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Strategic Financial Planning

Strategic Financial Planning. Val Andrew ASCL Business Management Specialist May 2014. AIMS. A straightforward approach to strategic financial planning which links to staff deployment and curriculum planning

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Strategic Financial Planning

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  1. Strategic Financial Planning Val Andrew ASCL Business Management Specialist May 2014

  2. AIMS • A straightforward approach to strategic financial planning which links to staff deployment and curriculum planning • To make suggestions to facilitate discussions of strategic financial planning within the senior leadership team and with the governing body 

  3. A common language ……

  4. It is about team work Team work ~The actions of a group working together towards a common goal The skill that allows common people to achieve uncommon results 

  5. Why is financial awareness important? • Declining funding post-16 (around 12.5% reduction between 2011-2014, and further cuts in the pipeline) • Declining funding pre-16 (MFG -1.5%) • Rising costs (inflationary pressures on non-pay expenditure, and pay inflation) • Greater financial freedom, but also greater financial accountability

  6. Benefits of financial awareness? • Common understanding that making any commitment has a financial implication • Common understanding that quality improvement cannot be driven just by increasing resources • Managing expectations! • A 3-5 year financial strategy to ensure drastic changes are identified and planned for/avoided

  7. Factors in our control:- You cannot continue to perpetuate the past • Which means a step change in management thinking is required • Sometimes called:- A paradigm shift

  8. The paradigm shift – is the link between the curriculum and the money….. • No! • Yes 

  9. What constitutes a “good enough view”? Establish some key elements:- • Critical variables • Distinction between essential and desirable expenditure • Rules of thumb • Benchmarking • Best, worst and most likely scenarios

  10. What are the critical variables? In general useful categories include:- Average costs for staff • Teaching staff • Education support staff • Premises Staff • Administrative staff Broad expenditure categories such as • Premises • Learning resources • Supplies and services • Other

  11. How do they compare? Benchmark your expenditure against other institutions

  12. What is the trick? Have as few variables as possible • Use those that really make a difference • Recognise when it is useful to think in terms of • Per pupil - e.g. learning resources • Per school/college - e.g. premises • Per other things (school, teacher, class etc.)

  13. Essential and desirable expenditure • Is this a Health and Safety issue? • Is this a safeguarding issue? • Could this put us in an Ofsted category? • Are we planning this expenditure because • we have to do it? • we would like to do it? • we have always done it? • It is part of a strategic plan? Ask questions

  14. Keep an eye on the student roll • What are our current roll numbers? • What are our expected intake numbers for the next three years? • Can we influence our intake numbers? • Can we influence our retention of students? School/college funding depends on student numbers

  15. Rules of thumb – what does it cost to run the school/college? What’s the cost per period? What are economic class sizes? What are teacher costs (the largest variable?) What are the other costs?

  16. Cost per period? Depends on teachers average contact time, average cost, and the ‘overheads’ of running school – calculations next slides Economic class sizes? Depends on the costs above, and the taught hours that students receive - calculations next slides Teacher costs (the largest variable?) Take average cost across all teaching staff, and include the employers contribution to national insurance and teachers pensions (usually min of 56% of total budget with on-costs) What are the other costs? All other staff, premises, equipment /resources – usually 44% of total budget

  17. 2013/2014 – A period on the weekly timetable

  18. 2013/2014 – A period on the weekly timetable

  19. A different way of working out what was tenable in 2013/2014? …..and funding for post-16 provision is in significant decline, so future class sizes must increase to be economic

  20. The big picture means ……. PRODUCTION DEMAND …. must not exceed thePRODUCTION CAPACITY………. OR “Houston, we have a problem!”

  21. The equation of life (Sam Ellis) PTR = Pupil to teacher ratio you can afford ATC = Average teacher cost (salary plus on costs per FTE staff) I= Revenue funding in pounds per pupil pT = proportion of revenue funding available for spending on teachers.

  22. So what can you do? THESE ARE QUESTIONS NOT SUGGESTIONS! • Staffing structure/curriculum review - teachers teach (more?) and support staff support? • Students have more - supported self study? • Different delivery options – lecture style post 16? • Collaboration - sharing staff with other schools? (watch out for system cost and local politics!) • Fewer chiefs andmore indians? • Buying resources at Aldi prices and not Waitrose

  23. What else can you do? MORE QUESTIONS NOT ANSWERS • Only buy resources that are needed / group purchasing initiatives? • Energy savings maximised ? • Water saving ? • Study DfE review of efficiency ……(June 2013) • Is your BM/FD an integral member of leadership ? • Common language/understanding of financial targets within leadership ? • Benchmarking? - I’ll show you mine if you show me yours?

  24. And ….. • Is sponsoring academies, setting up studio schools etc good business? What about college viability – is this a serious distraction from the core business? • Is government funding now so unreliable that colleges need to focus on employer funded activities? • Are we seeing a shift in priorities away from the teaching and learning agenda towards managing the business?

  25. To summarise then:- Effective strategic financial planning considers:- • Vision and context • Funding prospects • Development plans • Curriculum plans • Demographic data and forecasts • Contingency plans • Benchmarking expenditure • Procurement principles

  26. Key areas of business risk in schools • Governance Risks - governing body lacks skills or commitment • Operational Risks- safety, staffing issues • Financial Risks- dependency on grant, cash flow • External Risks- demographic trends • Fraud risks- misuse of public funds/ property • Compliance with law & regulation- poor knowledge of requirements • Horizon scanning – what could impact in 3 – 5 years time?

  27. Whilst the information provided at this event was correct to the best of the knowledge of the presenters and organisers, neither ASCL nor Professional Development can accept liability if at a later date this should prove not to be the case. Nor can they be held responsible for any errors or any consequences resulting from its use

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