April 21, 2025 • 23 mins
There are a number of things that can trip new principals up when it comes to school funding, and this episode covers some of them. Remember you’re not expected to know everything right away – contact your Ministry of Education finance advisor if you have questions or concerns.
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.
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:
- Things that can trip new principals up when looking at their budgets include use of land and buildings, provisional staffing, and the Ministry contribution to learning support funding.
- You need to make sure you’re above reproach when it comes to school finances. You need to be prudent and responsible with the money because it is public money. Have very clear processes around spending and make sure there are no conflicts of interest when signing off on expenses. Use the ‘front page of the Herald’ test – could this spending be brought into question?
- Focus on the working capital, not the bank balance, because those current liabilities show the cash that's going to come out very soon.
- For most schools, most years, January is your cheapest month out of your budget, because the school's closed. And December, even though it's not a full month of school, is often the most expensive,
- It’s really important to keep an eye on the budget year round – because if you’re 70% through the year and you’ve spent 90% of the budget, you may be in strife.
- An external accountant can really add value when trying to keep track of the school finances, especially when it comes to interpreting what the numbers all mean.
- When it comes to managing your staffing entitlement, the Ministry produces a spreadsheet that lets you plan this out for the year, one that you can update each fortnight when payroll information comes through. Request it from your finance advisor.
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) https://www.education.govt.nz/education-professionals/schools-year-0-13/funding-and-financials/day-day-financial-management#paragraph-9126
Questions
00:58 [Mārama/Martyn] Are there any kinds of fish hooks for new tumuaki that they should be aware of when they're looking at their funding?
3:35 [Adrian] When is the operational grant paid?
8:04 [Mārama/
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Eleisha (00:07):
Kia ora, and welcome to The Principals, a podcast series
for new tumuaki in Aotearoa NewZealand. I'm Eleisha McNeill. In
the last episode we startedtalking about school finances
with my guests Ministry ofEducation finance advisors
Hannah Levy and Adrian Edwards,leadership advisor and former
tumuaki Mārama Stewart, andMartyn Weatherill, principal of
(00:30):
Laingholm School in Auckland. Wecovered some basics of the
different streams of fundingthat make up a school's budget,
including the operations grant,which covers the normal
operations of the school likeadmin, property, and learning.
And we talked about Pourato,which is a tool where you find
most of the funding informationfor your school. So if you
haven't already listened to that,it may pay to go back and do
(00:52):
that now. Martyn, cracking backinto it. Are there any kinds of
fish hooks for new tumuaki thatthey should be aware of when
they're looking at their funding?
Martyn (01:02):
So probably a couple of things that I get phone calls on
which cause great angst for newprincipals, use of land and
buildings is a horrendous linethat appears and it looks like
you're paying rent on yourschool. At my place, it's $400,
000 a year on a $390,000 opsgrant. It's an in and out
(01:23):
transaction. It's paper. Do notpanic. We haven't touched on
property, particularly around5YA. That can be a trap for
young players in principalshipbecause they'll go, oh, I've got
$200,000 here. I can fix mystaffing issue. That notion that
you talked around pots of money,really, really important. If
(01:45):
it's property money, it'sproperty money. I was in an
interesting scenario at aprevious school where we were
going through surplus staffingand we were actually having to
say to teachers you're going tolose your job, at the same time
we were putting a new fencearound the school. You can
imagine how that went down withthe community. But the reality
is you cannot use fencing moneyto pay staff. And much as you
(02:07):
might want to change that system,that's the system that we work
under. The other piece somebodymentioned earlier, a Ministry
contribution. You come into thejob thinking, oh, I've I've got
two children with needs, theywill be funded. No, you get a
contribution. So the child's atschool 30 hours, the maximum
contribution you're going to getis 13 from the Ministry. It is a
(02:28):
contribution and the school isexpected to find the difference.
Eleisha (02:32):
Mārama, did you want to add anything?
Mārama (02:34):
It can feel quite overwhelming to start off with.
Always reach out for support butI was given some really good
advice, that you must always beabove reproach. So when any
spending happens, reimbursements,you need to make sure you are
above reproach, like you havethe receipts you have documented,
(02:55):
you're following the budget.You're not just spending willy
nilly. Avoid having a creditcard if you can. If you do need
to have one then have very, veryclear procedures and make sure
there's always somebody that youhave no conflict of interest
signing off these decisions,especially in the first year.
It's better to check early on,than go and make a financial
(03:18):
mistake. And then you have toexplain it to the auditors
because unfortunately, theauditors are now going to be
part of your life, and theyspeak auditor. But we're very
lucky here that we have Adriansand Hannahs in the world who
translate auditor to us simpleteachers.
Eleisha (03:35):
And Adrian, getting back to that operational grant,
when is that paid?
Adrian (03:39):
Right. So it's paid quarterly at the beginning of
the quarter, January, April,July and in October. And so on
the operations grant, at least,you're funded ahead of time,
which is good because there areother items of funding which you
receive after
Eleisha (03:54):
Hmm.
Adrian (03:54):
the fact.
Eleisha (03:54):
Hmm.
