School funding ‘crisis’: the reality on the ground

Friday, March 24th, 2017

by Sara McNeillis

School funding is finally hitting the headlines. Of the many recent media reports on school budgets, few contain any new or surprising information for those of us working in the sector – but it is nevertheless good to see the scale of schools’ financial challenges being more widely recognised.

Right now, as the second consultation stage for the national funding formula closes and we wait to hear the outcomes, there is such uncertainty around school funding that it is difficult to summarise the matter in concrete terms. Reports are doing their best to contextualise the issue by putting numbers on it; they’re talking about the percentage of funding that schools could lose, and how many schools this could affect, and the number of lost jobs that this might equate to.

But speculation around numbers – however well-informed – will only get us so far. It doesn’t tell us what is actually happening on the ground. This year, The Key used its annual State of Education survey as an opportunity to find out how schools are responding to the very real funding issues that they are facing right now. The full report will be out soon, but in the meantime, here are three findings that, I think, might raise questions about some of the general assumptions related to the funding crisis.

Urban and rural schools are in the same (worried) boat

A lot of the talk around the national funding formula is focused on the impact the formula is expected to have on urban schools in comparison to those in rural areas. But if the formula will favour rural over urban schools, this isn’t making any difference to how schools are feeling about their funding situation.

Budget pressures are the biggest concern, by far, for all school types and phases that we surveyed. In fact, a slightly higher proportion of leaders at rural schools expressed concern than urban school leaders, with 55% telling us that budget pressures are their biggest worry compared to 49% of urban schools, but there’s not much in it.

They also expressed very similar feelings about the national funding formula: only 17% of urban schools and 19% of rural schools expect that the formula will make it easier for them to forecast and plan their budget effectively. The Department for Education’s own uncertainty around the formula is perhaps no help to schools’ longer term budget planning; it only clarified on Wednesday (via Twitter) that the funding ‘floor’, a protection that will prevent schools from losing more than 3% funding per pupil as the new formula is introduced, will extend past 2020. Knowing key details like this at an earlier stage may just make it easier for schools to make a forward projection of budget “for at least three years”, a recommendation of the DfE itself.

So the dramatic urban/rural divide caused by the national funding formula isn’t actually a leading to different feelings on the ground – which supports reports and other survey findings that existing funding pressure, not the national funding formula itself, is schools’ main concern right now.

Secondary schools are keener money-makers

Secondary school leaders are less confident than their primary counterparts that the national funding formula will make budget-planning easier. This could be linked to the fact that cuts seem to be hitting the secondary phase harder than primaries, with more than a quarter of secondary schools telling us that they need to make savings of more than 8% of their expected costs. Only 17% of primaries are facing a similar situation.

However, secondary schools are more confident that they can generate extra income – perhaps because, being typically larger than primaries, they might feel that there are more options available. For example, we know that 66% of those school leaders who have to make savings are letting their buildings and facilities, compared to just 37% of primaries.

So maybe we need to talk about other ways of generating income that are more realistic for primary schools. Letting school premises is often the go-to fundraising solution, and came out as the most popular method for both phases. But with only 37% of primary schools looking to make savings taking up this option, perhaps it’s time to think outside the box. For example, one primary school in Solihull (£) struck a deal with a local restaurant. The pupils designed a new cover for the children’s menu, and each time a customer orders a meal off that menu, the school receives a 50p donation.

Passive income streams (otherwise known as ‘free money with minimal effort’) like this collectively earn the school £5,000 a year. It’s not the same as renting out a football pitch, but in the current climate, amounts like that can make a big difference for pupils.

Not much advantage for academies

When talking about the academy system, I still hear the occasional assumption about the amount of money that academies have in comparison to maintained schools. But they are funded on exactly the same basis, and are similarly concerned about budget pressures: 52% of maintained schools and 53% of single academies told us that this is their biggest challenge.

Fewer schools that are part of a multi-academy trust (MAT) – and are perhaps making use of the economies of scale that a MAT offers – are concerned about budget pressures, although 43% expect it to be the biggest challenge for them too. This makes sense, as research suggests that an academy chain needs around 5,000 pupils before it can begin reducing average costs across the trust. Our own research using the DfE’s database of schools shows that only 4% of MATs meet this criteria, and less than half have enough pupils on roll just to cover essential costs. If the DfE’s plans for cost efficiencies remain tied up in their plans for MATs (take a look at page 45 of this guidance), or even if MATs are to be financially sustainable, the DfE may have to find a way to increase capacity within MATs much more quickly.

Our State of Education report will explore these findings and others in more depth, but what do you think so far? Do the findings reflect your personal experience as an education professional on the ground? Get in touch and let us know.

Comments 1

  1. warnefordco 27th March 2017

    Once the Rubicon was crossed and the school converted,it was always going to have to develop strategies to create additional revenue streams regardless of the imminent cuts and recalculated formulas. Some schools will be better placed to take advantage of their size and income so as to benefit from economies of scale, whilst others may be blessed with beautiful buildings and vast playing fields. Some schools have recruited well, appointed and rewarded their school business managers. The best SBM’s recognise that part of their role is to source external experts who can bring a professional approach to ensuring their assets are used to extract optimum value, to collect and prepare data for bids and other means of accessing funding.
    Yet to convert schools, SATs and existing MAT’s are going to have to merge into ever larger MAT’s (10+) so as to benefit from pooled resources, improved buying power and better understanding of the myriad advantages of asset management.

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