Counting on it

Terry Freedman on departmental budgeting

In the November/December 1994 edition it was argued that specialised software is better than general applications for maintaining the school's finances. However, this is not the case when it comes to departmental budget-keeping. While there are products on the market, directed at the SOHO - small office, business office - market, which could be customised to suit your needs, the common spreadsheet is likely to be at least equally useful.
At the most basic level, whatever system you adopt should enable you to know more or less exactly how much capitation you have left in your account. This means that you must note down all of your spending, including the semi-hidden items such as photocopying, postage and packing and, if you are not in an LEA school, VAT. It is surprising how easy it is to find yourself with £50 less than you thought you had simply because you forgot to include one of these items in your calculations.

Where does the money go?

However, there is far more to effective budgeting than simply knowing what your balance is at any one time. As any business person will tell you - and as you yourself as a householder know only too well - it is essential to know where the money is actually going.
For example, how much of your capitation is being spent on day-to-day items as opposed to what we might call developmental items: those which, while not essential in the strict sense of the word, will nevertheless expand the pupils' horizons? How much of your capitation is spent on photocopying? Are you able to break this down into expenditure by courses or year groups? This level of analysis can be useful in a number of ways.
First, it can help you manage your resources more effectively. For example, you may decide that since your sixth form courses were the greatest beneficiaries of your photocopying budget last year, you will focus on Year 10 courses this year.
Secondly, it can be used in support of a case for more capitation for your department. For example, you may be able to demonstrate that as the courses you offer have become more popular, you have had to spend a greater proportion of your capitation on file paper and a smaller proportion on travel expenses for visiting speakers.
Given the fact that like most heads of department you simply do not have the time to pore over departmental spending figures to undertake this level of analysis, there is clearly a potential for a computer and a spreadsheet to do the job for you.

Plan it first

Remember that most of the work involved in setting up a capitation spreadsheet should take place long before you switch the computer on. Advance planning saves much time. Without it, you are almost certainly going to waste time trying to get an ill-designed spreadsheet to work properly.
The first stage in the planning process is to note down what exactly you want to be able to find out from the spreadsheet. This should be done in some detail. For example, if you decide that you would like to be able to summarise how much money you have spent on different types of item, you must categorise those items, as finely and precisely as you think you will need. For example, the drama department may lump together file paper and pens as stationery; the art department, on the other hand, will probably have several sub-categories: sugar paper, cartridge paper, fine felt tips, broad felt tips and so on.
The next stage is to codify all the various items of expenditure and sources of income in a logical way. For example, you may give fine felt tips a code of '100', broad felt tips a code of '101', cartridge paper a code of '200', sugar paper a code of '201', and so on. In this example, numbers from '100' to '199' are for writing tools, while paper has been allocated numbers from '200' to '299'.

Advantages

There are two advantages of this method. First, it enables you to very easily find out how much of your capitation you have spent on certain items. More to the point, if you have a reasonably powerful spreadsheet (see page nnn of this issue) this approach allows you to set the program up to do fairly sophisticated work on your behalf.
The second advantage is that it gives you plenty of room to allocate further categories as the need arises, without disrupting the numerical sequence. The importance of this may not be obvious, but it is based on the fact that a spreadsheet is, from one point of view, a specialised type of database, in which the column headings are the fields and the rows are the records. This is illustrated in the table below.

The fields are 'Code', 'Item', 'Date' and so on, while the records are '100', '102', '203', etc. This allows us to find out, say, how much money has been spent on writing tools in the last few months, or between particular dates. This is achieved by finding out, or getting the program itself to find out, how much was spent on all items from code '100' to code '199'. (In many spreadsheets this type of analysis can be automated through the use of a crosstab function or pivotal table).
Suppose that the department decides to spend some money on floppy disc pens. Under the coding system recommended here, it could allocate a code such as '109' to this item and still be able to run the analysis described in the previous paragraph.
If, however, you had coded your items with single digits, or not coded them at all, you would not be able to undertake this type of analysis without a great deal of trouble - which somehow defeats the object of using a computer in the first place.
Even if you are not using a particularly sophisticated spreadsheet program, a little forethought along the lines described here can make the world of difference to your grasp of what's going on financially in your department.

Contributor : Terry Freedman