Article MiE

Management in Education
27(3) 96–105
Responsibility for financial management ª 2013 British Educational Leadership,
Management & Administration Society

in primary schools: Evidence from an (BELMAS)

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English local authority DOI: 10.1177/0892020613490501
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Sarah Fitzgerald
University of Huddersfield, UK
Julie Drake
University of Huddersfield, UK

Abstract
Financial management in primary schools has changed in the UK with the introduction of the Schools Financial Value
Standard (SFVS). There is increasing delegation of financial responsibility to the management team in the school, increasing
the role of the head teacher and the governing body as part of overall responsibility for the strategic direction of the
school. This article draws on contemporary research from three case studies within one local authority based on
interviews with three stakeholders: the head teacher; a member of the finance sub-committee of the governing body; and
a local authority finance officer. Evidence is presented of how financial management responsibility is discharged and on the
relationship between the three parties. It is found that financial management is increasingly being prescribed without clear
guidelines. The article presents some implications and recommendations for governance arrangements, including consid-
eration of how financial management might be made more effective.

Keywords
Governance, financial management, primary schools, United Kingdom

Introduction: Financial management as financial management responsibilities are understood,

part of school governance
Good financial management in schools will help optimize
planning, assisting in direction and control of resources for
effective, efficient and economic utilization of funding allo-
cations, thereby raising standards in the school and attainment
of pupils. The pressure on public funds presents challenges for
those involved in financial management in schools: in what
is allocated to the school; how those funds are allocated to
achieve strategic objectives by those charged with govern-
ance; and how those funds are spent in accordance with the
budget. This raises questions about the accountability process
for those involved in financial management in schools and
whether the framework for financial management is effective
in meeting the legal and educational responsibilities to the
learner.
Prior to the SFVS, improving financial management
focused on process (Audit Commission, 2009), and hence
procedure rather than practice, and how it could be
improved through evaluation of that process by those
charged with financial management. In order to evaluate
financial management, the parties involved in the task
need to understand their responsibilities; therefore this
article identifies the responsibilities in the first section.
The second section describes how the study was con-
ducted, followed by key findings organized into how
evidence of how duties are discharged, the role of the
local authority finance officer (LA finance officer), and
competencies for financial management. In the final sec-
tion implications and recommendation for more effective
financial management are presented.
This article is about financial management in schools but
is relevant to a wider audience and different organizations 
especially not-for-profit organizations  where governance
takes place. However, it is of particular interest to those
involved in educational administration and leadership
because financial management is an important contributor
to legal, financial and educational governance of all educa-
tional establishments and is being emphasized increasingly.
It is of value to those interested in educational management,
administration and leadership, particularly for those increas-
ingly involved with financial responsibility, because it is
argued here that effective financial management is the linch-
pin in the discharge of legal, financial and educational
responsibility through planning, direction and control to
achieve organizational objectives.
Corresponding author:
Julie Drake, University of Huddersfield Business School, Department of
Accountancy, Huddersfield, HD1 3DH, UK.
E-mail: j.e.drake@hud.ac.uk
Fitzgerald and Drake 97

Changes in financial management

Implications for

Management
Learner Governance and
within the school
governors

Figure 1. Implication of changes in financial management: Groups affected.

