Executive summary
Local authorities play a vital role in helping schools plan, manage and use their financial resources. At a time of rising costs, demographic shifts and increasing pressures on school budgets, high-quality local authority support is essential for schools to remain financially stable and able to prioritise resources to meet pupils’ needs. This report considers how effectively local authorities support schools with budget management and strategic financial planning. The report draws on evidence from a national survey of local authorities, governing bodies and school leaders as well as documentary review and interviews with finance officers, education officers, headteachers, school business managers and governors.
Purpose of the review
This review aims to evaluate the nature and effectiveness of the support that local authorities provide to maintained schools in Wales. It examines the following aspects:
- the clarity and timeliness of financial advice
- the transparency of local authorities’ budget-setting processes
- the quality of relevant training for headteachers, business managers and governors
- how local authorities monitor risk, intervene in schools which face financial difficulty and support recovery
- how well local authorities help schools use targeted grants such as the pupil development grant (PDG); and
- how local authorities promote equity and long-term sustainability in their funding decisions.
Overview of findings
Across Wales, local authorities showed strong commitment to supporting schools and maintaining constructive professional relationships with regards to budget management and strategic financial planning. Most schools valued the advice they received and had confidence in their link finance teams. However, the review found considerable variation between authorities, particularly in the depth of how they supported strategic planning, the clarity and timeliness of information, and the systems used to monitor risk and support improvement.
Three overarching messages emerged from the evidence.
1. Operational financial support is strong, but strategic support is inconsistent
Most local authorities provided secure operational guidance. Schools and governors were positive about day-to-day advice on budget monitoring, coding expenses and compliance. In most authorities, schools found officers were approachable and responsive, and templates for staffing forecasts and grant planning were widely used.
Overall, strategic support by local authorities varied considerably. Only a minority of authorities provided consistently strong support to help schools model the medium-term implications of their decisions, although many encouraged three-year planning in practice. In many authorities, support focused on balancing annual budgets rather than developing long-term plans. Limited capacity in local authorities, late grant funding announcements and fragmented cross-service working often restricted strategic oversight. Strong practice occurred where finance, human resources (HR) and school-improvement officers met jointly with schools and aligned financial decisions with educational priorities.
2. Budget-setting processes were generally open and transparent, but the quality, clarity and timeliness of information were uneven
Budget-setting arrangements were usually structured and procedurally transparent. Most authorities issued planning timelines, offered meetings with finance officers and engaged schools through budget forums or consultation groups. Schools valued these opportunities and described communication as constructive.
The information schools received, however, was not always clear or timely, despite most authorities issuing guidance within required deadlines. Many schools struggled to confidently understand how delegated budgets were calculated, particularly where formulae had not been reviewed for many years or where documentation was highly technical. Late funding announcements from Welsh Government to local authorities remained a major barrier. Only around half of governors surveyed felt they received information early enough to make confident staffing or curriculum decisions. In authorities with small finance teams, capacity issues sometimes reduced consistency and limited the depth of collaborative planning.
3. Systems for monitoring financial risk and supporting schools in difficulty were well-intentioned but varied in quality
Most authorities monitored budgets regularly and maintained supportive relationships with schools. Many used dashboards, RAG-rating systems or multi-agency meetings to track emerging risks. Schools generally found finance teams helpful when deficits emerged.
Support for long-term planning was strongest where authorities provided multi-year projections and helped schools understand demographic trends and implications of staffing costs. However, early identification of risk was not consistent. A minority of authorities used integrated financial, HR and school-improvement data to diagnose pressures. In many areas, deficit recovery focused on immediate savings rather than long-term sustainability. Approaches to targeted grants such as the pupil development grant (PDG) were mostly compliance-driven, with limited evaluation of impact. Very few local authorities demonstrated a more strategic approach to the use of targeted grants, for example by consolidating them into wider programmes to clearly link their use to priorities and analyse outcomes.