School reserves shrink

The news that the annual survey of school bank balances revealed that a third of schools surveyed were in deficit should come as no surprise. This blog along with many others has been charting the decline in school funds for some time.

Coincidentally, I asked the question at Oxfordshire’s Cabinet meeting this afternoon about school balances across maintained primary schools in Oxfordshire and how they changed between the end of the 2017 and 2018 financial years.

Since I haven’t yet had the data in the form of a spreadsheet, only as a written answer, I have yet to see whether Oxfordshire schools are faring better or worse than the national average. I hope to be able to answer that question later this week. However, there are a lot of minus figures in the table, even taking the effects of double entry bookkeeping into account.

At the Cabinet meeting, I also challenged the Cabinet member – part of the Conservative administration of the County – whether or not she would support the notion that money provided for schools in Oxfordshire should not be allowed to be transferred by Multi-Academy Trusts to support schools in the Trust located elsewhere in England.

I will need to check the minutes for her answer, but I am confident that she agreed with me. Personally, I would go further and not allow MAT or MACs to transfer funds between schools within the group even in Oxfordshire unless the same arrangements were possible for maintained schools and stand-alone academies.

Regular readers of this blog will know auditors of MAT/Macs were written to earlier this year by the Minister in the DfE about the issue of allowing the virement of funds between schools within MAT/MACs. However, schools outside MAT/MACs have no such facility available to them. Whether this should be seen as an invitation to join a MAT or to avoid doing so and keep the cash for the school will be a matter for local decision-making.

However, as I made clear above, if the DfE is going to have a National Funding Formula for schools it cannot, at least in my judgement, be correct for trustees to take money from schools in one area to provide for schools in another area.

Schools Forums up and down the country should take a long look at the issue or virement of monies between schools and consider whether they can draw up local guidelines. After all, the Schools Forum has a key role to play in school finances these days.

The F40 Group of local authorities might also want to have a say if cash were being transferred from their members to poorly performing schools in better funded parts of the country. Such a move would be a case of ‘depriving the deprived’.

After ten years of austerity it is no surprise that schools are running out of reserves. When they do then real cuts start being to be made. With a 3.5% pay rise to fund, expect 2019 balances to be far worse than they were this year.

 

 

Advertisements

Bulk buying back in vogue

When I was a young teacher in London there was a large central buying organisation for schools, called something like Greater London Supplies. I recall that they had a big depot at Tottenham Hale in north London. Purchasing basic supplies on behalf of large numbers of schools made good business sense, even to the most socialist of Labour councils. However, it didn’t make sense to the Thatcher government that believed market competition at a school level was the way forward.

Reading the DfE’s recent announcement on procurement and helping schools with costs, suggests that this is yet another move back in the direction of levering the purchasing power of schools as a combined unit, rather than expecting them to operate as individual business sites. How long will it be before Ofsted is asked to include in their inspection report whether a school is making full use effective purchasing decisions to target as much cash as possible on teaching and learning?

TeachVac, the free vacancy site for schools and teachers, www.teachvac.co.uk  where I am chair of the board, doesn’t yet feature in the DfE list. I am sure that they will find a good reason not to list it, as they don’t yet list any vacancy advertising services, whether they are either paid for services like all the others or free like TeachVac and their own nascent service. Maybe they don’t want competition?

The government’s actions in driving down costs aren’t completely risk free. After all, if prices are driven down too far then suppliers will exit the market and leave just one monopoly provider. At that point, it becomes an issue as to whether the State should regulate the provision of the service or actually take over the running.

As I have suggested in previous posts on this topic, once prices have been reduced by increasing efficiency then it can become very difficult to make a profit. Then there is also the reason why local decision-making was favoured by many: the speed of service delivery. A central maintenance contract may be cheaper, but what is the true cost of waiting several days for a window to be replaced or a leaking toilet mended?

I am sure that there is a unit within the DfE thinking of other areas where schools can either save money or increase their incomes without putting more pressure on parents. They might want to ensure deals there are good deals on school uniforms and sports kit and make schools explain why they are requiring a uniform that is more expensive than the average. Tradition, would not be a good enough answer.

My own suggestion for research is, as mentioned before, school playgrounds. They must be the least used piece of real estate in the country. I don’t suggest they are done away with, as when needed they perform a vital function, but what can we do with them for the other 99% of the year? More all-weather community pitches; a source of generating renewable energy; even vegetable growing spaces areas with a playground on top.

We are spending millions on research into driverless cars; how about a couple of million for more effective playground spaces?

