Cheryl Campbell, Kemi Arogundade and Husham Khan from ABBLed join me for the first in a special series of podcasts discussing the hot topics that SBLs are dealing with right now.
In Part 1, we’re talking all things post-Covid finance and we’re digging into insurance, contracts and lettings as well as risk management, pupil numbers and contingencies. It’s a good one!
The episode at a glance:
[2:04] –Not sure what ABBLed is about? Cheryl fills us in!
[6:00] – We get stuck in to the detail and talk around all things income and expenditure
[11:10] –We take a closer look at risk management and risk registers and how these tools can help SBLs
[15:40] –We talk about the impact of COVID on staff wellbeing and how we can factor this into budget setting
[27:17] –Husham explains the ABBLEd ratio, how it can be used to measure your school’s exposure to the commercial sector and what this means for your organisation in terms of risk
[32:28] – Cheryl emphasises the importance of an appropriate contingency for your school
[41:50] –We discuss how wide-reaching the role of SBL is and why it’s important that SBLs are involved in strategic discussions
[48:30] –Is there such a thing as COVID-proof finances? The panel forms a conclusion…
[52:18] –Husham sums up the top take-aways from this episode
You know I love to hear from you so please pop me an email or get in touch on social media to let me know what you think of the show and what you’d like to see in the future!
Micon Metcalfe, School Business Professional and MAT Executive Leader, returns to the show to talk about all things financial benchmarking. Is it worth it? How does it work? What info should you be looking at? This episode has all the answers!
And because it’s us… we didn’t stop there (again!) We also talk about governance, Ofsted, the ESFA, the DfE, the SRMA role and MATs in terms of growth, central team structures and what we think the future holds for education generally…
Really, there is nowhere we won’t go!
The episode at a glance:
[2:15] – Micon shares her views on financial benchmarking, how and why this has shifted over time and the role of the SRMA
[29:04] –Micon discusses Ofsted inspections from a MAT perspective plus how she feels about scrutiny, GAG-pooling, and much more!
[40:27] –Micon shares her advice for those SBLs who aren’t ‘allowed’ to observe or participate in critical strategic discussions
[46:22] – Micon talks about how you can get started with financial benchmarking
[01:02:02] –Micon talks about the challenges in the sector both now and moving forward and what we can do to weather them
You know I love to hear from you so please pop me an email or get in touch on social media to let me know what you think of the show and what you’d like to see in the future!
In the second episode of the Summer of CPD podcast series, Marcus Peedell and Sean Clark from School Business Services join me to talk about the things you need to consider when setting your budget and monitoring your expenditure.
We talk about why consistency is key, why change is inevitable and how we can make sure we’re flexible when it counts.
And if you’re listening to this episode and feeling a little bit lost, stay tuned until the end to find out how I can help!
The episode at a glance:
[1:28] –Marcus and Sean discuss overwhelm and the importance of planning and tracking finances.
[7:42] –We talk about how to share financial information effectively with the SLT and school governors
[8:43] – We talk about what’s coming in terms of financial planning and financial returns
[12:25] –We talk about the impact of COVID on financial processes
[15:46] –The pair share their top tips for school financial management
You know I love to hear from you so please pop me an email or get in touch on social media to let me know what you think of the show and what you’d like to see in the future!
Almost every day we read a news article about a MAT scandal. Whether it be a financial notice to improve, a poor Ofsted report or a failure of governance, these stories have become all too common.
The questions that are often asked are: why has it taken Ofsted, the DfE or the ESFA to come along for people to realise how bad it is? Why hasn’t something been done before?
A MAT cannot lose all of its money or shift from good to special measures overnight. These things happen over time.
So how do you know if you’re working in a mismanaged MAT? What are the symptoms you should be looking out for that may lead to a detrimental diagnosis?
In my experience, there are three key areas that you should assess to determine whether your MAT is being mismanaged:
Governance
Consider the constitution of your Board and Governing Bodies. Determine whether they are the right people to undertake these roles in terms of their values, skillset, personal interests and capacity.
Review the governance self-evaluation systems that are in place. Consider how objective this process is, how often it is undertaken and how effective your MAT is at following up on areas for development.
Evaluate the effectiveness of your Scheme of Delegation. Determine how well it is adhered to and whether it is effective in operation.
