of the organisation and making sure its money is well spent.

The three functions overlap and cannot be viewed in isolation.
All governing boards need a vision and strategy – setting out where they want the organisation to be in three to five years’ time. A board cannot be using its resources well if its budget hasn’t been structured to meet its vision and strategic priorities. The strategic plan for the school should be fully resourced – it’s all very well saying we’re going to climb Mount Everest next year, but totally unachievable if you haven’t identified a person to lead the expedition, trained everyone and provided the necessary equipment.

It should explain why the school business manager and headteacher are proposing the level of expenditure they are and how this fits with the strategic priorities

Strategic planning

Knowing where you want to be is important but so is knowing how to get there. Putting the right resources in place is an essential part of this; without the right resources, a strategic plan is just words.
Here’s where the annual draft budget comes in. The draft budget should be accompanied by a detailed commentary, written especially for the governing board. It should explain why the school business manager and headteacher are proposing the level of expenditure they are and how this fits with the strategic priorities.

For the governing board there are two pivotal appointments for resource management: the headteacher or chief executive and the lead finance professional

For this to happen staff responsible for the school’s finances and staff responsible for teaching children need to put their heads together. Business managers needs to understand the school’s curriculum but, equally, those responsible for teaching the curriculum and timetabling (including the headteacher) need to understand that changes to these will have an impact on resources.

The master plan

This doesn’t happen by accident. Governing boards need to make sure the right staff are in place to make this possible. For the governing board there are two pivotal appointments for resource management: the headteacher or chief executive and the lead finance professional – be they a chief finance officer or bursar. They both need to have the expertise to manage the day-to-day running of the school and report to the board in a coherent and meaningful way.

The governing board, headteacher/chief executive and business manager all have vital roles to play in achieving that core purpose

The board should ensure the lead finance professional has exactly that – appropriate professional competence. Where possible, they should also have a leadership position. Sometimes difficult decisions need to be made and these need to be made at the right level. Likewise, the board should ensure that, when recruiting for a new headteacher or chief executive, the person they appoint can demonstrate financial management; competence in this should form part of the application and interview process.

Decisions, decisions, decisions

When it comes to making decisions about expenditure, all governing boards need to question the rationale for decisions and proposals. No board should agree to significant expenditure (or any other significant decision for that matter) that is tabled at a meeting. If the relationship between the two key roles is working well, proposals to the board will be fully costed, evidenced and made in a timely fashion.
Good resource management helps to ensure that the organisation can deliver its core purpose to the best possible standard – in schools that means achieving good outcomes for children and young people. The governing board, headteacher/chief executive and business manager all have vital roles to play in achieving that core purpose.