Seven budgetary skills for school and academy trust budget holders

The balance on a department’s budget report can look reassuring while orders for next term’s resources have already claimed much of it. Before approving another purchase, the budget holder needs to understand what remains after those costs.

Budgetary skills involve interpreting financial information, estimating costs and making informed spending decisions. For headteachers and department leads, these seven skills connect the figures in a report with the needs of the school.

1. Know what your budget report includes

A school-wide total and a departmental total answer different questions. Establish which allocation the report covers, then check its reporting date.

When reviewing reports from multi academy trust accounting software, ask finance colleagues to explain the recorded expenditure, outstanding orders and forecast columns, including how the remaining budget is calculated.

Compare actual spending with the budget for the same period. An annual allocation is not a year-to-date spending target, and costs such as textbooks or annual subscriptions can fall unevenly throughout the year.

2. Account for spending already committed

An order can commit money before it appears as recorded expenditure.

In an illustrative example, a department has a £10,000 allocation, £6,000 of recorded expenditure and £1,500 of outstanding orders for the same budget period. The orders are separate from the recorded expenditure. Subtracting both amounts leaves £2,500 before other planned costs.

Some reports already deduct commitments when calculating the remaining budget. Establish the treatment so each cost is counted once, then keep upcoming purchases visible alongside existing orders. Together, these show how much of the allocation is needed for the rest of the year.

3. Estimate the full cost of a purchase

Look beyond the quoted price. Classroom equipment might also require delivery, installation, accessories or staff training, all of which belong in the purchase estimate.

Before requesting approval, separate initial costs from ongoing charges. A learning-resource subscription needs a renewal estimate as well as a first-year price. Ask suppliers what is included, what costs extra and how long the quoted terms apply.

Compare options on that consistent basis. A lower-priced device that needs additional equipment to perform the required task could cost more overall. Record the assumptions behind your estimate so the person approving it can assess the whole commitment.

4. Explain why spending differs from the plan

A variance is the difference between budgeted and actual figures.

Suppose classroom resources budgeted for October will now arrive in November. October may show an underspend, but the expected cost remains. Ordering more items than planned or paying a higher unit price, by contrast, changes the expected total.

Investigate whether the difference reflects timing, price, quantity or changed activity. Then describe what happens next: will spending catch up, remain lower or exceed the original plan?

5. Update forecasts when assumptions change

The budget records the approved plan. A forecast estimates the likely outcome using current information.

For a supplies budget, build the forecast from recorded expenditure and expected costs through year end, including outstanding orders. Revisit assumptions such as pupil numbers, quantities needed, supplier prices and delivery schedules.

If an additional class needs materials, revise the expected quantities and keep a short note explaining the change alongside the new estimate. Forecasting informs decisions; spending approval remains a separate step.

6. Prioritise spending against educational needs

Assess competing requests by their purpose, urgency and consequences. Replacing an unusable resource needed for a scheduled lesson presents a different decision from upgrading equipment that still works.

Consider who benefits, what happens if the purchase waits and whether an existing resource could meet the need. Check your spending authority, applicable funding conditions and rules on transferring allocations before committing money. A balance alone is not permission to move funds elsewhere.

If competing needs exceed available funds, make the trade-off explicit. Set out which activity would be deferred or reduced and what that would mean for teaching.

7. Communicate concerns with a proposed response

Give colleagues enough information to act: the amount involved, the cause, the likely effect and your proposed response.

An increase in consumables costs, for example, could prompt a smaller order, an acceptable alternative or a request for additional spending approval. Explain which option you recommend and its effect on lessons. Raise the issue while those choices remain available, and include the decision needed and its deadline.

To practise, take one current report and explain its remaining allocation and expected year-end position to a finance colleague. Resolve any uncertainty before using the figures to support your next purchase.

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