Assess the quality of your meetings in relation to schedule, agendas and records of discussion. Evidence of accountability, scrutiny, challenge and support should be clear and documented.
Consider the level of transparency of your governance systems. You should be able to clearly articulate your decision making process and justify the actions of governors both to local stakeholders and external bodies.
Leadership
Consider the capacity of your leaders in relation to delivering sustainable improvement within your MAT.
Assess how well your leaders tackle poor performance and conduct and whether they execute their role as leader fairly, equitably and consistently.
Determine how well your leaders apply the policies of your MAT. Consider how you ensure that MAT systems and processes are followed in relation to education, employment law, finance and compliance.
Review the performance management processes for your leaders to ensure that they focus on MAT determined core competencies beyond education specific targets. Consider finance management and people management as indicators of leadership quality.
Consider how well the leaders within your MAT respond to challenge and the opportunity to collaborate. Issues within these areas can indicate an underlying cultural problem that can erode the effectiveness of the MAT over time.
Finance
Consider the level of experience of your finance staff and the qualifications they hold in the context of the role that you expect them to perform. Assess their ability to provide correct and timely information and whether they present it in an audience-appropriate way.
Determine how your finance team responds to challenge and scrutiny both within meetings and from external bodies. Questions that cannot be answered or data that cannot be supported is a red flag that should not be ignored.
Review the financial systems within your MAT to ensure that there are appropriate checks in place to act as an ‘early warning’ system. An external audit report should not be the first time that you learn about financial issues within your MAT.
Assess the value of the MAT central team in terms of the capacity that they add to the schools and whether the relationships between the financial team and local school leaders enables sound financial management.
Consider how the finance function integrates with other areas across the MAT including school development planning, curriculum planning, staffing strategy and capital expenditure. A financial team that works within a silo cannot be effective.
In the world of Academies, GAG pooling is seen as something of a taboo. Though it first featured in the Academies Financial Handbook in 2013, it has been until recently, largely ignored.
With the increasing financial pressures on the sector and the depletion of resources throughout the system, it has steadily risen to the top of the agenda.
The DfE, the ESFA and numerous financial experts all cite the process of GAG pooling as a way to further increase efficiencies and improve the effectiveness of MATs.
“To enable financial governance to continue to improve it is essential that MATs become more centralised. This will, in turn, facilitate GAG pooling which will enable MATs to ‘look after‘ the financially weakest schools in the system.”
“I would like to share more widely across the audit sector several key points that will help boards govern more effectively and make best use of the freedoms they have. We are aware that a substantial proportion of trusts are still hesitant about implementing some of the freedoms and mechanisms to enable this.”
He encourages auditors to discuss these freedoms with their clients; GAG pooling being at the top of the list.
He said:
“This is one of the greatest freedoms a MAT has. The opportunity to pool GAG is particularly valuable, in particular, to simplify the provision of support to weaker schools in a MAT until they can grow their pupil numbers. It is worth remembering that a MAT is a single financial entity.”
Interestingly, out of the 350 Trusts represented in the Kreston report, only 3 are currently GAG pooling. In the opinion of Kreston, it is clear that ‘there is something holding the sector back’.
There’s no doubt that moving to a GAG pooling model requires a significant shift in both the mindset of leadership and governance and the culture, systems and processes of the organisation.
But with approximately 50% of MATs showing an in-year deficit, an increasing number of MATs having a cumulative deficit and continually depleting reserves sector-wide, why are so many MATs reluctant to GAG pool?
The Kreston report states that MATs said they were not GAG pooling because:
The politics were challenging (SLT, Trustees, LGBs) 46%
Financial position 22%
It was too difficult to implement 14%
They will do it or are seriously considering it 5%
Other reason 13%
The issues surrounding the ‘politics’ of GAG pooling include:
The belief that school-level funding allocations are for the benefit of the students in a specific school and therefore should not be redistributed
The concern that the deployment of resources from a central perspective would disadvantage individual schools and students
The reduction in the autonomy of schools, Headteachers and Local Governing Bodies
If the financial landscape was rosier, it’s clear that GAG pooling would remain an overlooked clause hidden in the depths of the Academies Financial Handbook. But with the financial future of the sector looking increasingly bleak, MATs may find themselves having to grasp this nettle.
If you’re open-minded to the concept or are actively considering GAG pooling and you’re wondering how best to approach it, then I’ve put together a list of frequently asked questions to help you navigate this largely uncharted territory.
