Derek Todd: "Disney’s Gary Wilson put it perfectly when he said: “A lack of money is an excuse to become more creative”

Cost control? Time to get creative

Schools need to emulate Disney, says Derek Todd, Bursar of St Albans School

Posted by Stephanie Broad | December 12, 2015 | Law, finance, HR

• #school-finance
• #st-albans-school
• #cost-control
• #disney
• #independent-schools
• #education

Cost control is an important process for any organisation trying to make it itself more streamlined, efficient and ultimately sustainable, but controlling costs is not just the Bursar’s job, as most in the independent sector already know.

Hopefully, every Bursar will be familiar with the fundamentals of managing costs and achieving best value: cost tendering, zero-based budgeting, outsourcing, purchase control and naming and shaming budget holders who over-spend are all part of the tactics we deploy.  

Costs are created by the choices schools make, but the biggest problem we face is that the largest percentage of our budget is spent on a cost over which we have little or no control – teachers’ salaries. That’s not to say I don’t think they are worth the money we pay. Good teachers are in greater demand than ever before. Schools in the southeast especially are finding the highest quality teachers in subjects like Maths, Sciences, Modern Languages and Economics increasingly hard to come by, and that is primarily because the numbers that are qualifying in these subjects is falling.

Not on my watch 

Then there are the costs that are in someone else’s remit. What we might refer to as ‘Uncontrollable costs’ are shouldered by Heads: the breadth of the curriculum, for example, and specifically the different subjects we offer; the variety of extra-curricular activities required to attract the best students, are virtually out of bounds when it comes to cutting costs.

Many, if not most independent schools also have inherited old or historic buildings. Typically that means that part of our estate is in buildings that are listed, not fit for modern education and require greater maintenance. By their very nature, they cost far more to heat during winter, never mind the bits that keep falling off. Again, these are costs that may be considered uncontrollable, but the character of our schools is one of the factors that sets us apart in the market.

The St Albans estate

To stay ahead of the field, we have increased our new-build programme – but is that sustainable? When financing the building of our new sports hall we were fortunate to have a significant windfall from the sale of land (alongside our fundraising efforts) to add to the pot, but that is not always possible. We cannot just hold out the begging bowl every time we need funds for a new project.

Parents cannot pay for our development each time, so what next? Many schools, St Albans included, rent our facilities during the summer holidays as a means of generating cash. But this can also have cost implications that almost render the activity pointless from a money-making perspective; language schools and swimming pools need to be staffed. Heating and lighting needs to be paid for. Someone once suggested that: “Unless you are generating an extra £100,000 it isn’t worth the hassle.”

Without radical thinking many of us will face an uncertain future. We need to look outside the education sector for inspiration. Farmers for example are a sector that has needed to diversify to survive. Many are now adding value by making and selling cheese or meat products at local farmers markets rather than relying on the big supermarkets, where the pressure on margins has proved unsupportable.

Without radical thinking we are not going to solve this. I think Disney’s Gary Wilson put it perfectly when he said: “A lack of money is an excuse to become more creative” - the same needs to be said for schools and their funding.

There are no quick fix solutions or miracle cures, other than honest conversations at board level and a cold hard look at what makes us different, and what we need to do to stay unique. We need to constantly demonstrate why parents should divert their hard earned money into school fees and investing in their child’s education.

Derek Todd is Bursar of St Albans School