State and state-integrated school funding is made up of various components that have different eligibility rules and funding structures. Staffing for your school is based on your roll, but there are also additional allowances and staffing that you are eligible for.
Being aware of what’s available to your kura is crucial for accessing the funding and staffing you are entitled to, and for making the best use of these resources.
My guests are:
- Hannah Levy, Ministry of Education finance advisor – Otago/Southland
- Martyn Wetherall, principal of Laingholm School
- Mārama Stewart, former tumuaki and Ministry of Education leadership advisor
- Adrian Edwards, Ministry of Education finance advisor - Bay of Plenty/Waiariki.
This podcast was produced for the Ministry of Education as part of Te Ara Tīmatanga mō ngā Tumuaki - The Beginning Pathway for Principals.
You can learn more about this topic by accessing Te Ara Tīmatanga mō ngā Tumuaki - The Beginning Pathway for Principals e-learning modules on the Education LMS: https://training.education.govt.nz
Show notes
Episode themes:
- School budgets are based on the school’s income, which mainly comes from the Ministry of Education, and generally you want your income to match your expenditure.
- The main forms of funding from the Ministry are teachers’ salaries, which are paid by the Ministry, the operational funding for the running costs of the school, and learning support funding. Locally-raised funds (or school fundraising) also contributes to the school’s income.
- Responsibility for the school’s budget is most often delegated by the board to the principal.
- Ministry of Education finance advisors can advise you on all financial matters, including banking staffing. They can come and give you a finance 101 when you start - in as much detail as you like - just give them a call.
- When you first start at a school, speak with the person who manages (or has been managing) the school’s finances to see if your school is in surplus (income greater than expenditure), or deficit (expenditure is more than income), and to have them talk you through what you need to know.
- It’s important to keep an eye on the budget throughout the year. Sometimes spending will go over budget, and you’ll need to take action on that. For example, if there’s a lot of teacher sickness, you can apply for additional relief teacher funding to make sure you can cover those costs.
- It’s important to understand banking staffing, which is the amount of money you get for the number of teachers the Ministry says you can have. If you’re allowed 10 teachers and you hire 11, you’ll end up accumulating debt that you’ll need to pay back.
- You can find most of the funding information about your school in the Pourato tool (link below).
Additional information
Pourato https://applications.education.govt.nz/pourato
Funding and financials https://www.education.govt.nz/education-professionals/schools-year-0-13/funding-and-financials
Managing staffing usage (banking staffing) https://www.education.govt.nz/education-professionals/schools-year-0-13/funding-and-financials/managing-staffing-usage-banking-staffing
Day-to-day financial management including link to Financial Information for Schools Handbook (FISH)
School finances are complex.They're made up of various pots
of money, each with rules aroundhow it can be spent. And getting
your head around the state of aschool's finances as a new
tumuaki can be quite daunting,but there's lots of help
(00:27):
available. Today, we're going togive you a basic introduction to
school finances and in futureepisodes we'll delve a bit
deeper to help you understandmore. Just a reminder that you
can find more information aboutthis and other topics in the
e-learning modules, and you'llfind a link to those in the show
notes. Here are my guests.
Hannah (00:46):
Kia ora koutou, ko
Hannah Levy tōku ingoa. I'm a
school financial adviser withthe Ministry of Education and
I'm based in the Otago/Southlandregion.
Adrian (00:55):
I'm Adrian Edwards and I
have the same role as Hannah,
but I cover Bay of Plenty and myprevious experience was at a
financial service provider,which led into this role quite
well. And I've been in this rolefor two years.
Hannah (01:10):
Kia ora koutou, ko
Mārama Stewart tōku ingoa, I
am a leadership adviser in theBay of Plenty and Waiariki area,
formerly the principal ofTāneatua School with 14 years
of experience in primary schools.
Martyn (01:25):
Oh, tēnā koutou katoa,
ko Yorkshire-West Riding te
whenua, ko te Pennines te maunga,ko River Tyne me Waterloo Lake
ōku awa me roto ko Dorset ahau,ko Leeds tōku iwi, ko Leeds
United tōku hapū, ko MartynWeatherill tōku ingoa. Nōku te
hōnore kei te tū hei tumuaki ite kura o Laingholm. So my
(01:47):
name's Martyn Weatherill. It'smy absolute privilege to be
principal at Laingholm PrimarySchool, a position I've had for
15 years, but on some days itseems an awful lot longer.
Eleisha (01:59):
Isn't that always the
case? Yeah. So, Hannah, starting
with you, to start off the realbasics. Obviously, a school has
a budget to work within. What'sa school's budget based on?