Background and context governing body’ and that ‘the budget must be spent for the
purposes of the school’ (DCSF, 2010: 73). The production
There are approximately 17,000 primary schools in England,
of the budget is the head teacher’s responsibility in associ-
with a delegated average budget of £1.0 million (DfE, 2012)
ation with the local authority finance officer; the budget
per school. The government in the UK requires effective finan-
should then be submitted to the governing body for
cial management of the funding so that ‘money is spent wisely
approval. The role of the head teacher is to take responsibil-
and properly, and allows schools to optimize their resources to
ity for the internal organization, management and control
provide high quality teaching and learning and so to raise stan-
of the school. Head teachers must implement the governing
dards and the attainment of their pupils’ (DfE, 2011). Figure 1
body’s strategic financial framework, providing the gov-
shows the three key stakeholder groups affected by the out-
erning body with information so that they are confident that
comes of financial management in schools. The learner is at
responsibilities they have delegated to the head teacher
the heart of the consequences of the practice of financial man-
have been met (DfE, 2011: 1).
agement in schools, yet there is surprisingly little empirical
Prior to the SFVS, there was a first attempt to disseminate
evidence of how those charged with increasing financial
strong financial management with the publication of the
responsibility  the school management team and governors
Financial Management Standard in Schools known as
 are involved in securing strong and effective financial man-
FMSiS (DCSF, 2004). It was officially described as ‘a sim-
agement to the ultimate benefit of the learner.
ple one page statement of what a school that is well managed
Although the role of governors in financial management
financially would look like’. However, in practice FMSiS
in schools has not been explored in depth, the broad impor-
proved to be ‘a lengthy and burdensome process’ which was
tance of school governance has, and the complexity of the
‘unwieldy and expensive’ (DfE, 2010) and was criticized for
role has been recognized: see, for example, Balarin et al.
focus on the process rather than the achievement of economy
(2008), DCSF (2010), McCrone et al. (2011) and Ofsted
and efficiency (Audit Commission, 2009: 22). Schools were
(2011). These studies identified financial management as
required to apply the FMSiS every three years with the aid of
one of the key roles for the governing body. With increasing
a self-evaluation tool. Compliance with the Standard was
pressure of reduced funding, it is important to investigate the
audited, usually by the local authority. Such infrequent eva-
implications for governing bodies and management teams in
luation of financial management shows a lack of rigour when
schools. Changes have consequences for the head teacher
schools were being given increased delegated responsibility.
leading the management of the school and for the governors
However, the FMSiS was short-lived, as the Secretary of
(see Figure 1). With consideration of the context of how the
State for Education (DfE, 2010) announced (in November
school management team fulfils its role, including the rela-
2010) that it would end with immediate effect. The replace-
tionship with the LA finance officer, then necessary plan-
ment presented a simpler requirement than the FMSiS, con-
ning, directing and controlling of the financial resources
centrating on the key points about which governors and
can be examined. Ultimately, anything that impacts on how
heads ought to assure themselves.
schools are financed and its funds managed will have an
The school must now apply the SFVS annually, com-
impact on the learners; poor financial management will
pleting their first application and submitting it to the local
directly impact on those the school seeks to serve.
authority no later than March 2013. The SFVS consists of
23 questions which governing bodies should discuss for-
Governors’ and head teachers’ mally with the head teacher and senior staff (see Appendix
A). For example, one of the questions is, ‘Does the govern-
responsibilities for financial management
ing body receive clear and concise monitoring reports of
in England the school’s budget position at least three times a year?’
In England the DfE (2011: 1) guidance is clear that the for- (DfE, 2011: 2). On receipt of the documentation the local
mal ‘responsibility for financial management lies with the authority does not audit the form but will use it to inform
98
its programme of financial assessment and audit. The
responsibility rests with the governors to ensure that they
complete the form accurately and hold the head teacher
to account. The SFVS guidance notes (DfE, 2011: 1) state
that the main governing body can delegate their responsi-
bility to a finance sub-committee, which must then provide
a detailed report to the full governing body. In overview, it
seems that in the last decade, financial management, partic-
ularly for the role of governors, has been an increasing con-
cern. The significant change has been the move from
FMSiS to the current SFVS, with the latter concentrating
less on procedure and process and more on self-evaluation.
The SFVS comprises four key areas in the financial
management process: the governing body and the school
staff; setting the budget; value for money; and protecting
public money. Thus, as the responsibilities for financial
management have increased, so has the guidance for gover-
nors with the introduction of the SFVS, but little is known
about how the SFVS is used, how the structure of govern-
ance allows its consideration and how key people involved
in financial management are meeting their responsibilities
(or not).
The article is presented in four sections. This section has
introduced the responsibilities for financial management in
schools in England. The remaining three sections will
explain the methodology and the main findings, and discuss
the implications of financial management in schools for the
stakeholders in Figure 1.
Method
The study involved three primary schools from one local
authority in England. Each of the schools had created a
finance sub-committee, and therefore a member of that com-
mittee was interviewed for their proximity to financial man-
agement as a representative member of that committee. The
interviewees were selected by using snowball sampling
(Bryman and Bell, 2007: 200)  a form of convenience sam-
pling  commencing with one head teacher. Each head
