Four Critical Stages of School Budgeting Process

Adapted from The four critical stages of the school budgeting process


While there are several steps to the school budgeting process, they fall broadly into four stages: review, planning, forecasting and implementation/evaluation. Every stage feeds into the next. It follows a cyclical process and relies on taking predetermined actions at specific points of the year. The benefit is a considered, informed and realistic budget that sets you up for financial success.


Source: The Access Group, 2019


Stage 1: Review

Reviewing past performance against budgets can be revealing. How accurate was the budget? Where did the underspends and overspends occur? These questions can help you shape your school budget and increase its accuracy. Look at the cost base too. It can give you a foundation on which to build your budget and be a prompt to review expenditure. Benchmarking against similar schools can help you understand how your spending compares and put it into context. It’s also an opportunity to identify cost savings or improvements.

Stage 2: Planning

Once you’ve gathered your historical data and carried out the benchmarking, it’s time to think about your resource, staffing and accommodation needs for the next year. The planning stage shouldn’t be a one-step process. It’s important to model a range of income and cost scenarios based on your most important data. To be as accurate as possible in your planning, consider data such as:

  • Changes in funding (revenue and capital income)

  • Number of pupils and their characteristics

  • Class and group sizes

  • Staffing profiles and increments

  • Pay and price increases

  • Procurement and maintenance

  • Longer-term development plans in areas such as asset management, premises, staff and IT/ICT

  • Local Authority Plans/Central Government Plans

  • Ofsted reports

Stage 3: Forecasting

Your three to five-year forecast should be more than your ‘best guess’ for it to be useful. Yet it’s difficult to predict changes in areas such as funding, pupil numbers and the costs of staffing. It can be beneficial to get involved in the local community to stay abreast of developments which could impact your school. Being active within the wider education sector can also give you insight into factors most likely to affect you. You can use this knowledge and your historical data to model a range of income/cost scenarios to assess the impact of varying factors on the budget. Factors to consider include:

  • Funding over the next three years

  • Changes in pupils and their characteristics

  • Curriculum changes

  • Likely staff profiles

  • Teaching staff salary rises

  • Inflation

  • Aims of the school development plan

  • Longer-term improvement and development aspirations

‘What if’ analysis is most useful when you model trends rather than one-off changes and apply the highest probability and impact. This process is made much easier, quicker and more accurate by using budget modelling software.

Stage 4: Implementation and evaluation

Once the budget gets approval from the governing body the budget is implemented, and monitoring and evaluation should begin. Monitoring and reviewing your budget monthly will highlight areas of potential risk early enough to act. It also makes life easier when it comes to submitting budget monitoring returns to the DfE.


While evaluation is the final stage of the school budgeting process, it feeds back into the first stage. Ongoing evaluation gives you a head start on the following year’s review and helps inform forecasting. By keeping a close eye on the budget throughout the year, you can identify ways in which resource and budget could be used more efficiently or differently. For example, where there is recurrent underspend meaning money could be shifted to other resources in the future.



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