Adrian (03:54):
You know, things where you have to apply for funding or
there's a slight delay. So Ithink, for example, learning
support funding usually comes amonth after the ops grant, which
means if you've got your opsgrant in April, might not get
your learning support fundinguntil May, but you've been
paying those teacher aides thatare staff from it in the
meantime. So getting back towhat Hannah said earlier,
(04:17):
working capital is reallyimportant to look at in your
monthly accounts, it's yourcurrent assets minus your
current liabilities as Hannahsaid, I really stress with new
principals, especially, focus onthe working capital, not the
bank balance, because thosecurrent liabilities show the
cash that's going to come outvery soon. So you don't want to
(04:37):
count that as though you've gotall your eggs in your basket
when you've spent some of those.So, understanding the ebbs and
flows of the year in cash. Theother thing I'd add is for most
schools, most years, January isyour cheapest month out of your
budget, because the school'sclosed. And December, even
though it's not a full month ofschool, is often the most
(05:00):
expensive. And the reason forthat is that any staff that
aren't annualised that you payout of your bulk funding will
get holiday pay in December, wis basically a whole month's pay.
So that's just an example. Thereare other accruals that are done
at year-end, but that's probablythe biggest.
Eleisha (05:18):
So don't panic if you see that.
Adrian (05:20):
Don't panic. Don't panic. But I would also say if you
think you're like 1% over budgetin say September, it's likely to
be more than 1% over budget bythe time you've got your final
December accounts. So by thesame token, if you're like 3%
under where you should be, don'tnecessarily think that you're
(05:41):
home and hosed and you can spendthat extra 3% now, I would
recommend for a new principal,don't do anything off script in
that first 12 months becauseoften it's easy to underestimate
how much more things cost whenyou get those final accounts
through after December.
Eleisha (05:57):
Oh, man. Thank goodness for financial advisors, because
I don't know about you, but myhead is spinning.
Martyn (06:04):
Can I make it spin a little bit more? Because we
haven't actually touched onprovisional staffing and ops
grant, it's one that principalsdo get wrong because they
misunderstand the message. Soeach year you get your
provisional staffing for thefollowing year, it's based on a
certain number of students. Ifyou have less students the
following year, the Ministrystill pays that amount of staff,
(06:25):
but they will reduce your opsgrant to match the actual number
of students you've got. So yourstaffing paid for, but your ops
grant will reduce. A lot ofprincipals hear the message, oh
it all stays the same. So youneed to be really clear -
staffing stays, actualoperational money changes
depending on the number ofstudents you actually have. And
(06:47):
in days of falling rolls, whicha lot of our primary schools are
in, that is important.
Eleisha (06:51):
Hmm. Mārama, would you add anything to that?
Mārama (06:54):
Just ask for help early. It is really confusing, and you
will be confused for that first12 months. But yeah, if you just
be conservative and sometimesit's good to have a pause and
see how the status quo isworking and then you can build
that story. I remember I cameinto my first school and the
school actually paid for all thestationery for all the children
(07:16):
back then. And I was like ah,I'm going to cut this, this is
expensive, why are we doing this,we can save lots of money.
Actually, it wasn't. The boardtalked about how actually we
know that there's shepherds hereand these owners and there's a
huge pay difference. And weasked that the family give time.
They did working bees. They gaveus firewood. They worked really
(07:37):
hard and then they really meantthe philosophy that education
should be free and all the kidsshould have their books and have
everything they need to do. Andit was actually really cheap
because they were there all thetime and we only had to replace
books. I didn't get a wholesuite of books every year. They
just carried on
Eleisha (07:52):
Mm
Mārama (07:52):
because there was only 12 kids. So yeah, don't rush in
like a bull just wait and pauseand build yourself a story, an
understanding of the communityand then go for it.
Eleisha (08:04):
I wanted to ask both of you, how does your school keep
track of your accounts, Martyn?
Martyn (08:08):
We are fortunate we have office staff and I appreciate a
number of my colleagues don'thave office staff. So my office
staff process the accounts asthey come in. They create a
monthly report which, goes to afinancial support company, kind
of gets double checked, makesure the journaling's right. I
then get those what we call thepre reports to check that
(08:29):
everything is right and that Imost importantly recognise what
every invoice is.
Eleisha (08:34):
Mm
Martyn (08:34):
That's probably one of the key areas, particularly on
that fraud prevention,
Eleisha (08:39):
Yeah.
Martyn (08:40):
making sure that you know the names of the company
you should be paying. I checkall of those. They are then
processed. And my DP actually isone of the authorisers. So we
have a few people involved inthe process. They then go to the
board. But because of theboard's timing, the report
they're getting is on paymentsthat have already been made
Eleisha (08:58):
Right.
Martyn (08:58):
so their role becomes a monitoring role.
Eleisha (09:00):
Right. Mārama.
Mārama (09:03):
So yeah, in my little school I actually was the admin,
the bills would come in, paperform back then. I had a stamp,
I'd stamp it, and I would writewhat budget line it was on,
would go to the board person.And I think it's pretty much the
same for many of the schools.They probably still have those
stamps and then send it all offto education services and they
(09:23):
do their magic. And then themonthly report came in. Or,
whoever it is, if you're workingwith an accounting firm, make
sure that they're dedicated orspecialize in education, b
education accounts, while I didhave a farmer's wife doing it,
she understood that educationbudgets are very different to
your farm budget,
Eleisha (09:42):
MM
Mārama (09:42):
very different to personal budgets, actually, and
different to business budgets aswell, because you're actually
wanting to spend your money onthe kids, not stockpile your
money. As I got better and Iunderstood more and I was able
to delegate that responsibilityof processing the bills to a
financial person. I had a biggerschool. I pretty much did what
(10:06):
Martyn did. I just reviewed thesummaries, made sure they were
all coded correctly. I knew whoI was paying. I was able to say
hey, I need more informationhere. What's this receipt for?
