Schools will be left “having to cross red lines” in their budget cuts, a leading school business professional has warned, as polling reveals growing concerns about money running out within the next two years.
A briefing seen by Tes shows that half of Institute of School Business Leadership (ISBL) members who responded to a survey reported that their school was set to run out of cash by 2025-26.
A further one in five said their school would run out of cash this year, and one in 10 said next year.
The ISBL briefing indicates that fewer than one five schools did not expect money to run out by 2025-26.
The survey received 52 responses from across ISBL’s network of school business professionals, with the majority from the maintained sector and smaller academy trusts.
“It tells quite a sobering story,” said Stephen Morales, chief executive of ISBL. “Schools end up with unpalatable decisions. The biggest savings to be made are always on people.
“If you ask a school business manager to balance the budget, it is always possible but not without consequences. It comes at a high cost, and at the end the people who suffer are pupils.”
Mr Morales added that smaller academy trusts and schools in the maintained sector were more stretched financially because, unlike with big groups of schools, they were not able to “spread the pain”.
School funding crisis: ‘unpalatable’ cuts
Simon Oxenham, director of resources at Southend High School for Boys and national finance lead for ISBL, said: “The results do confirm what we feared was happening within the sector.
“Schools are facing having to cross red lines. The state of schools’ finances right now and what they are having to do is damaging pupil outcomes.”
Mr Oxenham said schools that are really struggling to balance their books may have to close facilities like libraries, stop school trips or cut less popular subjects. They could have difficulty providing for children with high needs.
“Some may have to reduce support staff, which just puts more pressure on the teachers, which increases stress and then absence, and therefore turnover - and that also damages pupil outcomes,” he added.
In the briefing seen by Tes, ISBL says it intends to share the survey findings with the Department for Education’s funding policy unit.
School business professionals are, on average, assuming a 5 per cent cost increase for teachers’ pay in 2024-25, a 4 per cent increase in support staff pay and a 4 per cent increase in non-staff costs, the ISBL poll shows.
Nearly two-thirds of respondents said they expected their school or trust’s reserves to be at less than 5 per cent of their total income by the end of this year.
This comes after the recently published Kreston UK Academies Benchmark Report 2024 said that nearly half of academy trusts had reported an in-year revenue deficit for 2022-23. Many trusts in the report were expecting their finances to get worse in the coming years.
Accountants found that rising non-staff costs, in particular, were hitting trusts hard, and many trusts had to dip into their reserves in the past financial year to cope.
Some 13 per cent of maintained schools reported deficits for 2022-23, up four percentage points on 2021-22.
High-needs funding pressures
Many ISBL respondents saw a lack of high-needs funding as the biggest risk to school budgets.
Some 88 per cent of respondents said special educational needs and disabilities (SEND) was only “partially funded” at their school, and nearly three-quarters said recent additional grants had only partially closed gaps.
Also, nearly one-third said that more than 3 per cent of their staff costs were payments to outside agencies.
A Department for Education spokesperson said: “School funding is rising to more than £59.6 billion next year, which is the highest-ever level in real terms per pupil.
“We are also putting significant investment into the high-needs budget, which will have risen by over 60 per cent to £10.5 billion next year since 2019-20, and our SEND/AP improvement plan will create more consistent high standards, cut bureaucracy and bring in earlier intervention across England.”
