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Financial management in schools


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Presentation at Jessie Repoll

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  • 1. Financial Management in SchoolsJesse Ripole Primary School Presenter: Errol GregoryFinancial Analyst and Certified Investment Manager (Canadian Securities Institute) April 12, 2012
  • 2. OBJECTIVES Discuss the broad Economic Environment in which Financial Management will occur Define financial management within an educational context specifically at Primary School Designing and developing a budget Identify likely sources of school funding Record Keeping Procedures to account for school funds Summary comments on role teachers play as educational managers in financial management
  • 4. FINANCIAL MANAGEMENT Management in education is defined as “a process of relating resources to objectives required in organizations which explicitly exist to provide education” (Paisley, 1992)
  • 5. FINANCIAL MANAGEMENT cont’d What is Financial Management: “seeing to it that the school has funds it requires to meet its goals and that such funds are used for the purposes for which they were meant.
  • 6. FINANCIAL MANAGEMENT cont’d Financial management covers such areas as:  The procurement of funds  Allocation of funds  Monitoring their use in the interest of accountability and producing financial reports for the relevant stakeholders
  • 7. FINANCIAL MANAGEMENT cont’d Effective Financial Management ensures that:  All financial regulations and procedures are complied with  All financial transactions are recorded accurately  Adequate controls are in place to ensure that expenditures do not exceed income  Only authorized expenditures are incurred
  • 8. MAKING THE SCHOOL BUDGET The budget is critical for any financial management process. In fact, a basic definition of financial management is making an expenditure budget:  looking at actual expenditure and accounting for any variance in what was targeted and the eventual outcome.
  • 9. MAKING THE SCHOOL BUDGET The Commonwealth Secretariat defines a budget as “a financial management planning tool which summarizes income and expenditure for a specific period of time”
  • 10. THE BUDGET PROCESS This is the critical first step to ensure good financial management The principal and his team of senior teachers should establish a budget in consultation with major stakeholders, especially teachers and PTA. Usually done on a term basis This demands identification of definite priority areas of projected expenditure - are there windows that must be repaired this term?
  • 11. THE BUDGET PROCESS cont’d The figures used must be realistic – this is where data on previous periods would be vital – how much was the light bill last term? The team should announce the broad guidelines of the budget If priorities change or emergencies appear, explain to stakeholders the financial adjustments that have to be made
  • 12. BENEFITS OF BUDGETING Establish a plan of action over a specific period. (practice of most businesses) Requires an appraisal of past activities in relation to planned activities Establishes a work plan Foresees expenditure and estimates revenue Establishes a system of Management controls Provides a planned orderly process of Review and Planning for both personnel and facilities needs
  • 13. THE FINANCING GAP The other aspect of the budgeting process is to determine your revenue inflows:  Where will the money come from to fund your targeted expenditure? When this is done you will get an idea of the Financing Gap that you are up against.
  • 14. THE FINANCING GAP cont’d Government Grants  Of course the first inflow you would identify is government grants. This is usually for clearly identified purposes such as paying teachers (bursar school) / ancillary staff and some plant maintenance. Sanitation funds are usually earmarked. These funds must be properly managed and must be kept in designated accounts as outlined by the Ministry of Education
  • 15. EFFECTIVE FINANCIAL PRINCIPLESEffective Financial Principles should be enforced These include:  Any funds paid by the institution should be documented with a cheque or receipt  Issue receipts for any funds received by the institution  For security reasons require two `signatories on cheques sent out by the institution”
  • 16. EFFECTIVE FINANCIAL PRINCIPLES cont’d Monitor advances and petty cash allocations closely Report and record all financial transactions promptly Conduct a monthly review of expenses and revenues Have an external audit of the school financial records once per year (where practical).
  • 17. CREATIVE FUNDRAISING The problem with government grants is that they are never enough – there is usually a large financing gap that has to be met and this is where the challenge generally occurs with fund raising activities and systems to ensure accountability.
  • 18. CREATIVE FUNDRAISING cont’d Creative fundraising activities - closing the Financing Gap: School Canteen  It is no secret that the School Canteen is a major way the schools underwrite their financing gap
  • 19. CREATIVE FUNDRAISING cont’d Tuck Shop As a result many schools run a Tuck shop that is owned, run and operated by the school. Some schools pay the staff to operate the tuck shop – some schools have more than one selling points where the tuck shop can be accessed
  • 20. CREATIVE FUNDRAISING cont’d It is imperative however that strict financial management principles are applied in these ventures: This entails:  Daily lodgments by relevant operator to the bank  Regular stock taking
  • 21. CREATIVE FUNDRAISING cont’d Attention paid to effective purchasing of supplies to tuck shop/ canteen Receipts must be written for all purchases A system must be in place to sign off on purchases - this should be authorised by 2 designated persons Receipts must be generated at all point of sales Quick books are useful to generate receipts and update cash balances
  • 22. CREATIVE FUNDRAISING cont’d When effective management systems are in place Tuck shops/ canteens can generate profits that can be used to offset expenditure.  One school is said to have build its administrative block and beautified its environ from its tuck shop
  • 23. CREATIVE FUNDRAISING cont’dChallenge Recently this area is associated with controversy as the Ministry contends that any fundraising activity undertaken in the schools name should be accounted for and permission sought for expenditure The ministry is contending that any funds raised by the school should be the property of the ministry and that any construction /expansion undertaken by the school should follow government procurement guidelines
  • 24. CREATIVE FUNDRAISING cont’d Popular fundraising activities:  It is an open secret that despite government restrictions concerning fundraising activities schools can not survive without undertaking their own fundraising activities. Volunteerism- Barbecue /Fairs/Fundays  Volunteerism usually undertaken by the PTA and Past students Associations is a critical part of fund raising by most schools  These fundraising activities must be viewed as business ventures with their attendant risks and proper accounting systems must be in place to protect the school community
  • 25. CREATIVE FUNDRAISING cont’d These ventures should be carefully planned paying attention to the necessary financing inputs
  • 26. CREATIVE FUNDRAISING cont’d Some critical issues are Pricing strategy Breakeven analysis - how many tickets must be sold before a profit is made Will sponsorship be sought? How much? What if scenarios - what would happen if the rain falls when the barbecue is planned
  • 27. CREATIVE FUNDRAISING cont’dRecording Keeping Irrespective of the financing strategy adopted there are Critical financial records that must be kept:  Receipt book  Petty cash book  Cash book  Bank statement  Cheque book  Invoice Book
  • 28. CREATIVE FUNDRAISING cont’dRecord Keeping:• The critical issue with school financing is that without additional fundraising activities schools would be in more crises What is very important is that whatever fund raising activities you decide as a staff proper accounting and accountability will be the new watch words. As funds become difficult to come by this will be more critical - remember where we started.
  • 29. CREATIVE FUNDRAISING cont’dRole of the teacher/Finance Manager This is difficult – how should teacher be compensated for their role in fundraising  I know a School that takes its teachers to a North Coast Hotel on the labour day week end. The school pays Seven thousand towards each teachers hotel bill for two nights and the teacher picks up the rest of the bill usually five thousand Would you support that at this school?
  • 30. CREATIVE FUNDRAISING cont’d This is a definite balancing act that the administration must discuss and take a position. Invariably however the teaching staff will have to take the lead in demanding and enforcing proper financial management of schools funds. Without this other objectives educational and other wise could be thwarted