By Mark Smulian | 19 October 2011
Auditors called today for an ‘early warning system’ to flag up problems with schools’ finances, as head teachers grapple for the first time with reduced budgets.
The National Audit Office found that some 18% of secondary schools were in deficit at the end of 2009/10. ‘Schools in deficit generally performed worse [academically] than schools in surplus,’ the NAO noted.
‘Financial management in schools must be strong for the [Department for Education] to be assured that teaching and learning will continue to improve while schools make cost reductions.’
The NAO said that a long period of generous school funding over the past decade meant that many head teachers had ‘no personal experience of leading a school during a period of financial constraint’.
Against this backdrop of tight funding, councils were becoming less willing to invest in monitoring schools’ finances, the NAO warned. Some 40% said they did not have sufficient resources to support schools and almost half intended to reduce these yet further.
NAO head Amyas Morse said: ‘Financial pressures are growing on local authority-maintained schools and the need to reduce costs is becoming greater, and the capacity of local authorities to monitor and support financial management in schools is itself under pressure.
‘There must be early warning systems in place to alert the Department for Education to emerging issues requiring action and intervention.’
Compounding these problems, schools are now left to assess their own compliance with the new Schools Financial Value Standard, losing the independent evaluation in the pre-2011 system.
The DfE has also scrapped compulsory independent supervision of schools by improvement partners, and, from January, regulator Ofsted will drop value-for-money assessments from its inspections.
Schools are expected by the DfE to save £1bn by 2014/15 from procurement and back-office costs. They have received government guidance on this, but less help with managing the staff reductions that 68% expected to make over the next two years, the NAO said.
Public Accounts Committee chair Margaret Hodge said the level of school deficits was ‘extremely worrying’.
‘We are concerned that the department has not properly examined why schools fall into the red, [and] that scrutiny of school finances is being watered down.’
* The Local Government Association has called for the fledgling Education Funding Agency to be stripped of responsibility for the funding and improvement of academy schools, which it said should instead rest with local authorities.
Academies are funded by the Young Peoples Learning Agency quango, which is due to be replaced by the EFA from April 2012.
David Simmonds, chair of the LGA’s children and young people board, said this ‘simply isn’t cost-effective for the taxpayer’.