teacher provided a governor contact from the finance com-
mittee. The head teacher, a member of the finance sub-
committee from each school and a local authority finance
officer were interviewed using semi-structured interviews
as part of the exploratory and interpretive nature of the study.
The study received ethical approval and interviews were
conducted from November 2012 to January 2013.
The sample schools
This sub-section presents the contextual data sourced from
the Ofsted website.
School 1 is a larger than average primary school with
below average numbers of pupils known to be eligible for
free school meals. The head teacher was interviewed and has
been in post for six years. The governor interviewed was a
member (not the Chair) of the finance sub-committee  a
parent governor in his first term of office. The most recent
Ofsted report rated the school as satisfactory overall, the
effectiveness of the governing body was rated as satisfactory,
Management in Education 27(3)
and leadership and management were also rated as
satisfactory.
School 2 is a junior school (ages 7 to 11) and is smaller
than the average primary school (usually ages 4 to 11).The
proportion of pupils known to be eligible for free school
meals is well above average. The head teacher was inter-
viewed and had been in post for five years, having been a
head teacher at another school within the authority previ-
ously. The governor interviewed was the Chair of the
finance sub- committee  a parent governor serving a sec-
ond term of office. The most recent Ofsted report rated the
school as good. The effectiveness of the governing body
and leadership and management were also rated as good.
School 3 is a larger than average primary school. The pro-
portion of pupils eligible for pupil premium (funding
allocated to schools for pupils who have been eligible for free
school meals at any point in the last six years) is lower
than average. The head teacher was interviewed and had
been in post for eight years. The Chair of the Finance Sub-
committee was interviewed  a community governor serving
a third term of office. He had been a governor previously in
another authority a number of years ago. The most recent
Ofsted report rated the school as good, and leadership and
management were also rated as good. Under the new Ofsted
regime there is no separate rating for governance.
Each of the head teachers in the sample had experience
at that level for at least five years. The Local Authority
(LA) finance officer had experience of working in several
local authorities over a number of years. Each school has
a designated finance officer; the finance officer inter-
viewed is the head of financial services to schools for the
local authority. The local authority provides support to
schools, assisting schools and their governing bodies to
meet the requirements of the Local Management of Schools
and Fair Funding. Fair Funding (Eurydice, 2001: 2) is the
methodology on which the calculation of the school budget
share is based, incorporating budget planning, financial
management and administration. Interviewing three types
of stakeholder in the financial management process enabled
the researchers to interpret how financial management
responsibility is discharged across the governance struc-
ture. Further, this enabled the researchers to concentrate
on the practice of financial management, rather than
describing procedure, in the spirit of the SFVS.
Initially, the qualitative data were collected to address
four key questions: What are the governors’ and head teach-
ers’ responsibilities for financial management? How are
these responsibilities discharged? What are the core compe-
tencies governors need to achieve this aspect of their role?
How are these competencies acquired? Based on multiple
observations and themes arising from the analysis of the
interview data, this article focuses on two of the key find-
ings: the evidence of how financial management responsibil-
ity is discharged; and the relationship between the three
parties in order to consider how financial management might
be made more effective.
The semi-structured interviews varied in duration from
15 to 54 minutes. The average for the head teacher inter-
views was 30 minutes. The average for the governors was
Fitzgerald and Drake
Table 1. How responsibilities are discharged: The structures.
Staff Parent Minimum
governors governors number of
Primary Sub- Number of on the on the meetings
school committee members committee committee a year
1 Yes 5 No Yes 6 ered not to have the necessary skills and knowledge were
2 Yes 4 Yes Yes 6
3 Yes 8 No Yes 3
29 minutes. Interviews took place at a variety of sites,
including the school, work place of the interviewee and,
in one instance, the home of the governor. Interviews were
digitally recorded and transcribed. The transcripts were
analysed according to the research question asked for com-
parative analysis within the same role, in the case of the
head teacher and governor, and across the three roles,
incorporating the LA finance officer.
Findings
The responsibilities for financial management are consid-
ered and analysed, organized as follows:
 evidence of how the duties are discharged
 understanding responsibilities for financial management
 role of the finance officer
 competencies for financial management.
How do governors and head teachers discharge their
responsibilities for financial management?
Table 1 shows the structures implemented by the three
schools in discharging their responsibilities. In the absence
of strict rules, a number of different models to support
financial management were found. Each school included
in the study had divided some of the key governor respon-
sibilities by creating sub-committees. Schools in the study
have two sub-committees, one to cover the improvement of
results and one to cover financial responsibilities, including
monitoring staffing and buildings (if the school is responsi-
ble for its own building). These sub-committees had dif-
ferent names in the different schools; for example, the
sub-committee responsible for financial matters in School
3 was called the resources sub-committee, while School 2
called it the finance sub-committee.
The membership of the sub-committee
Table 1 shows the structures through which financial man-
agement responsibility is discharged. The number of mem-
bers on the finance sub-committee varies across the three
schools, which is not a reflection of differing sizes of the
whole governing body, which in each case was approxi-
mately 14.
Two reasons were given for the small size of the sub-
committees in School 1 and School 2. Firstly, the difference
