“It is a scary time,” says Sir Michael Wilkins, the chief executive of the Outwood Grange Academies Trust, reflecting on the financial squeeze hitting schools around the country.
With responsibility for 23 academies, he should be more scared than most. But he’s not, and he wants to share the reason that he can sleep at night with other headteachers.
Between them, his schools are finishing the financial year with a surplus of around £10 million. And Sir Michael is confident that they can repeat it every year with comparative ease, leaving the trust with money to pay for new facilities.
His secret isn’t money-spinning business activity. He knows that his academies will be in good financial health because they all adhere to a simple formula that he worked out over two decades as headteacher of the original Outwood Grange Academy in Wakefield, West Yorkshire.
Renting out facilities
Crucially, that formula has nothing to do with money. “People think it is finance,” Sir Michael says. “But the finance people can only manage the budget once the headteacher has spent what they want on staffing. If you are not on top of your staffing then you can’t manage your budget.”
When you consider that paying teaching staff is by far the biggest bill faced by schools, it sounds obvious. But, in Sir Michael’s experience it is “completely the reverse of what people normally think”.
He says that he encounters too many headteachers who, when faced with squeezed budgets, might look at raising funds by renting out facilities, or saving money by making more efficient purchases, but ignore the most effective solution.
Pound signs are absent from the Outwood Grange approach to budget management. It is all about people. The formula is based on working out two separate numbers that measure the amount of non-contact time teachers have and how many teaching periods there are over and above what is strictly necessary to deliver the school’s chosen curriculum and raise standards (see box, below).
The approach does not necessarily mean that schools will be able to avoid making decisions about teacher numbers and subject offerings.
But it means that headteachers will always know exactly where they are financially and can ensure they will finish in the black.
Sir Michael says that if he knows that the two figures are OK for any school, “I don’t worry”.
Morale can instantly lift when he introduces the concept elsewhere. “When we do it in schools that have never restructured, we are saving half a million pounds every year, just by doing that,” Sir Michael says.
Working out optimum staffing measures has never been easier. Technology being showcased at the Association of School and College Lecturers’ (ASCL) annual conference last weekend showed how headteachers could find out how much their teachers cost per minute and compare it with other schools at the click of a mouse.
Yet Sir Michael has found that few other schools use such analysis: “Most schools now have no idea what they are spending,” he says.
ASCL’s deputy policy director Duncan Baldwin agrees. And he thinks that the issue is about more than senior leaders’ failure to get to grips with new technology.
“There is a generation of school leaders that understood what the cost of the curriculum was in terms of teacher-pupil ratios and class sizes and various equations and formulas about all that,” he says.
“That has somehow been lost. I think it’s become more unfashionable. But right now, really grasping the cost of your curriculum is absolutely crucial.”
To see how one school is coping with the cuts, read this week’s feature on page 24
‘The magic number appears to be 0.79’
The Outwood Grange approach to school finances is based on two figures: a school’s “contact ratio” and its “efficiency bonus”.
The contact ratio is the average proportion of time across a school’s entire teaching staff spent in front of classes.
At Outwood Grange, this is set at 0.79, which means that, on average, teachers spend around 80 per cent of their time actually teaching. Sir Michael says that is the optimum level.
“We go into schools where that figure is, like, 0.52, which means that half the staff are free,” he says. “So how can you afford it? We know that one lesson costs about £2,000. So every non-contact period you can save, that saves you £2,000.”
The “efficiency bonus” is a measure of the percentage of extra teaching periods that a school will run, over and above what is strictly necessary.
“If you teach a Year 7 in a class size of 27 and you have got just the right amount of periods (to teach the curriculum and you can still drive up standards) you call that a zero bonus,” Sir Michael explains.
This can be varied, but aim is to avoid unnecessary wastage. “You can use as many staff as you like by making classes smaller and smaller, needing more and more teaching spaces,” he says. “But that is not efficient, it’s not fit for purpose. It won’t work.
“What’s reasonable is to give a school 10 per cent more periods than it might need and then with that 10 per cent, make some smaller groups in music or Year 11 or whatever.”.
As long as the overall efficiency bonus is no more than 10 per cent and the contact ratio no lower than 0.8, Sir Michael says schools will work fine. But he has encountered some where the bonus is 44 per cent and the ratio is 0.65.