When I was at charge school Ihad a $500 discretionary fund
that I could use if we needed tobuy resources or if a window
(10:27):
broke I had 500 bucks to pay forwithout having to get board
approval to do it, becausesometimes you do need a little
bit of money there. Again,that's about making sure you're
above reproach,
Eleisha (10:38):
Yeah.
Mārama (10:39):
making sure you know exactly what you're using that
for. You're not just spittingout pizzas because you feel like
it. That increased as I got to abigger school to $2500 but
always have those careful,making sure your board chair is
signing it off or whatever, justso that you can be clear that
the monies you are using areused well.
Eleisha (10:58):
Absolutely. And as tumuaki, how often are you
looking at your finances? Andare there particular things that
you're looking for at particulartimes of year?
Mārama (11:09):
Yes. So I always you always have a good look at the
monthly report because youactually should be able to talk
to it if you're asked questions.I usually look at not so much
the line by line, but thedepartmentals, just seeing if
you're over or under, I look atthe percentage of the year
passed versus the percentage ofthe income coming in so if
you're through 70% through theyear and you've spent 90%
Eleisha (11:32):
Mm.
Mārama (11:32):
of your funds, you should have looked further back.
Also, how much anticipated fundshave come in through the year?
It goes up and down. Yeah. And Ialways checked all receipts
myself.
Eleisha (11:44):
Yeah.
Mārama (11:44):
If there's any kind of novel spending, I would probably
scrutinize it a little bit more.
Eleisha (11:48):
Yeah. Yeah. For sure. Martyn.
Martyn (11:50):
I often talk about, you know, term one, January is quite
quiet. Term one is kind of astart of year stuff. Term four
you're balancing this year andplanning for next year. So is a
finance term.
Eleisha (12:02):
Yeah. Hannah and Adrian, if a new tumuaki came in and
looked at their accounting ortheir software fees and thought,
hey, this seems like a lot ofmoney, I think we can save some
money by doing it ourselves,what would you advise?
Adrian (12:18):
First of all, often when you're contracting something out,
the figure may look large atfirst glance, but what you need
to factor in is what you get forthat money. So often it will
have your accounting softwarecovered. It will have monthly
reporting covered in many cases,it will have your end of year
(12:38):
preparation of accounts foraudit and a lot of accountants
will provide quite a lot ofsupport to their clients. So
coming in as the new principal,it's good to have someone with
accounting knowledge availableat the end of the phone or on an
email to ask all those questions.They may even come out and meet
with your board from time totime to ask their questions. So
(13:00):
I guess first finding out whatthat fee buys you in detail, and
then if you're thinking ofmaking a change, you know, the
the standard practice of threequotes I think can be quite
enlightening because you mightthink you're paying quite a bit
and then get three other quotes,even apart from the provider you
use and find that they're allfairly similar. So it can be a
(13:22):
little bit misleading when youjust see that is one of the
items on your budget and youthink, gosh, that's more than my
maths budget, what am I gettingfor that? But there is quite a
lot of work to be done behindthe scenes that if your
accountant is doing and it's notcoming through your office, a
good question is how much wageswould I get for this through my
(13:43):
own office? And if you justcompare it purely on the wages,
often it looks a lot better. Butget those three quotes. Yeah.
Eleisha (13:52):
Hannah, would you add anything?
Hannah (13:54):
Yeah. I guess the other thing too is that lots of
schools use the accountingpackage Xero. And sometimes they
think because they can press thebutton and pulls two reports out
of Xero every month and thatthat's probably good enough, but
it's actually not. And so sothat's where the extra time
comes in interpreting what thosenumbers actually mean. So that's
(14:14):
where your, an externalaccountant can really add value
because they can point out someof the variances and so forth.
So I guess just something thatyou need to think about hard
before you leap into bringingyour, all your accounting in
house.
Eleisha (14:30):
Yeah, for sure. Education money is obviously
public money. What are the rulesaround using public money and
what it should be used for?
Hannah (14:38):
I think Mārama had a really good, good term for that.
And I guess it is just aboutbeing prudent and being
responsible with the moneybecause it is public money. So
just thinking about in terms oflike am I getting value for
money? So for example, likeAdrian said, getting different
quotes so if you're going tochange supplier, or you're
(14:58):
looking at a new supplier for,say, your cleaning contract or
something like that, making surethat you get a couple of quotes
to know that you're actuallygetting good value for money.
And I guess also thinking aboutthat your spending should be for
the benefit of the students. Soit shouldn't really be for the
private benefit of any of yourstaff or I mean, not to say that
you can't have provide coffeeand tea supplies, you know, and
(15:21):
the occasional morning tea, butI guess just thinking about
making sure that any spendingthat it does actually go back to
supporting the students. Andthen I guess the other one, too,
is just thinking about couldthis be spending be brought into
question like, ooh, that's not agood use of public money. So
that's quite a good test. Justto just to ask yourself that
(15:41):
question before you spend it.
Martyn (15:44):
We talk about the front page of the Herald test. When
you make the payment, what's itgoing to look like on the front
page of the Herald? And it's areally good way of just checking
and thinking oh yeah, maybe notsensitive expenditure. It is
public money we're spending.
Eleisha (15:59):
Mārama.
