School budget preparation time can be an intense and stressful
time for Business Managers and School Boards or Councils (Governing
Bodies). The end of December always seems so far away until the
September school holidays are here, and budget deadlines suddenly
become more immediate.
Most Governing Bodies consist of volunteers who have limited
time to read through and interpret large budget reports with lists
of financial data. To help get their school budget approved faster,
Business Managers can reduce the time their Governing Body spends
reviewing such data by improving the analysis and reporting formats
of their five or ten year forecasts (which are prepared as part of
the annual budget process).
Preparing forecasts is a crucial part of a school's long
term financial strategy and they are important tools to understand
and anticipate a school's financial sustainability. The sooner
the Governing Body can approve the budget, the sooner it can return
to its main priority - making strategic decisions for the future of
The following guidelines can help your school to achieve
improved analysis and reporting of financial forecast reports:
agree on annual key performance indicators (KPIs) with your
Governing Body and use these KPIs in calculating the results of
your annual five or ten year forecasts
ensure that your KPIs cover a variety of ratios, including
liquidity, efficiency and sustainability ratios
discuss possible future strategic scenarios with the Governing
Body and compare the results of the different options using the
KPIs approved by the Governing Body. Scenarios can include, for
different campus capital developments such as building
refurbishments or new building projects
changes in student and staff numbers or ratios
different fee levels
analyse major cost categories using a cost per student ratio.
This helps puts into perspective how student fees contribute to
funding an activity
obtain benchmark data and incorporate these into your analyses.
For example: What is your student teacher ratio, maintenance and
information technology cost per student, debt per student? How does
these ratios compare to comparable schools, and if it is different,
Taking the time to agree on KPIs and prepare forecasts is all
part of good governance practices for schools. The collapse of
Mowbray College (a Victorian private school) in 2013 due to $28
million of debts, serves as a stark reminder to all schools and
their Governing Bodies of their financial responsibilities. It also
shows the importance of employing proper financial management
practices to ensure that the school has a long-term future.
Taking the time to prepare a forecast report to the Governing
Body, including the information listed above, should then tell them
a financial story that they can more easily understand and analyse.
By giving your Governing Body accurate and succinct information,
you will help them make the right decisions for the future of your
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