Responding to

Finance

LMS
with
LMS compared with
other schools?

Are you

How have schools responded to local

management? This was the central
question of a study funded by the
Economic and Social Research Council
which we undertook in 11 schools in
one LEA in 1991. We were particularly
interested to find out to what extent
schools were responding in the ways
intended by the government, as
expressed in the words of LMS circular
7/1988:
Effective schemes oflocal
management will enable
governing bodies and head
teachers to plan their use of

resources - including their most

valuable resource, their staff- to
maximum effect in accordance
with their own needs and

priorities...

study therefore focused on

decision-making structures and
processes, on the budget decisions

the first year. Schools varied

considerably in the energy with which
they responded and in their capacity to
manage their resources effectively. One
primary school in particular which,
having been a pilot school was in its
second year of delegated budgeting,

In general senior managers and

governors welcomed the
increased autonomy and
flexibility of LMS
exemplar of effective
resource management. It had well
developed processes for school
development planning and financial
planning which involved governors
and staff.
stood out

as an

Our

taken and

on

participants

views

regarding the effect of LMS on their

school. The information was gathered
by observing meetings, reading school
documents and interviewing around 80
people - teachers from heads to
probationers, finance officers and
chairs of governing body committees.
The 11 schools consisted of two small
primaries of around 50 pupils, three
larger primaries, two middle - deemed
secondary schools and two each of
11-16 and 11-18 secondary schools.
Each pair was matched so that one had
gained and one lost by formula
funding. All had fully delegated
-

budgets.

General Response

All schools made a genuine attempt to

respond to LMS by using their
resources
some

responsibly and by making

attempt to allocate them

Energy and capability did not

depend on whether the school was a
budget loser or winner. Two of the
losing schools demonstrated
considerable management capability:
financial constraint forced them to
examine their priorities carefully and
allocate resources accordingly. In
contrast two of the winning schools
did not scrutinise their priorities. The
losing schools were helped in various
ways by the LEA, such as replacing an
inefficient school boiler when energy
funding was allocated on a historic
basis. The headteachers of losing
schools, while deprecating the effects
of the formula on their schools, one of
which was in a socially deprived area,
still welcomed the increased
managerial powers and responsibilities.
The three larger primaries adapted well
to LMS but the two small primary
schools with teaching heads found it
very difficult to cope. One coped much
better than the other because the

budget was capably managed by a

according to the schools needs. In

general senior managers and governors

parent governor.

welcomed the increased autonomy and

flexibility of LMS and some became
more positive about it in the course of

The first year of managing

budgets was marked by extreme

22

caution and the absence of accurate

on course

Rosalind Levacic and

Eamon Marren

and timely financial information. This

resulted in most schools running a
budget surplus of 6% of their budget
on average, the extent of which was
not apparent until the end of the
financial year.

The

Role

i,

of the Headteacher and

Manal~ment Team.

Resource and financial

management

was, generally, undertaken by one

two members of the senior
management team together with a

couple of active governors.

or

In the

primary schools and one middle

school, budget management was
undertaken by the headteacher. In the
secondary sector this task was usually
delegated to a deputy, with the head
concentrating on curriculum and
external relations but keeping in close
touch with the deputy. In one
secondary school the headteacher kept
financial management to himself but

Resource and financial

management was, generally,

undertaken by one or two
members of the senior

management team together

with a couple of active
governors
employed a retired head as finance
officer. The time demands of financial
management were considerable but
most heads and deputies could rely on
the expertise of a finance officer. In two
instances governors were relied upon
to administer the budget and in one a
head of department took on this role.
One middle school head very
competently undertook much of the

administrative work himself in addition

to

budget planning.

