Effective financial management and the impact on achieving educational outcomes.

Effective financial management and the impact on achieving educational outcomes.

Financial management plays a crucial role in the overall success and effectiveness of a school, academy or Multi-Academy Trusts (MATs). Effective financial management ensures that resources are distributed efficiently, enabling schools to provide a high-quality education for their pupils. 

The Education Policy Institute published a report in April, sponsored by Capita and Entrust – The Features of Effective School Groups. The report shows that at primary level, MATs are approximately twice as likely to have positive in-year balances compared to other categories. At secondary level, MATs are almost three times as likely to have positive in-year balances than other school categories (though on average, they represent a smaller percentage of overall budgets than in primary). This supports the representation of top-slicing for centralised service functions which are more efficient and effective ways of serving clusters of schools due to economies of scale, sharing both staffing resources and cost of service level agreements.

When schools have a strong strategic plan, they can effectively manage their finance better, investing in key resources such as qualified teachers, up-to-date technology, and extracurricular activities that enrich the learning experience for pupils. This, in turn, can have a positive impact on pupil attainment and overall academic outcomes. Additionally, effective financial management can lead to a more positive school environment, with well-maintained facilities and a range of enriching programs and activities that motivate pupils to excel.

Poor financial management on the other hand can have detrimental effects on pupil attainment. Schools that are not able to effectively manage their finances may struggle to provide essential resources and services to pupils, leading to lower academic performance and reduced opportunities for success. Staff recruitment and retention can also be problematic if schools are poor at managing their finances and strategic plans. Responding to changes or risks is often more difficult if you do not have strong strategic financial planning in place. Inadequate use of funding can also result in overcrowded classrooms, outdated materials, and limited access to extracurricular activities, all of which can negatively affect pupil achievement. 

Generating extra revenue is often a crucial aspect for schools and trusts to ensure financial stability and enhance the quality of education provided. They can explore several ways to generate additional income beyond traditional funding sources.
An effective strategy to generate extra revenue is by diversifying their income streams. Sole reliance on government funding may not always be sufficient to meet all financial needs. Alternative revenue sources such as wrap around care or after school clubs, external funding streams, lettings or sharing of support staff may support budgetary challenges; however, these areas would need careful planning to ensure they are financially viable and sustainable.

The EPI report says that Diocesan school groups typically self-generate the largest fraction of their income, over 6 per cent on average, whilst academy trusts have the lowest self-generated income. This may reflect the level of affluence of the communities which schools serve. Community stakeholder engagement and marketing is key to the success of additional revenue income.
In conclusion, schools’ financial management is a critical component of ensuring pupil success. Sound economic management ensures that you can adapt to changes in funding or policies and mitigate risks more effectively as you will be able to proactively react instead of firefighting.

By prioritising effective fiscal management, schools can provide the necessary resources and support to help pupils and staff achieve their full potential in a safe and well-maintained environment.

If you require any support with financial planning, management or staff cover; please email information@entrust-ed.co.uk.