in size was a result of the selection methods used by the gov-
erning bodies when deciding which members of the full
99
governing body would serve on the finance sub-committee.
Schools 1 and 2 indicated that the sub-committee was selected
from members of the main governing body. Selection was
based on the abilities of the governors, the sub-committee
comprising of only those governors who already had the
necessary financial expertise. Governors who were consid-
not invited to be members of the sub-committee. In both cases
the head teachers indicated that they took a lead role in the
selection of the members of the sub-committee. A surprise
in this selection process arose when both head teachers made
reference to the fact that they were sometimes uncomfortable
with parent governors and staff governors being members of
the finance sub-committee  resulting in the head teacher
manufacturing their de-selection.
With parent governors, the ‘de-selection’ from the pro-
cess of involvement was for reasons to do with the head
teacher’s assessment of the suitability of the parent. There
was also some evidence of the belief that some parents
would not be able to cope with the need to be objective
when dealing with financial and staffing aspects  for
example, matters relating to teaching staff who had proxim-
ity to their children.
The reasons given for the ‘de-selection’ of staff governors
from involvement in the finance committee was that staff
members could not always contribute owing to conflicts of
interest, particularly when staffing issues were being dis-
cussed because they were a member of that peer group.
There was a staff governor serving on the finance sub-
committee of School 2; however, this was the deputy head
teacher. Therefore the problem of conflict of interest seemed
stronger relative to staff not involved at school management
level; hence this was not considered an issue in School 2
because the deputy head teacher was a member of the school
management team. In the apparent de-selection of staff gov-
ernors for the finance committee, if a request to join were
made, it was not clear from this study if the request would
be refused or if staff governors showed any interest in ser-
ving on the finance sub-committee. Nor was the option of
excluding such members from sensitive elements of the
agenda developed.
The size and meeting frequency of the committee
School 3 has a much larger finance sub-committee than do
Schools 1 and 2.The head teacher did not express the same
concerns as head teachers 1 and 2 in terms of selection/de-
selection, perhaps because the larger size avoids bias and
conflict of interest issues. However, there are no staff mem-
bers currently on the finance sub-committee of School 3.
Head teacher 3 did indicate that she was particularly reliant
on two key governors who had ‘lots of financial knowl-
edge’. So even though the sub-committee as a whole was
larger there was a great deal of reliance on two key gover-
nors. However, the smaller sub-committee size could be
influenced by the ‘de-selection process’.
There is a difference in the number of meetings held by
each school in an academic year. All three schools held at
least one finance sub-committee meeting each term, which
100
Table 2. Financial support to head teachers.
Financial support
available in school School 1
Local authority finance officer visits Yes
School staff A full time (term time) school
business manager
School staff attend governors’ No
meetings
is the minimum requirement set in the SFVS. Two of the
schools held at least one meeting each half-term. The rea-
son for more than one meeting was because things often
change within the half-term and decisions need to be made
 another indication of governor activity in monitoring the
budget outcomes. There was also an indication that head
teachers and governors were happier monitoring the budget
on a half-termly basis, even if there had been no changes to
building or staffing costs.
In addition to scheduled meetings, other meetings were
called as required, indicating responsiveness in financial
management. One of the reasons cited for the need for
sub-committees was to be able to call finance sub-
committee meetings at short notice and have enough mem-
bers able to attend so that the meeting was quorate and able
to make decisions. To be quorate, a meeting must have at
least three members of the sub-committee, or more, as deter-
mined by the sub-committee present. As can be seen from
Table 1, School 2 has only four members, so would therefore
be able to make decisions with only the head teacher and two
governors present. The head teachers of School 1 and School
2 both expressed the need to call meetings at short notice in
order to make decisions promptly, particularly in the area of
staffing. It is clearly the case, throughout the analysis of the
interviews, that there is a great deal of reliance on one or two
key governors with the necessary financial knowledge.
However, it is worth noting that there is the possibility of
bias and a shift from a strategic to a more operational role
when the numbers for a quorum are so low.
Table 2 shows that in addition to the reliance on govern-
ing body members for financial expertise there is day to day
support available to the head teachers, but once again it is
characterized by variety as shown in Table 2. School 3 had
the highest level of support in school and the fewest number
of finance sub-committee meetings. At the other end of the
scale, School 2 has only a peripatetic bursar, six meetings per
year and only four members. The effect of this appears to be
an increased reliance by the head teacher on the school gov-
ernors for support with financial management, in particular
the Chair of the Resources Sub-committee.
Understanding responsibility for financial
management: A finance officer perspective
The finance officer oversees the financial management pro-
cess in over 100 schools. He observed that most governors
Management in Education 27(3)
School 2 School 3
Yes Yes
Office staff only Part time (term time)
Peripatetic bursar school bursar
Visits school once or
twice a month
No Yes
had an understanding of their legal obligations and demon-
strated a fair understanding of the financial position of the
school relative to its budget. Governors were recognized as
‘getting involved’ in the management of resources. ‘By and
large schools actually do understand what they’re doing
and manage their budgets pretty effectively’, making sure
that the budget looks reasonable and understanding the
strategic direction of the school by engaging with the bud-
get mechanism as a monitoring tool. It was reported that
few governing bodies had a governor active in the setting