Under LMS the headteacher

role is that of securing resources from
the external environment and ensuring
their efficient and effective deployment
within the school. They are
increasingly the enablers of the work of
other teachers rather than engaging in
teaching themselves. A minority of the
headteachers remained uncomfortable
with this new conception of headship
which it seems particularly difficult to
develop in a very small school.

goip, of owmmm
In the schools studied, governors
typically did not play an influential role
in budget planning but relied heavily
on the judgement of the headteacher
and senior management team. The
extent to which governors

sought to

influence budget planning depended

very much on their own expertise and
view of the governors role. Governors
with a business background were
significantly more involved in financial
decision making but this was often as
an individual contribution rather than
as a whole governing body. Governorschool relations were generally good
with governors fulfilling a supportive
role rather than being the active
managers of school policy envisaged in
circular 7/88. The capability of
governing bodies was varied.
Governors of two of the primary
schools and the middle school in a

socially deprived area were highly

dependent on being instructed by their

governors typically did not play

an influential role in budget

planning
headteachers who

genuinely wished to
knowledgeable and
develop
questioning governing body. In
contrast, the governing bodies of two
other schools, with a much higher
membership of professionals and
business people, were developing a
a more

more active and interventionist stance,

while the LMS pilot primary governors
were getting more involved in

developmental planning. In general

governors recognised that they were on
the early stages of a learning curve and
coming to realise that in order to be
fully involved in budget planning they
needed to engage more deeply in the
curriculum decisions which ultimately
underpin the budget.

monitoring and setting the budget.

t~~~t:~~~t~~l~llIalII:~1 ~
Teachers below senior manager level
were generally not involved in overall
budget management. Their opinions of
LMS contrasted with those of senior
teachers involved in budgeting, being
. largely indifferent and more critical.
Classroom teachers saw budget
management as the province of senior
management and most did not seek
any greater involvement. Most
headteachers informed their staff of the
budgetary situation but only in the
primary schools and at one of the
middle schools were teachers views on
alternative ways of spending the
overall budget actively sought.
Teachers participated in curriculum
decisions but tended to be unaware of
the budgetary implications of these.
Primary teachers in the three larger
schools were more positive towards
LMS, especially at the pilot primary

school. Secondary teachers, even at a

winning school, were far more critical.
Most teachers reported greater financial
but this was limited to their
own class or department. The
difference in attitudes between primary
and secondary teachers can be
awareness

only in the primary schools and

at one of the middle schools

teachers views on
alternative ways of spending
the overall budget actively
were

sought
attributed to the greater involvement of
the former both by becoming budget
holders for curriculum support funds
and by participating in decision
making. Secondary teachers, other
than those with departmental

responsibilities,

were

not

budget

holders. Heads of department

experienced, if anything, a reduction in
their autonomy because funds from the
advisory service had dried up,
governors were expecting greater
accountability for departmental
allowances and senior management
teams were seeking more central
control in order to ensure that whole
school priorities were addressed.

&dquo;.r.
:

m2 -M,&dquo;, -

All the schools

reorganised their

committee structure before the start of

LMS. All set up a governors subcommittee for finance with the remit of

Other sub-committees included most,

but not all, of the areas of curriculum,
staffing, external relations, and
premises. The general pattern was that
the finance sub-committee undertook
budget preparation on behalf of the full
governing body which then ratified the
budget put to it. In two schools the
finance committee failed to meet and
budget preparation was done by the
head prior to submission to the
governing body. The quality of
decision making across the committee
structure in terms of integration, the
explicit consideration of priorities and
long-term planning varied along a
continiuum from highly developed to
fairly weak.

Only the pilot primary had a

discernible
documented
clearly
management plan, developed with
staff participation and continually
referred to in the course of financial
decision making. This school had
begun development planning in 1985.
No other school had such a clear
integration between school
development planning and financial
planning. To the extent that school
development planning was being done
at other schools, it was not explicitly
referred to when preparing the budget.
Most winning schools were satisfied
that their curriculum decision making
had driven the budget but the
interconnections relied very much on
integration undertaken informally by a
few key senior managers. Losing
schools, in contrast, felt that finance
had constrained their curriculum and
prevented them from addressing
important educational priorities. Losing
schools and the small primaries in
particular found long-term planning

difficult because of financial

uncertainties. In general, little
evaluation and resource allocation
decisions occurred.
more

Only the pilot primary had a

clearly discernible documented
management plan
In all schools budget planning
and monitoring were hampered by.lack
of accurate and timely financial
information from the LEA - a common
experience in most LEAs. Threats of
community charge capping meant that
the LEA could not issue final budgets
until the end of March and the
underspend from the previous financial
year was not known until well into the

23

term. Most schools

responded
by leaving budget preparation work
summer

until late in the

spring term and not

setting a budget until May or June,
With

few exceptions,

continuous

annual cycle of financial planning was

not observed. In some instances heads
of department were less able to plan
their purchases than before LMS.