Mārama (16:00):
Yeah, I was going to say the front of the Herald test
as well. It very important toconsider. But I always did, in a
small school, so you know Ithink my first budget was $40,
000 for the year. I just gotinto the mindset, I would try
and get someone else to pay forthe nice to have things, get
really familiar with the grantsand trusts process of applying
(16:21):
for funds, getting a good system.Maybe you've got a parent who
who's into that kind of thingand can support all those
applications, and then if youget someone else to pay for it,
you can keep those funds tickingover.
Eleisha (16:35):
Adrian.
Adrian (16:35):
I just wanted to add one thing. I'm something that
sometimes gets a little bit lostis having a priority list. So
just because something you thinkwould be a good thing and you
think you can afford it, youshouldn't make that decision in
isolation because if you writeyour wish list of what do we
want to accomplish in the comingyear, and you find there's 11
(16:58):
different items on it and youthink you can only afford seven
of them, then doing the onethat's number 11th on the list
might not be a good use of fundsbecause you're forgoing
something else that you thoughtwas of a higher priority. So I
think it really pays to have aclear idea of what you're trying
to achieve in the year. Andsometimes there'll be those
(17:19):
things that are number 11 on thelist and they're still nice to
do and you just won't do it thiscoming year. But the year after
it might make the list. So
Eleisha (17:28):
M hmm
Adrian (17:29):
I think if you operate on that basis, being educators,
usually the things of higheducational benefit you'll find
are creeping towards the top ofthe list and things that were
nice to dos, you may besurprised to find they're down
at number 11 on the list whenyou thought it was a really good
idea when you first thought ofit.
Eleisha (17:48):
Mārama and Martyn, what would you, what would you
add?
Martyn (17:50):
Colleagues and friends in the Ministry property would
probably keep reminding youinfrastructure and the hidden
stuff's important. As teachers,I'm really keen on spending
money on curriculum and teachersbecause it directly impacts on
my students. Number 11 on mylist might be stormwater drains,
bu listening to the rainbouncing off my roof at the
(18:10):
moment, stormwater drains havevalue.
Eleisha (18:13):
Definitely. I wanted to finish by asking each of you
what your advice is for newtumuaki starting in a school
when it comes to school finances.Mārama, start with you.
Mārama (18:25):
It's okay. Yeah, it gets better in time. And you
just need to ask. Call theschool finance advisors, they
are there for you. They willhelp you. They will work with
you and your board. Call NZEI,call your leadership advisory
service. And if you have aaccount accounting packages,
make sure you use those. Thereshould be support days within
(18:48):
those packages and just treat itlike a learning experience.
Eleisha (18:53):
Adria
Adrian (18:54):
I second everything Mārama said, do reach out to us.
B I think that taking a pauseand some time to familiarise
yourself and get other expertopinions, other finance people
and board members who may havefinance experience and skills
before you make any big changes.Often a wait and see approach,
(19:15):
even if it's for one or twoterms to see how things play out,
because things will surface allthe time in the school
environment and unexpectedthings will surface. So take
your time, don't panic, ask forlots of help. I guess an overall
guiding principle is you'd liketo be able to staff your school
within the staffing entitlementprovided by the Ministry, and
(19:37):
you'd like to be able to fundthe core operations out of your
core funding and then otherthings that might be nice to
have you can worry about that asa secondary concern.
Eleisha (19:50):
Hannah
Hannah (19:51):
I'll just touch back on what Martyn said earlier and
that's just about like as youcome into the job, like try to
get an idea of what the, thefinancial situation of the
school is actually like at themoment. So does the school have
lots of savings or is the schoolrunning a bit low on cash? And I
guess in finding those out, youcan look at reports but also do
(20:13):
do talk to your your accountant,y office people who may have a
good sense of the finances andalso any board members that have
a good financial background thatcan give you that overview.
Eleisha (20:24):
What about you, Martyn? And what's your advice for new
tumuaki?
Martyn (20:27):
I think there's a human nature element in that we've
just got the new role, we're theprincipal, we're the leader of a
school, we're supposed to knowstuff. We sit at the table and
actually when it comes tofinance, we don't. We kind of
think that it's just us. It isnot just you. Nobody knows this
stuff. Ministry financialadvisors do, your service
(20:47):
provider, the company you payout of your school funds to
support your accounts, they know.Reach out because the critical
thing is if you think, oh, it'sjust me and I won't ask,
something will go horribly wrongfrighteningly quickly.
Eleisha (20:59):
Hundred percent. Is there anything you wanted to add
that we haven't covered? Adrian.
Adrian (21:05):
Yes. So we've touched a little bit on banking staffing
and managing your staffingentitlement. But just to let
everybody know, the Ministryproduces a spreadsheet that lets
you plan this out for the wholeyear and you can update it each
fortnight with when the payrollinformation comes through. And I
(21:25):
use it with a number of schoolsto send it back and forth,
particularly with a newprincipal, just to show them the
effect of their decisions ontheir staffing. Just to quantify,
you know, if I actually add this,I'm going to owe the Ministry
$70,000 at the end of the year,I can't afford it. So I often
find it's a good spreadsheet tojust tinker with and on a
(21:48):
smaller scale to even see thedifferences in do I hire a 0.5
or a 0.4 for this position. Youknow, can I afford a little bit
more, it'll let you model thatout. I would recommend the first
time you use it, use it withyour school finance advisor, or
your school's accountant,because it can be a little
overwhelming coming at it coldwith nobody sitting next to you.
(22:11):
But it doesn't take that long toget the hang of.
Eleisha (22:14):
And how can they get hold of that spreadsheet?
