Bursar’s Review

Summer 2022 www.theisba.org.uk 10 Finance It all adds up Strategies need to be dynamic, focus on the slightly shorter term and must contain more analysis Whilst prudence in capital expenditure is wise and necessary, a complete stop, unless there is no other alternative, will not generate con dence amongst parents Management accounts produced monthly will ensure that any deterioration in the school’s nances is quickly spotted Managing school finances – some thoughts Managing school finances in times of stagnant economic growth and rising inflation is not for the faint-hearted and the next couple of years will be tough. But John Murphie , ISBA’s chief operating officer, offers encouragement and sets out the priorities for schools to help ensure their future business success. It is obvious to all in the sector that the economic background for managing businesses in the United Kingdom has never been worse than it is now and will not improve for the next nine to 12 months, or longer. This is going to have a significant effect on businesses, families and the country as any ‘feel good’ factor will disappear to be replaced by a feeling of pessimism as the economic troubles persist, or, as some will observe, may not disperse at all. Independent education is a piece of discretionary spending for some families, and an absolute necessity in other family budgets. This balance, as economic factors tighten the purse strings in all households, will change and, therefore, families will look to their household budgets for savings. School fees will be part of that debate, and it will depend on the discretionary versus mainstay debate as to whether the pupils from that family remain in school. Experience gained from the last recession showed that any economic downturn came to the independent school sector about 18 months after the rest of the country. This was because families saw independent education as key to their children’s future and thus it was preserved within family budgets. The second significant factor was a ‘flight to quality’ where obviously well-run schools, communicating what they were doing clearly to parents, attracted new pupils despite the economic circumstances prevailing in the country. Governing in this period The next two years will test schools again. The success that schools have seen during the pandemic will need to be replicated and the governance and management skills that were hard learned over the last two years will need to be dusted off, revised, and re-used to ensure that schools emerge from the economic crisis in a viable and flourishing state. A sound strategy, which is robust and able to deal with the uncertainties of the next two years, will be a necessity. This is difficult to do when the premise is that several different outcomes are possible from the one set of strategic facts. However, strategies need to be dynamic, focus on the slightly shorter term and must contain more analysis. This means that progress needs to be monitored more frequently and the direct and indirect consequences of unfolding economic circumstances need to be identified, analysed, risk assessed, and planned for. Governing boards in schools will need to have a close and questioning eye on the operational and strategic risks that their schools are facing. It will have been noted, and Sam Coutinho points this out in her article on page 16 of this issue of the Bursar’s Review, that the risk landscape is not static.