July 4, 2023

Reforecasting the school budget – teachers pay & energy costs focus

Whilst the best time to talk about budget planning will always be ‘yesterday’, this blog provides realistic reforecasting guidance to react confidently when unforeseen (and combined) expenditure challenges arise, such as right now.

 

What’s happening and when?

 

Staffing budget

As covered in our previous blogs, following the announcement on 19th July, the starting salary for teachers will rise by 8.9% in September this year to £28,000 outside of London. Teachers in the early stages of their careers will have salaries increased by 5% to 8% and more experienced teachers and school leaders will receive a 5% increase. In addition to this, staffing budgets are challenged by a proposed one year pay deal for support staff of between 4.04% and 10.5% and changes to the legality of term time-only contracts.

Other expenditure

Away from staffing, the school budget is facing significant pressure in all areas. In particular, schools are facing enormous hikes in electricity and especially gas rates – this has been common knowledge since February, but it is a developing, unsettling story with energy price caps due to rise on October 1st, and again in January. Building improvements and IT is capital expenditure that is dealt with separately and school trips are funded by parents generally, sometimes Pupil Premium for eligible children.

So. This is a perfect storm of demands that will have a strain on budgets, and now more than ever we need to acknowledge the piling pressure on school leaders who have just last month submitted a budget forecast return (BFR), and the knock on effect on the delivery of education, with the cost-of-living impacting households, parents and pupils. As finance consultants and supporters of school business staff and leaders, we are pooling together resources to help combat these challenges. Most of the content in this blog is free, the rest is in reference to our services and products.

 

Guidance

 

Our Finance & Accountancy Support team says:

No matter what happens in the academic year, the two areas below could help you to take stock:

Knowledge and proactivity
  • Understand where the school’s income comes from and why, and note that there are avenues for sustainable income generation (provided you have time to explore these)
  • Build knowledge of your local area’s pupil number trends and update your 3 year budget forecast as soon as October census day numbers are known, so you can predict next year’s funding and start planning early
  • Ensure the staffing structure behind your budget is kept up to date, so that predicted support and teaching staff costs  are as accurate as they can be
  • Ensure that you understand the figures reported by your finance staff each month; challenge underspends and overspends and be aware of trends and issues
  • Support your finance staff to carry out reforecasts and sensitivity analysis in order to identify the impact of changes to income and expenditure since your budget was set.
  • Don’t be afraid to ask a question
Contracts – Get organised, review existing contracts (energy contracts and more). These are the conversations to have:
  • Does the school have a contracts ledger and do you have access to it?
  • Are they value for money?
  • Is there a more cost-effective solution?
  • If you are a MAT, are their opportunities for economies of scale?
  • When are the contracts up for renewal?
  • When does notice need to be given?
  • Will the supplier offer a discount for a multi-year deal?
  • Would changing a supplier trigger a tender process?
  • What would the impact be on processes, procedures and staff if a contract changed?

To support the efficient completion of the BFR, finance staff should ensure that the data in their budgeting software is kept live and reflects realistic predictions of factors such as pupil numbers and profiles, funding formula factors, staffing and other costs. If the budgeting software is successfully integrated into the regular financial processes of the Trust the BFR is not a separate, onerous task and instead priority can be given to improving the quality and usefulness of the data.

 

Our Budgeting Software team says:

Since submitting the BFR, what are you doing in your budgeting system to mitigate against the impact of these changes?
  • With the goalposts constantly moving, ensure you can see the impact of changes (rising energy costs, unfunded pay rises) by creating multiple reforecast scenarios.
  • Forecast for several scenarios, including the worst case. This might sound obvious in a period of fiscal uncertainty, but it’s important for headteachers and governors to understand all possible outcomes so they can ask the correct questions and realistic plans can be made.
  • If users are wary of using the latest teaching and support staff salary scales we suggest duplicating their working budget, then applying the new scale tables to the duplicate budget so they can easily see the impact  of the potential changes.
  • If schools have created multiple budget scenarios to strategically plan their resources for the demands ahead, SBS provides the ability to update multiple budget scenarios at once to reflect year to date actuals and staff changes as they happen.

 

Our advice can be applied to any budgeting solution, but please note that these elements are best used in conjunction with SBS Budgets. Any financial outlook, optimistic or less-so, any school type, phase, vision or journey will be well received and catered for in SBS Budgets.

 

Further reading/watching

  • Excellent blog from TeacherTapp – laserlike insight and stats. We raise our caps to it: School Funding and the Cost of Living 2022 >
  • Our Finance Governance & Budget Setting video could provide a strong overview – Watch now >
  • Energy contracts – We hosted a Coffee Club with Tim Warneford and James Robson covering this issue – Watch now >

    Contact us

    You should always contact SBS if you have any questions 0345 222 1551 – Opt. 5 and hello@schoolbusinessservices.co.uk.

     

    Related SBS Videos

    Get Top Educational Insights Delivered Monthly

    Subscribe to our Staffroom Buzz newsletter and join a community of school leaders dedicated to making a difference. 

    Continue Reading

    Understanding the Pupil Premium in England

    Understanding the Pupil Premium in England

    Discover how the Pupil Premium is improving educational outcomes for disadvantaged students. Learn about the funding criteria, allocation methods, and effective strategies schools can use to close the achievement gap.