Monday, 3 January 2011

What Makes Schools Financially Efficient?

A new report reveals that larger schools have innate advantages when it comes to improving financial efficiency.

A recent study based on research carried out in March 2010 has concluded that the size of school budgets may be a determining factor in financial efficiency. As primary school budgets tend to be much smaller than secondary budgets, it follows that primary school structures are less flexible and there is a perceived requirement within some schools for a certain number of teaching assistants per class. Secondary schools have more flexibility, not only due to their greater budgets but also their ability to consider staffing in terms of how a subject is covered which lends itself to more creative approaches.

There is a broad understanding of the concept of efficiency in terms of the 3 Es:

Economy: minimising the cost of resources used

Efficiency: the relationship between outcomes for children and resources

Effectiveness: the extent to which objectives have been achieved.
However, there is no clear consensus regarding what this means in specific terms and there is a lack of clarity as to whether schools are expected to run in a similar fashion to businesses or whether efficiency can take into account educational outcomes.

The study found barriers to change in some schools which felt that:

• they were already as efficient as possible
• that factors beyond their control limit their efficiency
• action in areas other than staffing will be insignificant.

The study also found that governors were clearly an influential force within the financial management of schools. This varied on governors’ willingness to get involved and their level of financial understanding. One school said “we’re advantaged because we have a very experienced governing team who are experienced in financial matters and they question our rationale”.

The study found that more efficient schools are more likely to:

• employ bursars who are more qualified, more experienced and come from a private sector background
• have headteachers who are financially interested and proactive and who are supported by finance teams who can be relied upon to run the school finances without micromanagement
• recruit and involve strong, reliable governors with financial experience
• have greater flexibility in its budget after staff costs have been accounted for.

This article is taken from the Financial Efficiency in Schools study by Craig Ross Dawson, published in April and commissioned by the previous government.


  1. While I agree with you and the report that larger schools have more flexibility in managing resources, I would highlight the caveats in the report:

    "It is worth noting that this did not necessarily mean that primary school finances were managed less well; indeed this would be difficult to assess from the scope of this research. That said, it was clear that the majority of schools in this sample which were classified as „efficient‟ for the purposes of this research were secondary schools. Whilst it is possible that this was simply down to chance, given the relatively small sample size, it could also suggest a higher proportion of efficient schools in the secondary sector."

    The report was largely an interview and workshop based exercise rather than a statistical analysis of what kind or size of schools derives best efficiency or Value for Money.

  2. Agreed, I am chair of a very small infant school of just 90 pupils. I hope we are very careful with our budget and make every single pound count.

    For us to be financially efficient our small school needs to be completely full so we worked very hard on our attainment figures, achieving an Ofsted outstanding grade and branding and marketing of our school.

    The result is we are financially efficient and manage our finances extremely well but I do understand the economies of scale argument but I don't always agree that big is beautiful.