In all schools budget planning

and monitoring were hampered
by lack of accurate and timely
financial information from the
LEA
Uncertainty about future pupil
numbers also made planning more
difficult. While the number of mistakes
in financial recording which marked
the first years of LMS will diminish
with experience and the wider use of
school chequing accounts, the problem
of budget uncertainty remains.

; , , . 1 . , j
The two largest budget winners gained
a 13% increase in per pupil funding
compared to a 10% cut experienced by
the middle school in a socially deprived
area. Losing schools were in fact
funded at a higher per capita rate but
their year group sizes and unfilled
places meant that they ran with a
higher staff/pupil ratio and this made
the shoe pinch elsewhere. The two
biggest losers saved money by the early
retirement of senior staff but were
unable to afford extra incentive
allowances to attract new staff or
motivate existing ones. One school
could no longer afford a teacher to
foster parental involvement. There
were instances of schools choosing to

employ cheaper staff, though some

preferred not to do so. Uncertainty led
to the greater use of. temporary
contracts. When it came to spending
additional funds schools chose to
increase teacher staffing in order both
to bring down class size or increase
non-contact time. Additional special

needs

teaching, which in the.primary

sector replaced the cut in central
provision, was also funded. Both
primary and secondary schools
increased the employment of classroom
assistants and part-time teachers. In
some instances primary schools were
beginning to adopt different staffing
than one teacher per class for
the full week. In some schools head
and deputy salaries and incentive

patterns

24

allowances were increased. Primary

schools in particular increased the
number of clerical hours and most
schools which could afford it raised the
pay for the finance officer. Schools thus
demonstrated how the increased
flexibility in resource patterns could be
used and welcomed these
opportunities. Even losing schools
preferred to be able to make their own
difficult choices between alternatives.

annual

cycle of planning and

monitoring is needed whereby financial

management is integrated into the

planning and execution of the other

main functional areas, in particular
curriculum and staffing. This requires
considerable co-ordination. Most of the
schools in our study left budget
preparation to the March to May period
and did not clearly relate their
curriculum and staffing decisions to

budget planning.
All schools,

except the largest

winner, actively sought

to increase
cost-effectiveness through more careful
use of resources, such as energy

saving, water economising, or seeking

alternative tenders. There

was

Both primary and secondary

schools increased the
employment of classroom
assistants and part-time
teachers
considerable criticism of the poor value
of the authoritys contractors and direct
labour services which most schools
were obliged to purchase and
confidence that schools could do better.
The one school which had been able to

appoint its own groundsman was

highly satisfied with the result.

A major reason for leaving

budget planning until the last moment
was uncertainty about the budget.
While with time LEAs can improve
their ability to gather and disseminate
the necessary information, much of this
budget uncertainty is due to central
government policies to constrain local

government spending. Financial

stability would help considerably in

enabling schools to manage their
budgets effectively. In its absence
schools need to develop methods of
coping with uncertainty, such as
planning a number of alternative
contingencies and continually adjusting
budget spending plans as information
becomes available. Understandably
schools were over-cautious at the start
of local management but should
become less so as confidence increases
with experience.
Another

There

was no

great desire

to

maximise monetary income from the

schools assets. Only two losing
schools and a small village primary
devoted energy to income generation
either through lettings or sponsorship in which they were reasonably
successful. In one town the schools set
up a joint trust to raise money from
local businesses.

i j,ii, , ,j! , I +
As responses to local management are
evolving over time this study could
only capture part of a continually
moving picture. Nevertheless, the
study highlights a number of important
issues the resolution of which will
affect the success of local management
within individual schools.
Local management has changed
the headteachers prime role to that of
enabling the work of their staff with
pupils. To be successful headteachers
need to attract resources into the school
and ensure that the school operates
systems for the effective and efficient
use of its resources. A continuous

key issue is the

respective roles of head,

senior

management team, classroom teachers

and governors in financial
management. As the study shows (and
corroborates other emerging evidence)
financial management is very much the
preserve of the senior management
team, and even a smaller group within
it. In primary schools headteachers
usually take on the major responsibility
themselves, but because of the smaller
number of staff who teach a common
curriculum, sharing and
communicating budget decision
making appears to be easier to develop
than in secondary schools. The critical
attitudes of class teachers in schools
where the financial benefits of local

management are not patent or not

existent,

cannot

successful

bode well for the

implementation of local

management in a school. If there are

benefits then class teachers need to be
made fully aware of them and have
ways of participating in budget
decisions which are not excessively
time consuming.
_

