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Delegation deductions

The long-awaited Audit Commission report opposes handing over more cash to schools. Phil Revell reports

TWENTY months in preparation, Money Matters is the first major appraisal of school finances to be made since local management was introduced a decade ago. Its conclusions challenge policy initiatives from both major parties while providing evidence to support the profession's view that primary heads in particular have been overwhelmed by the work required of them.

The Conservatives' education team will be dismayed to learn that the Audit Commission does not support further delegation of school budgets, while David Blunkett's use of the Standards Fund as a tool to drive forward cherished initiatives is also questioned. The report is not in favour of wholesale reform, but it does argue that the present funding system is flawed and needs to be re-engineered to become more transparent.

Day-to-day handling of money was sound in most schools, but one in six has significant weaknesses in financial control. Handling of voluntary funds was a key issue, as some schools use governors independently to audit the funds, a practice the commission does not recommend.

A bigger concern was overall resource management. "There's a need to get the budget and the development plan working together," said Nick Ville, one of the report's authors.

"Effective heads say to themselves, 'We've got this amount of money, how can we use it to deliver our priorities?'"

Examples of poor resource management included:

Poor planning in relation to falling pupil numbers which led to crisis cuts in staffing and

damage to staff morale.

An over-reliance on voluntary work from secretaries and

support staff.

Classroom support in one school was funded without

considering whether the money could be sustained.

The report team found wide variations in resource allocation. In a comparison of similar-sized primary schools, spending on teaching staff ranged from 58 per cent to 74 per cent of the

overall budget.

Fewer than half the schools surveyed had linked their development plan to their budget, only 13 per cent had asset replacement plans, 24 per cent had redecoration or repair plans and just 12 per cent had costed staffing plans.

This contrasted with schools using an integrated approach. One school used a detailed analysis of its future pupil numbers to foresee a need for a redundancy and planned for it accordingly.

The Audit Commission felt that many schools held too much money in reserve. School

balances total pound;600 million, with the money in more than half of the schools earmarked simply

for contingencies or staffing issues. Schools with significant levels of reserve described their financial situation as "difficult", while 11 per cent were running a deficit.

For many heads, the barrier to effective financial management was insufficient time. There was a real difference between primary and secondary schools. Primary heads had half the administrative support of their secondary colleagues - even when pupil numbers were comparable. Secondaries with 500-600 on the roll typically had 120 hours of administrative support. A primary head in a similarly sized school had just over 60 hours of support.

"As a result, such schools had particular difficulty in dealing with their delegated responsibilities," says the report.

Local education authorities support school financial management in many ways - from providing information to the regular audit. But the report found that weaknesses in provision were causing difficulties for schools.

Ineffective or conflicting information and communications technology systems were criticised, as was the failure of most authorities to provide benchmarking information that would allow schools to evaluate finances.

There was wide variation in the way authorities monitored school budgets. Some schools with multi-million-pound budgets are audited only once every four years. Resource management in schools is often left unquestioned with scrutiny concentrated on "bottom-line" figures. The commission noted that in some authorities "this falls between two stools, with the educational advisers assuming that the finance department does it - and vice versa".

But the biggest problem with LEAs was their failure to inform schools early enough of their budget allocation. Nearly half the schools surveyed were dissatisfied with how much notice they were given. Some LEAS were giving schools budget information after the start of the financial year.

And that funding can vary widely from authority to authority, with a gap between primary schools of anything up to pound;1,600 per pupil. Much of this is due to the Government's Standard Spending Assessment (SSA), the formula used by the Department of the Environment, Transport and the Regions and the National Assembly for Wales to assess local authority needs. The system is under review and the report's authors reprise the main points of debate.

The SSA is too complex and is based on historical spending patterns rather than an objective assessment of need.

Concerns have been expressed about the formula's failure to address the needs of rural areas and the disadvantaged.

The formula doesn''t separate the needs of schools from the needs of the LEA, making it

difficult to identify how much an LEA has decided to spend above or below its SSA on schools.

Wales has no separate block of education funding.

The report accepts that funding differences between schools often reflect local circumstances. A survey of similar primaries found that, for most, the actual gap was about pound;200 a pupil. But, even in that survey, the schools at each end of the spectrum were pound;400 a pupil adrift.

"These variations need to be challenged," says the report. "Unfortunately, the lack of

transparency in the system means that a challenge isn't always possible."

The report argues that the 2000 spending review, with its increases in spending, offers "an historic and rare opportunity to smooth the transition towards a revised funding framework".

But wholesale change is ruled out, as is a national funding formula. "The commission supports the Government's option of separately assessing the needs of schools and LEAs while leaving councils room to tailor school funding to local needs," it says.

Further delegation is also questioned. The report argues that schools had limited benefits from the latest round of delegation. Government, say the authors, should "clarify its expectations of LEAs and evaluate whether further delegation would be in the public interest".

The report also found significant concerns in schools over the impact of short-term funding on school planning. Initiatives such as the literacy and numeracy hours, financed through the

Standards Fund, have achieved a great deal and the Government plans to increase Standards Fund spending to around 10 per cent of all education spending by 2001-02.

But the report's authors argue that direct, targeted funding isn't necessarily the best way to achieve results. "A number of heads told us that initiatives like the literacy and numeracy hours had succeeded because they were well supported, with training, resources and a high profile from government," says Nick Ville.

The report asks how schools can plan ahead if a large

proportion of their funding is short term. "Government should evaluate whether it is the best way to deliver national


Money Matters - School Funding and Resource Management. Published by the Audit Commission: 0800 502030


Government should:

Ensure that all funding choices are transparent and needs based.

Implement the separate assessment of the needs of schools and local education authorities and work with them to produce guidance on how fair funding arrangements should take account of deprivation.

The National Assembly for Wales should publish the separate blocks of its spending assessment.

Councils should:

Fundamentally review how schools are funded.

Challenge funding choices in schools by benchmarking the funding of similar sets of schools.

Notify schools of their budget share at least a month before the start of the financial year.

Give schools choice and control over support services by ensuring the services are flexible and clearly priced.

Schools should:

Use their development plans to focus resources on to


Plan ahead better by taking a three-year view of the resources available and the likely demands on those resources.

Set clear targets for what major spending decisions are expected to achieve.

Review management support to ensure that headteachers have the time to plan ahead.

Enable governors to scrutinise and support by providing sufficient information and support.

CASE STUDY - Preston Manor High, Brent

OVER a six-year period, the school has radically altered its funding to focus on priorities.

Spending on energy and cleaning has been reduced through improvements to school buildings and value-for-money reviews.

The money released has increased departmental allowances by 300 per cent, with a "significant impact on learning" acknowledged by the school's OFSTED report.

A review of administrative support identified the need to increase support available in order to reduce the burdens on teaching staff.

Working with the Industrial Society, the school implemented a programme to develop the skills of middle managers who are also offered short-term secondments to senior management positions in order to develop their skills further.

Heads of department bid for funds and allocations are not fixed but vary from year to year depending on changing departmental needs

Decisions about resource allocation are made by the entire management team with the governing body giving final approval.

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