School funding – is it ever enough?

The Education Policy Institute, where David Laws, ex-Education Minister is Chair of the Board, published a report on school revenue balances today. The data on school balances discussed in the report in maintained schools comes partly from the same DfE source discussed in a post on this blog on the 12th December 2018.

Simplistic analysis of the report produced comments that the Report showed schools were under-funded. This was because one in ten of the remaining maintained secondary schools had a deficit overall and many others were in deficit in the latest year data was available for from the government. In reality, as the EPI report discussed, the picture is both more nuanced and more complicated than a bald assessment that schools don’t have enough funding, although pressure on 16-19 funding almost certainly does need attention.

What is less clear is the extent to which the former funding formula created winners and losers and whether the new formula will help redress the balance in the future. Personally, I don’t think it will. However, there also needs to be more understanding as to why these one in ten maintained secondary schools cannot live within their means for several years and more schools are now in that position?

As EPI note, academy chains have fewer schools with deficits and are able to move money around between schools. Local Authorities cannot do this to help schools over a temporary crisis. Should the remaining maintained schools now be treated as if they were a Multi-Academy Trust, allowing cash to be moved between schools?  If local financial management means the cash provided for a school is for that school, then MATs should not be allowed to take any cash away from one school to help another and can only charge for services provided.

The EPI report covers this point in their policy recommendations

  1. With increasing financial pressures on schools – particularly in secondaries – the government should consider before the Spending Review whether higher per pupil funding is needed, or whether efficiency savings can make up part of the current shortfalls. It should especially focus on the strains faced by many secondary schools, and assess whether changes in pupil numbers are likely to ease financial pressures, or whether these will prove more enduring.
  2. Further consideration should be given to what extra help or advice can be offered to those schools facing large deficits.
  3. The government should determine the reasons for the lower level of in-year deficits in academy trusts, and whether there are any lessons to learn from this.
  4. The government should also look closely at the level of “excessive”, unallocated, surpluses and consider if existing rules allow for these resources to be used effectively.

The last recommendation from EPI is interesting, especially in view of the concerns over deficits. As I noted in December, some schools have balances equivalent to 20% of their annual income and there are schools with more than £1,000,000 in reserves. My view, as expressed in December, is that revenue income is for spending in the year it is provided ad for the current pupils, although setting a sum aside for depreciation is now acceptable.

Finally, TeachVac www.teachvac.co.uk was established to help schools cut costs by providing a free vacancy service to schools. I am delighted to record TeachVac handled nearly 55,000 vacancies in 2018 and has a great start to 2019, breaking records. Just why the DfE needs to run a rival scheme isn’t clear.

 

 

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Happy Texans?

So the TES now has new owners. Once again they are an American Group. The new owners are Providence Equity Partners. https://www.tes.com/tesglobal/articles/tes-announces-new-owners

At least, being headquartered on the East Coast of the USA, they are nearer the TES HQ than the former owners in Texas. Providence as a Group also invest in Autotrader that made a successful transition from print to on-line advertising and Burning Glass, a company that provided data for the Home Office’s Migration Advisory Committee study into teaching and subjects that should be eligible for Tier 2 visas in January 2017. Both may be able to provide helpful advice and expertise to the TES brand under Providence’s guidance.

Hopefully, Providence did more due diligence on the teacher recruitment market in England than just to rely upon the data Burning Glass, presented to the Migration Advisory Committee (MAC) that then appeared as Figure 4.4 of the MAC Report in January 2017. The manner in which Burning Glass counted job postings was very inclusive and over-estimated actual demand for teachers. You only have to look at the data for August in Figure 4.4 to recognise the difference between postings and vacancies.

The question for Providence that will have undoubtedly considered before they made their offer is, can the recruitment side of the TES be made profitable, in the face of the DfE’s new free job site and the development of the TeachVac brand (where I am chair of the Board), with the help it can receive from other Providence investments?  In addition, can the resources side of the TES business be made more profitable as part of a larger global enterprise? It might also be worth adding, can the education journalism side be developed into a global platform providing information and news to other Providence media investments?

