Costing the Curriculum: Some Thoughts on Financial Sustainability in Schools

11-10-2016

By Lisa Forster, CIPFA principal consultant and Val Andrew, ASCL Business Leadership Specialist 

Article in association with ASCL

ACSL logoSchool funding has been relatively well protected since 2010, with ‘flat cash’ and additional pupil premium monies being introduced. Despite this, schools (which includes local authority schools and academies) are increasingly finding that financial planning is becoming more difficult as costs rise and funding fails to keep pace. 

All this against a backdrop of new initiatives in the pipeline – eg the introduction of an apprenticeship levy, and encouraging more schools into collaborative academy structures creates further uncertainties in financial terms. 

Schools have already absorbed an increase in pupil numbers and while predictions vary, there is the expectation that the system will have to accommodate another 10% increase in the pupil population between now and 2025 (DfE statistics). 

In addition to the cost pressures of pensions, rising salaries and general inflation, concerns about teacher supply and the increasing issues schools face when trying to recruit teachers mean that in some areas salaries are being adjusted to reflect this imbalance between demand and supply. 

Schools are facing a difficult dilemma: how to deliver a balanced budget, avoid a financial deficit and resource a curriculum which is creative, meets the students’ needs and which will stand the various benchmark testing and improve levels of attainment. 

In most schools, at least 60% of each school budget is spent on classroom delivery which means there has to be relative certainty that they have the most efficient model possible. 

In terms of the structure and delivery options there is the consideration of whether you consider staff first or curriculum first ie do you model the curriculum and then slot the existing staff into it – with little regard for the effectiveness of this – or do you disregard the current staff, model the curriculum and then assess who is needed? 

This latter model can be a paradigm shift for many – and result in difficult decisions needing to be made – ie when you realise that the curriculum you can afford is based on lower staffing numbers and/or higher contact ratios. In an ideal world small class sizes and low contact ratios may be best, however in today's financially straitened times this is unlikely to be a feasible and sustainable option. The whole of the public sector is forced to ‘cut its cloth accordingly’, often to the detriment of ‘ideal’ service provision. 

Schools have choices as to how they structure and operate. There is no perfect model, just a range of options, some being less palatable than others. These largely boil down to staffing numbers, classroom contact time, class numbers and pupil numbers. Needs versus wants is also an important distinction to be made here.

We have considered some basic principles and key numbers that could be used to help model scenarios in any school. 

These key numbers are:

  • the average cost of a teacher at your school (ATC)
  • the amount of revenue funding per pupil (I)
  • the proportion of funding available to spend on teaching staff (Pt)
  • the pupil to teacher ratio (PTR).

These figures come together as follows:

PTR equals ATC over I x pT 

Using a theoretical school we can illustrate the impact this has:

  • There are 1,000 pupils. 
  • Revenue per pupil is £4,500.
  • Average teacher cost is £45,000. 
  • Currently 60% of total budget is spent on teaching costs. 

Using the equation above this produces a PTR of 16.67.

1,000 pupils ÷ 16.67 = 59.98 FTE teachers the school can afford.

The school can match this against its current operation, and change any of the factors to model different scenarios.

There are of course optimum limits to class sizes and contact ratios – based on capacity in terms of physical space and workload pressures. While high contact ratios and larger class sizes may work well in financial terms, and can also work well for short periods, the long-term qualitative impact could be negative and should not be under estimated. 

Using the curriculum equations above will assist in appraising the options, but they are not the only considerations – attainment, school demographics and Ofsted demands can put equal if not greater pressure on a school than its financial responsibilities. It is important to note there is no one size fits all in terms of optimum structures, however what is common across all schools is the need to be proactive, model and to cut their cloth accordingly. 

This is an extract from a longer article which will be published shortly.

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