 

 

Courts support the underdog

From time to time the courts become involved in changing the direction of the education system in England. One such occasion, discussed previously on this blog, was the judgement of the Supreme Court on the issue of holidays during term-time. That judgement has redefined the contract for parents that ask or allow the State to educate their children in a more prescriptive manner than many might have thought possible.

Recently, there have been two more important judgements, albeit from lower courts, below the level of the Supreme Court. The Upper Tribunal, a court in all but name, as it interprets the law, has handed down what has been described as a landmark judgement in the treatment of pupils with SEND that involves a degree of aggressive behaviour linked to their disability: in this case autism. The case has been well reported, but you can read about it at https://www.equalityhumanrights.com/en/our-work/news/landmark-ruling-exclusion-disabled-pupils-schools

The case was brought under Section 28 of the Equality Act 2006 and the implications arising from the judgement should be on the agenda of governing bodies during the autumn term. The issue will turn on what are ‘reasonable adjustments’ that a school can be expected to make in educating these children. Obviously, or I suspect obviously, a special school catering exclusively for children with aggressive tendencies might be expect to make more adjustments than a small rural primary school faced with a five year old with such tendencies. However, if the five year old is living successfully in the community, the school is a part of the community and must now make clear what adjustment sit has made to deal with the education of the child. This might mean more specific training for the class teacher and any classroom assistants encountering the child in the course of their work. It might also mean dinner supervisors; office staff and anyone likely to come into contact with the pupil also receiving training.

The other recent case concerned Bristol City and its role in providing special education. The case was primarily about the issue of consultation over possible cuts to the City’s SEND budget, but the judge strayed into the area of the financing of education. You can read the whole judgement at https://specialneedsjungle.com/wp-content/uploads/2018/08/KE-others-v-Bristol-City-Council-Approvedjudgment.pdf As with the previous case, fairness for minority groups played a large part in the arguments before the court and in the reasoning of the judge. I can foresee more challenges in this area about cuts to SEND transport, based upon this judgement.

However, there was a rather curious exchange about the funding of education by local authorities that is reported in the judgement that suggests that it is not only in the realm of understanding popular culture and music that some judges and indeed other members of the bar may be slightly out of touch with currently realities.

Take this extract from the judgement from paragraph 98:

  1. Mr Tully explained that ‘The overall principle which the Council is seeking to follow is the principle that, if possible, the DSG (Dedicated Schools Grant) should pay for Schools Budget responsibilities.

However, as Ms Richards Q.C. correctly points out, this a simply a principle which the Defendant has chosen to follow i.e. a political choice and not a statutory requirement. As a consequence, it could be abandoned or varied, most pertinently in light of the results of appropriate consultation.

Surely, the DSG and the High Needs Block isn’t open to virement and by implication also isn’t open to being supplemented should local authorities ever find themselves with an excess of cash or indeed required to make choices about how they spend their income. If this section of the judgement is regarded as ‘obiter’ then it doesn’t matter, as it can be ignored, one would not want to raise the hopes of parents and others that the DSG is just an addition to a local authority overall income stream and not as its says, a ‘Dedicated Schools Grant’. Schools forum need to be consulted about the distribution of the DSG. How far is there also a need to consult the wider public?

The situation is of course complicated by the fact that some education expenditure, including on home to school transport, is provided for not from the DGS and High Needs Block within it, but from the general grant to local authorities and must compete with other services for its share of the cake. Here is issue is a fight for resources subject to the decision of the ruling group on any Council and is clearly subject to the need for consultation with the public and interested groups.

The person on the Clapham Omnibus, or is it in the Uber car these days, must be able to understand the logic behind the funding of our education system, lest they be deceived into thinking some things are possible that are actually not the case.

Despite some politicians feeling about European Courts, the courts and civil law plays an important part in defending liberties. At this time of financial cut backs it is also sometimes the way that minority groups can ensure that they are treated fairly.

 

 

What happens if EU pupils disappear from schools post Brexit?

Tomorrow marks one of the final acts of the 2017-18 school year, the publication of examination results and the opening on the university ‘clearing’ round. Next week will see the publication of the examinations normally taken at 16+. From that point onwards, the 2018-19 school year might be said to have commenced.

One of the interesting challenges for the next year will be how well the new National Funding Formula copes with the unexpected changes that will emerge and have not been pre-programmed into the formula. One such, is the extent to which some schools will be affected financially if the movement of EU citizens out of England continues.

