Financial Oversight

School Governors have three core roles.  We have already explored earlier this month the first two, and now is the turn of Financial Probity.

As Governors, we have responsibility for important financial decisions in our school, and we are ultimately answerable to parents and the wider community for how we use our resources. This is becoming ever more challenging as those resources are becoming increasingly restricted, at a time when expectations about school standards are increasing, running alongside continuing additional funding pressures due to Covid. This means that the task of applying our limited resources to the greatest benefit of our children is becoming more and more difficult.

As a result of budgetary pressures, the role of finance is much more to the forefront. It informs many of the decisions that senior leaders take as they try to deliver high standards of education and ensure that they use limited resources in the most efficient way.

We work with 100s of schools annually, using Shaping Governance® our school governance benchmarking and improvement toolkit. In the last academic year, just over a third of the schools that we worked with identified that they were not confident in their financial oversight role. This isn’t surprising given the complexity of school finances; however, it is worrying.

Therefore increasingly, boards are seeking governors with financial expertise to increase the board’s confidence to challenge the work, strategy, and direction of school leaders and increase the rigour and depth to that challenge. However, not all governors have this experience, and the benefit of the schools’ stakeholder model of governance is that it draws on different knowledge and experience.

So, below I have explored a few key aspects and actions for governors to consider.

  • Financial awareness: make sure all governors know how schools are financed, including income, expenditure, financial year vs academic year, and the financial systems and processes in school. Doing this doesn’t have to be expensive training; a simple summary from your bursar on key aspects of school finance, including how the school manages the budget, will suffice for an overview. However, more detailed training can be accessed through many providers. Carrying out a skills audit will allow you to see who has financial skills (that you could utilise more effectively) and identify where you may need further support.

  • Championing finance: many of the schools I work with appoint a governor with a particular remit for finance. Individually, they can get a better overview and understanding of the financial systems, together with the necessary checks and balances. A great way to build your knowledge is to shadow the financial staff, and of course, this will assist you in preparation for your role on the SFVS.

  • Intelligent school planning: this includes linking the curriculum plan, the staffing plan, and the budget, which feed into the school development plan. Therefore governors need to know what the school’s priorities are and that they are costed and affordable. The Department for Education advocates the use of integrated curriculum and financial planning to enable schools to deliver their education priorities within their budget. Does your school utilise this?

  • Understanding staffing costs, now and in the future: are all of your staffing decisions taken knowing what they will cost in future years? Staff tend to get more expensive the longer they serve the school and progress through their career. This knowledge, therefore, needs to be built into your forecasts. So, when you approve staffing structures, you need to look at the costs now and what they are projected to be in the future. Use the link in the bullet below to consider staffing costs and benchmarking information.

  • School Resource Management: governors need to ensure that school leaders are managing school resources and money efficiently. The Government has produced this helpful guide detailing their Top 10 planning checks for governors, which will help you access the Schools Financial Benchmarking Service.  The SFVS is also a great tool for Governors to use as a development tool and not just an annual process.

  • Reporting to Governors: robust and accurate information should be reported to governors at least six times per year (maintained) - and this information should be readily available. Without this, governors and senior leaders will not be able to do their job properly. Maintaining good financial records is vital as this provides the cornerstone of the management information on which key strategic decisions are to be based.

  • Making strategic decisions: Governing Boards should look at the financial implications of the various potential courses of action. Robust historical financial information allows schools to prepare financial forecasts with a high degree of accuracy. Applying different assumptions based on different scenarios ensures that you see which course would most benefit the children while ensuring our financial resources are protected.

  • Preparation: Papers for meetings should be provided at least a week in advance to enable governors to have time to review them. Ensure that you get the information you need in a timely manner, and leave yourself time to digest the information and prepare your questions.  And lastly;

  • Be Curious and Challenge: in my book, there is no such thing as a silly question. Mostly, your simple question may be on the minds of other governors - so ask away!

The Government has produced a Checklist that provides helpful information and questions for governors to improve their financial probity. The checklist covers: Governance, Strategy, Setting the annual budget, Staffing, Value For Money, and Protecting Public Money. For each, it poses a series of questions, good practice examples, and what to do if things are not right in your school.

Posted in Shaping Governance.