Run the numbers

ASCL has created a tool which links staff deployment to budget planning to help leaders estimate how spending cuts will affect the make-up of the workforce. Sam Ellis explains.

If you are planning to drive from the outskirts of Hull to ASCL headquarters in Leicester without the aid of satellite navigation, a quick look at the route-planning pages of a road atlas will be good enough to get you close to Leicester city centre - even if you need to stop somewhere on the outskirts to do a more detailed map check.

The point is that you do not need high degree of accuracy when you start out. You only need information that gets you close enough before you do a more refined calculation.

The same idea can be applied to the supermarket shopping trolley. Provided you have an average range of goods, a notional sum per item, say £1.50, will probably give you a reasonable estimate of the bill without adding it up in detail. Clearly the notional sum will vary from shopper to shopper and from supermarket to supermarket but the point is that you can calculate your own figure and work within that context.

To reduce your overall expenditure, you could shop in a way which reduces the average price per item. Alternatively, you could buy fewer items. You could also benchmark your spending by comparing the price per item and number of the items per trolley with other people.

Extending this analogy to finance, the cost per item is similar to the average staff cost. The number of items per trolley is equivalent to the staff per school or college. However, analogies are always interesting at the point of breakdown. In this case what happens to the shopper when the overall spend on shopping is not sufficient to sustain body and soul? This point seems to be avoided in discussions of finance. At what point is it no longer possible to run the school or college?

In December 2008 an idea for a spreadsheet linking staff deployment to budget planning over a five-year period emerged in discussion at ASCL. The aim was to produce something which gave answers good enough to support strategic decision-making without going into the fine detail. We also wanted to produce a tool that members could use in discussion with groups where the strategic view was important but where financial detail may be counterproductive. This might be, for example, at a meeting with governors where the focus is on the big picture rather than the price of an apple in the canteen.

We presented our first attempt at the ASCL Conference in April 2009. There has been significant positive feedback since then from members who have used this early version and we are therefore making it available as a download from the ASCL website at www.ascl.org.uk/guidance. However, it comes wrapped in caveats and there is a sheet titled 'Read Me' which really is required reading before you start.

'What if' questions

What does the spreadsheet do? It takes data from one budget year and uses it to project a school's or college's funding level for five years. Given an estimate for five years of the student numbers, an outline of the planned curriculum and a figure for teaching staff contact ratio, the sheet gives a projected in-year and cumulative balance for each of the years. The output is in the form of a bar chart.

Once the spreadsheet has been set up, the output page allows the user to alter key figures and the impact on the bar chart is immediate. This means that the output page can be used as the basis for group discussion, as the group is able to see instantly the impact of 'what if' questions.

The idea was to base the sheet around a few key parameters which could be then used as a type of target. I say 'type of target' because target implies it might be something that you want to hit. In the context of this spreadsheet, they will actually be values that you do not want to cross. I am sure that some expert in business-speak can come up with a better term but I shall refer to them as limiting values. In a sense they are like Mr Micawber's limiting value of £20. Fall short of it and you are happy; exceed it at your peril.

The limiting values that the sheet works with are: number of teachers employed; average teacher cost; expenditure on all other CFR (consistent financial reporting) lines except E01, income; and available funding. All of these values can be altered on the summary sheet to give instant feedback on the output chart.

The contact ratio for teaching staff can also be altered. Changing this value does not affect the projection chart. It produces an indication of the level of teaching staff above the basic curriculum need. It will be a matter of judgement as to how much additional staffing is needed in order to have a match in subject expertise which does not fall short of that required for good curriculum delivery and to provide an acceptable timetable.

A judgement has to be made about changing the number of teaching staff employed and the level of non-teaching time allocated to those staff. This is a critical area which highlights the quagmire between looking at a school or college from a purely financial point of view and considering the use of teaching staff in a way which does not put the core business at risk.

Value of strategic planning

In the current Ofsted evaluation schedule for schools, under the heading 'the quality of teaching and the use of assessment to support learning grade', the descriptor for achieving grade 3 - satisfactory is 'teachers' subject knowledge is secure'. In grade 2 - good, the descriptor is 'teachers generally have strong subject knowledge which enthuses and challenges most pupils and contributes to their good progress'.

These grades focus the mind for any school leader attempting to balance the books in the face of a shortage of staff in specialist areas. The Ofsted schedule does not allow for the regional variation in the ability to recruit specialist staff.

Unfortunately the fact that, at a local level, a poor Ofsted judgement can lead rapidly to a change in membership in the senior team underlines the value of careful strategic planning. In some parts of the country the manager of the local football team may be a more secure position than that of a senior leader in a school!

Work in progress

This sheet is still a work in progress. It is very simplistic, it only considers teaching staff in detail and all other expenditure is treated as a global item. When the total number of teaching staff is adjusted there is an assumption that this happens at the average pay point. It is also assumed that changing the total number of staff does not alter the contact ratio. We plan to address these difficulties in the follow-up sheet which is due for presentation at the ASCL annual conference in March 2010.

Despite its shortcomings we feel that the sheet is useful as it stands, provided care is exercised when interpreting the results. It should only be used as an indicator before fine detail calculations are carried out. This again is similar to the map analogy used earlier.

At the root of this sheet is a very simple idea: if you divide the average staff cost by the pupil to staff ratio you get the expenditure per pupil on staff. These figures also have the advantage of being easy to benchmark.

In essence, at the risk of quoting the obvious, if the only place you can adjust spending is in staffing then either you need cheaper staff (lower average staff cost) or you need fewer staff (higher pupil to staff ratio) or a combination of both.

We are attempting to develop a spreadsheet which allows the 'limiting value' type of analysis to be carried out across all types of staff and across all other expenditure areas. Whether or not we succeed is yet to be seen - but watch this space.

Feedback from members on the current sheet, both positive and negative, can only help. It would be nice to be able to provide a 'good enough' model that is useful to members for strategic planning prior to detailed accountancy and which enables people to build the ark well before the rain starts to fall.

Sam Ellis is ASCL regional officer for the north east.

• Access the staff deployment and budget planning spreadsheet at www.ascl.org.uk/guidance