What will happen to the TES team? Will Lord Jim Knight become chairman or even President of the company? Alternatively, has Providence already lined up a new team to take over the helm from the existing management team, as is sometimes the case when a company changes owners after a sale?

In the past, the recruitment income has been a key source of revenue for the TES, especially once reader subscription income started to disappear, as print was replaced by the move on-line. However, the TES is now a significant provider of initial teacher training. Will the new owners see this either as a distraction or alternatively as a possible avenue on which to develop a significant CPD business with a global reach? It goes without saying that the recruitment business will be developed into one with a significant presence in the global market for teachers. This is, after all a large and growing market.

As a former employee of the Times Supplements, after they bought my company just as the recession hit world stock markets, I am interested in seeing how the new owners will develop the title. As a competitor in the recruitment market though TeachVac, I am interested to see how quickly the new owners will move and whether there will be developments in time for the 2019 recruitment round that will peak in the spring. But, maybe Providence’s pockets are deep enough to not worry about 2019 and they will start to focus on 2020 and beyond.

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.

Planning on the back of an envelope

Education planning now seems to be in the hands of either a member of the House of Lords for the Tory Party or groups of parents for the Labour Party. I am not sure my own Lib DemS even understands the concept of planning, just as they also don’t sometimes seem to understand how markets operate.

Lord Baker’s idea of vocational colleges for the 14-18 sector chimes well with my 2002 Report on ‘No Child Left Behind’ for the then Lib Dem education spokesperson, now Lord Willis, where I was one of the early advocates for a 14-18 sector. The difference was that I wanted the sector as part of rational planning for the whole age-group, not just the abstracting of limited numbers of young people across the country to attend such colleges. How will it really work in rural areas unless someone pays for the transport costs? In London the Mayor has so much cash that he can provide free transport for secondary age students to travel to school anywhere in the Capital. Locally, in Oxfordshire, the ruling Conservative and Independent Coalition will probably struggle against budget cutbacks to maintain the present level of home to school transport provision in 2014.

If the Tories have abrogated planning to Lord Baker then Labour seems, according to the new Shadow Secretary of State, to be happy to pass the baton for the future of our school system to random groups of parents that presumably want private schools on the rates. I suppose that is one way of reducing the influence of the independent schools, but it will come with a hefty funding cost or will produce a lot of disappointed parents. But, perhaps Labour has noticed that relatively speaking apparently fewer new schools backed by parents and teachers are now being approved than in the first rounds of free school applications.

There has been a lot of thinking about schooling over the past decade by the many lobby groups and think tanks, as well as national anguish about the performance of our school system. So we are not short of ideas, what we are short of is proper planning. Why spend money on new schools when we have the FE sector that can now take pupils from 14. The FE sector needs attention anyway, and a real boost in both resources and status, along with an encouragement to raise outcomes in the way that many schools have achieved during past decade. There is also the danger that planning 14-18 without thinking about what goes before or comes afterwards for all young people is disruptive of Key Stage 3, and may require a huge expenditure on school buildings using cash that might better be used for other areas such as social housing projects.

Finally, I haven’t heard anyone mention the teachers that might be needed, and whether Lord Baker’s plans will be neutral in staffing terms? There are not enough highly qualified maths and science teachers to go around at present. If we increase demand, by teaching more science and technology, then the discipline of the market will be reflected in the price schools will have to pay. We are already at risk of not training enough mathematics, physics and computer science teachers, and it is important to know the effects of any shortfall on other schools if the vocational colleges are funded sufficiently well to take first pick of what teachers there are.

A new approach to 14-18 is definitely needed; whether more schools is the answer is open to debate. There might be better use of the resources. Bringing back 14-19 FE back into the DfE, and away from BiS might be a start.