School principals need lessons in budgeting to make Gonski 2.0 successful

This article was published in The Australian Financial Review (paywall) on 23 June 2017.

Ben Jensen

The Gonski 2.0 federal school funding will see a lot more money flowing to schools, especially those serving poorer communities. Because increases in school spending have been largely wasted over recent decades, the federal government has asked David Gonski to report on how to spend the dollars effectively. Unfortunately, the pressure is already on to produce a report that repeats past mistakes.

Many education experts and commentators want governments to provide lists of what the academic research says makes the most difference in classrooms. If student outcomes have not improved, these experts argue, then money must have been spent on the wrong things. So we need to tell schools what the right things are. This approach sounds good, but it has one problem. It doesn't work.

School principals are inundated with lists, standards, rubrics, templates, guides and websites all telling them what the evidence is on how to improve their schools. Producing another one will change nothing. Instead, we need to recognise and help school principals with the complexity of school strategic and financial planning.

Historically, principals had little influence on school budgets. State governments largely controlled the finances. In the 1990s the push for greater school autonomy, led by Victoria, changed the principal's job forever. It has taken many years, but most schools now have a single budget line that is controlled by the principal. He or she pays the bills, balances the budget, and decides whether to spend more money on computers, teacher professional development or classroom materials and so on.

Poor training

This is no small task. A primary school of about 350 kids has a budget of well over $3 million. A high school with roughly 1000 kids will often have a budget in excess of $11 million. Managing organisations of this size requires serious strategic and financial expertise and experience. But principals have been promoted because they were great teachers. They normally have little or no financial management experience.

While this mismatch is clear, the training principals receive is often poor and normally ignores the issue. Instead, school principals must be experts in curriculum, pedagogy, teacher development and student learning.

When school systems contact principals about their budget it is normally a negative experience; an audit that focuses on large mistakes or misconduct or when the school has run out of money before the end of the year.

It is rarely discussed but hundreds of millions of dollars are sitting each day in school bank accounts. This isn't because of improper conduct or because schools have too much money. It is the result of the uncertainty and risk aversion of principals whose job descriptions continually under-emphasise the importance of strategic financial planning.

More work is needed connecting key budget decisions such as teacher training and professional development to improvements in student learning. And then learning about what budget decisions did and did not have an impact to improve budget planning in subsequent years.

This is how school principals and school systems will learn and improve over time. It is what is needed to make Gonski 2.0 successful.