of the budget.
Although governors clearly understood duties and
responsibilities, the analysis of the data revealed that effec-
tive financial management was disadvantaged by the remo-
teness of governors from the budget setting process and did
not always work well, resulting in ‘governors asking ques-
tions which the head couldn’t answer’ about the budget.
Sometimes the knowledge held by the head teacher about the
budget was limited, in the opinion of the LA finance offi-
cer’s wider experience. This lack of knowledge about the
budget was attributed to a lack of communication between
the head and the bursar (who is responsible for maintaining
the school’s financial records). This lack of ‘in-school’
knowledge about the budget potentially restricts the effec-
tiveness of financial management as the LA finance officer
observed governors struggling to understand the meaning
and implications of the budget: firstly, because they are not
involved in the setting of it, hence little understanding of the
variables that contribute to it; and, secondly, because the
head teacher has inadequate knowledge to explain it. This
was not to be critical of the level of knowledge held by the
head teacher about financial management, who in the first
instance is not a finance person, but is a scenario that could
impede the impact of governors on the financial manage-
ment of schools: ‘we do not see huge amounts of evidence
that shows what impact governors have’. It suggests that
impact can be reduced when the budget is not well under-
stood, which could be resolved by some governors getting
involved in the budget setting process.
The finance officer did not perceive a significant gover-
nor impact, but then again he did not expect them to because
he perceived their role to be supporting and challenging
decisions made by the head teacher. Surprisingly, the finance
officer has already acknowledged that some governors were
more active than others  for example, going to budget set-
ting meetings. Further, he did acknowledge the important
Fitzgerald and Drake
role the governors have when there are financial decisions to
be made, noting that it varied from school to school, for
example when decisions needed to be taken involving the
reduction of staffing in a school. Largely, the finance officer
was seeing decisions made based on governors using the
budget outcomes rather than engagement and understanding
of the process of financial management that would involve,
for example, assisting in setting the budget. Thus, although
financial management is key, the contextual variables in set-
ting the budget that impact on the understanding of the out-
comes may hamper the overall effectiveness of financial
management.
Understanding governor responsibility for financial
management: A head teacher perspective
Consistent with the finance officer, the head teachers also
identified the role of governors as primarily of support,
closely followed by challenge of outcomes. In respect of
theirs and the governor role:
They do have to ask those difficult questions
and
They have a role in ensuring that best value is achieved
with public money. (HT1)
. . . they are looking at best value in terms of how we are
using the money to get the best from the children. (HT2)
While two head teachers focused on best value and pro-
tecting the public purse, the third (HT3) described this role
in financial management more strategically. It was a role of
being involved and informed in order to actually impact on
the direction of the school but ‘it is very easy to be dis-
tracted from my core purpose which is the quality of teach-
ing and learning’ (HT3). For head teachers, good financial
management started with working within a budget but also
involved wider aspects such as ensuring that best value was
achieved. Head teachers were clear that this must be
achieved whilst maintaining a clear focus on the teaching
and learning priorities of the school.
Thus, on the face of it the governors were more con-
cerned with the ‘spend’ of the budget, securing value for
money with the focus on the learner, hence outcomes. In
two of the three cases in this study, a governor from each
school attended the budget setting meeting alongside
the head teacher  an area of good practice identified by
the LA finance officer. This is described as ‘unusual’ by the
LA finance officer but may be owing to the snowball sam-
pling, which may bias the sample by encouraging those to
participate because they are confident in the topic area of
financial management. Although convenience sampling
may skew the level of involvement in budget setting, it nev-
ertheless contributes to the evidence of how financial man-
agement is executed. Such attendance at budget setting
meetings closes the gap between the governors and the
local authority and it may give the governors a better under-
standing of the mechanisms of the budget setting process –
101
it certainly increases their involvement as a governor. Fur-
ther, the activity shifts from a mere monitoring role of out-
comes for challenge, towards better planning and direction
of the organization and an increased strategic capacity as a
governor.
In all three case studies, governors viewed the key
aspect of financial management as working within the bud-
gets allocated to them by the local authority, with the need
to achieve best value or spend wisely. The governors at
Schools 2 and 3 were keen to report the need to focus any
spending on the improvement of the school’s results. The
governor at School 2 was very clear that the role was about
monitoring the finances to make sure that the school is
‘using money efficiently for the best results’. Further, the
three governors were clear that their role was one of provid-
ing support to the head teacher with financial decisions and
providing challenge if necessary. Such support was
reported as related to staffing changes or larger expenses
such as the purchase of equipment, i.e. the decisions which
would have a large impact on the school budget rather than
decisions relating to the day to day operation of the school.
Therefore, the main role of the governing body, inter-
preted from the analysis of interviews, is the monitoring
role in financial management, using the budgets delegated
from the local authority. However, two of the three cases
show schools where the involvement extends into the bud-
get setting process, which is commended by the finance
officer as good practice. Also, challenge may be improved
when the variables contributing to the budget are better
understood in order to engage governors more effectively
in the monitoring, planning and direction of resources.
