Much has been written about the skills needed on an effective governing board or trust board, but very little attention has focused on the knowledge required when you undertake such an important role.
Let’s focus on three areas: risk, finances and regulation. These three are matters for all governing boards, but become particularly important in an academy or multi-academy trusts where the organisation is its own legal entity – i.e. there is no local authority infrastructure to offer support.
What do governors need to know about risk?
Governors and trustees should know the principles of and processes for risk management. There should be a comprehensive risk register which is regularly reviewed.
There are many types of risk that a school or trust could encounter depending on their circumstances. Documenting financial risks and how to manage them should be an obvious one. But other types of risks also need to be considered, for example, operational risks – loss of key staff, facilities, IT systems failure, etc.
Some of the high profile failures of governance have been a result of not understanding risk
Again depending on the circumstances of the school or trust, there could be strategic risks. For a trust, this could relate to school improvement and decisions that trustees in a multi-academy trust make about taking on another school. Trustees must have a secure understanding of the improvement model for the trust, the capacity in the trust, the findings of due diligence activity and reach an informed, evidence-informed and knowledge-based decision.
Reputational risks – for example, a concerted social media campaign targeting the school or trust – should also be considered.
This register should include risks that can arise from conflicts of interest or a breach of confidentiality.
I think it is fair to say that some of the more high profile failures of governance have been a result of governors or trustees not understanding or managing risk, particularly risks associated with related third party transactions – where payments are made to companies related to members of the trust’s staff or trustees.
And there is a problem here. The Education Select Committee in 2016 heard evidence that seventy-four trusts warranted scrutiny by the government in relation to related third party transactions, with twenty-four trusts found to have broken rules.
What financial knowledge do you need to be a governor?
If we turn now to finances, governors and trustees must have financial knowledge and understanding.
They must know the importance of curriculum and how this leads financial planning. The curriculum is the core business of any school or trust – and staff will be by far the greatest expense. Therefore governors need to understand how the curriculum is constructed and how this relates to the school or trust’s staff model.
Ignorance of the law is no excuse
They must know and understand a viable financial strategy and they must have working knowledge of how the school or trust receives its funding. This is obvious, you might say, but the Education and Skills Funding Agency will tell you otherwise – many trust boards lack this basic knowledge.
Core revenue funding for schools is distributed through the dedicated schools grant to each local authority on the basis of historical allocations. Currently, to allocate funding to individual schools in their area, each local authority, in consultation with the local schools forum, designs its own funding formula. But the government is committed to moving to a fairer funding formula to make sure that schools with similar characteristics, with similar pupil cohorts, receive a similar level of funding.
What regulations should governors be aware of?
Educational legislation and regulation is complex territory. It is relatively easily to find oneself adrift of requirements simply because no-one on the board knew or understood them. But ignorance of the law is no excuse. Hence the importance of the role of the clerk. But this person also needs training to build the knowledge of legislation and regulation that will enable them to advise governors or trustees on governance, constitutional and procedural matters.
For trusts, my take on the top seven documents that a clerk should be familiar with are: the Governance Handbook and Competency Framework for Governors; Clerking Competency Framework; Academies Financial Handbook; the Trust’s Articles of Association (model Articles here); the Trust’s Funding Agreement (model Funding Agreement for a MAT here); Charities Commission guidance for trustees, The essential trustee – what you need to know, what you need to do.
This is why it is really important that the Department for Education has commissioned comprehensive programmes, particularly aimed at governance leaders – chairs, vice chairs, etc. – and clerks.
It is now attendant on the sector to ensure that governance leaders and clerks are properly trained in the knowledge requirements for the role, in order that we build effective governance across all types of schools. If we do not do so, we are failing in our duties of stewardship of the system.
Leroa Cruddas is chief executive of FASNA, a not for profit school membership association that supports executive, governance and business leaders.