Counting the Pounds

In a couple of weeks the Cabinet member with responsibility for schools in Oxfordshire will be asked to revoke a decision by a maintained school to open a sixth form. Had the school been an academy it could just have decided not to run any post-16 courses. The reason given for the application to revoke the change of status is that the school cannot operate a viable sixth form with the present level of income it would generate from likely pupil numbers. Presumably the school didn’t want to cross-subsidise a sixth form from revenue received for younger pupils: a position I applaud. Assuming the decision is approved, pupils will still face the need to change schools at sixteen and will continue to have to pay for their transport that has up to now been free because they either walked to school or were bussed by the county council.

This change of heart for financial reasons set me wondering about the economics of School Direct in London. With income for next year fixed at £9,000 per trainee on fee based routes, how likely is it that schools are going to be able to cover their costs?
A cohort of 20 trainees paying fees would bring in £180,000 to run the course, but let’s assume a school has recruited three trainees in each of five subjects bringing in £135,000. Now how you spend that money is critical. But, assuming that a head of department in each subject provides 20% of their working week (about 20% of teaching time per week) in each subject to work with trainees. This would come to just over £60,000 if the heads of department are on the top of the upper pay band and also receive a middling TRL and taking into account the recent increases in National insurance and pension contributions schools have faced . In some subjects the TRL will be less, but in Science, mathematics and English it would be more. Now, also assume there is a course leader to do all the recruitment and the rest of the teaching and administration for the course on a similar salary of £60,000 including on-costs. This takes the teaching staff costs to £120,000. Add in £20,000 for administrative staff. After all, it is not economic to use a teacher to do the paperwork. Then there is another £10,000 for marketing, resources and miscellaneous costs and the total comes to around £150,000.

Now, I suppose you could reduce the time for the course leader and farm out some of the teaching to a university with lower salary costs because they are located outside of inner London and can spread their overheads across a larger number of trainees. However, university central overheads can be higher than those in schools – Vice Chancellors earn more than head teachers – so there may not be as much of a saving as would be hoped for by taking this option.

Possibly the course doesn’t need a full-time admin person and the marketing budget can go. Perhaps, you can reduce expenditure to around £120,000, but what sort of preparation would you be offering trainees? Even so, there is little margin for error. If even one trainee either doesn’t turn up or leaves very soon after the start of the course, then the school might have a shortfall to cover from its other income.

I should be interested to hear from schools how they are managing in London on this level of income? Clearly, outside of London, the lower salary costs might make it more likely schools can operate effectively at this level of income, even with smaller numbers of trainees. However, as London needs the largest number of new teachers each year, despite Teach First, the economics of teacher preparation in the capital must be a matter for concern.

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