The role of the LA finance officer
Thus far the article has concentrated on the in-school finan-
cial management. Examination of the LA finance officer
role extends the study across the schoollocal-authority
boundary as an important part of the budget setting process.
In this study the role and activities of the LA finance officer
were consistent. The finance officer indicated that there are
two key times for finance officers to visit schools but that
most schools receive three visits from their allocated
finance officer each academic year. The purpose of these
visits is to support the school through the budget and bud-
get setting process, ensuring that schools have a clear
understanding of their budget position. The budget infor-
mation provided is for three years (the current financial
year and the following two years). Funding allocation for-
mulas are subject to change; budget allocations are based
primarily on pupil numbers (also subject to change in the
current academic year), and therefore it is the current year
budget which is ‘live’ and monitored in year.
The school financial year starts in April and the visits
during the year were described as:
1. Visit 1: MarchMay – preparing the budget for the
coming financial year prior to approval by the govern-
ing body. Budgets must be approved by the governing
body before the end of May.
102
2. Visit 2: September/October – amending the budget for
any changes from the original, e.g. staffing changes or
changes to pupil numbers.
3. Visit 3: January/February – amending the budget to
agree with the PLASC (Pupil Level Annual Schools
Census).
The meetings were ‘usually between the school head
teacher, a bursar and other members of the leadership
team’. The finance officer noted that in some schools gov-
ernors are also invited and involved in the discussion but,
again, he was keen to point out that this was unusual and
that sometimes he would only meet with the head teacher.
It can be concluded that the LA finance officer is very
much an external adviser leaving the deployment of key
decisions to the school management team with the support
of the governors.
Head teacher views on competencies for financial
management
Thus far, evidence has been presented about how governors
and head teachers discharge their responsibilities in the
governance structure of the schools, from which the sup-
porting role of the LA finance officer emerges. This section
will now consider further the head teacher who emerges as
the hub of the financial management process, around which
the other stakeholders operate in their respective roles.
Despite an increasing role in financial management, all
three head teachers expressed a similar concern relating to
their own capabilities. Each one described how they were
initially unprepared as new head teachers to take on the
financial management of their schools. They felt that the
training they had received prior to taking up a headship role
had not adequately prepared them. It is also fair to say that
they acknowledge that their priority should always be the
quality of teaching and learning taking place in their school
but that poor financial management could jeopardize that,
providing more evidence to support the argument here that
financial management is the linchpin to school and learner
success as the resource follows the learner. Moreover, it
appeared that head teachers, despite being at the hub of
financial management, were not confident in that role:
I feel secure that my governors have the knowledge to sup-
port me and are more knowledgeable financially than me.
(HT3)
All three head teachers said that they now felt able to
meet the needs of financial management but this had been
achieved through years of experience and the support given
by governors, the local authority and school staff. To that
end each recommended that it was very important to give
their deputy heads early exposure to the financial aspects
of running a school. As such, deputies were included in
decisions and invited to attend governing body meetings
as associate members. This is an important finding from the
study as it suggests the evident exclusion from finance
committees is unhealthy for prospective head teachers and
Management in Education 27(3)
perhaps the same for less senior staff with management
aspirations. They are often excluded from membership of
the finance sub-committee and directed towards sub-
committees that deal with aspects of attainment and
achievement when they should be exposed to financial
management earlier in their careers.
The finance officer concurred that unless new head
teachers had been given access to budget information when
they were deputy head teachers they may not have the nec-
essary grounding to take on their financial responsibilities.
This clearly has implications for succession planning in
schools and for the training of potential future head teach-
ers. The training of head teachers has been improved in
recent years with the introduction of the NPQH (Audit
Commission, 2009; Thody, 1998), but the level of financial
training  what there is and what there ought to be  has
not been investigated under this new regime.
Discussion
It is reassuring that the learner is at the heart of the bud-
get decision as emphasized from School 3: ‘your role as
a governor is to ensure that money is being spent cor-
rectly on looking after the property but more impor-
tantly making sure that the education of the children is
the priority,’ and:
. . . that the money is well spent, . . . it is public money that
comes with those children and it has to be spent on those
children and we need the best value for those children and
the governors are there to make sure that you do. (HT1)
. . . they are looking at best value in terms of how we are
using the money to get the best from the children. (HT2)
governors are confident to challenge spending and deci-
sions of that nature. (HT3)
The responsibility for financial management in schools
is increasingly being delegated and requirements documen-
ted. Although the guidance on how a school must evaluate
its effectiveness has increased, the actual requirements and
responsibilities of governors and head teachers have been
less prescriptive. Those charged with governance can
choose what they do and how they execute their responsi-
bilities. For the first time a study provides insight into how
the financial management of schools is conducted based on
the views of three significant players: the head teacher; a
governor with proximity to the financial management pro-
cess; and the LA finance officer.
The main tool that governors and head teachers use to
