Professional Documents
Culture Documents
Financial Data For Schools
Financial Data For Schools
Financial Data For Schools
Understanding school
financial decisions
This research report was commissioned before the new UK Government took
office on 11 May 2010. As a result the content may not reflect current
Government policy and may make reference to the Department for Children,
Schools and Families (DCSF) which has now been replaced by the Department
for Education (DFE).
The views expressed in this report are the authors and do not necessarily
reflect those of the Department for Education.
Contents
ExecutiveSummary.............................................................................................................................3
ResultsCommentary ....................................................................................................................3
ResultsSummary..........................................................................................................................4
Introduction ........................................................................................................................................5
ReviewoftheEvidence.......................................................................................................................8
Theoverallrelationshipbetweenschoolincomeandquality ........................................................8
Classsize,thequantityanddeploymentofteachers .....................................................................9
Teacherquality................................................................................................................................9
TeachingAssistants .......................................................................................................................10
Resources ......................................................................................................................................10
Data...................................................................................................................................................11
NationalPupilDatabaseandEdubase ..........................................................................................11
ConsistentFinancialReporting200910 .......................................................................................12
SchoolWorkforceCensus .............................................................................................................12
ResultsSummary............................................................................................................................14
DetailedResults ................................................................................................................................15
Part1:Howmuchvariationinspendingisthereforlikeschools?.............................................15
Part2:Howistheresidualincomethatsomeschoolsreceivespent? ......................................22
Part3:Whereincomechangesbetweentwoyears,howisitspent?..........................................23
Conclusions .......................................................................................................................................25
Difficultieswithcurrentpolicyapproachofdisseminationofbestpractice ................................26
Usingbehaviouraleconomicstohelpimprovefinancialdecisions ..............................................27
References ........................................................................................................................................30
DataAppendix.......................................................................................................................................56
ExecutiveSummary
Withover30bnofpublicmoneyspenteveryyear,Englishschoolsfacecomplexfinancialdecisions
thatrelatealmostexclusivelytotheirspending.InthisReport,weanalysethedegreeofvariationin
expenditureitemsbetweenschools,andexaminehowmuchofthatvariationisduetotheir
circumstances,andhowmuchreflectsspecificdecisionsmadebytheschool.Lastly,weconsiderthe
potentialforimprovementsinresourceutilisation.Althoughtheseissueshavebeenaddressed
before,mostoftheexistingliteraturefocusesonoverallschoolexpenditure.Thuswecontributeina
numberofways:
1. Byexploitinganewdataset,wecanexamineschoolsataverydisaggregatedlevelandisolate
someoftherealoperationaldecisionsthattheymakeonhowtoallocatetheirbudgets.Thenew
SchoolWorkforceCensuscoversallemployeesinallschoolsinthecountry,andincludes
informationsuchasage,payandtenure;
2. Wecontrolinconsiderabledetailfortheschoolscircumstancestoensurethatwearefocusing
onschoolsthatarefacingthesameoperationalenvironment;
3. Tobetterunderstanddiscretionoverexpenditure,weanalysewhatschoolsdowiththeir
residualincome.Thatis,incomewhichisnotaccountedforbytheircircumstances;
4. Weusedataovertwoyearstoexaminehowschoolsadjusttheirspendinginresponseto
changesintheirincome.
ResultsCommentary
Ourresultsshowthatthereishugevariationintheallocationofexpenditurebyschools.Even
controllingingreatdetailforthespecificindividualcircumstancesofeachschool,muchofthat
variationremains.Forsomecomponentsofexpenditure,thedecisionsappeartobelargely
unexplainedbyanyobservablefeaturesoftheschool.Theresultsshowthatevenmanyofthe
importantoperationalfinancialdecisionsofschoolsarelargelyidiosyncratic.Thedegreeof
differenceinexpenditureissuchthatitseemsveryhardtointerpretthisasoptimalresponsestothe
differentperceivedlocalratesofreturntoparticularfactorsintheeducationproductionfunction.Of
coursemanyofourconclusionsarereliantontheSchoolWorkforceCensus,andouranalysis
emphasisesthegreatimportanceofmaintainingthisnewlongitudinaldatabase.