There has always been an ebb and flow of such citizens, but the balance until recently has been on the positive side of the equation. Should the flow turn negative over the next few quarters, while Brexit is sorted out, it seems likely that some schools, and probably some primary schools in particular, could lose a proportion of their pupil population, not to mention a few teachers and support staff as well. Losing the staff may help reduce expenditure, if they don’t need to be replaced, although many will I suspect need replacing.

More concern will be over the financial effects by 2020 of any reduced pupil numbers and hence lower income for the school. Successful schools that are over-subscribed will just let it be known that there are now places in particular classes and, hey presto, applications will materialise, as if by magic. But what happens to schools either thought to be less attractive to parents or in areas where they may be the only school?

In the past, local authorities could cope with the unforeseen changes in pupil numbers. Indeed, multi-academy trust can still do so by viring cash between schools in the Trust. Stand-alone academy trusts, with a single school, and maintained schools don’t have the ability to take that route. Cash cannot be moved around these schools. This might be a reason for schools in a weak financial situation to join a MAT, if they think they will receive help and not later be closed s uneconomic anyway.

How much of a concern might this issue of a potential pupil exodus be? A recent answer at the July meeting of Oxfordshire County Council revealed 11 maintained primary schools with more than 10% of current pupil numbers with non GBR EU citizenship. Now, some may either have parents with dual nationality or be unconcerned by Brexit, but a school of 250 losing just two percent might see a budget reduction of more than £20,000 in a full year: a not insubstantial sum to lose from a tight budget.

Should the DfE publish a full list of areas mostly at risk of losing pupils if there is an outflow of EU workers from England? No doubt the devolved administrations are also taking note of this issue and its implications for their schools?

Hopefully, there won’t be an issue, but, if there is, should schools muddle through or expect some anticipation of the problem and a solution within the National Funding Formula?

Idle cash is not not useful cash?

Is holding some £2.4 billion pounds of public money in reserves a good use of our money? The DfE revealed that in August 2017 academies and their Trusts were holding this sum in reserves against committed and potential future needs. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/728768/Academy_revenue_reserves_2016_to_2017.pdf.

The position seems to have worsened over the most recent period, as the DfE note states that: ‘This is a decrease of 0.6 percentage points from 94.5% of trusts in 2015/16. 95.7% of academies (6,715) were in trusts that were in surplus or breaking even at the end of 2016/17’. Despite noting that figures could not be provided at an individual school level, the DfE does state that:’ Smaller trusts are more likely to have a deficit. This means that only 4.3% of academies (300) were in trusts that were in deficit at the end of 2016/17.’ Of course it is possible for some schools in a Trust to have positive balances and others to have a deficit. Following Lord Agnew’s recent letter to auditors of academies and Trusts, it is perfectly possible to transfer funds between schools in this situation, something not possible in the maintained sector.

The note doesn’t seem to consider whether benchmarks for levels of reserves are appropriate for academies and MATs? In the past 5% of turnover was considered sufficient for secondary schools and 8% for primary schools to hold as reserves. Even allowing for central costs, MATs should not be holding significant amount sin reserves.

Earlier this week, I raised concerns with Oxfordshire’s the accounting for positive balances held by maintained schools and schools with deficits. I have the same concern about the use of a table showing ‘net’ reserves in the DfE’s note. Any lay person looking at the table and associated text might think that the net position was because deficits could be offset against surpluses. As noted, that is possible at the level of the schools within an individual Trust, but not between schools in different Trust as far as I am aware. For MATs the table really needs to be split into two sections; deficits that can be covered within a MAT and MATs where all schools are in deficit or stand-alone academies where there is no current provision for covering the deficit other than by reducing expenditure within the academy to a point where the deficit is eliminated.

The STRB might be helped to be made aware of any regional trends in schools with deficits that might relate to pay decisions. The alternative is that schools and MATs with deficits are randomly spread around the country and are the result of poor leadership rather than the consequence of any policy decision.

Although the Command Paper on Legislating for the Withdrawal Agreement between the UK and the EU (Cm 9674) contains a section on rights to residence of EU citizens, the DfE could usefully publish a paper on how school budgets, including those of academies might be affected, should a percentage of EU citizens decide to return home, possibly because of their jobs transferring to another EU country, after March 2019 and Brexit.

Some five per cent of pupils in Oxfordshire’s schools have EU citizenship of a member state of than the UK. Some 14 schools, mostly in and around Oxford has more than 10% of such pupils at the last count. Any significant withdrawal might put their finance sunder some strain.

More pay: fewer teachers: worse PTRs?