Hannah (02:11):
Well, the school's
budget is mainly based on the
income they get. So that incomeis mostly from the government
through the Ministry ofEducation. But then also we have
the expenditure side as well,which is all of the funds that
they will spend during the year.And generally you would want
their income and the expenses tomatch each other, so you're not
(02:32):
spending more than your fundscoming in.
Eleisha (02:34):
Absolutely. And there
are different pots of money and
different sources of money fordifferent things. Just in brief,
because we will come back tothem later. What are those
different pots of money?
Hannah (02:45):
Sure. So there's the
funding for teacher salaries, th
the operations grant, which isalso called a bulk grant,and
then there are locally raisedfunds as well.
Eleisha (02:57):
Who's responsible for
the financial governance of a
school and what do they need todo and what kinds of things do
they decide? It's kind of atriple header question, sorry.
Hannah (03:06):
Sure. So the board and
the tumuaki are responsible for
the governance of the school.But in practice, the board sets
the strategic direction of theschool, and of course the
principal is on the board, andthen they delegate the day to
day management of the school tothe tumuaki. So the board sets
the overall budget for the yearthen at that point they delegate
(03:26):
it down to the tumuaki. So thetumuaki's responsibility is to
try to spend in line with thatbudget. So I guess in terms of
what they actually need to do umwell, first of all, they need to
keep track of what they'reactually spending. They want to
spend money wisely, so that theydon't overspend their funding,
essentially because you don'twant to run out of money, and
(03:48):
then also making sure that atthe same time they don't just
stockpile the money, but theyactually use it on the kids to
benefit their education. And Iguess sometimes things won't go
can't go according to plan, like,for example, you might have a
lot of sickness of your teachersor something like that. And so
sometimes spend will go overbudget. So then it's about the
(04:09):
tumuaki taking action on that.So in the example of a lot of
teacher sickness, there's somefunding that they could apply
for, which is called additionalrelief teacher funding. Again I
guess another example would beif they see that their
curriculum spending is gettingclose to the budget, then they
could put a stop on that. I mean,part way through the year they
(04:29):
might decide the resources thatpeople have purchased is
probably enough and they canjust put a stop and let the
teachers know that thereshouldn't be any more spending
on that.
Eleisha (04:37):
Mm hmm.
Hannah (04:38):
So, yeah, so I guess
it's it's not just keeping an
eye on how the finances aregoing, but taking action as well
in response.
Eleisha (04:46):
Yeah. So you mentioned
there a couple of the parts of
the finances. What's the keyfinancial information that a
tumuaki needs to understandabout their kura, say a new
tumuaki going into a school,what information do they need to
to understand quite early on.
Hannah (05:02):
Sure. So I guess the
first thing is, is the school
making a surplus or a deficit,so surplus being that the income
is greater than the expenditure,and a deficit being that your
expenditure is greater than yourincome. So that's the first
thing. And then the second thingis knowing what your cash
balance is, so how much moneyhave you got in all your bank
(05:22):
accounts? But I guess further tothat, they also need to know
what their working capitalposition is and working capital
is current assets minus currentliabilities.
Eleisha (05:32):
Mm
Hannah (05:33):
So it's basically like
not just knowing the cash
position of the school, but alsoknowing what that cash might be
tied up needing to do. So kindof knowing the net amount that's
actually available after youtake into account all your
obligations.
Eleisha (05:47):
hmm
Hannah (05:48):
And then I guess the
other thing that they should
also keep an eye on, too, istheir banking staffing. And I
think we'll get to that a littlebit later.
Eleisha (05:56):
Cool. Thank you. Martyn,
where can a new tumuaki find
information about the financesof their kura?
Martyn (06:05):
If you're talking about
you've been appointed to the job,
you've been given the key to theschool, you've got your desk.
Hopefully the first thing you'llfind on your desk is the last
year's audited accounts. And ifyou're taking over partway
through the year, the currentaccounts. Issue that we're going
to have is a lot of principalsare arriving in the principals
(06:27):
chair with no financialexperience,
Eleisha (06:30):
Mm hmm.
Martyn (06:30):
particularly those
taking over small, rural and
isolated schools are oftencoming directly from being a
teacher. There isn't a course attraining college called Finance
101. So the first thing you'vegot to do is get those documents.
The next thing you've got to dois work out who your Hannah or
Adrian is and go and talk tothem. So in my context, I took
(06:53):
over Laingholm Primary School 15years ago and we were bankrupt.
Eleisha (06:57):
Mm hmm.
Martyn (06:58):
The drawback was nobody
had noticed. How's that possible,
you might ask? Well, 15 yearsago, bank staffing wasn't as
well reported as it is now, Ihad highly qualified accountants
on my board but bank staffing isa concept that only exists in
schools.
