With the recent announcement, of £3bn potential cuts required to school’s budget by 2020 is it time for a fresh look at how schools operate financially?
With most long established institutions, the ability to change and examine new ways of operating is a challenge. The changing landscape of education funding whereby most schools will become academies and therefore self-managing, further compounds this challenge.
As the report states, approximately 60% of secondary schools will be or are currently operating in deficit, meaning there is a radical change needed to manage the operating expenses of every school. Worryingly the call from the sector seems to be that this will result in staff cuts. Whilst it is inevitable that some staff cuts will take place due to the size of the required cuts there could be other areas of opportunity that can be realised, thereby reducing the need to reduce staffing levels so severely.
From our experience of working with a variety of schools and institutions ,we are often faced with a reluctance to change from “what we have always done”. Such reliance on existing recognised buying clubs and council run procurement activity has not produced the required levels of savings or efficiencies that schools require to meet future education funding targets and the demands of expenditure cuts.
Whilst dealing with some schools that are open to change, we have been able to use our experience from other sectors to optimise their operating costs. It does seem however that whilst commercial businesses recognise the need for outside expertise, the education sector seems reluctant to accept this.
Many suppliers are keen to work in the education environment but are often prohibited due to the use of framework agreements or OJEU. Therefore, the availability of alternative sources of supply and a challenge to existing costs may be limited, again making the challenge of cutting costs difficult.
Commercial businesses have long faced the challenge of ensuring costs are comparable to income and it could be argued (as I have on previous blogs) that schools must now operate in a similar manner. Added to this the need of future governments to balance the fiscal budget means that such challenges will not diminish over time, but actually will increase. So schools do need to look at new ways of operating and explore services that are outside of the existing ones that have been used.
As a wise man once said; “If you always do what you’ve always done, you will always get what you’ve always got”. In the case of schools this could be a budget gap of £3bn – and increasing.