Mārama (22:16):
Maybe request it from your school advisor in finance.
And it's a good in for them toget some one on one time.
Adrian (22:23):
That's a great point, actually, because your local
school finance advisor candownload the pay periods to date
and put them in the spreadsheetfor you so you don't have to do
a bunch of data entry. If you'restarting mid-year we can at
least give you a spreadsheetfilled out to the current date.
Eleisha (22:40):
That's great, Oh, my goodness. There's so much to
know about school finances.Thank goodness for people like
Hannah and Adrian who can comein and help talk you through it.
Thank you all so much for yourtime today. Much appreciated, as
always.
Martyn (22:57):
See you. Thanks Eleisha. I should thank you.
Eleisha (22:59):
Thank you. In the next episode, we're going to keep
talking about school finances,but we're going to focus on
budgeting and financialreporting. See you next time.
Kia ora, and welcome to The Principals, a podcast series
for new tumuaki in Aotearoa NewZealand. I'm Eleisha McNeill. In
the last episode we startedtalking about school finances
with my guests Ministry ofEducation finance advisors
Hannah Levy and Adrian Edwards,leadership advisor and former
tumuaki Mārama Stewart, andMartyn Weatherill, principal of
(00:30):
Laingholm School in Auckland. Wecovered some basics of the
different streams of fundingthat make up a school's budget,
including the operations grant,which covers the normal
operations of the school likeadmin, property, and learning.
And we talked about Pourato,which is a tool where you find
most of the funding informationfor your school. So if you
haven't already listened to that,it may pay to go back and do
(00:52):
that now. Martyn, cracking backinto it. Are there any kinds of
fish hooks for new tumuaki thatthey should be aware of when
they're looking at their funding?
Martyn (01:02):
So probably a couple of things that I get phone calls on
which cause great angst for newprincipals, use of land and
buildings is a horrendous linethat appears and it looks like
you're paying rent on yourschool. At my place, it's $400,
000 a year on a $390,000 opsgrant. It's an in and out
(01:23):
transaction. It's paper. Do notpanic. We haven't touched on
property, particularly around5YA. That can be a trap for
young players in principalshipbecause they'll go, oh, I've got
$200,000 here. I can fix mystaffing issue. That notion that
you talked around pots of money,really, really important. If
(01:45):
it's property money, it'sproperty money. I was in an
interesting scenario at aprevious school where we were
going through surplus staffingand we were actually having to
say to teachers you're going tolose your job, at the same time
we were putting a new fencearound the school. You can
imagine how that went down withthe community. But the reality
is you cannot use fencing moneyto pay staff. And much as you
(02:07):
might want to change that system,that's the system that we work
under. The other piece somebodymentioned earlier, a Ministry
contribution. You come into thejob thinking, oh, I've I've got
two children with needs, theywill be funded. No, you get a
contribution. So the child's atschool 30 hours, the maximum
contribution you're going to getis 13 from the Ministry. It is a
(02:28):
contribution and the school isexpected to find the difference.
Eleisha (02:32):
Mārama, did you want to add anything?
Mārama (02:34):
It can feel quite overwhelming to start off with.
Always reach out for support butI was given some really good
advice, that you must always beabove reproach. So when any
spending happens, reimbursements,you need to make sure you are
above reproach, like you havethe receipts you have documented,
(02:55):
you're following the budget.You're not just spending willy
nilly. Avoid having a creditcard if you can. If you do need
to have one then have very, veryclear procedures and make sure
there's always somebody that youhave no conflict of interest
signing off these decisions,especially in the first year.
It's better to check early on,than go and make a financial
(03:18):
mistake. And then you have toexplain it to the auditors
because unfortunately, theauditors are now going to be
part of your life, and theyspeak auditor. But we're very
lucky here that we have Adriansand Hannahs in the world who
translate auditor to us simpleteachers.
Eleisha (03:35):
And Adrian, getting back to that operational grant,
when is that paid?
Adrian (03:39):
Right. So it's paid quarterly at the beginning of
the quarter, January, April,July and in October. And so on
the operations grant, at least,you're funded ahead of time,
which is good because there areother items of funding which you
receive after
Eleisha (03:54):
Hmm.
Adrian (03:54):
the fact.
Eleisha (03:54):
Hmm.
Adrian (03:54):
You know, things where you have to apply for funding or
there's a slight delay. So Ithink, for example, learning
support funding usually comes amonth after the ops grant, which
means if you've got your opsgrant in April, might not get
your learning support fundinguntil May, but you've been
paying those teacher aides thatare staff from it in the
meantime. So getting back towhat Hannah said earlier,
(04:17):
working capital is reallyimportant to look at in your
monthly accounts, it's yourcurrent assets minus your
current liabilities as Hannahsaid, I really stress with new
principals, especially, focus onthe working capital, not the
bank balance, because thosecurrent liabilities show the
cash that's going to come outvery soon. So you don't want to
(04:37):
count that as though you've gotall your eggs in your basket
when you've spent some of those.So, understanding the ebbs and
flows of the year in cash. Theother thing I'd add is for most
schools, most years, January isyour cheapest month out of your
budget, because the school'sclosed. And December, even
though it's not a full month ofschool, is often the most
(05:00):
expensive. And the reason forthat is that any staff that
aren't annualised that you payout of your bulk funding will
get holiday pay in December, wis basically a whole month's pay.
So that's just an example. Thereare other accruals that are done
at year-end, but that's probablythe biggest.
