Schools shape future generations of leaders, entrepreneurs and citizens, and thus, they play an important role in society. When it comes to school upgrades, it’s natural to focus on the curriculum, facilities and faculty. However, financial management is also important to ensure efficient resource allocation for uninterrupted, high-quality education for all.
This is where budget reviews come in.
Budget reviews ensure proper financial stability, transparency and compliance. When it comes to schools, regular internal scrutiny in academy trusts can help assure members and trustees that a proper system is in place and risk management is undertaken to ensure optimal financial performance.
Let’s explore the importance of budget reviews and how it impacts the primary responsibility of academic institutions, i.e., providing quality education to children.
Financial Stability
Academy trusts in the UK provide free education to all children and are funded by the government. However, in today’s economic climate—marked by high inflation and the ongoing cost of living crisis—many academies are facing significant financial pressure.
With limited budgets, it’s essential for school leadership teams to maximise cash reserves to prepare for unforeseen challenges, such as sudden costs or unexpected funding cuts.
Conducting regular budget reviews is key. These reviews help track spending patterns and highlight areas where money may be unnecessarily drained. Early detection of such issues allows school committees and trusts to make timely adjustments, for example, managing cash flow, controlling expenses, and avoiding a budget deficit.
Resource Allocation
As schools upgrade over time, their demands and requirements change. With regular budget reviews, it’s possible to allocate resources where they’re most needed. For instance, a MAT allocated a huge chunk of its budget towards upgrading its science labs and equipment.
However, a recent review has shown a dearth of funding towards retraining current teachers or hiring new ones. For the next academic year, the committee directs the funds towards teacher retraining. This will ensure the students receive best-in-class education and support and are better equipped to ace their examinations.
Budget review also allows MATs to allocate funds towards student support services such as providing mental health resources and offering provisions for special education.
Transparency and Accountability
Proper budget management and regular reviews are essential for maintaining transparency among trustees and school administrators. Since schools are funded by the government—and ultimately by taxpayers—there’s a public expectation for accountability in how funds are spent and how that spending impacts pupils’ education.
Routine budgetary reviews help ensure that resources are being allocated effectively and strategically. Clear documentation of these reviews also proves invaluable during external audits or internal assessments, providing evidence of responsible financial stewardship.
Better Decision-Making
Budget reviews and internal scrutinies help decision-makers gather important data to shape their future policies. Depending on past trends, the school board can decide how they want to allocate resources in the future to revamp the infrastructure, the curriculum and extracurricular activities.
This will also help them set short-term and long-term goals for the school upgrades. Government policies often have significant implications for school budgets, and by undertaking reviews, you can create financial buffers to handle any emergencies or unforeseen budgetary cuts.
Have Buffer Funds To Manage Unexpected Costs
One of the biggest challenges that MATs face is balancing the staffing costs. Hiring qualified staff is becoming increasingly expensive with each passing year, and with more students enrolling, schools constantly need to hire more staff to maintain the teacher-student ratio.
School budgets must have provisions for unexpected expenses, such as needing emergency building repairs or mitigating the damage created by natural disasters or arsons. Regular reviews can help trustees and administrators create provision for emergencies.
Wrapping Up
Internal scrutiny and budget review will help reduce financial oversights and mismanagement, create areas for cost-saving and improvements, and ensure compliance without compromising the quality of education. Regular financial review will help with transparency and accountability.
Each academy within the trust has different needs, challenges and opportunities, and by understanding your school’s unique requirements, administrators can pave the way to a financially solvent and academically enriched institution.
Has your school done its annual budget review yet?
