Green shoots of recovery?

Schools are being urged to reduce their expenditure now with more cuts widely expected. But where budgets are already tightly controlled, can savings be made without jeopardising the quality of education? The numbers don't add up, says Sam Ellis.

I know my glasses exist. I had them on when I was in the kitchen last night; I just cannot lay my hands on them at the moment. This contrasts with the weapons of mass destruction in Iraq - the existence of which turned out to be more virtual than real. The belief in weapons of mass destruction did however result in some very real actions and consequences.

In a similar way the idea of 'efficiency savings in schools' gives me cause for thought. Like my glasses I am confident that they exist. Unfortunately, the type and level will vary considerably from school to school. In some instances such savings may be significant. In others they are so small that they exist only as background noise. If the blanket assumption is made that these are to be found at a significant level across the whole sector and if those in power take action on this basis by reducing funding accordingly, it could lead to a major and possibly unpredictable change in the operation of a large number of schools.

On funding matters it can be useful to put numbers on things, if possible. To quote philosopher David Hume, "Let us ask, does it contain any abstract reasoning concerning quantity or number? No. Does it contain any experimental reasoning, concerning matter of fact or existence? No. Commit it then to the flames: for it can contain nothing but sophistry and illusion."

As an exercise I invented a school loosely based on the one given when logging in as a guest to the school benchmarking website. I grouped the expenditure lines as follows:

Category	CFR lines included in this category
Teaching staff	E01, E02, E10, E26, E27
Education support staff	E03
Premises staff	E04
Admin and clerical staff	E05
All other staff costs	E06, E07, E08, E09, E11
Premises	E12, E13, E14, E15, E16, E17, E18
Learning resources	E19 & E20
Exam fees	E21
Supplies and services	E22, E23, E24, E25, E28
Other	E29, E30, E31, E32

My imaginary budget for April 2009 is shown below.

Consider this to be a typical substantive budget above which I had a small balance of 0.8 per cent as my contingency or reserve fund. If this was a school, how much can we expect to be able to save?

This is an 'accountant's question' which invites the response: "What answer are you looking for?"

Exactly what size of saving schools will need to make after April 2011 is anyone's guess until we see the numbers.

Lean and mean

There is a strong steer from Westminster that officials believe there are efficiency savings to be made in schools and that future funding levels may be linked, in part, to that assumption.

I decided to set myself a target of considering efficiency savings that might reduce the overall budget by 5 per cent. Not an outrageous long-term possibility. If they exist I may be able to put them in rank order and prepare to work down the list when the truth about funding becomes apparent.

The problem, of course, with drawing up a substantive 'lean and mean' budget is that it is only a fine line away from 'morbidly undernourished'. If I cut the production capacity below the minimum required to meet demand then it is goodbye to the school.

Can I save up to 5 per cent of my current expenditure and still run the school? Five per cent is just over £375,000 or £220 per pupil. What could I reasonably expect to be able to trim from my non-staff lines?

Some schools have found that they have been able to make savings through better procurement. Let us assume that I could save as much as 7 per cent on the areas of supplies and services and learning resources by this approach. That would save me about £35 per pupil altogether. So far so good, £185 per pupil to go.

It is unlikely, given the drive to raise headline outcomes in terms of 5 A*-C including maths and English, that I can save anything on exam fees. In fact, I am probably going to be entering more students early for maths and English with a view to possible retakes and getting exam results 'in the bank'. Let us say that expenditure on exam fees will increase by 5 per cent. That is about £4 per pupil so we now need to find £189 per pupil.

There is a chance that if we group together with other institutions or even on a larger scale we can negotiate cheaper energy. Let us assume that there is a potential saving of 10 per cent to be made in this area. A 10 per cent reduction in energy costs would reduce the premises expenditure by about £10,000 or about £6 per pupil. We still need to find £183 per pupil from somewhere.

Supply budget

What would happen if we savaged all other staff costs in an extreme manner? Imagine I cancel all absence from school for CPD with the exception of compulsory exam board meetings and replace it by buying staff relevant literature or resources for self-study and use time on training days for self-help study groups. I might reduce my supply budget by as much as £10,000, taking £6 per pupil off my teaching staff line where the supply costs are included.

There is the increase in cost for the self-study resources and the savings made on course fees to account for. Say the saving on all other staff costs is about £6 per pupil. That still leaves us with something of the order of £177 per pupil to find from the staffing lines.

Unless I am already running with an excess of premises staff or paying for high levels of unnecessary overtime then it is unlikely that there are any significant saving to be made on the premises staff line. If I have a significantly falling roll I might be able to mothball some of the site but I suspect that that is a remote possibility in most schools. I am therefore left with looking for savings from the remaining three lines.

If I divide the average staff cost by the pupil-to-staff ratio, I get the expenditure in pounds per pupil. This is one way of saying: if I increase the number of staff or I pay them more, it costs more. It does however have the advantage of being easy to benchmark. This school has 1,712 students aged 11-18 with 111 teachers, 23.5 educational support staff and 14.2 admin and clerical staff. I do not see how I could make much of a saving by staff reductions in the last two areas, given the size of the school and the increasing need for both types of staff in the current climate. So far we have achieved a saving of just approaching 1 per cent on the overall budget. (Even a cut of four staff from these areas would not have got us halfway to the 5 per cent target.)

That leaves the teaching staff. If the year groups in the main school are the same size we are looking at a school with year groups of 300. A curriculum with a maximum class size of 27 in general teaching groups in Key Stage 3, a maximum group size of 20 in technology, an average class size of 18 in Key Stage 4 and one post-16 subject group on the timetable for every 12 students at all times of the week would need 111 to teach at a contact ratio of about 0.79. I don't see a lot of room for manoeuvre there.

Loss of teaching staff

The current average staff cost is around £42,000. I would need to reduce that to around £39,000 to achieve the required saving. Unless a significant number of expensive staff leave to be replaced by newly qualified staff then that seems difficult and would also be a short-term measure as they quickly move up the scale.

If the average staff cost stayed the same the pupil to teacher ratio would need to shift from about 15.4 to 16.5, equivalent to a loss of about seven teaching staff. Unless I have a rapidly falling roll I do not see that as an option, given the class sizes and the contact ratio above, and the falling roll would reduce the budget in future years in any case.

Clearly, if I have a low class size and a low contact ratio then there are savings to be made but these must be carefully balanced against how much the staff can be expected to teach and how large the classes can become. This will vary considerably from school to school.

If however I am already at the maximum point in terms of class size and teacher contact then I am going to need something a lot more powerful than the pair of glasses I've just found to identify significant efficiency savings beyond the 1 per cent of my total budget I had achieved before touching the staffing costs.

It seems to me that for schools where staff are already teaching at the limit in classes at the maximum size the school can manage, the existence of significant efficiency savings may be more virtual than real.

Sam Ellis is ASCL's regional officer for the North East and facilitates several ASCL MAPS courses on financial management.

Budget

Category	Expenditure	Exp Per pupil	% Exp
Teaching staff	£4,660,369	£2,722	62
Education support staff	£609,717	£356	8
Premises staff	£152,115	£89	2
Admin & clerical staff	£410,497	£240	5
All other staff costs	£159,074	£93	2
Premises	£539,943	£315	7
Learning resources	£494,374	£289	7
Exam fees	£133,622	£78	2
Supplies and services	£364,347	£213	5
Other	£0	£0	0