Eleisha (05:18):
So don't panic if you see that.
Adrian (05:20):
Don't panic. Don't panic. But I would also say if you
think you're like 1% over budgetin say September, it's likely to
be more than 1% over budget bythe time you've got your final
December accounts. So by thesame token, if you're like 3%
under where you should be, don'tnecessarily think that you're
(05:41):
home and hosed and you can spendthat extra 3% now, I would
recommend for a new principal,don't do anything off script in
that first 12 months becauseoften it's easy to underestimate
how much more things cost whenyou get those final accounts
through after December.
Eleisha (05:57):
Oh, man. Thank goodness for financial advisors, because
I don't know about you, but myhead is spinning.
Martyn (06:04):
Can I make it spin a little bit more? Because we
haven't actually touched onprovisional staffing and ops
grant, it's one that principalsdo get wrong because they
misunderstand the message. Soeach year you get your
provisional staffing for thefollowing year, it's based on a
certain number of students. Ifyou have less students the
following year, the Ministrystill pays that amount of staff,
(06:25):
but they will reduce your opsgrant to match the actual number
of students you've got. So yourstaffing paid for, but your ops
grant will reduce. A lot ofprincipals hear the message, oh
it all stays the same. So youneed to be really clear -
staffing stays, actualoperational money changes
depending on the number ofstudents you actually have. And
(06:47):
in days of falling rolls, whicha lot of our primary schools are
in, that is important.
Eleisha (06:51):
Hmm. Mārama, would you add anything to that?
Mārama (06:54):
Just ask for help early. It is really confusing, and you
will be confused for that first12 months. But yeah, if you just
be conservative and sometimesit's good to have a pause and
see how the status quo isworking and then you can build
that story. I remember I cameinto my first school and the
school actually paid for all thestationery for all the children
(07:16):
back then. And I was like ah,I'm going to cut this, this is
expensive, why are we doing this,we can save lots of money.
Actually, it wasn't. The boardtalked about how actually we
know that there's shepherds hereand these owners and there's a
huge pay difference. And weasked that the family give time.
They did working bees. They gaveus firewood. They worked really
(07:37):
hard and then they really meantthe philosophy that education
should be free and all the kidsshould have their books and have
everything they need to do. Andit was actually really cheap
because they were there all thetime and we only had to replace
books. I didn't get a wholesuite of books every year. They
just carried on
Eleisha (07:52):
Mm
Mārama (07:52):
because there was only 12 kids. So yeah, don't rush in
like a bull just wait and pauseand build yourself a story, an
understanding of the communityand then go for it.
Eleisha (08:04):
I wanted to ask both of you, how does your school keep
track of your accounts, Martyn?
Martyn (08:08):
We are fortunate we have office staff and I appreciate a
number of my colleagues don'thave office staff. So my office
staff process the accounts asthey come in. They create a
monthly report which, goes to afinancial support company, kind
of gets double checked, makesure the journaling's right. I
then get those what we call thepre reports to check that
(08:29):
everything is right and that Imost importantly recognise what
every invoice is.
Eleisha (08:34):
Mm
Martyn (08:34):
That's probably one of the key areas, particularly on
that fraud prevention,
Eleisha (08:39):
Yeah.
Martyn (08:40):
making sure that you know the names of the company
you should be paying. I checkall of those. They are then
processed. And my DP actually isone of the authorisers. So we
have a few people involved inthe process. They then go to the
board. But because of theboard's timing, the report
they're getting is on paymentsthat have already been made
Eleisha (08:58):
Right.
Martyn (08:58):
so their role becomes a monitoring role.
Eleisha (09:00):
Right. Mārama.
Mārama (09:03):
So yeah, in my little school I actually was the admin,
the bills would come in, paperform back then. I had a stamp,
I'd stamp it, and I would writewhat budget line it was on,
would go to the board person.And I think it's pretty much the
same for many of the schools.They probably still have those
stamps and then send it all offto education services and they
(09:23):
do their magic. And then themonthly report came in. Or,
whoever it is, if you're workingwith an accounting firm, make
sure that they're dedicated orspecialize in education, b
education accounts, while I didhave a farmer's wife doing it,
she understood that educationbudgets are very different to
your farm budget,
Eleisha (09:42):
MM
Mārama (09:42):
very different to personal budgets, actually, and
different to business budgets aswell, because you're actually
wanting to spend your money onthe kids, not stockpile your
money. As I got better and Iunderstood more and I was able
to delegate that responsibilityof processing the bills to a
financial person. I had a biggerschool. I pretty much did what
(10:06):
Martyn did. I just reviewed thesummaries, made sure they were
all coded correctly. I knew whoI was paying. I was able to say
hey, I need more informationhere. What's this receipt for?
When I was at charge school Ihad a $500 discretionary fund
that I could use if we needed tobuy resources or if a window
(10:27):
broke I had 500 bucks to pay forwithout having to get board
approval to do it, becausesometimes you do need a little
bit of money there. Again,that's about making sure you're
above reproach,
Eleisha (10:38):
Yeah.
Mārama (10:39):
making sure you know exactly what you're using that
for. You're not just spittingout pizzas because you feel like
it. That increased as I got to abigger school to $2500 but
always have those careful,making sure your board chair is
signing it off or whatever, justso that you can be clear that
the monies you are using areused well.
Eleisha (10:58):
Absolutely. And as tumuaki, how often are you
looking at your finances? Andare there particular things that
you're looking for at particulartimes of year?
