Financial

What is financial benchmarking?

Financial benchmarking means comparing your finances with other schools and academies who have similar characteristics and challenges. Areas that schools often compare are their income, expenditure, balance and workforce with either schools of a similar size or within their Local Authority (LA).

How Maintained Schools Are Funded, How They Spend Their Money, and How Governors Scrutinise Spending and Strategic Financial Planning

Maintained schools operate within a regulated financial framework that ensures public funds are used transparently, efficiently, and in the best interests of pupils. Their income is generated primarily through government funding distributed by local authorities, with additional grants and income streams supplementing the main budget. The role of governors is central to ensuring that money is spent effectively and that financial decisions support the school’s long-term strategic objectives.

Funding Sources for Maintained Schools

The core funding for maintained schools is delivered through the Dedicated Schools Grant (DSG), which the government provides to local authorities. From this, local authorities allocate a Schools Block Budget Share to individual schools using a locally agreed funding formula. This formula typically takes account of factors such as pupil numbers, deprivation indicators, additional needs, and premises-related allowances. Because pupil numbers drive most of the funding, fluctuations in enrolment can significantly influence the school’s financial position.

In addition to the core budget, maintained schools may receive several specific grants. The Pupil Premium Grant supports disadvantaged pupils, funding intervention programmes, pastoral support, and enrichment. The PE and Sport Premium funds improvements in the quality of physical education and sport. Many schools also receive SEND (Special Educational Needs and Disabilities) top-up funding for pupils with high-level needs, as well as smaller grants for universal infant free school meals, early years provision, or catch-up initiatives.

Schools can also generate their own income through lettings, donations, fundraising, community partnerships, and before- or after-school childcare. Although these amounts are generally modest compared with core funding, they offer schools additional flexibility. All these income streams are subject to strict accounting requirements, ensuring transparency and appropriate use.

How Maintained Schools Spend Their Budget

School spending is driven by the need to provide high-quality education and maintain a safe and effective learning environment. The largest proportion of expenditure—often 75% or more—is spent on staffing, reflecting the labour-intensive nature of education. Teachers, support staff, administrative staff, and leadership roles are all funded from the school’s main budget. Decisions about staffing levels, deployment, performance-related pay, and recruitment are therefore among the most significant and strategically important expenditure areas.

Maintained schools must also budget for premises costs, including maintenance, repairs, utilities, cleaning, health and safety compliance, insurance, and site improvements. These costs ensure that buildings meet statutory standards and remain conducive to student learning.

Another substantial area of spending is curriculum resources, including textbooks, digital technologies, classroom supplies, library stock, sports equipment, and specialised learning materials. Schools also fund professional development, enabling teachers and support staff to update their skills and respond to evolving curriculum expectations.

In addition, schools must allocate money for services, such as IT support, payroll, catering, grounds maintenance, HR consultancy, and safeguarding training. Many of these are procured through the local authority, although increasingly schools may choose private providers if they offer better value.

Finally, schools invest in strategic improvement initiatives, such as new learning programmes, targeted intervention strategies, behaviour support systems, and capital improvement projects. These expenditures must align with the school’s development plan and long-term vision.

The Role of Governors in Scrutinising Spending

Governors in maintained schools have a statutory responsibility to ensure that public money is properly spent. Their role is one of strategic oversight rather than operational management, acting as a “critical friend” to school leaders. Governors must ensure that financial decisions support the school’s core purpose: raising pupil achievement and maintaining financial sustainability.

A key mechanism for scrutiny is the Finance Committee, which typically meets several times a year. This committee reviews detailed financial reports, monitors the budget position, and evaluates spending against planned allocations. They examine variances between actual and projected expenditure, seeking explanations for unexpected trends. They also ensure compliance with the Schools Financial Value Standard (SFVS), which requires schools to demonstrate robust financial management, internal control systems, and risk-mitigation procedures.

Governors scrutinise the school’s procurement processes to ensure value for money, transparency, and fairness. They may question why a particular supplier has been chosen, what competitive quotes were obtained, or whether a contract represents good long-term value. They also oversee the school’s policies on charging, lettings, and reserves to ensure they align with both statutory requirements and the school’s priorities.

Staffing decisions receive significant scrutiny because they represent the majority of spending and have the greatest impact on educational outcomes. Governors challenge leaders on the affordability of staffing structures, the sustainability of pay progression, and the strategic deployment of teaching assistants or specialist roles. They also examine the impact of funded interventions, especially when linked to grants such as the Pupil Premium.

Financial Planning and Strategic Alignment

Effective financial planning goes beyond balancing the books; it ensures that resources are aligned with the school’s broader strategic objectives. Governors therefore play a crucial role in evaluating and approving the School Improvement Plan (SIP) and ensuring that the budget supports its priorities.

Schools typically prepare a three- to five-year budget forecast. Governors analyse these projections for sustainability, paying particular attention to future risks such as declining pupil numbers, increasing staffing costs, or changes in national funding policies. By scrutinising multi-year plans, governors help the school avoid short-term decisions that could lead to long-term deficits.

Governors must also ensure that financial decisions support inclusion, equity, and curriculum breadth. For example, they may examine whether funding for SEND provision is adequate, whether extracurricular opportunities are accessible to all pupils, or whether investment in digital technology supports long-term learning goals.

Another important aspect of strategic oversight is risk management. Governors review the school’s risk register, considering financial, operational, and compliance risks. This ensures that mitigation strategies—such as contingency budgets, insurance, or emergency planning—are in place and effective.

Conclusion

Maintained schools operate within a complex financial framework designed to ensure that public funds are used responsibly and effectively. Funding is derived largely from government grants, supplemented by targeted allocations and locally generated income. Schools allocate their budgets to staffing, premises, curriculum resources, services, and long-term development priorities.

Governors play a vital role in scrutinising spending and guiding financial strategy. Through rigorous oversight, challenging questioning, and a focus on value for money, they ensure that financial decisions align with the school’s vision and support high-quality education. Their work underpins transparency, accountability, and sustainability, helping the school deliver the best possible outcomes for its pupils.

All state-funded schools in England (both maintained schools and academy trusts) must publish the number of employees earning over £100,000 per year, broken down into £10,000 bands.