Eleisha (07:14):
Mm hmm.
Martyn (07:15):
They did not know to ask
anything about bank staffing,
and because it didn't appear onthe report, it was simply a huge
amount of money the school owedand nobody was aware of it.
Eleisha (07:25):
What is bank staffing?
Martyn (07:27):
You get in your teacher
staffing a certain amount of
money for the number of teachersthe Ministry says that you can
have. So let's keep this simpleand say it's ten. If for a
reason you hire 11 teachers, youcan still charge that back to
the Ministry, but there is anaccumulated debt called bank
(07:49):
staffing that has to be paidback at some point.
Eleisha (07:52):
hmm.
Martyn (07:52):
You can juggle, you can
do a few bits and pieces to
mitigate that debt. But the endpoint is that debt is due July
the following year and it simplyis taken off your operations
grant. So if you're not aware ofit, suddenly come July the
following year, you don't haveas much money as you thought you
(08:13):
had. So you got to be aware ofall of these things, and that's
where the Ministry financialadvisers are brilliant.
Eleisha (08:21):
Fantastic. And Adrian,
can you tell me what you do as a
financial adviser, please?
Adrian (08:26):
Oh well, we advise on
all matters financial, really,
including staffing, but alongthe lines of, you know, coming
in as a new principal andwanting to know where to get
information, I think schoolfinance advisor's a good start.
A lot of schools have someonewith financial delegation in
their own school. So if you havea finance officer or even
(08:47):
someone that just processesaccounts in your school, do have
some conversations with them. Alot of schools use an external
accountant, particularly
Eleisha (08:55):
Mm
Adrian (08:56):
small schools. So find
out who they are straight away
and meet with them as soon asyou can, because they will often
have a lot of knowledge abouthow your school operates
financially and be able toeasily answer questions that
seem complex on the surface.Because listening to a podcast,
you can get quite generalinformation and a general
understanding of what's going on.
Eleisha (09:17):
hmm.
Adrian (09:17):
But there are so many
individual circumstances that
are affected by various thingswe won't talk about today. So
touching base with those peoplethat are familiar with how
schools operate is a really goodidea. As Martyn said, there
isn't a finance 101 offered inteacher training college or
anything like that. Basically,our team has a finance 101 that
(09:40):
we can come and present. We'vegot it at all different lengths
from 30 minutes to 2 hours ifyou're brave. And a lot of the
content of that finance 101 isgiving you an overview of
everything that can possiblycome up in your school, we're
trying to give an overview ofand a roadmap to where to go.
(10:01):
There's also a FinancialInformation for Schools Handbook,
which has grown over the years,
Eleisha (10:05):
Hmm. Hmm
Adrian (10:06):
but tapping one of us on
the shoulder, your local school
finance advisor, means we cancome in and look at the
questions that are pertinent toyou immediately. So sometimes it
might be a blow out in yourproperty area with a lot of
maintenance required, for otherschools it might be a blow out
in your relief budget, all kindsof different things, a blow out
(10:27):
in your teacher aide budget.When you're coming in and you're
still finding the lay of theland, it can be quite difficult
to navigate those numbers on areport
Eleisha (10:36):
hmm hmm
Adrian (10:36):
without a bit of
assistance from someone with
accounting knowledge. So that'sreally what I spend a lot of my
time on. I probably hear a lotmore from the less experienced
principals than the experiencedprincipals. In large schools
often it's the delegated financeperson who will contact me, just
to ask queries and things likethat and updates on where their
funding's at and things likethat, or just to double check
(10:58):
their figures. So we can visityou at school and go through
your specific situation. So Ithink that's that's the biggest
value. We also do a lot of memosand things behind the scenes. So
for example, if your board wasgoing to put some money into a
Ministry- led property project
Eleisha (11:17):
hmm hmm
Adrian (11:17):
or into a school-led
property project funded by the
Ministry, the board may want tospend its own funds, so we would
get that memo to assess whetherwe think it's affordable for the
school. So that's just anexample.
Eleisha (11:30):
And what are the
dangers Hannah if a school's
finances aren't managed well?
Hannah (11:34):
Basically, as I was
saying before, if you're
continually spending more thanyou're you're getting in, then
you're just going to run out ofcash eventually.
Eleisha (11:44):
Mm hmm.
Hannah (11:44):
And then obviously, then
you haven't got any options. So
I guess the area that's probablythe highest risk for schools
tends to be to do with thethings that drive the funding.