Mārama (11:09):
Yes. So I always you always have a good look at the
monthly report because youactually should be able to talk
to it if you're asked questions.I usually look at not so much
the line by line, but thedepartmentals, just seeing if
you're over or under, I look atthe percentage of the year
passed versus the percentage ofthe income coming in so if
you're through 70% through theyear and you've spent 90%
Eleisha (11:32):
Mm.
Mārama (11:32):
of your funds, you should have looked further back.
Also, how much anticipated fundshave come in through the year?
It goes up and down. Yeah. And Ialways checked all receipts
myself.
Eleisha (11:44):
Yeah.
Mārama (11:44):
If there's any kind of novel spending, I would probably
scrutinize it a little bit more.
Eleisha (11:48):
Yeah. Yeah. For sure. Martyn.
Martyn (11:50):
I often talk about, you know, term one, January is quite
quiet. Term one is kind of astart of year stuff. Term four
you're balancing this year andplanning for next year. So is a
finance term.
Eleisha (12:02):
Yeah. Hannah and Adrian, if a new tumuaki came in and
looked at their accounting ortheir software fees and thought,
hey, this seems like a lot ofmoney, I think we can save some
money by doing it ourselves,what would you advise?
Adrian (12:18):
First of all, often when you're contracting something out,
the figure may look large atfirst glance, but what you need
to factor in is what you get forthat money. So often it will
have your accounting softwarecovered. It will have monthly
reporting covered in many cases,it will have your end of year
(12:38):
preparation of accounts foraudit and a lot of accountants
will provide quite a lot ofsupport to their clients. So
coming in as the new principal,it's good to have someone with
accounting knowledge availableat the end of the phone or on an
email to ask all those questions.They may even come out and meet
with your board from time totime to ask their questions. So
(13:00):
I guess first finding out whatthat fee buys you in detail, and
then if you're thinking ofmaking a change, you know, the
the standard practice of threequotes I think can be quite
enlightening because you mightthink you're paying quite a bit
and then get three other quotes,even apart from the provider you
use and find that they're allfairly similar. So it can be a
(13:22):
little bit misleading when youjust see that is one of the
items on your budget and youthink, gosh, that's more than my
maths budget, what am I gettingfor that? But there is quite a
lot of work to be done behindthe scenes that if your
accountant is doing and it's notcoming through your office, a
good question is how much wageswould I get for this through my
(13:43):
own office? And if you justcompare it purely on the wages,
often it looks a lot better. Butget those three quotes. Yeah.
Eleisha (13:52):
Hannah, would you add anything?
Hannah (13:54):
Yeah. I guess the other thing too is that lots of
schools use the accountingpackage Xero. And sometimes they
think because they can press thebutton and pulls two reports out
of Xero every month and thatthat's probably good enough, but
it's actually not. And so sothat's where the extra time
comes in interpreting what thosenumbers actually mean. So that's
(14:14):
where your, an externalaccountant can really add value
because they can point out someof the variances and so forth.
So I guess just something thatyou need to think about hard
before you leap into bringingyour, all your accounting in
house.
Eleisha (14:30):
Yeah, for sure. Education money is obviously
public money. What are the rulesaround using public money and
what it should be used for?
Hannah (14:38):
I think Mārama had a really good, good term for that.
And I guess it is just aboutbeing prudent and being
responsible with the moneybecause it is public money. So
just thinking about in terms oflike am I getting value for
money? So for example, likeAdrian said, getting different
quotes so if you're going tochange supplier, or you're
(14:58):
looking at a new supplier for,say, your cleaning contract or
something like that, making surethat you get a couple of quotes
to know that you're actuallygetting good value for money.
And I guess also thinking aboutthat your spending should be for
the benefit of the students. Soit shouldn't really be for the
private benefit of any of yourstaff or I mean, not to say that
you can't have provide coffeeand tea supplies, you know, and
(15:21):
the occasional morning tea, butI guess just thinking about
making sure that any spendingthat it does actually go back to
supporting the students. Andthen I guess the other one, too,
is just thinking about couldthis be spending be brought into
question like, ooh, that's not agood use of public money. So
that's quite a good test. Justto just to ask yourself that
(15:41):
question before you spend it.
Martyn (15:44):
We talk about the front page of the Herald test. When
you make the payment, what's itgoing to look like on the front
page of the Herald? And it's areally good way of just checking
and thinking oh yeah, maybe notsensitive expenditure. It is
public money we're spending.
Eleisha (15:59):
Mārama.
Mārama (16:00):
Yeah, I was going to say the front of the Herald test
as well. It very important toconsider. But I always did, in a
small school, so you know Ithink my first budget was $40,
000 for the year. I just gotinto the mindset, I would try
and get someone else to pay forthe nice to have things, get
really familiar with the grantsand trusts process of applying
(16:21):
for funds, getting a good system.Maybe you've got a parent who
who's into that kind of thingand can support all those
applications, and then if youget someone else to pay for it,
you can keep those funds tickingover.
Eleisha (16:35):
Adrian.
