Price is what you pay

Price is what you pay …

Price is what you pay, value is what you get, according to American business magnate and philanthropist Warren Buffett.  This applies to many things – small purchases and large institutions. He has made a successful career from investing in outstanding companies at a sensible price – and as governors we want our schools to be outstanding at a sensible cost as well.

Ofsted now explicitly comments on governors’ ability to oversee effective financial management.  They are asking if financial resources are managed efficiently, if salary progression of staff is justified, and how additional funding such as the pupil premium is used to specifically support students entitled to free school meals. 

Yet good value for money is so much more than effective use of the pupil premium.  In my own school, with nearly 27 per cent of students currently entitled to free school meals, (and nearly 40 per cent premium entitlement under the six year rule), pupil premium is still less than 4 per cent of our total income.  So if as governors we only focus on the premium, we are missing the point.

The real challenge is to get the best value from all the income flowing into a school.  We need to see income as an investment, so we can get the maximum impact in terms of teaching and learning and student progress.  All schools have historic spending patterns, and with an average of 75% of the budget going on staffing costs, these patterns are not easy to change quickly.  But part of the strategic view of the school that we develop as governors should include a long term vision of what spending priorities should be, and there needs to a clear and explicit link between the action plan priorities in the school development plan and the annual budget. 

So often our schools have clear lines of accountability for the vision and priorities in delivery plans right through to individual objectives for staff – but with no direct budget link. This is not to say funds are not managed appropriately.  They can be very well managed in financial terms, but may not be directed specifically at a school’s priorities. 

A good governing body will be looking at the pay bill for the school and asking some testing questions.  They might be:

–    Is our split between teaching, teaching assistants and other support staff correct?  A starting point might be to ask - is it right that we have more (or less)  ‘other staff’ than teachers?  There isn’t one correct answer – the point it is what is right for your school, and how would you judge that?
–    What about teacher deployment and the curriculum – could you collaborate more with other schools to increase teacher value? Have you thought about how you might invest in some additional resources that could make your school more attractive (and grow your income)?
–    What is sickness absence costing?  Is this figure going up or down?  How do we compare with other schools? And what are the most cost effective ways of providing cover and ensuring our students still get good quality teaching?
You are likely to want to look at non-pay expenditure as well.  This could be questions about the scope for sharing premises, reviewing catering options, and asking what skills you hold in-house and what services you might buy-in. 

There is a wealth of data available to help you.  We should benchmark our schools annually against similar schools.  The DfE performance tables give extensive information on results and progress data.  But alongside this sits data on income and expenditure per pupil; head count and full time equivalent numbers for teachers, teaching assistants and other support staff.  The tables provide pupil teacher ratios, and the average salary of a full-time teacher.  None of this tells you if your school is providing good value for money, but it’s not a bad place to start if you want to compare your school with others, and to start think about what really good value for money would look like.