Cheques & balances

In our new funding column, Sam Ellis tries for a simplified view of school finance and looks optimistically for a 'planned overspend'.

When the physicist Niels Bohr was asked how to find the height of a building using a barometer, he allegedly suggested taking the barometer to the caretaker and offering it in exchange for the correct answer. Lateral thinking but it's not physics!

One approach to a problem is to ask someone else to solve it. The school leader, for example, needs to rely on a range of people to provide an answer to the question of how many teachers to employ in September.

This question represents around 60 per cent of revenue expenditure. Answers from financial, curriculum and wider school perspectives, including staff expertise and ethos, will produce three valid but different answers.

Here we consider the financial view. School finance is wrapped up in jargon and does not make an ideal topic for group discussion so I looked for some simplification.

Consistent Financial Reporting (www.standards.dcsf.gov.uk/vfm/financial/reporting) has 32 lines of revenue expenditure from E01 to E32, more than I can juggle in one go. I decided to group them into six areas shown in the table below. The sum of these lines subtracted from the revenue funding gave the 'balance'.

I estimated the funding and expenditure for the academic year by taking 7/12 of one financial year and 5/12 of another. The average teacher cost was calculated from the value on the E01 line and the number of full-time equivalent (FTE) teachers it represented.

I added a column for the next year and put in my best estimates based on the current year and known factors. This left me with the three questions shown in the table (below).

Expenditure	CFR lines	This academic year Expenditure in £ per pupil	Next academic year Expenditure in £ per pupil
Teachers	E01	£2,912	Question 1: How much is left to spend?
All other staff	E02 to E11	£1,196	£1,232
Premises	E12 to E18	£305	£300
Learning resources	E19 to E20	£272	£250
Supplies and services	E21 to E28	£447	£500
Other	E29 to E32	£39	£42
Funding area	CFR lines	Funding in £ per pupil
Funding	I01 to I17	£5,223	£5,284
Balance (or can I have a 'planned overspend'?)		£52	£0
Other information
Average teacher cost		£43,439	£45,000
Roll		995	982
FTE teachers		66.7	Question 2: How many teachers can I afford?
Pupil teacher ratio (PTR)		14.9	Question 3: What value fits with the answer to Question 1?

Data driven

For question 1, I assumed a zero balance and subtracted the expenditure estimates from the funding leaving £2,960 per pupil to spend on teachers. I then divided the average teacher cost by £2,960, the expenditure per pupil on teachers, to get a pupil teacher ratio (PTR) of 15.2.

For question 2, I divided the PTR (15.2) into the roll to get 64.6 FTE teachers.

Increasing the funding or decreasing lines E02 to E32 means I can afford more teachers. If the average teacher cost goes up then I cannot afford as many teachers. I need an average teacher cost at or below £45,000 and a PTR at or above 15.2 to be solvent.

This is clearly an over-simplification containing guesswork and rounding errors that only gives an indicative answer but I offer it as a suggestion for development.

This type of exercise could be put into a spreadsheet for team discussion to establish targets for the PTR and average teacher cost that can also be benchmarked.

But is it possible to deliver a PTR of 15.2? At this point, the question swings over to the curriculum and timetable teams.

In times where the financial barometer is moving towards 'unsettled', the Niels Bohr approach to "How many teachers?" is probably needed across a range of people. The final decision will be a judgment of Solomon...pleasing no one! 

Perhaps the joke of referring to the balance as a 'planned overspend' might not be so funny after all.