The school budget is a task few people relish. But this year, your financial plan has to include considerations that no school business manager or headteacher has had to include before. 

You will be asking yourself: will your school be open when the new academic year begins in September? Will you be able to count on income from letting out your premises in the summer months? What can you expect to be paying out in supply costs when the school reopens?

The only thing we know for sure is that Covid-19 has made an already challenging and complicated task even harder.

So how do you go about successfully drawing up a budget?

Tina Button and Hilary Goldsmith are two school business managers from Kent who have plenty of experience of writing up budgets. They advise taking the following six steps to ensure that planning your school’s budget is a relatively pain-free experience.

Planning your school budget in the coronavirus crisis

You can also listen to my conversation with Button and Goldsmith in the podcast below: 

1. Look back at your predictions

Before you can even begin to look at your budget for the next year, the first thing to do is to take a look at how last year shaped up, Button advises.

“I’ll be looking at expenditure from last year, and what areas we’ve gone over budget, but also being mindful of our income,” she says.

Button is based in the special needs sector, where income per child carries an even heavier importance due to the higher funding they have per student. 

As you look back, remember to do this in the context of unseen events, she recommends.

“Last year we took additional children, so we may have overspent on budgets this year. But that’s because we knew we had additional income coming in,” she explains.

Goldsmith, meanwhile, uses this time to consider how close her predictions came to matching the reality of the year. “It’s about looking at the accuracy of your forecasting last year, seeing what you thought was going to happen. Did it happen? Are you coming in on target?” she says.

Whether you’re over or under, she adds, you need to look at the reasons why and what the implications are.

2. Ask these questions if you’re under budget

You would be forgiven for thinking that coming in under budget was something to celebrate, but both Button and Goldsmith warn against seeing a surplus as entirely positive.

“If you over-budgeted and you’ve got lots of surplus funds, then perhaps you haven’t addressed all of the issues which you were planning on addressing, or your forecasting model is missing something,” says Goldsmith. “Either way, it needs investigation.”

This is even more of a concern if you are surprised by the surplus. Goldsmith says normal monitoring should highlight in advance if there are going to be any big anomalies in your budget spending. 

3. Prepare for staff spending to be the biggest cost...and the biggest mystery

It isn’t a surprise that staff are a school’s biggest cost - after all, you can’t run a school without people. But people are an expensive resource. 

“Once you get your staffing right and your income right then you’re 90 per cent of the way,” says Button.

However, getting those things right is a challenge at the moment, with leaders still unclear about how the planned teacher pay rise, due to take effect in the 2020-21 academic year, is going to be funded. 

How do you account for that in your plans?

Rather than panic, Button recommends referring back to your staffing structure. “You’ll have a good idea which structure you need to be able to run the school efficiently, and I would base [your prediction] on that,” she says.

And don’t forget to think beyond the annual income, adds Goldsmith.

“Your staffing budget isn’t just your payroll. It’s your assumptions for pay progression. It’s your pension costs. The costs of movements where somebody might be retiring next year, and then [the cost] of who you think might be replaced.”

5. Look at your context for clues about student income

Depending on the context of your school, the income generated by your students may be pretty static. However, when there is a falling roll, or a transient student population, or an expanding sixth form, you may find yourself running into budget-shaped problems.

How much of a problem this will be depends upon how you handle this in your budget.

“For some schools, people numbers will be absolutely driving their income, and for schools who aren’t at capacity, that’s the number which will make the most amount of difference,” says Goldsmith. “There’s a deprivation factor there, so some schools are heavily reliant on pupil premium, but for other schools in different contexts, that’s much less of an issue.”

Schools with sixth-form colleges, meanwhile, are dealing with massive unknowns due to the way the funding structure works. Sixth-form funding is based on the previous year’s numbers, so expanding schools can find themselves dealing with guesswork.

If you’re faced with guessing, Goldsmith advises being prudent.

“I always err on the side of caution when I’m looking at income. So, I look at the worst-case scenario with my income, and the best-case scenario of my expenditure. I would much rather presume the worst-case scenario and end up in a better position,” she says.

6. If you want to save on supply, spend elsewhere

Supply is a huge cost to schools, and there will be a budget set aside for it. But are there ways to ensure your supply costs will be as minimal as possible? 

One option might be budgeting for absence insurance, says Button.

“We found in recent years it’s been beneficial to [pay for absence insurance], because we have had to have supply teachers in and it’s helped mitigate some of that expenditure,” she says.

However, Button emphasises that it isn’t sensible to continue to budget for a spend simply because it’s been successful in previous years. A good budgeter constantly questions whether a cost can be justified every year. “It’s worked for us in the past. That’s not to say it will work in the future,” she points out.

Another way to minimise supply costs is to make sure you are looking after your existing staff - and building those costs into your budget, says Goldsmith.

“[Schools can be] looking at actively working on retention strategies, and trying to encourage and support the staff you’ve got to stay, and to feel valued,” she explains.

“You may want to take some duties away from staff to support them, or give them more free time to do the other stuff that they need to do.”

Taking duties away from staff might mean adjusting meeting times and providing training.

These things will come at a cost, says Goldsmith, but it could work out cheaper in the long run if the result is better retention rates.

“If you can retain and train the staff that you’ve got, then that’s a far far better solution than recruiting new ones,” she says.

Three budgeting mistakes you don’t want to make

1. Assuming next year will be the same as last year 

Don’t just copy the budget from last year - that will only lead to disaster. Predicting change has to come from an informed position, so ensure you’ve put every cost and saving into context before you look to next year.

2. Leaving yourself without wriggle room

It isn’t a good idea to write a budget where you’re left without any room for manoeuvre. If possible, it’s best to leave yourself a couple of slush funds.

3. Forgetting to double-check your numbers

Another pair of eyes is necessary when dealing with so many numbers. Always ask someone to sense-check your final budget for you, because it is so easy to leave a line off or miss a zero.