Efficiency Review Tool

Efficiency Review Tool

Efficiency Review Tool

Introduction

This tool is designed to help the school’s leadership team carry out a strategic review of the systems, processes and structures in place to secure the most efficient use of those public funds allocated to the school. The tool complements governors’ responsibilities for the completion of SFVS and may be used to provide evidence for some of the standards. Links to SFVS are signposted.

It is not intended that this tool is completed in one session – but that the relevant governors’ committee looks at one section each term/meeting.It may not be necessary to complete all of the sections or respond to each question.

Using the tool

a)Step One: Gather the information. Each section has a series of questions to be answered and/or information to be gathered. Wherever possible this should be provided to governors in advance of the meeting.

b)Step Two: Governors and the SLT discuss the information gathered. Does it suggest areas where efficiencies might be possible?

c)Step Three: Commit to action. Agree on the strategy for the implementation of agreed actions. Agree process for monitoring of implementation of strategy.

General considerations

1. Some areas of school finance can be regarded as good common sense e.g. shopping around before making a purchase.
2. Some areas of school finance are much more complex and a review we should be wary of jumping to simple conclusions. For example, if you find that your school spends more than average on energy is it because it is inefficient or because it has a very old buildings? Data alone will not answer this question. However a review which examines ‘the reasons behind the data’ may help you to do so and more importantly to identify where efficiencies might be possible.
3. Incremental or marginal gains add up. A review may not identify potential efficiencies of 50% in specific areas but it may indicate the potential for say 2% – 10% efficiencies in a large number of areas. Where this is the case collectively these efficiencies could make a significant positive contribution to the school’s financial position.
4. The role of governors is strategic. They should not be involved in the procurement process except where this a requirement of the school’s financial standing orders e.g. as part of a tendering process. The primary focus of governors should be on ensuring that the school’s leadership has effectivesystems and processes in place for securing the efficient deployment of resources and that the school’s leadership collectively promote an ‘efficiency culture’.

Key documents

It is essential that sufficient governors are familiar with the contents of the following documents and their implications for the leadership and management of their school’s finances:

• Schools Financial Value Standard(SFVS)including guidance notes – maintained schools. Whilst SFVS is not a requirement for academy governors it is a valuable checklist for governors of all types of schools.
• Academies Financial Handbook.
• Financial Management and Governance self-assessment (FMG) – academies only.
• Academy funding agreements.
• Governors Handbook 2014, Chapter 7 ‘School Finance’ – all schools.
• School’s Scheme of Delegation – this outlines the financial powers and duties delegated by the full governing body to its Finance Committee and the Headteacher.
• School’s Financial Regulations Policy – this outlines the financial arrangements to be followed for all aspects of the school’s finances.
• School/LA Procurement Regulations.
• DfE Benchmarking Website – allows school leaders to compare their spending on staff, goods and services with other schools.

Before commencing your Review it will be beneficial to confirm that governors have access to these documents and are familiar with the statutory requirements and guidance each contains.

Section 1: Procurement of goods and services

Introduction

There may be opportunities to improve your efficiency by:

a)Reviewing your general approach to procurement processes, systems and skills

b)Reviewing your purchasing practice with regard to specific areas of expenditure

The value of individual goods and services purchased by your school will vary enormously – from a few pounds to in excess of £100,000 on a few occasions – and it is clearly not appropriate for an identical process to be followed for every purchase. Before completing this section of the Review you will find it useful to revisit your school’s current financial regulations and/or other guidance with regard to the procurement guidelines for particular levels of expenditure. One approach is to distinguish between low, medium and high value procurement; the DfE suggests the following as a starting point but this is a matter each school to decide:

• Low – Under £10,000
• Medium – Between £10,000 and £40,000
• High – above £40,000 but below the EU qualifying thresholds

SFVS Standards

SFVS 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?

SFVS 13: Does the school have procedures for purchasing goods and services that both meet legal requirements and secure value for money?

SFVS 16: Does the school consider collaboration with others, eg on sharing staff or joint purchasing, where that would improve value for money?

SFVS 17. Can the school give examples of where it has improved the use of resources during the past year?

Areas for consideration and discussion

1. What guidancedoes the school currently provide/follow with regard to the processes to be followed for low/medium/high value purchases (provide any relevant documents for the meeting to review)?

Consider this question: Are the limits for the low and medium value purchases appropriate? How do they compare to the DfE’s suggestions? Other schools locally?

They may be too low if the specified process generates greater bureaucracy than is justified by the value of the item i.e. contributing to inefficiency.

They may be too high if the specified process leads to a lack of rigour with regard to product specification, achieving value for money and so on i.e. contributing to inefficiency

Summary: Do you need to amend your guidance (note: this is a question you may wish to return to when you have competed the following sections)?

