Background
Management of School Finances involves a wide variety of issues that can not be covered comprehensively in one article.  This overview identifies many of the key issues and provides access to further resources and articles that deal with individual topics in more detail.

Almost all of a school's income comes from their LA through a process known as Fair Funding (see link to GovernorNet article for more details).  Through this process, each governing body receives a delegated budget (unless they are a new school or their right to a delegated budget has been suspended).  This delegated budget is intended to cover all day-to-day running costs.  Governing bodies may spend their delegated budget for the purposes of their school, although they will need to be aware of services that their LA provides and funds centrally.  Accumulated savings and deficits are carried forward from one year to the next.  These provisions extend to include Maintained Nursery Schools from April 2004.

Through their local Schools Forum, governing bodies have a means to engage with their LA in the process of setting the Individual School Budget (ISB) from which each school's budget share and therefore delegated budget is drawn.

Schools are free to raise extra funds through voluntary contributions from parents and from letting of the school premises.  Further information is provided in the GovernorNet articles on these topics (see Related Topics below).

Responsibility
The governing body decides how to spend the school's delegated budget and is required to produce an annual budget plan.  The governing body must ensure that accurate accounts are kept and that income and expenditure returns conform to the Consistent Financial Reporting framework.

Governing bodies are not under a direct duty to secure Best Value but LA's schemes for financing schools require governing bodies to demonstrate, in their annual budget plan, that they have followed Best Value principles in drawing up that plan.  The GovernorNet article on Best Value provides more information (see Background Reading below).

Although the LA has the duty to provide free meals to eligible pupils, paid lunches on request and to comply with national nutritional standards, Section 512A of the Education Act 1996 effectively transfers this duty to the governing body.

By virtue of Section 50(7) of the School Standards and Framework Act 1998, governors do not incur any personal liability in respect of anything done in good faith in exercising their power to spend a school's budget share, or delegating that power to the headteacher.

Roles and Actions
The governing body can delegate any of its statutory functions to a committee, a governor or the headteacher, although functions relating to the approval of the first formal budget plan of the financial year cannot be delegated to an individual.

In fulfilling their broader role in relation to school improvement, governing bodies will need to take a strategic view on the impact of the school development plan on school finance.  In doing so there are a range of additional aspects to school finance that governing bodies may wish to consider including:

• Forward planning
  - taking a 3 year view on the likely impact of school development on school finances over the coming 3 years
• Sources of capital funding
  - funding to assist with the development of the infrastructure of the school (e.g. costs of new buildings, significant repairs, capital equipment such as IT equipment)
• Sources of revenue funding
   - funding to assist with the day-to-day running costs of the school (e.g. costs of staff, training, consumables, teaching resources, utilities etc)

Guidance
Chapter 8 of the Guide to the Law for School Governors provides a basic summary of issues relating to the School Budget (see Background Reading below).  More detailed guidance is provided by the following websites that can be accessed via the Web Links area below:

• the TeacherNet website provides the most comprehensive review of School Funding.  The link below takes you to the School Funding "Quick Index" which provides access to a wide range of further information including sources of Capital and Revenue funding.
• the DCSF Value for Money website provides access to detailed information on:
• Best Value
• Consistent Financial Reporting
• Energy and Water Management
• Financial Benchmarking
• Insurance - a guide for schools
• Purchasing Guide for Schools
• Supply Teachers

The Law
The following legislation applies and can be viewed via links in the Further Reading section below:

• Consistent Financial Reporting (England) Regulations 2003 (SI2003/373)
• Financing of Maintained Schools (England) Regulations 2002 (SI20020377)
• Financing of Maintained Schools (England Regulations) 2003 (SI2003/453)
• School Standards and Framework Act 1998

Related Topics
GovernorNet articles on the following topics provide more detailed information and can be accessed via the Background Reading section below

• Best value
• Charging for School Activities
• Fair Funding
• School Capital Funding
• School Companies
• School Forums
• Standards Fund