So for example, if your roll isdeclining, the operations grant,
that's based on your roll. So soif your roll starts declining um
things can quickly get out ofcontrol because all of a sudden
(12:07):
you're not getting as much moneyas you were getting in, but you
might be spending the way youused to spend, so.
Eleisha (12:14):
Mm
Hannah (12:14):
So that's an area where
schools can get into financial
difficulty. And I guess theother one would be staffing as
well. And sometimes the two gohand-in-hand. So you could have
a declining roll, and you can'talways adjust your staffing
straight away because you've gotyour collective agreement
requirements and so forth. Butif you don't take action
(12:35):
eventually,then you can havesignificant staffing costs.
Eleisha (12:39):
hmm.
Hannah (12:40):
Because it's the biggest
cost for the school, really. So
if you're overstaffed, then thatcan also cause financial
difficulties.
Eleisha (12:47):
100%. Out of interest,
Martyn and Mārama, did you have
any financial experience beforeyou became a tumuaki, and if not,
how did you learn what youneeded to know?
Mārama (12:59):
I knew nothing. I knew
how to pay off my student debt.
That's about it. I was very,very lucky, in my first
principal's role, um I was in asole-charge school with a very,
very strong board. They had time.They were farmers in big sheep
stations and their wives did allthe finance for the farm.
Eleisha (13:23):
hmm.
Mārama (13:23):
When I started there I
didn't actually have to do any
finance. We had educationservices, they came out and
taught me how to read a reportand then I would just say what I
needed. And I sat alongside thefinance person on the board and
learnt as we went, yeah, yeah,
Eleisha (13:41):
Mm
Mārama (13:41):
learnt all that
budgeting. I also had a local
principal association and wealways nominated and like a
mentor at a local level and shecame out whenever I had staffing
questions sat alongside me andwe worked all that out together.
So yeah, I was really wellsupported and I learnt really
early on just to say I'm abeginner,
Eleisha (14:03):
hmm
Mārama (14:03):
I don't know what I'm
doing, can you help me please
and so many people helped?
Eleisha (14:06):
That's so good.
Mārama (14:07):
Yeah, I was really
lucky.
Eleisha (14:08):
What about you, Martyn?
Did you have any financial
knowledge?
Martyn (14:12):
In between teaching
positions, I ran a multimillion
dollar IT company, so yes, I hada bit, but what that gives me is
the insight. I arrived atLaingholm understanding how to
read accounts and how to read abalance sheet,
Eleisha (14:26):
Mm
Martyn (14:26):
and that was my very
deep breathing, literally
sitting down at the principal'sdesk, with those being pieces of
paper that have been left on thedesk and doing the deep breathe
because I knew there was anissue.
Eleisha (14:37):
hmm.
Martyn (14:38):
You can't say oh I'll
deal with that later.
Eleisha (14:41):
Yeah,
Martyn (14:42):
As principals, as
teachers, we are so keen to get
involved in the curriculum andin the teaching and in the PLD.
None of that is possible withoutmoney.
Eleisha (14:50):
Yeah,
Martyn (14:51):
And like it or not, the
lead learner in a school has to
pay the bills. It's part of thejob. You know, it's not
something you get to give itnecessarily to somebody else,
unless you're quite a large highschool
Eleisha (15:03):
Mm hmm.
Martyn (15:04):
The principal will have
a significant role in the
finances.
Eleisha (15:08):
Yeah. And so that level
of understanding is is important,
and talking about that, Hannahcan you tell me more about the
different streams of funding,we've touched on them already -
through the Ministry ofEducation - and what they each
pay for, please.
Hannah (15:23):
Sure. So we've got
teachers salaries. So what
happens there is that ratherthan the school paying teachers,
the Ministry pays them. So sothat's a form of funding,
basically. And as Martyn wassaying before, we allocate you a
certain number of teachers whichis based on your roll, the year
(15:45):
levels that you have in yourschool, and also sort of maximum
class sizes. So we give you astaffing entitlement and we kind
of promise to pay those teachers.So that's the first form of
funding.
Eleisha (15:57):
Mm hmm.
Hannah (15:57):
And then another one is
the operational funding or
operational grant. And that'sessentially for all the other
non non-teacher staff and thenfor all the other running costs
of the school. So curriculum,electricity, property costs, all
those sorts of things.
Eleisha (16:16):
Mm hmm.
Hannah (16:16):
And then then I guess
the other major one is what we
call learning support funding,which is for specific students
which have been identified withhigh needs. In order for their
learning to happen,we givesupport in the form of a
contribution towards teacheraide hours.
Eleisha (16:35):
Mm hmm.
Hannah (16:35):
So I guess those are the
main forms of funding from the
Ministry. But of course thereare others as well.