What options do we have in relation to GAG pooling?
Receiving all school funding centrally and allocating resources to individual schools and to the centre (removing the need to top-slice a ‘management fee’)
Allowing school allocations to continue at a local level but pool reserves and other specified incomes streams (whilst continuing to top slice a ‘management fee’)
In addition to the top sliced ‘management fee’, top slice an additional specified amount for central reserves/contingency
Increase the percentage of the management fee and from this, create a centralised reserve
How could we use these pooled funds?
Again, it depends on where the money comes from, how much of it is pooled and the overarching strategy of the MAT. Outside of school allocation, (however this is determined), the money can be used for:
Supporting the financially weaker schools in the MAT
Creating a contingency for cashflow, unforeseen emergency costs, building maintenance, ICT replenishment etc.
Increasing central resource and achieve efficiency savings MAT-wide (through centralisation and procurement)
Funding projects cross-MAT to support improvement and build capacity
In what situation would GAG pooling be most effective?
If there are clear inequities across your schools funding with surpluses and reserves varying to the extreme, you can argue a case for GAG pooling. The ESFA, though it monitors individual school performance, is more interested in the overall financial sustainability of the MAT as a whole. GAG pooling is one way to secure that. For financially vulnerable schools, joining a MAT should provide them with adequate protection rather than expose them to further threat.
If all of the schools in the MAT are running close to the red line, then you could argue that pooling these funds would not achieve much at all; like shifting the deck chairs around on the Titanic. If your central budget is not capable of generating surpluses either, then your MAT will likely need to consider a more drastic approach to bring things back into line and secure sustainability.
But redistributing funds away from the schools it was intended for is not right!
You could argue that having a ‘management fee’ does exactly the same thing as GAG pooling but is simply called something different. When you look at the size of or uses of the ‘management fee’ in some MATs, it could be said that they are GAG pooling already, with some reserves and contingencies sitting centrally. The difference with this is that the route to challenge and scrutiny by the schools is stronger and more defined in terms of quantifying the value for money provided by the MAT. In fact, I worked with a Head recently who said they felt the management fee that they paid their MAT was too low and they would gladly pay more to enable the MAT to do more for them.
If the MAT has a large amount of cash sitting in the bank but ‘cannot’ use it, it will merely be an onlooker as one or more of its financially weaker schools fail; thus negligent in its financial stewardship. In these cases, if the sole purpose of GAG pooling is to secure long-term financial sustainability of the MAT, then GAG pooling in some form should be a no-brainer.
So how do we reconcile the inequity that GAG pooling creates in the schools that are financially effective?
MATs need to decide how committed they are to GAG pooling and whether they are in it for the long term. Depending on the level of need and ‘pooling’ that needs to be done, MATs might consider some form of internal loan and repayment system to overcome short-term difficulties. If the GAG pooling mechanism is being used as a means to secure sustainability in the short term – either until funding becomes adequate, pupil numbers increase, or further local efficiencies can be achieved – then the MAT can account for the internal redistribution and repayment of funds. This mitigates the perspective of schools ‘losing’ or ‘giving away’ their reserves and being ‘penalised’ for their financial efficiencies. This option should be considered carefully, taking into account context, the level of need, the financial position and the long-term goals of the MAT. GAG pooling in any form needs to be articulated clearly in relevant MAT policies including the Reserves Policy.
What if there are other reasons that we need to use the reserves/pooled resources?
Implementing a transparent system around the management of these reserves is essential. If your MAT is pooling reserves to secure tighter financial control, it should implement a process whereby schools can apply for funds as and when they need it. The MAT should ensure that the criteria for decisions taken and the prioritisation of expenditure are clear so that no school feels like it has been unfairly treated. The Academies Financial Handbook states that an appeals process for such circumstances be articulated clearly in MAT policies. My advice is that the more specific you are around the allocation of pooled resource, the less chance there is that complications will arise further down the line. Ambiguity fosters distrust. If the MAT doesn’t have a robust process for managing GAG pooled resource and cannot justify its expenditure decisions, then appeals may be lost and the impact on the relationships within and the culture of the MAT may be devastating.
What about the National Funding Formula?
If the National Funding Formula achieves its goal to balance funding across UK schools, then this will ‘iron out’ any imbalance that the GAG pooling process is designed to achieve – thus making GAG pooling, at least at its extreme, redundant. Instead, the focus will shift back to the ‘management fee’ and value for money of the MAT.
