Efficiency is a word brought up time and again when it comes to financial matters. But what does it really mean – and can it be applied in a school setting? A report by NASBM looks at how working more efficiently can make a big difference on budgets.
The education sector has grappled with efficiency for a number of years now. Various initiatives have gone some way to improving operational effectiveness and a commitment to value for money, however, the sector continues to administer operations in a very manual and paper-based fashion. Unnecessary levels of bureaucracy and multiple layers of sign-off are adding no tangible value, and perhaps most significantly, the skills of senior leaders are not being optimised.
The National Association of School Business Management (NASBM) therefore commissioned research into operational effectiveness and efficiency of schools, asking some searching questions of school leaders and their understanding of the strategic deployment of resources and effort.
The resulting report – Guidance for Improving School Financial Outcomes – suggests a series of continuous improvement strategies that schools can put in place for better financial outcomes.
It suggests that state-funded schools, even those previously considered ‘efficient’, have the ability to make further savings. Even
small administrative changes – such as using existing resources more prudently and implementing better time management and staff training – could result in savings of up to 20 per cent on administration costs, the report found.
Examining the idea of efficiency in a school setting, Stephen Morales, chief executive of NASBM wrote in a recent article: “The notion that a drive for greater efficiency is an attack on precious education resources is a result of a narrative perpetuated by a perception that efficiency translates directly into cost cutting, reduced resources and capacity, and ultimately a drop in a school’s ability to improve children’s life chances.
“Efficiency should in fact be seen as the opposite. If we subscribe to the definition above, any changes to the level of inputs should not adversely affect outputs and indeed should enhance outputs in a truly efficient system.”
An outstanding school
The report by NASBM was part sponsored by Optimus Education and researched and produced by OEE Consulting.
Backwell School, an Outstanding school, already measured as performing highly in a range of administrative areas, was analysed for research into the report. OEE identified where the school was making significant savings compared to other schools and then found areas where other savings could be made. Areas they analysed included leadership time, business management, operations management, planning, performance management, process management and continuous improvement.
Wendy Farrier, School Business Manager at Backwell School said: “When we agreed to take part in the study I was confident that we were taking every measure available to be efficient. The changes OEE suggested seemed small and obvious so we were surprised how much money they represented and how easy they were to implement.”
What can school leaders do?
The report says that the school leadership team is in an ideal position to influence the financial results for the school, as well as build a culture that promotes collaboration and good value for effort. It says that governors should hold the school leadership team to account on financial management matters, as well as prudent budget forecasting and planning. Governors with financial skills should therefore be recruited, finance and budget should be a regular agenda item, and governors should challenge financial decisions. This is essential to ensure that the school leadership team does not become solely immersed in teaching and pupil welfare considerations and lose sight of their obligations to manage within their financial constraints.
Admin and finance
With schools focused on teaching and student welfare, it is easy to take administration and finance areas for granted and lose sight of inefficient or ineffective processes.
However, this can be one of the areas where improvements can be implemented easily without having to worry about the effect on educational outcomes. As well as stressing the importance of getting the basics right, the report makes other suggestions, such as using BACS to pay supplier invoices rather than cheques, which saves time writing cheques, postage costs and bank charges for cheques.
It advises to keep a close track on any invoices raised by the school, tightly manage debtor status, and not to let invoices become overdue. Unmanaged invoices increase risk of bad debt and therefore lost income.
Accurate student data is critical and can incur a lot of effort to capture and verify. The report therefore suggests trying innovative techniques to maintain accurate student data, such as adding additional fields to the consent forms for school trips and capture this information into the student database on return.
It also advises to use a digital payments portal to manage online payments from parents or cash via PayPoint.
This will minimise theft and loss of cash, as well as bank charges and cash management efforts.
Will Jordan, education sector manager, PS Financials, says: “We are increasingly seeing a number of our clients moving their focus towards driving financial health and efficiency. There are a number of ways in which a robust, established financial management solution can assist in this area.
“For example, we have a client who previously was having to manually process and manipulate in excess of ten excel worksheets to produce their monthly report. This, on average, was taking three to four days per month to complete. After streamlining their processes through our software, those lost days can now be utilised by our client for analysing and acting on the results from that monthly report.”
Effective use of time
School leaders and senior admin staff have multiple intense demands on their time. It is therefore essential that the value and importance of these activities is well understood to avoid spending a lot of time on wasteful or non-essential tasks. It is also important to ensure that necessary tasks are completed as efficiently and effectively as possible.
Meetings are commonly time-consuming and ineffective, driving further meetings to address unresolved issues. It takes a concerted effort to break out of this cycle. The report says to rethink how time is used and to not keep going to meetings every week to discuss things. Focus on what you want to achieve and devise actions to let you achieve those goals.
The report recommends looking at your TA resource by understanding how their time is spent and evaluating where and how they add most value. Reconsider how TAs can be used in innovative ways rather than continuing to follow established practice. For example, could using experienced TAs as cover teachers be a more cost‑effective solution than supply teachers?
How admin team leaders and their teams are organised can impact the effectiveness of the teams as well as the cost.
A common problem in schools is a desire to retain experienced admin staff who aspire to a higher earning potential.
The consequence is the creation of additional (unnecessary) team leader roles and promoting staff into them.
This results in teams with very small spans of control and a top-heavy cost structure.
Paradoxically, with small teams the level of management of the work actually goes down as the team leader focuses on doing work themselves rather than managing.
This whole situation needs to be addressed by resetting team sizes to the optimum span of control of between 8 and 12 to 1.
This will be more effective even if the manager then operates across functions. The benefit is the manager can then focus on team quality and performance.
Diligent procurement and attention to detail offer abundant opportunities to reduce costs from suppliers.
Group purchasing arrangements can negotiate much better pricing than individual schools could.
There are many government and local authority procurement frameworks available for access by schools. These frameworks have agreed bulk purchase deals with a range of suppliers, are fully compliant with EU requirements and do not require further tendering. Examples include: YPO, ESPO, Crown Commercial Services. NASBM also operates an energy framework and has contacts for others.
The report suggests establishing a procurement policy for the school and ensuring that all purchases go through the designated procurement process and are subject to the same rigour and control. It also says that teaching staff should define the requirement and the
admin team with sourcing the best supplier.
Cluster opportunities and benefits
The advantage of schools entering into a cluster arrangement or a multi-academy trust (MAT) are many. For example, a cluster of schools can be run with a single representative school leadership team, reducing the number of senior roles required. There could be a single head teacher for the group located at one site with senior deputy heads at the other sites, and faculty leads could be shared across secondary schools in the group. Considering finance, a cluster or MAT can expect considerable savings from consolidating finance activity.
A single finance function can be established to manage all financial activity and reporting for all members of the cluster/MAT. This potentially reduces the number of senior staff required with capacity shifted to lower-cost roles. The consolidation would also reduce volume and costs in a number of areas: reduced invoices and associated payments, single payroll overhead, single financial report, and reduced audit charges.
Other options for consolidated teams across the group could include: procurement, timetable planning, exams planning, IT support, and so on.
Capital equipment intensive activities could share capital and human resources to reduce investment requirements as well as improve resource utilisation, such as reprographics, groundskeeping, general building maintenance, and catering.
What’s more, outsourcing cleaning and catering contracts should enable the negotiation of better rates for a cluster as a single supervisor should be able to manage activities across sites and catering may be able to produce all meals in one location for distribution to the cluster.