Use it or you will lose the money

3rd March 2006 at 00:00
Teacher shortages as school deficits grow" was the striking newspaper headline. According to recently-published government statistics, 27 secondary schools were in the red in Wales last year and 17 had reserves equating to more than 10 per cent of their budgets.

Some argued strongly that the deficits resulted from a lack of sufficient funds to deliver services, like Oliver Twist asking for "more please".

Others used the same headline to claim that there is serious mismanagement of funds and the people responsible should be sacked immediately.

So who is right? Are deficits good or bad?

Reports from headteachers indicate that local authorities across Wales are cutting school budgets in real terms - and using "excessive reserves" as a justification. However, Jane Davidson, the education, lifelong learning and skills minister, has emphasised that there could be good reasons for the apparently excessive reserves in some schools.

These headlines always appear at this time of year because of the accounting system, which the Assembly and local authorities persist in using. In Wales, at the year end, any funds which have not been spent are deemed to be reserves - even though pound;100,000 may be committed and the fundholder is waiting for the work to be completed and the invoice presented for payment.

Add in a rule which says that any unspent funds above 2 per cent of budget will be reclaimed and you have the "use it or lose it" culture, where the priority at the end of year becomes to spend the funds on anything rather than risk having any reclaimed.

Prudence, longer-term planning and careful management becomes less important than ensuring that next year's budget is not cut because you "obviously" did not need all the money.

It is only a matter of time before headlines about excessive school reserves reappear. The realities of the budget management and accounting methodology will be ignored in the interests of a good story, and "excessive" reserves will be used as a reason for education funding to be transferred to highways or social services.

Perhaps journalists might like to start investigating why the Assembly government persists in an outdated accounting methodology. Who benefits? Certainly not the public.

Gareth Jones is head of Bryn Celynnog comprehensive, Beddau, Rhondda Cynon Taf

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