Eleisha (16:41):
Yeah. So what are those
other streams of income?
Hannah (16:43):
Some there can be
funding from other government
departments, but I guess outsideof government funding there's
locally raised funds as well,which are like the the funds
that the school raisesthemselves.
Eleisha (16:56):
Mm hmm.
Hannah (16:56):
So they might have a
school fair or something like
that
Eleisha (17:00):
Yeah.
Hannah (17:01):
or it could be donations.
So could be donations from the
parents or caregivers
Eleisha (17:06):
Mm hmm.
Hannah (17:07):
or could be donations
from external parties, maybe be
a former student or somethinglike that. And then I guess the
other one is schools might applyfor community grants as well,
from local community trusts andusually those are for particular
things.
Eleisha (17:24):
Yeah.
Hannah (17:25):
Yeah.
Eleisha (17:26):
Yeah. And what about
things like, you know, our local
school rents out the school hallfor various activities. Does
that count as income?
Hannah (17:33):
Oh yes. Yeah, definitely.
No,
Eleisha (17:35):
Mm
Hannah (17:35):
that's
Eleisha (17:35):
hmm.
Hannah (17:35):
another good one. So
that's another form of locally
raised funds. Or you could havea school house that you, you get
rent from or some schools, tendsto be the bigger ones and tends
to be the, more the secondaryschools, but sometimes they'll
have international students aswell
Eleisha (17:50):
Mm hmm.
Hannah (17:50):
who they can charge fees
for, so that can be another form
of revenue as well.
Eleisha (17:55):
Yeah. Great. Adrian,
can you tell me, what does
operational funding coverexactly.
Adrian (18:02):
Basically the
operational funding is to cover
the normal operations of theschool. And in the reporting
model, this predominantly coversthe areas administration,
property, learning anddepreciation, which is now
recorded under learning. Sothere can be the tendency to
come in as a new principalthinking, right, I'm looking
(18:24):
forward to seeing my budget. Iwant to do all this amazing
stuff in the learning areas, butoften a significant portion of
the operation grant is used onadministration and in
maintaining the property.
Eleisha (18:35):
Mm
Adrian (18:35):
So in terms of how that
funding is calculated and broken
down, I would recommend that anew principal goes into Pourato
and brings up the operationalfunding notice and just
familiarizes themselves withwhat those components are,
because some components whichare a very good guide to what
spending should be. So forexample, heat, light and water
(18:58):
is itemised and in a normal yearthat heat, light and water
should cover your electricity,gas if you have that,
potentially water rates, if youhave those.
Eleisha (19:09):
hmm.
Adrian (19:10):
So there's often a
reasonably good guide to that
line. Another one is reliefteacher funding is its own item,
that's based on what yourstaffing entitlement is. So that
can be a good guide as to whatyou'll need to budget for relief
for teachers for the year.
Eleisha (19:26):
Mm
Adrian (19:26):
But there are other
components and actually the
larger part of the operationgrant is very much generated by
your roll.
Eleisha (19:33):
hmm.
Adrian (19:33):
So there are lines like
per pupil funding, which is
different at different yearlevels. So I think as a guide,
you want your operations grantto fund your administration,
your property and your core ofyour curriculum, because those
things probably won't have analternative funding stream. So
familiarising yourself with whatyou're paid in the operations
(19:56):
grant is a good starting pointto understand, because schools
vary, different schools havedifferent numbers of different
funding streams for differentprogrammes.
Eleisha (20:05):
Yeah.
Adrian (20:06):
So there are, there are
lots of programmes around the
place that aren't funded byoperations and they've got their
own funding stream.
Eleisha (20:11):
Mm hmm.
Adrian (20:11):
So once you know what is
coming in your operation grant
from that notice, often thefirst step is you compare it to
your total expenditure and yougo, gosh, I'm not really covered
by my operations grant. That'sbecause there will be other
items in your expenditure thatare funded separately.
Eleisha (20:27):
You mentioned Pourato
there Adrian. Hannah, can you
tell me what that is?
Hannah (20:33):
Sure so Pourato is where
you find out most of the funding
information about your school.So you get a log in when you
when you start up and you can goin there and you can check what
your staffing entitlement is andyou can check what your
operations grant is and you cansee that detail like Adrian was
saying, which bits of theoperations grant relate to roll
(20:55):
and what the breakdown of thatis. So yeah, that's that's
really important to be dippinginto and out of during the year
Eleisha (21:03):
Yeah. Sounds like a
super handy tool. In the next
episode, we're going to talkmore about school finances,
including some of the thingsthat can trip new tumuaki up.
Mā