1. The ‘procurement cycle’ breaks down the procurement process into a number of activities and provides a useful model against which to evaluate your current practice. Through the adoption of a structured process to your procurement activities you will help to reduce risk and improve efficiency.(Note: for the procurement of many low value items it will be inappropriate for governors to be involved, however governors will wish to be assured that the school has effective processes in place.)

The checklist below suggests a number of questions

The Procurement Cycle / Questions to consider / Response/evidence
1 Identify need - develop a pre purchasing review based on your school's current needs for goods, works or services
L, M, H / For which items is this a requirement?
What type of information must be provided at this stage?
What is the process for agreeing that items, say between £1,000 and £10,000 (you may wish to vary these figures,) are approved?
2 Develop your Business Case - the essential planning document for managing the whole procurement process
M, H / For which items is this a school requirement?
What type of information is required at this stage?
What is the process for approving the business case?
Are we satisfied with our current process?
3 Define your procurement approach - what are your options for carrying out this procurement?
M, H / Does the school consistently carry out Options Appraisal exercises e.g. comparing the relative merits of using Framework Agreements or Tendering?
What is the process for Risk Analysis for all medium and high value purchases?
4 Markets and suppliers – understanding the market, identifying potential suppliers
L, M, H / How does the school ensure those responsible for procurement understand the market theyare procuring from?
What guidance does it give to those responsible for procurement on the research they should engage in?
How does it encourage suppliers to compete against one another to provide goods and services to the school?
Does it hold ‘supplier open days’?
5 Tender and evaluation – advertising for bids, evaluating tenders, making the right choice
M, H / Review the most recent occasion you went out to tender for an item?
What were the most effective and least effective aspects of the process?
6 Awarding the contract – agreeing and signing the formal legal agreement, taking delivery of your goods or services
M, H
7 Contract management – to ensure you're getting the goods or services you are paying for, securing best value for your money
M, H / It is likely to be inefficient to micro-manage low value contracts but for medium or high value contracts you should have a process for contract management.
Identify 2 medium/high value contracts – one contract you are pleased with and one where the service might be improved. Evaluate the difference between the two contracts and how you might bring about any necessary improvements.
8 Closure - lessons learned – at the end of the contract, what lessons will you take forward to the next procurement?
M, H / Is it standard practice to carry out a systematic review of the contract, how well it was delivered and how well the school managed it?
Do governors receive evaluation reports on the management of medium/high value contracts?

3Procurement skills

Effective procurement practice may be viewed as a mixture of common sense (e.g. most of us shop around before making significant prices) and specialist skills (e.g. some of us are more confident and skilled in negotiating over prices; some of us have specialist knowledge about specific products).

In this section it is suggested that you take 2 or 3 examples of actual purchases made by the school and track through the processes to evaluate your systems and processesusing these questions as prompts.

Procurement process
Procurement of an item of equipment or resources with a total value of around £1,000 e.g. a purchase for a particular curriculum area.
What information must the budget holder provide in order to gain approval for the purchase?
What guidelines are given to budget holders about this part of the process?
Who makes the decision to approve the purchase? What criteria do they use to approve/not approve a request e.g. inclusion in a development plan?
Who carries out any relevant research into the market for the goods or services e.g. price comparisons, obtaining quotes? Is this the budget holder, SBM or similar?
What procurement skills does this person possess?
Procurement of an item of equipment or resources with a total value of around £5,000 – £20,000e.g. purchase of a service or a major outlay on equipment.
Who makes the decision to approve the purchase? What criteria do they use to approve/not approve a request e.g. inclusion in a development plan?
Does the school carry out a Total Cost of Ownership (TCO) exercise?
Who carries out any relevant research into the market for the goods or services e.g. price comparisons, obtaining quotes? Is this the budget holder SBM or similar?
What procurement skills does this person possess?
Who makes the decision to approve the purchase? What criteria do they use to approve/not approve a request e.g. inclusion in a development plan?
Staff training and development.
What procurement skills or expertise does the school possess?
What procurement training has taken place in the last 3 years?
Has a member of staff undertaken the DfE’sBuyways programme?
Does the school collaborate with other schools to share and develop its procurement expertise?

4 Review of current expenditure on specific goods and services

The checklist below is designed to help you review your school’s current expenditure on specific goods and services in order to determine where efficiencies might be possible. You may not be able to review all of the items at one meeting but it is suggested that over time each area is visited and that a cycle of continuous review is established.

Columns 2-5 should be completed in advance of the meeting.

