Good housekeeping

To run an organisation effectively, you need a mechanism to control expenditure within an agreed framework – the budget. Controls need to be robust, widely accepted, communicated and understood, says Mark Taylor

Current economic uncertainty is causing governors and senior management to take an increasing interest in financial budgets and outturns. To survive the recession, the process of budget-setting and cost control is crucial.

Having started my bursarial career 15 years ago, I have seen and tested many budgetary methods. Effective budgeting is not rocket science but it does require a process and system that delivers the key requirements of the school. It is vital that the budget-setter is in tune with the ethos and educational direction, and is not there to apply an inappropriate commercial template over a sometimes quite complex organisational requirement.

Which approach?
The top-down approach to budgeting is the process of applying a blanket increase to the previous year’s budget. It works well, is quite simple and straightforward to apply.

The bottom-up approach assumes that you start at zero for each budget and work the budget upwards through justification. This process is quite time-consuming but ensures that budgets are tight, fully justified and supportive of the organisation. I prefer the bottom-up approach and this is how I try to achieve it.

The process
Bedales School has three schools within its responsibility: Dunannie (3-6 years), Dunhurst (6-13 years) and Bedales (13-18 years). They operate largely as separate entities, and each has a multitude of cost centres. I have set up a budget cycle that can be understood and easily communicated. Our cycle is as follows:

December: blank budget request sheets are distributed to all budget-holders, asking for budget requests (with justification) as well as any anticipated staffing changes for the forthcoming academic year. I am available to all budget-holders for advice and discussion.

End January: all budget sheets are returned and entered into the financial budget model. The result is reviewed with the heads of the three schools, who amend/comment where necessary. By this time, approaches have been made to all the externally driven budget costs, namely insurance brokers, local council, utility providers and DCSF. If the teachers’ pay increase has not yet been agreed, we take a sensible estimate and apply it individually to each member of staff to generate a reasonably scientific annual salary budget.

Late February: the budget is completed and any fee increase is agreed and presented to the board of governors’ finance and general purposes committee for approval.

March: the budget is presented to the board of governors for final formal approval. Once it has been approved, we write to all parents with the new fee level (if any), which allows them the option of giving a term’s notice of withdrawal before the new fee rates are applied in September. There is always a caveat that we reserve the right to adjust the fees mid-year if there are any unforeseen costs.

The advantages of this system are that during the year any variances to the budget over or under can be specifically analysed at the earliest opportunity. This also helps the budgeting process for the following year.

Keeping costs down
Any fee increase that we pass on to parents is the product of a tight and efficient process that supports the ethos and educational requirements of the school. We are determined to contain the fee increase as best we can and feel that this method involves the community in the process.

We try to avoid the use of contingencies and always look for any sensible savings we could make in any of our cost centres. We have found that, by tendering our day-to-day maintenance purchases, we have achieved a 25 per cent saving, and that by centralising the purchase of paper further significant savings have been made.

The independent sector is under scrutiny at the moment and anything that can help to contain fees must be a sensible and clear way ahead.

Mark Taylor is bursar at Bedales School.

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