Adrian (16:35):
I just wanted to add one thing. I'm something that
sometimes gets a little bit lostis having a priority list. So
just because something you thinkwould be a good thing and you
think you can afford it, youshouldn't make that decision in
isolation because if you writeyour wish list of what do we
want to accomplish in the comingyear, and you find there's 11
(16:58):
different items on it and youthink you can only afford seven
of them, then doing the onethat's number 11th on the list
might not be a good use of fundsbecause you're forgoing
something else that you thoughtwas of a higher priority. So I
think it really pays to have aclear idea of what you're trying
to achieve in the year. Andsometimes there'll be those
(17:19):
things that are number 11 on thelist and they're still nice to
do and you just won't do it thiscoming year. But the year after
it might make the list. So
Eleisha (17:28):
M hmm
Adrian (17:29):
I think if you operate on that basis, being educators,
usually the things of higheducational benefit you'll find
are creeping towards the top ofthe list and things that were
nice to dos, you may besurprised to find they're down
at number 11 on the list whenyou thought it was a really good
idea when you first thought ofit.
Eleisha (17:48):
Mārama and Martyn, what would you, what would you
add?
Martyn (17:50):
Colleagues and friends in the Ministry property would
probably keep reminding youinfrastructure and the hidden
stuff's important. As teachers,I'm really keen on spending
money on curriculum and teachersbecause it directly impacts on
my students. Number 11 on mylist might be stormwater drains,
bu listening to the rainbouncing off my roof at the
(18:10):
moment, stormwater drains havevalue.
Eleisha (18:13):
Definitely. I wanted to finish by asking each of you
what your advice is for newtumuaki starting in a school
when it comes to school finances.Mārama, start with you.
Mārama (18:25):
It's okay. Yeah, it gets better in time. And you
just need to ask. Call theschool finance advisors, they
are there for you. They willhelp you. They will work with
you and your board. Call NZEI,call your leadership advisory
service. And if you have aaccount accounting packages,
make sure you use those. Thereshould be support days within
(18:48):
those packages and just treat itlike a learning experience.
Eleisha (18:53):
Adria
Adrian (18:54):
I second everything Mārama said, do reach out to us.
B I think that taking a pauseand some time to familiarise
yourself and get other expertopinions, other finance people
and board members who may havefinance experience and skills
before you make any big changes.Often a wait and see approach,
(19:15):
even if it's for one or twoterms to see how things play out,
because things will surface allthe time in the school
environment and unexpectedthings will surface. So take
your time, don't panic, ask forlots of help. I guess an overall
guiding principle is you'd liketo be able to staff your school
within the staffing entitlementprovided by the Ministry, and
(19:37):
you'd like to be able to fundthe core operations out of your
core funding and then otherthings that might be nice to
have you can worry about that asa secondary concern.
Eleisha (19:50):
Hannah
Hannah (19:51):
I'll just touch back on what Martyn said earlier and
that's just about like as youcome into the job, like try to
get an idea of what the, thefinancial situation of the
school is actually like at themoment. So does the school have
lots of savings or is the schoolrunning a bit low on cash? And I
guess in finding those out, youcan look at reports but also do
(20:13):
do talk to your your accountant,y office people who may have a
good sense of the finances andalso any board members that have
a good financial background thatcan give you that overview.
Eleisha (20:24):
What about you, Martyn? And what's your advice for new
tumuaki?
Martyn (20:27):
I think there's a human nature element in that we've
just got the new role, we're theprincipal, we're the leader of a
school, we're supposed to knowstuff. We sit at the table and
actually when it comes tofinance, we don't. We kind of
think that it's just us. It isnot just you. Nobody knows this
stuff. Ministry financialadvisors do, your service
(20:47):
provider, the company you payout of your school funds to
support your accounts, they know.Reach out because the critical
thing is if you think, oh, it'sjust me and I won't ask,
something will go horribly wrongfrighteningly quickly.
Eleisha (20:59):
Hundred percent. Is there anything you wanted to add
that we haven't covered? Adrian.
Adrian (21:05):
Yes. So we've touched a little bit on banking staffing
and managing your staffingentitlement. But just to let
everybody know, the Ministryproduces a spreadsheet that lets
you plan this out for the wholeyear and you can update it each
fortnight with when the payrollinformation comes through. And I
(21:25):
use it with a number of schoolsto send it back and forth,
particularly with a newprincipal, just to show them the
effect of their decisions ontheir staffing. Just to quantify,
you know, if I actually add this,I'm going to owe the Ministry
$70,000 at the end of the year,I can't afford it. So I often
find it's a good spreadsheet tojust tinker with and on a
(21:48):
smaller scale to even see thedifferences in do I hire a 0.5
or a 0.4 for this position. Youknow, can I afford a little bit
more, it'll let you model thatout. I would recommend the first
time you use it, use it withyour school finance advisor, or
your school's accountant,because it can be a little
overwhelming coming at it coldwith nobody sitting next to you.
(22:11):
But it doesn't take that long toget the hang of.
Eleisha (22:14):
And how can they get hold of that spreadsheet?
Mārama (22:16):
Maybe request it from your school advisor in finance.
And it's a good in for them toget some one on one time.
Adrian (22:23):
That's a great point, actually, because your local
school finance advisor candownload the pay periods to date
and put them in the spreadsheetfor you so you don't have to do
a bunch of data entry. If you'restarting mid-year we can at
least give you a spreadsheetfilled out to the current date.
Eleisha (22:40):
That's great, Oh, my goodness. There's so much to
know about school finances.Thank goodness for people like
Hannah and Adrian who can comein and help talk you through it.
Thank you all so much for yourtime today. Much appreciated, as
always.
Martyn (22:57):
See you. Thanks Eleisha. I should thank you.
Eleisha (22:59):
Thank you. In the next episode, we're going to keep
talking about school finances,but we're going to focus on
budgeting and financialreporting. See you next time.
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