Budget Forecast Return – Deadline impending…
Tick, that’s the BFR done… despite the extended deadline, a deadline that for many was welcome as business professionals were involved with the re-opening for more pupils and the ever-changing health & safety requirements; many schools haven’t got to this task ticked…
For many schools by the daily reminders will be popping up for the impending submission date of 29th September!
This year’s return sees the removal of the requirement for forecasts regarding 2021/22 and 2022/23, which given the current climate is welcomed however isn’t the approach that we have seen with our schools. The academy trustees and external auditors will require sight of the budget and forecasts to assess going concern, academy trusts must still compile longer-term forecasts for their own internal financial planning as required by the Academies Financial Handbook
If you haven’t already downloaded the latest handbook, check it out here.
Schools are continuing to prepare and forecast to allow them to define their financial goals and stick to plan. We have put together some useful tips to help you get your BFR submitted:
What are the benefits of financial forecasting and scenario planning?
There is still much debate in the sector in the value of preparing financial forecasts, many headteachers, school business professionals, governors and directors questioning how to accurately predict income and the cost of the future years expenses. This often means seeing schools focussing on the immediate problems of balancing the current year’s budget.
Forecasts, the value is in the word. By definition; to forecast, is to predict or estimate, it is not set in stone, but it will give early warning of future position based on past decisions.
It allows schools to look at scenario planning based on worst- and best-case scenarios that will allow leaders to make strategic decisions.
What’s the best way to plan?
Forecasts should be prepared based on the current actuals and budgets, they should include income based on known factors or the commonly accepted such as, pupil numbers as at the previous October census and Local Authority figures. Expenditure should be based on known staffing levels and any changes to the staffing – these conversations should be discussed between the curriculum lead and CFO whilst considering Integrated Curriculum Financial Planning metrics and School Improvement objectives.
Have you already looked and know that there are planned changes that have not yet happened – apply those too.
Apply the known percentage increases in on-costs, a practical approach to below staffing expenditure increases in line with inflation and conversations that have been had with service providers.
How can forecasting assist in effective decision making?
What does the overall budget forecast tell you? Do you balance this year but not the next? Read the forecast what does it tell you, are you spending more than 75% of your income on staffing, if so where, why? What is the desired outcome by doing so, how are you going to measure it and hold people accountable?
Balanced – does the budget balance? Is what is being proposed affordable, and sustainable long term?
Reserves – The impact of these forecasts on the reserves should be considered, are specific projects for the use of reserves being proposed or are the reserves being used to prop up an unsustainable staffing structure?
Expenditure – are you underspending anywhere to make savings as a way of supporting overspending in other areas, considerations into the impact of the underspend also can be made.
Avoiding making the decisions will make the decisions even worse longer term and put the pupil’s education at risk. Forecasting is a supportive function for a school, by presenting the forecast inclusive of ICFP metrics to leaders, trustees and directors, it allows the opportunity for high challenge low threat conversations.
Find out about how to include ICFP metrics and benchmarking into your schools forecasts at the EPI ICFP Services area; https://www.edupi.org.uk/icfp/