The Role of Governance in School Finance

Responsibilities of Trustees and Governors

When we talk about school finance, most people immediately think of budgets, spreadsheets, and perhaps the finance officer tucked away in the school office. But the real foundations of sound financial management in a school or Multi Academy Trust (MAT) are built at governance level. Trustees and governors play a critical role in overseeing how public funds are used, ensuring money is spent wisely, and holding leaders to account for financial decisions. Understanding how governance structures work – and how they influence financial decision-making – is essential to appreciating the bigger picture of how schools are run.

Why Governance Matters in School Finance

Schools operate with significant sums of public money. In an average primary school, the budget will be in the hundreds of thousands of pounds; in a large secondary or a MAT, it can run into the millions. The Department for Education (DfE) and the Education and Skills Funding Agency (ESFA) set clear rules for how this money should be managed. At the top of the accountability chain are those charged with governance – trustees in academies and local governors in maintained schools.

In academies, the board of trustees is legally responsible for the trust’s finances. They set the strategic direction, approve the budget, monitor financial performance, and ensure compliance with the Academy Trust Handbook. In maintained schools, the governing body has a similar role, working within the requirements of the local authority’s scheme of delegation and the School Governance (Roles, Procedures and Allowances) Regulations.

This governance layer is about more than ticking boxes. Effective trustees and governors act as a check and balance, making sure that decisions are not only compliant but in the best interests of pupils.

Core Financial Responsibilities

The key financial responsibilities of trustees and governors can be grouped into a few main areas:

• Strategic Planning – Setting a clear vision and priorities for the school or trust, and ensuring that the budget aligns with these priorities. This might mean deciding to invest more heavily in staff development, technology, or building maintenance, depending on the school’s needs.
• Budget Approval and Monitoring – Approving an annual budget that is realistic, balanced, and supports the school’s improvement plans. Once agreed, the budget must be monitored throughout the year, with governors reviewing financial reports and asking questions about variances or unexpected costs.
• Compliance and Accountability – Ensuring that the school meets all legal and regulatory requirements. For MATs, this includes compliance with the Academy Trust Handbook and company and charity law. For maintained schools, it means adhering to the local authority’s financial rules. In both cases, governors and trustees must be confident that public money is being used with propriety, regularity, and value for money.
• Risk Management – Identifying and mitigating financial risks, such as falling pupil numbers, rising staffing costs, or unexpected building repairs. Good governance means having plans in place to deal with these challenges before they become crises.
• Audit and Assurance – Overseeing internal and external audit processes, and ensuring that any recommendations are acted on promptly. Trustees and governors need to understand audit findings and use them to strengthen financial controls.

How Governance Structures Influence Decisions

The way a MAT or school is structured can significantly shape how financial decisions are made. In a single-school maintained setting, the governing body has direct oversight of the budget and works closely with the headteacher and school business manager. In a MAT, responsibilities are more layered.

At trust level, the board of trustees holds ultimate responsibility for the finances of all schools in the trust. They may delegate some functions to committees or local governing bodies, but the trust board remains legally accountable. This means that a financial decision affecting one school – such as approving a major capital project – may need to be weighed against the needs of the whole trust.

The scheme of delegation is the key document here. It sets out exactly who can make which decisions, from approving expenditure to signing contracts. A clear scheme avoids confusion and ensures that everyone understands their role in the financial chain of command.

The Importance of Skills and Training

Financial oversight requires specific knowledge. Trustees and governors do not all need to be accountants, but they do need to be financially literate enough to understand budgets, scrutinise reports, and challenge leaders where necessary. The DfE encourages boards to carry out regular skills audits and to access training in school finance. This might cover reading management accounts, understanding cash flow, or interpreting benchmarking data.

In MATs, having at least one trustee with financial expertise – often a qualified accountant – is considered best practice and is an explicit expectation in the Academy Trust Handbook. This expertise complements the strategic and educational skills of other board members, creating a balanced and capable governance team.

Balancing Challenge with Support

Effective governance strikes a balance between holding leaders to account and offering them support. Financial decisions are rarely black and white; they involve trade-offs and prioritisation. Trustees and governors need to ask probing questions – Why is this expenditure necessary? How does it benefit pupils? Is there a more cost-effective alternative? – while also recognising the professional judgement of school leaders.

This constructive challenge is what keeps the system healthy. It prevents groupthink, ensures transparency, and gives stakeholders confidence that resources are being used wisely.

Transparency and Public Confidence

Financial governance is not just an internal matter. Schools and trusts must publish their accounts and key financial information, such as executive pay, on their websites. Governors and trustees are also expected to be open with stakeholders about major spending decisions and the school’s financial position. Transparency builds trust with parents, staff, and the wider community, and it reassures the public that their money is being well spent.