manage the school financially is the budget that is devel-
oped by the head teacher in association with the local
authority finance officer, the school bursar (if onsite) and,
in a minority of schools, a governor from the resources
sub-committee. The governors are aware of their responsi-
bilities for financial management but are usually inactive in
the budget setting process, although they do use it to govern
through monitoring as part of the finance committee. The
impact of financial management may be impeded as the
Fitzgerald and Drake
head teacher is the conduit of the budget to the governing
body, having to explain to the governors in the absence
of direct governor contact with the bursar.
There are two issues emerging from the study: firstly,
the increasing need for head teachers to have an awareness
of finance, which might be developed as part of local
authority head teacher development or individual personal
development; secondly, with increasing responsibility for
financial management, that governors need a more active
role in the development and monitoring of the budget in
order to discharge effectively the duties that they clearly
recognize as a significant part of their role.
The creation of finance sub-committees facilitate effec-
tive financial management and allow concentration of
effort and development of expertise. However, the variety
in size requires some further explication and evaluation
in terms of effectiveness but requires further research with
a larger sample. What is significant is that head teachers
seek committee members who have good financial knowl-
edge, which has the advantage of promoting good govern-
ance generally but also will support the head teacher in
their role as intermediary between local authority, bursar
and governing body.
Ranson et al. (2005: 361) noted that governing bodies
were often made up of core and peripheral governors.
There are indications here of the development of possible
core and peripheral governors. Core governors are more
central and important to the head teacher in discharging
their own duties, while peripheral governors are less central
to the financial management and, possibly, less engaged in
governance of the school generally. This reliance on gover-
nors with financial capabilities puts them in a core position
on the governing body, and provides the potential for being
influential with the possibility of dominance. As the num-
ber of governors with financial capabilities may be limited
this is likely to put additional roles and responsibilities on
their shoulders. It seems that because primary schools
appear to lack the resources to employ full time, qualified,
finance staff it may lead to an increased reliance on finan-
cially able governors and the potential for crossing of a
boundary from strategy to operations.
This study has begun to address the lack of literature on
financial management in primary schools, recognizing that
the governor role is increasing and becoming more challen-
ging and crucial. While empirical research in the primary
school sector is limited, the sector might learn from other
sectors. For example, Gleeson et al. (2011: 791), in their
work on governance in further education colleges, noted that
personal issues to do with calibre and chemistry were judged
to make a difference in governance. All three head teachers
in the study considered themselves to be lucky in the quality
of governors on the finance sub-committee, which suggests a
strong working relationship and chemistry:
. . . we are very careful, I and the Chair, to make sure
you’ve got the right, you know, people. (HT1)
The inclusion of financial expertise on governing bodies
is increasingly important but there is much more to debate
103
about what is good practice whilst pursuing effective finan-
cial management. This study raises further questions, some
of which are mentioned here as more of the evidence is
summarized:
1. Governors are using budgets to serve the needs of lear-
ners by monitoring the budget in their governor role.
Not all the governors in this study engage in the budget
setting process in the schools but the finance officer
observes it as commensurate and useful to the governor
acting out a role in financial management. Would that
involvement improve the overall financial manage-
ment of the school? Early indication in this study sug-
gests that it would be conducive to planning and
direction as a fundamental part of the financial man-
agement process.
2. The creation of finance sub-committees is favoured by
the schools in this study. Should they be made a com-
pulsory as part of articles of governance in primary
schools under SFVS? This would reinforce the notion
of financial management as the linchpin holding legal,
financial and educational aspects of governance
together – for ‘good’ governance.
3. Finance sub-committees vary in their composition.
Composition is influenced by the level of financial
support within the school unit, the degree of influence
and personal demands of the head teacher, and head
teacher perceptions and influence on the perceived
conflict in the role of being a staff and/or parent gov-
ernor. There is evidence of a governance dilemma
about the right stakeholder for the role of governor and
any conflict of interest they bring to the table of gov-
ernance. Should the composition of the finance com-
mittee be regulated?
Conclusion
Financial management has implications for governors,
school management teams and the learner, and should
be recognized as the linchpin of good governance. The
governors’ responsibility for financial management is a
key function for the sustainability of learner provision and
discharging financial responsibilities – including the right
level of challenge to the management team – supporting
the broader duty to promote high standards of educational
achievement. The financial management of the school
is just one part of this wider role of governance. In the
absence of guidelines this study found variety in how the
responsibilities are discharged, but there are lessons that
could be learned from appreciating the issues at hand and
recommending good practice. Financial management is the
linchpin that enables the learner to be educated in a sustain-
able and high quality organization. Good financial manage-
ment in schools goes beyond monitoring outcomes, and
this study suggests that by more contribution to the budget
setting process, the monitoring, planning and direction of
resources would be improved. Further, effective financial
management will be supported when this aspect of the role
of governor includes a particular skills and knowledge set,
104 Management in Education 27(3)