As local

management is time

consuming a very careful allocation of

the related tasks is needed. We

observed a marked tendency for heads

deputies to be undertaking routine

and

administrative tasks which could be

which governors could become more

active in trying to ensure a reasonable
and balanced ivorkload for heads and

deputies.

performed by finance officers or a new

breed of bursar. Primary heads face

considerable problems in delegating
such tasks when their deputy has full-

teaching commitments and if the

school secretary is not fully competent
in financial matters. This is an issue on
time

We observed a marked
tendency for heads and
deputies to be undertaking
routine administrative tasks
which could be performed by
finance officers or a new breed
of bursar.

LETTERS TO THE EDITOR

.
I was astonished to read on the
Contents page of Issue 6 (iii) of
Management in Education that Issue 6
(iv) would ask the question - why so
few non-male writers for this journal?
We

are

not

non-males; we are

females. Once again men are taken as

the reference group and anyone any
different - i.e. women - are seen as a
negative reference group. I hope the
issue on Equal Opportunities does not
fall into that trap.
Yours

sincerely,
Helen Currie, Reading
(Editors note: Well,
the

are

to

take

fully the management

responsibilities envisaged in the

Education Reform Act then they need a
much greater understanding of school
finances than we observed, in
particular those that relate to the core
of the schools purpose - its curriculum
rather than the more familiar areas
for many govenors of buildings and
balanced budgets. In particular they
need to be clear about the budgetary
implications of school policies for the
curriculum and to engage more fully in

we

fallen into

experience seems perverse in

the

extreme.
I would like to come to the
defence of these amateurs. What
educational professionals do not
always realise is that there are people
in business who know more about the
processes of learning, of management
and of organisations than many
teachers, including heads. Conversely,
I was astonished, after moving from
ICI into education, to find how few
teachers I met thought about and could
discuss pedagogy intelligently, deeply
though they understood their subjects.
In contrast, ICI staff received training
and regular practice in appraising
others, and Division education

was one

of many amateur

industry representatives that validated

trap?)

CNAA courses,
i_

<1 _

Field Inspectors
Norman Thomas informative article in
the Summer 1992 issue describes as a
shortcoming of the new proposals for
school inspection: the proposed use of
amateurs ... To insist simply on

Unless schools develop further

the structures and processes for
involving class teachers and governors
in budget decision making, it will
remain the preserve of a small senior

management group. @

departments were inspected.

have

W wfi ~ ~_ W

If governing bodies
on

continuous annual cycle of integrated

planning of the curriculum and the
budget. Such improvements in
governor understanding and decision
making take time and are not easy to
achieve.
a

education

including those in

management,

(inspected) institutions.

and visited

Both
academic peers and amateurs from
industry contributed much to the
inspection process. The New Zealand
Government has rightly placed much
stress on judging the effectiveness of
school management and organisation,

Rosalind Levaci&cacute; and Eamon Marren

the Open University.

are

at

which has seldom proved the strong

suit of UK HMIs and their LEA
counterparts. When I spent two days
consulting with the New Zealand
Inspectors in the Educational Review
Office in 1990, I was shown an
impressive manual which set out their
procedures in considerable detail. I am
sure something similar could be written
by our HMIs to demystify the
inspection process and assist field
inspectors to hold their own against
those who have spent a lifetime in
education.

My final comment on the

inspection process is to encourage
peers to take part in school inspection;
what one learns by inspecting
anothers operation is often invaluable
in improving ones own. If teachers
inspecting other schools behaved like
lecturers I have seen trenchantly, yet
constructively, critiquing an FE or HE
course, the public need not fear

unethical collusion; but in any case, the

amateurish field inspectors would soon
detect it, if they were proper persons.
Yours

faithfully,
Bertie Everard, Wehvyn Garden City,
_

Herts

25