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The Impact of COVID on School Funding and What Schools Leaders Should Be Mindful Of

  Schools and Academies Show  ·  4 minute read

COVID-19 continues to affect the day-to-day runnings of global economies and global education systems. The UK government may allocate a large number of funds towards economic stimulus and healthcare. Alongside that, education has also been a focus, with the Department for Education confirming state-funded schools will receive their budgets.

In light of this, it’s still worth preparing schools for uncertain financial futures. In this blog, we’ll delve into the impact of COVID-19 on school funding in the UK.

The Financial Impact of COVID-19

There have been several financial implications of COVID-19 on the education system in the UK. First of all, there were worries about budgets not being approved in full. Yet as we’ve stated, that fear has been assuaged. There was also the worry schools would have to remain open over the summer holiday, either for children to catch up on studies or for the children of key workers to be cared for. However, this idea was also reversed with Downing Street confirming that schools would shut.  

There have been the costs of additional cleaning services, staff overtime (as well as increased utility fees) and free school meals - those not covered by the national voucher scheme. Additionally, there’s also been a potential loss of income from school-ran daycare services not being able to operate or school-ran catering. 

While times have been tight for everyone, with many businesses having to close because of a lack of cash flow, there’s also been real care shown for the education sector. The UK Government announced it has put in place a reimbursement scheme for those schools that have suffered from exceptional costs. 

When applied for, payments will either be made directly or indirectly, distributed via local authorities. During this process, schools must assess whether their expenses are eligible for reimbursement. Similarly, there’s a cap on how much that can be claimed, depending on the size of the school. 

For example, schools with 250 pupils or fewer are eligible for £25,000 of funding, whereas schools with over 1,000 pupils can receive up to £75,000. Schools need to factor this in, in regards to what their expenses currently cost and whether they come under the limit. Costs outside of what is eligible for reimbursement should be accrued cautiously. If a cost represents a financial risk or burden, it might be worth avoiding it.

Accessing New Funding

To access this funding, the government stipulates it must relate to specific items that have been judged ‘necessary to allow schools to provide appropriate support to those children attending school during the period of partial closure'.

Funding is open to schools who are unable to meet the new costs with their existing finances, alongside schools that may have to dip into reserves/savings that could destabilise their financial health. 

School leaders need to be aware that these funds aren't open to schools that expect to add to their surpluses in the current financial year (September 2019 to August 2020 for academies and April 2020 to March 2021 for maintained schools). 

Here are more specifics when it comes to eligibility. Eligible schools would have either:

  • Had to use their historic surpluses.
  • Increase the size of their deficit.
  • Be unable to repay a deficit.

Schools should make any necessary payments using their existing budgets and record all of these in line with their local finance policies. There is more information on eligibility on the government website.

Income Generation for UK Schools

Another important function school leaders should be mindful of is income generation. 

When it comes to financial efficiency, there are two things schools can do. Firstly, create savings through more effective resource use. This could mean streamlining office functions, standardising resource allocation or improved procurement practices. 

Secondly, generate income through existing resources and new revenue streams. Now, there are many ways of doing this and also several ways of defining what income generation is meant to benefit. For some schools, it could be purely monetary and making sure there’s more money coming in. For others, it could be using this additional revenue to improve school services and educational outcomes. 

It was identified by the Institute of Fiscal Studies (IFS) that ‘passive income’ was the best income generation idea - meaning a process that, once set up, requires little further effort. For example, solar panels can be financially beneficial via feed-in tariffs, where schools can actually make money from power going back into the national grid. A case study for St Teath CP School in Cornwall found the school could raise £176,000 over a 20-year period by installing solar panels.

Additional income generation is being pursued by many schools - in the form of things like after-school clubs, fundraising events and school trips. While these require sustained effort to run, they can help to ease the growing pressures on school budgets. At the same time, school leaders should be aware that income generation schemes can’t take away focus on delivering quality education. 

If you’re considering an income generation idea, make sure it has the full support and engagement of the school business manager and governing body, alongside the head. Carefully consider the school’s current finances before implementing any scheme. You’ll also need to develop a fully robust and watertight business plan. It’s also worth seeking professional advice, private sector input and other support before pursuing income generation ideas. 

Any additional revenue streams always need to be linked to the current curriculum in some ways. If the money generated doesn’t go directly to classrooms, think of how children can learn from the income generation scheme. 

For example, if it's a solar panel implementation, can the children be taught about renewable energy first hand? Remember, development breeds development, so any income generation shouldn’t be viewed in purely monetary terms. 

Monitoring Future Finances

While the exact effect on school funding due to the impact of COVID-19 is somewhat hard to pin down at this point, the good practices associated with financial protection need to be implemented regardless. For example, school leaders will have to monitor the state of their finances constantly at a more granular level than before.

School leaders can make an effort to track the effect of COVID-19 on the UK’s national budget. Information on education budgets is available but can be somewhat delayed, so it’s worth being proactive with any finances and not committing to any large projects until they can be fully funded with no potential risk. Monitoring finances needs to be made a daily task and any gap in information can be the difference between ongoing practice or failure. 

This means schools, alongside looking into digital platforms to help remote learning, should also look into digitally transforming the business side of institutions. It will become easier as we leave the first phase of crisis response and the economy returns to a more normal state.

School funding is just one area of the UK’s education sector affected by the coronavirus pandemic and lockdown. As an educational professional, it’s worth becoming aware of the wider extent of impacts, issues and responses. To do this, you can read our latest offering, a guide detailing the impact of COVID-19 on education. Read on to find out more.

Explore the Further Impacts of COVID-19 on Education in the UK

In our guide, you can explore the state of education pre-COVID and the immediate impacts the pandemic and lockdown had on schools in the UK. We’ve included a helpful timeline so you can visualise the changes as they happened in order as well as information on the latest implementations and school openings.

Inside, you’ll also find key information on what the future of school education may look like due to these changes. To download your copy, click the banner below.

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