not least because it is very likely that the head teacher of a
primary school is going to be looking for additional support
when overseeing the financial management of the school.
Finally, it is surprising, while the responsibilities of gov-
ernors are increasing in England, that the latest Ofsted
reports no longer give a separate judgement for governance.
However, ‘the inspection examines the impact of all leaders,
including those responsible for governance’ (Ofsted, 2013:
19), and must ‘evaluate how effectively governors challenge
and hold senior leaders to account for all aspects of the
school’s performance and ensure financial stability’ (Ofsted,
2013: 20). Optimizing resource utilization means achieving
a high quality teaching and learning experience, raising stan-
dards and attainment as funding follows the learner. Moni-
toring budget outcomes in isolation will not enable the
financial management team, identified and interviewed in
this study, to plan and direct funding. The participants in
financial management in schools may need more prescrip-
tion, or evidence of good practice, including training, in both
governance structures and activities in order to increase their
ability and confidence to execute effective financial
management.

Appendix A
Schools Financial Value Standard
List of questions

A: The governing body and school staff

1. In the view of the governing body itself and of senior staff, does the governing body have adequate financial skills among its
members to fulfil its role of challenge and support in the field of budget management and value for money?
2. Does the governing body have a finance committee (or equivalent) with clear terms of reference and a knowledgeable and
experienced chair?
3. Is there a clear definition of the relative responsibilities of the governing body and the school staff in the financial field?
4. Does the governing body receive clear and concise monitoring reports of the school’s budget position at least three times a year?
5. Are business interests of governing body members and staff properly registered and taken into account so as to avoid conflicts of
interest?
6. Does the school have access to an adequate level of financial expertise, including when specialist finance staff are absent, e.g. on sick
leave?
7. Does the school review its staffing structure regularly?
B: Setting the budget
8. Is there a clear and demonstrable link between the school’s budgeting and its plan for raising standards and attainment?
9. Does the school make a forward projection of budget, including both revenue and capital funds, for at least three years, using the
best available information?
10. Does the school set a well-informed and balanced budget each year (with an agreed and timed plan for eliminating any deficit)?
11. Is end year outturn in line with budget projections or, if not, is the governing body alerted to significant variations in a timely
manner, and do they result from explicitly planned changes or from genuinely unforeseeable circumstances?
C: Value for money
12. Does the school benchmark its income and expenditure annually against that of similar schools and investigate further where any
category appears to be out of line?
13. Does the school have procedures for purchasing goods and services that both meet legal requirements and secure value for
money?
14. Are balances at a reasonable level and does the school have a clear plan for using the money it plans to hold in balances at the end of
each year?
15. Does the school maintain its premises and other assets to an adequate standard to avoid future urgent need for replacement?
16. Does the school consider collaboration with others, e.g. on sharing staff or joint purchasing, where that would improve value for
money?
17. Can the school give examples of where it has improved the use of resources during the past year?
D: Protecting public money
18. Is the governing body sure that there are no outstanding matters from audit reports or from previous consideration of weaknesses
by the governing body?
19. Are there adequate arrangements in place to guard against fraud and theft by staff, contractors and suppliers (please note any
instance of fraud or theft detected in the last 12 months)?
20. Are all staff aware of the school’s whistleblowing policy and to whom they should report concerns?
21. Does the school have an accounting system that is adequate and properly run and delivers accurate reports, including the annual
Consistent Financial Reporting return?
22. Does the school have adequate arrangements for audit of voluntary funds?
23. Does the school have an appropriate business continuity or disaster recovery plan, including an up-to-date asset register and
adequate insurance?
Fitzgerald and Drake
Funding
We are grateful to the Financial Ethics and Governance Research
Group (FEGReG) at the University of Huddersfield Business
School and its Director, Professor Chris Cowton, for the provision
of funding to facilitate the research reported in this article.
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Author biographies
Sarah Fitzgerald is a part time lecturer in the Department
of Accountancy at the University of Huddersfield Business
School, specialising in management accounting and finan-
cial accounting. She has been involved in educational gov-
ernance in primary education since 2003, taking on the role
of Chair of Governors in 2004. Sarah is a Member of the
Institute of Chartered Accountants in England and Wales
(ACA) and a Fellow of the Higher Education Academy
(FHEA).
Julie Drake is Head of Postgraduate Programmes and a
Principal Lecturer in the Department of Accountancy at the
University of Huddersfield Business School, where she is
also a member of the Financial Ethics and Governance
Research Group. She has been involved in educational gov-
ernance since 2002. Julie’s lecturing specialism is auditing,
and she supervises Masters and Phd students in accounting,
audit, and education and financial ethics. Recently, she has
published on governance in further education and audit
education, whilst completing her doctoral thesis on primary
healthcare management. Julie is a Fellow of the Institute of
Chartered Accountants in England and Wales (FCA) and of
the Higher Education Academy (FHEA).