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Balancing the books

7 March 2014

On the 26th February 2014 a group of 20 school leaders from the primary, secondary, independent and maintained sector gathered in Birmingham to discuss the role and future of income generation in schools. It proved to be a lively and interesting debate and the discussion took some interesting turns.

A tale of two schools

The reality of continued reductions in school funding is universally recognised. A further 10 reduction is anticipated in the next 3 years. If we accept that excellent learning outcomes cost money (facilities, staff, equipment, opportunities etc) then logically, the more reduced the schools income stream, the harder it will be for them to achieve the results expected of them. Does this mean then that income generation is becoming viewed as an increasing necessity where schools need to find alternative income streams and less of a distraction away from the core purpose of education? There are 2 trains of thought; firstly that the commercialisation of education in this way is morally wrong and that schools should be concentrating purely on what they were put in place to do. Schools are not businesses and therefore commercial attitudes are out of place. The second approach is that schools need to be operated like businesses in order to sustain teaching excellence, the business being the engine that drives school improvement. If schools are required to act in the best interests of the children in our care, what is best for them? Are the two views incompatible? I do not believe so.

Thinking outside the box

School income generation is where a school creates revenue from its activities. This may be by saving money through smarter and more effective procurement systems, perhaps through cooperative or collaborative behaviour with other schools. This is something that most schools have started to address and represents a relatively quick and easy gain. The more adventurous schools have started to look at additional income generation from their assets, be their site and buildings, their services or their knowledge capital gathered from expertise and experience.

Why would schools consider income generation at a time when there is so much pressure on them to achieve high academic performance from their students? For some head teachers the two elements are entwined, not separate. If business is the engine that drives sustainable teaching outcomes then it is a necessity. If the financial rewards of thinking entrepreneurially are sufficient then business activity becomes increasingly attractive and the result worth the effort. The actual figure at which this happens will be different for each school and will depend upon its circumstances, but one of our delegate contributors revealed that income generation at their school had grown from £9,000p/a to £600,000p/a with an expectation that this was moving towards £1million in the not unforeseeable future. The income can be passive income, which is the sort of arrangement that once set up continues to bring in money with little on going effort or more one off activities. An example of passive income is where a primary maintained Trust school in Cornwall is looking at the possibility of borrowing against the prospective income from solar panels, in order to finance an additional classroom that the local authority cannot fund. If a commercial lender has the understanding of the sector it is doing business with, opportunities can be found.

There are also opportunities for one off events or regular events such as using sports facilities to run holiday camps during the summer holidays. Schools could make good venues for weddings where the budget is more limited and the numbers of guests high.

A holistic approach

Not all income generation only results in revenue in terms of pounds and pence. We want to encourage enterprise and entrepreneurial attitudes in our students. We know it is a competitive and difficult world of work that they are going into and consequently we have a duty to prepare them as best we can by involving them in the real world; giving them experiences that they can use on their CVs to evidence particular strengths and build character and capability in a safe and supervised environment. An example of this would be the involvement of St James school in Exeter, Devon where Browne Jacobson recently held an education conference during the school day and where the catering GCSE students ran the catering and hospitability. 18 students divided themselves into task groups and considered the business and operational side of the event. They demonstrated, team work, creativity, planning, client care and catering skills. This was an opportunity where they could apply their learning and training in a real life situation and add a genuine endorsement of their capability to their CVs.

It is also possible that income generation could offer career development opportunities for staff and provide possible performance measurements, adding to the reputation of the school. Income generation might enable the school to build links with the local business community, providing business exchange as well as work experience opportunities.

The links between education and business is not always embraced but in a world which is increasingly commercial income generation is an area that should be considered seriously.

Taking the lead

So where does the leadership for change come from if schools decide to explore a new approach to sustaining and growing the school budget? School business managers are key players and probably the most important people in schools to identify the opportunities available to their particular school and scope out a business case. The calibre of school business managers varies but the possibility of a requirement for enterprise and entrepreneurship becoming part of the job description was discussed. Most school business managers welcomed the opportunities but at the same time identified the need for training and support. They also identified that on their own they will struggle to make their voices heard. Strong leadership from head teachers is crucial and not always up front. It requires a head teacher who fully embraces the concept for it to be successful.

Governor support

Whilst considering leadership for change, what is the role of the governors? It is not a governors role to devise a business plan but it is their role to scrutinise the plan that the school business manager puts in front of them and to ask challenging questions both in respect of the financial health of the plan but also the wider impact and outcomes for the school. It is also incumbent upon governors to challenge their schools as to how they are planning to deal with reducing financial budgets; what else is going to be put in place to make up for the revenue reduction? Are their students going to be disadvantaged if they do nothing? It may well be that the first step is to work more efficiently and collaboratively through better procurement practices with other schools and cutting out unnecessary expenses etc but will that be enough and what about the growth and development of our schools vision; can this blossom on its own or would it benefit from some assistance? If the governors have a skills set that would be beneficial to a school looking to explore the income generation route then they should be exploited as a resource of information, experience and contacts.

Governors need to consider their role and their responsibilities with respect to regulation and compliance, constitutional documents and property ownership but maybe it is time that governors looked at the possibility of thinking more outside the box than they have been used to doing. As schools are facing the brave new world and having to make changes to their thinking, perhaps governors should be too.

This article was first published in SecEd

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