HIV AIDS Integrated Strategic and Financial Planning Guidebook
Strategic Financial Planning
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Transcript of Strategic Financial Planning
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Strategic Financial Planning
Val AndrewASCL Business Management Specialist
May 2014
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AIMS• A straightforward approach to strategic financial planning
which links to staff deployment and curriculum planning
• To make suggestions to facilitate discussions of strategic financial planning within the senior leadership team and with the governing body
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A common language ……
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It is about team work
Team work ~The actions of a group working together towards a common goal
The skill that allows common people to achieve uncommon results
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Greater financial freedom, but also greater financial accountability
Why is financial awareness important? Declining funding pre-16
(MFG -1.5%) Declining funding post-16
(around 12.5% reduction between 2011-2014, and further cuts in the pipeline)
Rising costs (inflationary pressures on non-pay expenditure, and pay inflation)
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Managing expectations!
Benefits of financial awareness? Common understanding
that quality improvement cannot be driven just by increasing resources
Common understanding that making any commitment has a financial implication
A 3-5 year financial strategy to ensure drastic changes are identified and planned for/avoided
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Factors in our control:-You cannot continue to perpetuate the past
• Which means a step change in management thinking is required
• Sometimes called:-
A paradigm shift
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The paradigm shift – is the link between the curriculum and the money…..
•No!
•Yes Budget reality process Curriculum
compromise
Curriculum Vision process Budget (compromise?)
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What constitutes a “good enough view”?Establish some key elements:-
• Critical variables• Distinction between essential and desirable expenditure• Rules of thumb• Benchmarking• Best, worst and most likely scenarios
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What are the critical variables?In general useful categories include:-
Average costs for staff– Teaching staff– Education support staff– Premises Staff– Administrative staff
Broad expenditure categories such as– Premises– Learning resources– Supplies and services– Other
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How do they compare?
Benchmark your expenditure against other institutions
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What is the trick?Have as few variables as possible
• Use those that really make a difference
• Recognise when it is useful to think in terms of
– Per pupil - e.g. learning resources– Per school/college - e.g. premises– Per other things (school, teacher, class etc.)
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Ask questions• Is this a Health and Safety issue?• Is this a safeguarding issue? • Could this put us in an Ofsted category?• Are we planning this expenditure because
– we have to do it?– we would like to do it?– we have always done it?– It is part of a strategic plan?
Essential and desirable expenditure
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School/college funding depends on student numbers
• What are our current roll numbers?
• What are our expected intake numbers for the next three years?
• Can we influence our intake numbers?
• Can we influence our retention of students?
Keep an eye on the student roll
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i. What’s the cost per period?
ii. What are economic class sizes?
iii. What are teacher costs (the largest variable?)
iv. What are the other costs?
Rules of thumb – what does it
cost to run the school/college?
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Cost per period?
Depends on teachers average contact time, average cost, and the ‘overheads’ of running school – calculations next slides
Economic class sizes?
Depends on the costs above, and the taught hours that students receive - calculations next slides
Teacher costs (the largest variable?)
Take average cost across all teaching staff, and include the employers contribution to national insurance and teachers pensions (usually min of 56% of total budget with on-costs)
What are the other costs?
All other staff, premises, equipment /resources – usually 44% of total budget
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11-16 Students 16-19 Students Teachers
900 250 70 FTE
@ £5,500 @ £4200
£5,000,000 £1,100,000
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2013/2014 – A period on the weekly timetable
Pre-16 Approximate figures
School income (13/14) £5,000,000
Total number of periods on timetable 950 per week
Cost of a period on the timetable £5,300
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Post-16 Approximate figures
School income (14/15) less a very small contingency/surplus £1,000,000
Total number of periods on timetable 250 per week
Cost of a period on the timetable £4,000
2013/2014 – A period on the weekly timetable
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A different way of working out what was tenable in 2013/2014?
Approximate figures
Average teacher cost(this includes all teaching staff, and
employers on-costs)
£46,000
How many teachers do we need to teach the lessons a post-16 student
attends (say 18)
Teachers teach on average 18 periods, so we need 1 teachers, at a
cost of £46,000
How many post-16 pupils (@ £4200) each?
11
How many post-16 pupils are needed to cover all the costs (add 44%)
16
…..and funding for post-16 provision is in significant decline, so future class sizes must increase to be economic
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The big picture means …….
0 2 4 6 8 10 12 14 160
50
100
150
200
250
Arbitrary time units
Arb
itra
ry d
eman
d u
nit
s
PRODUCTION DEMAND …. must notexceed
the PRODUCTION CAPACITY……….OR “Houston, we have a problem!”
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The equation of life (Sam Ellis)
TpI
ATCPTR
PTR = Pupil to teacher ratio you can affordATC = Average teacher cost (salary plus on costs per FTE staff)I= Revenue funding in pounds per pupilpT = proportion of revenue funding available for spending on teachers.
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So what can you do?THESE ARE QUESTIONS NOT SUGGESTIONS!
• Staffing structure/curriculum review - teachers teach (more?) and support staff support?
• Students have more - supported self study?• Different delivery options – lecture style post 16?• Collaboration - sharing staff with other schools? (watch out
for system cost and local politics!)• Fewer chiefs and more indians?• Buying resources at Aldi prices and not Waitrose
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What else can you do?MORE QUESTIONS NOT ANSWERS
• Only buy resources that are needed / group purchasing initiatives?
• Energy savings maximised ? • Water saving ?• Study DfE review of efficiency ……(June 2013)• Is your BM/FD an integral member of leadership ? • Common language/understanding of financial targets within
leadership ?• Benchmarking? - I’ll show you mine if you show me yours?
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And …..• Is sponsoring academies, setting up studio schools etc
good business? What about college viability – is this a serious distraction from the core business?
• Is government funding now so unreliable that colleges need to focus on employer funded activities?
• Are we seeing a shift in priorities away from the teaching and learning agenda towards managing the business?
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To summarise then:-Effective strategic financial planning considers:-
• Vision and context• Funding prospects• Development plans• Curriculum plans• Demographic data and forecasts• Contingency plans• Benchmarking expenditure• Procurement principles
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Key areas of business risk in schools• Governance Risks - governing body lacks skills or
commitment• Operational Risks - safety, staffing issues• Financial Risks - dependency on grant, cash flow• External Risks - demographic trends• Fraud risks - misuse of public funds/ property• Compliance with law & regulation - poor knowledge of
requirements• Horizon scanning – what could impact in 3 – 5 years time?
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Whilst the information provided at this event was correct to the
best of the knowledge of the presenters and organisers, neither
ASCL nor Professional Development can accept liability if at a
later date this should prove not to be the case. Nor can they be
held responsible for any errors or any consequences resulting
from its use