The 28th Report of the School Teachers Pay Review Body, published earlier today, provides a great summary of many of the points made on this blog over the past year. There are some good tables and graphs that summarise the situation regarding pay, recruitment and retention very well overall. However, the STRB might have looked at the primary sector in more detail, rather than just regarding it as a sector with a uniform set of issues. Data on leadership trends is also a bit on the thin side, which is surprising given that both associations representing school leaders are consultees and commented on concerns about recruitment.

The big issue arising from the Report is the extent to which schools will be able to afford the pay rise both for teachers and that to support and ancillary staff as well. As I suggested in my earlier post, before the report appeared, the settlement is going to cost schools real money. A secondary school with 60 teachers can expect an increase of perhaps between £70,000- £100,000 on its pay bill once on-costs have been taken into account. That’s a couple of classroom teachers or a review of the senior management team and perhaps one fewer deputy head and more reliance on assistant heads and teachers with TLRs?

I note that the STRB made the point, as I did earlier today, about the timing of their reports and the budgetary cycle in schools. How much did business managers put in the budget for this pay increase? Judging by the number of vacancies in the secondary sector so far this year, probably not as much as has been awarded in at least some schools.

How will the independent sector respond to this increase? This year saw the first reported decline in enrolments in their schools in the published DfE data on schools and pupils. Will it be possible to raise fees to cover the increases or might those schools be constrained in the increases on offer?

As I suggested in the earlier post, changes in recruitment on to teacher preparation courses as a result of the pay increase won’t be apparent until the 2020 recruitment round for new teachers. By then, secondary schools will be well into their growth cycle.

There is a very interesting chart on page 47 of the STRB Report showing the proportion of postgraduate entrants by different routes into teaching for 2016/17 and 2017/18. The DfE in their evidence stated that  2017/18 was the third successive year in which over half of recruitment to postgraduate ITT was to school-led routes, with such routes accounting for 53% of ITT recruitment in that year. (Para 2.13) The chart shows that although true, there was a decline in 2017/18 compared with the previous year in the percentage of trainees on school-led routes.

Finally, it is always difficult to proof read documents prepared at the last minute, as some of the posts on this blog bear testimony. However, the footnote 3 on page 12 suggests a degree of wishful thinking.

Portents on pay

Will today’s announcement on teachers’ pay end the shortage of teachers in some of our schools? Not this year, as the announcement has come too late to affect recruitment on to teacher preparation courses, except possibly at the margins. The latest UCAS data should appear on Thursday and will provide a good guide to the supply side of the teacher labour market in 2019, at least as far as new entrants are concerned. A decent pay settlement may tempt back some leavers from the profession, but, again, probably not enough to make any real difference.

The big change in response to the pay settlement may come on the demand side of the labour market equation. Let’s assume that the Treasury won’t fully fund the pay settlement, leaving either the DfE to find more cash or schools to decide how to make use of the cash they have. This could mean a reduction in demand for teachers next year as a funds are directed towards paying the remaining staff more and those leaving are not replaced.

In passing, it is worth noting that leaving the outcome of the Review Bodies Reports until July is really unhelpful in terms of making meaningful budgets for both academies with their new financial year starting with the new school term and even local authorities where maintained schools still operate their budgets on the April to March financial year.

Since academies and free schools can set their own pay and conditions, it is entirely possible that some schools or MATs might choose to ignore the Pay Review Body Report and try to go it alone, by not paying the proposed increase. The Secretary of State has to approve the recommendation of the Pay Review Body – not doing so seems highly unlikely, especially if the pain can be passed to schools to deal with in human terms.

However, this will be the first big test of the Secretary of State. How far will he be able to stand up to the Treasury and gain any extra cash for schools? It is worth recalling that he was a member of the Education Select Committee that published the report: Great Teachers: attracting, training and retaining and best, so he is fully aware of the arguments about teacher supply. Indeed, I recall providing both written and oral evidence to the Committee during their deliberations on the subject.

Indeed, it is worth recalling this exchange I had with Mr Hinds during the oral questioning in November 2011 when teacher supply was less of a concern than it is now.

Howson … society as a whole has to decide where it wants to put teaching in terms of competition for graduates. (Q148 answer)

Q149 Damian Hind: Gosh – most people would say that teaching should be very near the top. McKinsey, BCG and Goldman Sachs can fight their own battles, but in society we want teaching to be very high up the list of priorities, don’t we?

Professor Howson: Then this Committee must recommend the Government takes actions to achieve that. As someone has already said, pay may well be one of those actions.

HC 1515-11 published 25th April 2012

Regular readers of this blog will know what has happened to both teachers’ pay and teacher supply since 2012.