It’s a while away yet, but the school year is edging ever closer to its end. In this article, as things begin to wind down, Nicola Evans, school budget officer at One Education, walks us through the financial year closedown
2016/17 financial year closedown
The new financial year starts with a preliminary closedown of maintained schools’ accounts and reporting to the local authority (LA) on the financial position of each school for 2016/17.
There’s a timely deadline for the preliminary closedown to be produced and varying schools’ holidays as well as delayed post will make this a challenge for school business managers everywhere. Following the LA deadline schools will await any feedback before a final closedown can be performed. This is also a time where schools are anticipating their final carry forward to allow them to start the budget planning process.
Budget planning for maintained schools
Preparation and completion of budget planning before submission to governors for discussion/approval will soon begin. Once preliminary closedown has been completed the carry forward figures can be incorporated into the budget to provide an accurate starting point for this process.
For some schools this may mean that some plans will need to be staged over a number of years
School budget planning priorities
The initial priority is to look at the current year and, as far as possible, to accurately identify/forecast income and expenditure. Schools use the indicative budgets provided by the LA, plan for additional income – e. g. catering – review staffing and update expenditure lines with anticipated costs. Where annual agreements, for example, service level agreements, have been signed-up to this can be done accurately but some expenditure is indicative and may need to be reviewed/adjusted later in the year.
Headteachers will be reviewing their schools’ development plans and may want to prepare and incorporate a wish list of plans they would like to see come to fruition during the year – e.g. purchase of equipment and implementation of interventions – to allow SBMs to identify/review affordability. For some schools this may mean that some plans will need to be staged over a number of years.
Reducing costs, income generation and accessing available grants will all be considerations as part of this process
Analysis of reserves
Some schools will have surplus balances above the percentage allowable by the LA and will need to produce an analysis of reserves to breakdown how this surplus will be spent. Due to the implications of the National Funding Formula a number of schools will be utilising any surplus to ensure that their budgets are sustainable for the immediate future. Some schools will be investing in large capital projects – making improvements to school buildings to ensure they are fit-for-purpose going forward or upgrading IT equipment in line with the learning needs of their pupils.
Others, whose budgets are tighter or whose income has seen a reduction this year, will be entering more challenging times where difficult decisions are being taken to protect the sustainability of the school in future years. Reducing costs, income generation and accessing available grants will all be considerations as part of this process.
Many schools have already identified potential deficits in their budgets for 2017/18 and will already be preparing recovery plans and applying to their treasurers for 0% interest loans to support their budgets
All school leaders and governors will be looking at least three years ahead to see whether their models/spend/structures are sustainable longer term. All schools have to plan ahead in this way as future year income is expected to decrease in while costs increase year-on-year due to many factors including inflationary increases in services and ever-increasing salary/pension costs. It may be that a school with a healthy brought forward surplus this year may still have to look at restructuring to some extent in future years.
Deficit Recovery Action Planning
Many schools have already identified potential deficits in their budgets for 2017/18 and will already be preparing recovery plans and applying to their treasurers for 0% interest loans to support their budgets. Be mindful that these applications aren’t guaranteed and can take up to six months to complete before any cash is transferred into accounts; this will have to be considered during budget planning due to the potential cashflow implications. Future year repayment plans (once agreed with the treasurer) will also need to be factored into future years to ensure affordability and that funds are committed for those years.