Bursar’s Review Autumn 2020 Sample

Autumn 2020 www.theisba.org.uk 10 Finance Author John Murphie ISBA chief operating o cer Internal risks In the short term the internal risks will be to pupil numbers, the parents’ ability to pay, staff availability and staff physical and mental well-being. All of these will influence the delivery of education in the 2020-21 academic year and the preparation of pupils for the 2021 round of public exams. In the medium term the internal risks alter to include the risk to premises if income has dropped and the costs of maintenance and repair become difficult to accommodate. A second risk, which will grow in significance, will be to the attractiveness of the school to parents as investment in new facilities (or refurbishing existing premises) will not be possible if money is tight. The long-term internal risks are to the reputation of the school if its premises continue to be seen to degrade and to its finances if the COVID-19 pandemic results in a loss of pupils or a loss of educational reputation. External risks These will shape themselves in the coming months as the rate of infection of the pandemic changes but different parts of the United Kingdom will be affected in different ways and there will therefore be a need for different responses from schools. Added to the need for careful monitoring of COVID-19 will be the effects of Brexit. Many of the effects will be easily accommodated but in the short-term, food and fuel shortages may be factors, or food and fuel inflation may need to be accommodated in 2020-21 budgets and beyond. The risk posed by the unfriendly political environment should not be discounted. While not immediate or particularly sharp at present, it still exists and will need to be assessed with emerging initiatives such as proposed changes in legislation or taxation needing to be countered in the coming years. Actions Conscious of a changed market, schools need to identify the changes, verify the attractiveness of their unique selling points (USPs) and be clear about the types of parents they are targeting. It may be that USPs need to be revised to make schools more attractive to potential parents. Whatever the conclusions over the local market, an effective marketing strategy, a prompt and multi-faceted communications strategy, and an identifiable sought-after educational product will be as vital in the future as it has been in the past. A hard-headed revision of fee discount and hardship polices will be necessary to ensure they are fit to be used in the changed circumstances of the current financial year. A revision of the schools medium and long-term financial strategy will be required to revise capital expenditure and reserves policies. It may be that reserve funds are configured differently so funds can be made available more quickly if required. It will also be necessary to communicate with the bank as their appetite for financial risk will have been changed by the pandemic and will change further as the effects of Brexit become apparent. The question of a merger with another school or the acquisition of (or by) another school is one to be addressed. It may be that the altered market, trading conditions and financial pressures affect the medium to long- term viability of schools, in which case the early thought of a merger or acquisition should not be discounted. In conclusion, there is no doubt that the independent school sector, and most schools within it, will emerge from this sequence of crises in a viable state. However, COVID-19 has sharpened the pressures on the sector, accelerated existing financial trends within schools and introduced several new risks within schools and the entire sector. Many of the pre-existing financial trends had been identified by schools internally and externally prior to the pandemic and were being accommodated, but those plans and policies will need to be revisited to deal with a very different future to that envisaged by schools in January 2020. Finally, boards need to be very focused on the internal and external risks schools face. The identification, monitoring and amelioration of the likely effects of those risks will need careful foresight, disciplined thought and resource to achieve the aim of successfully ensuring a viable and vibrant school business in the short, medium and long-term. ISBA has been running a series of webinars focusing on the issues schools are currently facing as well as future challenges likely to arise. For November and December, webinars will be themed around ‘what next for independent schools’, governance for bursars, Brexit, business risks and ‘reflections on the term and looking forward to Spring 2021’. Please see details of the full programme (at the time of press) on page 88. Please also keep a close eye on our website and COVID-19 bulletins which will include the latest updates to the evolving programme of webinars. A hard-headed revision of fee discount and hardship polices will be necessary to ensure they are fit to be used in the changed circumstances of the current financial year