Budgets in Wales

Welsh schools have seen a return to deficit budgets as ever-tighter financial settlements cause head teachers to rethink their planning. “In the past it was a no-go area and you would have been hauled over the coals, but there is less money out there now and more acceptance that schools will have to run with deficits,” says Pat Clarke, the head of the all Wales budget forum training group.

However, accounting quirks mean that these deficits are not always visible; sometimes struggling schools even appear to have a positive balance, says Cheryl Weldon, the President of NAHT Cymru and headteacher at Coedffranc Primary School in South Wales.

She has had to cut 3.5 teaching posts this year but is still £12,500 in the red; she hopes to be able to save this money over the coming year. However, although she is, to all intents and purposes, running a deficit budget, it does not come out that way on paper, she says. The timing of end-of-year grant payments – including some money allocated unexpectedly so that the authority did not lose funding because it was left unspent – meant that it looked like her school ended the last financial year with a positive balance. Shortly afterwards, big bills fell due and the books were back in deficit.

“It is very much an accounting issue,” Cheryl says. “The shell was £165,000 less than what I needed, which meant that I had to lose staff and my deputy head had to go back to full-time teaching.”

Importance of contingency funds

Cheryl’s experience raises questions about just how genuine the apparently large reserves of some schools are. “If you look at what I had to run  my school this year and what my actual costs were, there is a significant discrepancy. In my situation a positive balance is unheard of but on 31^st of March I cannot deny that it looked like my school had £60,000 in reserve.”

But even schools that do have a savings safety net cannot relax, either: authorities will claw back anything that they deem excessive, Pat added. “What’s happened in Wrexham is that they have a system that means that if you have a balance of 8 per cent, it will be clawed back unless you have a really exceptional plan,” she says. While aided schools that are building up cash reserves for capital programmes should be ok, anyone who is hoarding cash against a rainy day should expect to lose it.

While contingency funds are important, they have to be kept small if they are to be retained by the school. “It means that we are looking at long-term funding [issues] with short-term finances,” Pat says.

On the plus side, not having a positive balance can make it easier for heads to fight their school’s corner when they go to the council’s funding committee each year (unlike the English system, in Wales money for school is not ring-fenced and councils have complete control over how it is distributed). “You have to go in and do battle for everything. It means that we need structured arguments and logic…that’s why we train our members to make sure that they have the skills needed to fight those battles.”

Aging Infrastructure

Both Pat and Cheryl expect these arguments to become more challenging as public sector finances become tighter in the aftermath of the recession and the public money spent in the government’s efforts to ameliorate its effects.

“Budgets are not easy and we appreciate that there will never be as much money as we like in the system, but there is a combination of factors making the problem more obvious now,” Cheryl says.

One of the biggest is the increasing costs of running a school, particularly given the aging infrastructure. For example, Cheryl’s school is housed in a Victorian building with ceilings that are so high that changing a light means hiring a professional with tower scaffolding. “The caretaker can’t change it…I had a quote of more than £2,000 to replace a lightbulb,” she says. Coming as it does on top of increasing electricity bills this is difficult.

Cheryl also believes that schools are bearing some of the brunt of cuts in other parts of the public sector; for example, rubbish collection has become more expensive.

As a result, the only place in her budget where she can make cuts is with staging. “This is why I now have classes of 30 in my KS2 group,” she says. “With the settlements that we are getting the money is simply not coming in to cover the costs. This year I lost, in effect, 3.5 teaching posts, but I still have a £12,500 deficit that I hope that I can save back through the year.”

She advises all heads to take their planning more seriously than ever before. “We know that it’s not going to get better – the money isn’t there – and we have increasing numbers of initiatives to deliver. However efficiently you try to deliver it, it has a price tag.” Building a close relationship with officials from the local authority can also help get more of a sense of what lies ahead, and can also make it easier to find out about other funding opportunities. “You don’t always get the answers you want, but at least you are able to ask the questions and make sure that you get value for money,” she says.

But Cheryl also believes that answer lies in greater strategic efficiency rather simply in individual schools scrimping and saving. This may mean reducing the number of small schools with few people. “I think that money is being inefficiently spent because financially viable schools are subsidising schools that are unviable, and that the majority of that money is going into buildings, not pupils’ education,” she says. “For example, if there are four schools all within walking distance, you don’t need all of them – you could go down to three.”

Anna Brychan, Director for NAHT in Wales, said “NAHT Cymru has always acknowledged that some schools will inevitably have to close because of falling rolls and the often exorbitant cost of maintaining old school buildings at something approaching acceptable standards. Pat, Cheryl and their colleagues are however equally clear that any money saved in this way must be ploughed back into education to ease the increasingly difficult funding situation across Wales.”

Carly Chynoweth is a freelance journalist

who writes about leadership and management

in both the public and private sectors.