Our MAT isn’t in financial difficulty – should we still consider GAG pooling?
If your MAT is in a sound financial position but determines that it could add more value if it had more control over its funds, then this is where GAG pooling becomes particularly contentious; especially if you’re opting for Option 1 – total control over school allocation. In effect, it means that your MAT is saying that it will override the methodology of the funding formula and all its component parts and determine itself how much money each school needs – in other words, ‘acting like a Local Authority’ (Robert Hill). This is where the argument in relation to the autonomy of Headteachers and Governing Bodies grows strong. If a MAT opts for this type of GAG pooling, it indicates a significant shift in culture, operation and autonomy beyond what is currently common in the sector. These ripple effects will impact on the role of the Head, the management of the schools and the way in which the Scheme of Delegation operates.
Before going down this path, the Trustees and central team need to be clear about what they are trying to achieve and whether GAG pooling is really the best way to do it.
Our MAT is looking to grow – should we be looking at GAG pooling?
Much of your decision making in relation to GAG pooling will depend on the points made above. However, growth does pose both financial opportunities and threats to a MAT. If your MAT is looking to grow, GAG pooling is just one piece of the puzzle and should be considered in relation to the context, strategy and objectives of your MAT both in its current and future state.
For those MATs who are looking to grow or are already in a growth phase, download my Guidance for Growth Tool, written for Capita SIMS, to enable you to articulate your vision for growth, test and risk-assess your strategy and identify actions to implement your strategy successfully. Just click the image below:
So how do we move forward?
In summary, there isn’t a one-size-fits-all answer to GAG pooling. You’ll need to assess the current position of your MAT and identify your long-term challenges, priorities and goals to see if it is the right path for you.
For additional advice in relation to GAG pooling, get in touch with your auditors who will be able to provide you with bespoke, detailed guidance and support.
Monthly management accounts are the most useful financial tool a Headteacher has at their disposal. However, when presented with a spreadsheet full of numbers, for some, it can be difficult to know where to start or what questions they should be asking their Business Manager. Here are the top five things that you should be digging into each month:
1. Analysing monthly performance
Your management accounts should clearly state your actual expenditure for that period (month) against the forecasted expenditure for the month. The forecasted expenditure is usually the annual budget distributed evenly across twelve months. By comparing this information, you should know if you are behind, on track or ahead of budget. You should know whether a variance is planned (i.e. an annual invoice) or if there is an issue that requires monitoring (i.e. an unplanned overspend). Your SBM should provide you with details on any significant variances for the month and outline any mitigating action if required.
2. Analysing year-to-date performance against budget
Looking at the year to date expenditure against the full year budget can indicate if any significant issues require attention. Quality management accounts provide a full-year forecast based on year to date expenditure which is based on the assumption that current spending patterns will continue. This data highlights how any overspend may impact your planned year-end position and also flag up cost centres that require additional control or are indicating significant underspend. An in-year budget reforecast based on this information is considered good practice and should be undertaken by your SBM in consultation with yourself and governing body or MAT.
3. Reviewing staffing and agency costs
Depending on the structure of your management accounts, your core staffing and agency costs may be lumped together. Ensure that you receive expenditure, forecast and budget figures for these areas separately to gain a concise picture of staff costings. Ask your SBM to further break down agency costs into vacancy cover, sickness cover, planned absence and training cover. This way you will gain further insight into your agency costs and whether any overspend can be offset against any underspend in areas of your staffing costs or whether you are heading for an overspend.
4. Track key expenditure lines
Ensure that income and expenditure lines for areas such as catering, uniform and school trips are accurate and regularly reviewed to determine whether there is a profit or loss in these areas. Ensure that any loss is forecasted and factored into the bottom line. Also ensure that if any expenditure is to be recharged to departments or teams (i.e. reprographics, hospitality, stationery) that this is undertaken on a regular basis and that department expenditure is reviewed and communicated with Heads of Department.
5. Reviewing planned expenditure for the year
Odds are that since you set the budget, you’ve had to purchase some items that you hadn’t planned for, or needed to pay some unforeseen maintenance costs. Sit down with your SBM and make sure that your planned budget is still realistic, and determine whether any of your plans need to change to accommodate your financial position.