Goods
Or
Service / Current supplier/arrangements / Market last tested / Outcomes from Benchmarking
Has the school used any of the following:
DfE/Audit Commission Tool?
Performance Tables financial data?
Locally generated data?
If so, what were the outcomes? / DfE support reviewed?
Local Authority support reviewed?
Academy Chain support reviewed?
Has the school explored the support available when making this type of purchase?
Has it used the support available?
If not, why not? / Action needed?
Energy
Food ingredients, catering supplies and equipment
Administrative supplies
Supply teacher insurance
Grounds maintenance improvement
Buildings maintenance and improvement
Caretaking and cleaning
Telephony
Exam fees
Shared services
ICT Services
Broadband supply
Photocopiers (multi-functional devices)
Add other areas you would like to explore

Section Two: Staffing

Introduction

‘Teacher quality is proven to be the single most important feature of successful education systems. The most efficient schools that we visited invest a great deal of effort to get the staffing structures right, recruiting the right people and ensuring that they are continually supported to improve.’

‘We have found that, particularly in the secondary phase, high attaining schools tend to spend proportionately more on teaching staff and proportionately less on education support staff than their lower attaining peers.’

Ensuring that teachers spend the greatest amount of time in the classroom, where they add most value, helps schools to achieve value for money(Audit Commission, 2011)

Expenditure on staffing is by far the largest item in the school’s revenue budget and it is vital that it is reviewed regularly and rigorously.It is, however, a complex area and this will be acknowledged in any review process. Staffing cannot be divorced from the school’s strategic aims and its capacity to deliver those aims; thus any review of staffing must be framed against the achievement of those strategic aims.

In advance of your meeting arrange ask the school’s leadership to carry out at least one benchmarking exercise and to have the outcomes available for your meeting. The DfE/Audit Commission benchmarking tool may be accessed at . If there is a local benchmarking scheme in operation either through the local authority, academy chain or on a self-help basis it will be valuable to include this data also.

The graph below (Fig 1) is an example of the type of data that is generated from the DfE/Audit Commission’s benchmarking tool. The host school is always highlighted in blue.It will be helpful to print off relevant tables and charts and to summarise the key data in the table below. Agree in advance which types of schools you wish to benchmark your school against.

SFVS16: Does the school consider collaboration with others, eg on sharing staff or joint purchasing, where that would improve value for money?

SFVS 7: Does the school review its staffing structure regularly?

Fig 1: Example of charts generated from DfE/Audit Commission Benchmarking Tool

1. Teachers

Expenditure
Outcomes from DfE/Audit Commission Benchmarking
(Is this based on Statistical Neighbours?) / School / How does your school compare with other similar schools?
Is it is it close to the average or is it at the lower or upper edge of the range? / Commentary i.e. what are the underlying reasons for the school’s position?
Does the data suggest that your teaching staff could be deployed more efficiently?
Teaching staff expenditure as a % of total expenditure
Teaching staff expenditure per pupil
Teaching staff expenditure per teacher
Pupil to teacher ratio
Teacher utilisation ratio (this will need to be calculated internally)
Outcomes from local benchmarking activity (e.g. within your local authority or academy chain)
Teaching staff expenditure as a % of total expenditure
Teaching staff expenditure per pupil
Teaching staff expenditure per teacher
Pupil to teacher ratio

1. Educational Support Staff

Spending patterns vary considerably between schools and the optimal mix will not be exactly the same for every school. However, we can gain some useful insights into how similar and successful schools spend their money from studying the 2011-12 expenditure data of all maintained schools in England. We found that among groups of schools serving pupils with similar levels of deprivation and prior attainment, the higher performing schools tended to spend proportionately more on teaching staff and less on education support staff than their lower performing peers(Review of efficiency in the schools system, 2013, p11).

The above extract focuses particular attention on the need for the school’s leadership to be very clear about the educational effectiveness of its spending decisions. For many schools there will be a direct trade-off between spending on teachers and spending on education support staff; more expenditure on one category of staff will mean less on the other. The sums involved will often be a relatively high proportion of the school’s overall budget.

This is an area in which there has been much debate but there is an emerging consensus that what how educational support staff is crucial to their effectiveness and value for money.

Ofsted found that teaching assistants are most effective when they are well-trained, well informed, aware of pupil targets and confident in assessing programmes. Ofsted concluded that the more general support offered by teaching assistants in the classroom is less effective.(ibid: 15).

In this section, therefore, it is recommended that you review both the level of your expenditure on education support staff and the effectiveness with which they are deployed.

Expenditure on education support staff: benchmarking This data should be gathered in advance of the meeting.

Expenditure on education support staff
Outcomes from DfE/Audit Commission Benchmarking
(Is this based on Statistical neighbours?) / School / How does the school’s spending compare with similar schools e.g. is it is it close to the average or is it at the lower or upper edge of the range? / Commentary i.e. what are the underlying reasons for the school’s position?
% Education support staff to teaching staff
Education support staff expenditure per pupil
Outcomes from local benchmarking activity (e.g. within your local authority or academy chain)
% Education support staff to teaching staff
Education support staff expenditure per pupil

Education support staff: review of deployment