Whydontschoolstakeamorestrategicapproachtotheirspending?Therewillbeanumberof
answerstothisquestion.Oneimportantfactorisconstraintsthatreducefreedomoverwhatto
spendincomeon.Inthepast,governmentshaveearmarkedmoneyforspecificinitiatives,thereby
allowingnoopportunityforlongtermplanningonthepartofschools.Theinteractivewhiteboard
fundingandExcellenceinCitieswereexamplesofthis.Implicitintheintroductionoftheseschemes
isthatschoolsarenottobetrustedinmakingchoicesaboutspending,andthatpolicymakersknow
howbesttospendtheschoolsbudget.Itwouldindeedbeinterestingtocomparethefinancial
decisionsofthoseschools,suchasacademies,thatarenowoutsidelocalauthoritycontrol.
3
Anotherimportantsetofrestrictionscomesfromtheinstitutionalsettingaroundteacherpayand
conditions,negotiatedbetweentradeunionsandgovernment.Whilesomeoftheserestrictions
havebeenrelaxedinrecentyearsforsomeschools,therehasbeenlittlechangetodateinpractice.
Butperhapsmoreimportantthantheconstraintsisthelackofincentiveforschoolleaderstoget
spendingdecisionsright.Acarefulandconsideredallocationofspendingthatapproximatesan
optimalallocationmakeslittledifferencetoaheadteacherandher/hisleadershipteam,whotendto
befocusedonoverallpupilachievementanoutcomethatweknowreflectslittleoninput
decisions.Severefinancialmismanagementisobviouslyaseriousissue,butspending(say)three
timesasmuchascomparatorschoolsonsupportstaffisnot.
ThesimplestanswertothequestionHowcanweimproveschoolsfinancialdecisions?isMake
themmatter.Byusinginsightsfromeconomics,psychologyandbehaviouraleconomics,we
attempttoshedlightonthisquestion
ResultsSummary
Theresultsshowthatthereisaverysubstantialamountofvariationinsomeexpendituredecisions
takenbyschoolsfacingasimilaroperatingenvironment.Thisappearstobethecaseinbothprimary
andsecondaryphases.Theresultsalsoshowthattheamountofvariationandthedegreetowhich
thesereflectrealdecisionsdiffersacrossawiderangeofoperationaldecisions.
Intheitemsthataccountforalargeshareofthebudgetthereisratherlessdisparity,butitisstill
nontrivial.Takingteachingexpenditureperpupil(whichaccountsforcloseto60%oftotal)asan
example,variationinthisexpenditureitemtranslatesintoagapofabout1000perpupilbetweena
schoolatthebottomquartile(25thpercentile)andaschoolatthetopquartile(75thpercentile).
60%ofthisvariationcanbeexplainedbythestructuralanddemographiccharacteristicsofthe
school,risingto70%ofvariationifweincludevariationintotalincome.Nevertheless,thisleaves
some30%ofthevariationinteachingexpenditureunexplainedoridiosyncratic.
Wealsoanalysemeasuresofdetailedoperationaldecisionsthatrevealtheschoolsdecisionmaking.
Thesearegenerallylessbudgetconstrainedgivingtheschoolsmorescopefordiscretion.For
example,wefindthat,controllingfortheschoolcontext,threequartersofthevariationinthe
numberofseniormanagersisidiosyncratic.Essentiallyequivalentschoolsaremakingverydifferent
decisionsonhowmanyseniorpositionstohave,alsoonthenumbersofsupportstaff,andsoon.
Themoredisaggregatedthefactoris,themoreidiosyncratictheexpenditurelevelsare.Accounting
ingreatdetailfortheschoolscircumstances,wecanexplainverylittleofthevariationsin
expenditureonseniorschoolleaders,supportstaff,Headteacherpay,teacherturnover,andthe
deploymentofteachersbysubject(thatis,howmanyhoursofasubjectaretaughtbyspecialists).
Thiscoincideswithouranalysisofunexplainedorresidualincome,whichsuggeststhatdiscretion
isprincipallyassociatedwithexpenditureonteachers,educationalsupport,theHeadteacherssalary
andtheschoollevelpaypremium.
Usingdatafrom20082010,wefindthatschoolsreactverydifferentlytochangesinincome.Only
42%ofsecondaryschoolsincreaseexpenditureonteachersaboveanyotheritem.Theremaining
4
58%ofschoolschoosetoincreasethemajorityoftheirexpenditureonotheritems,orallowtheir
budgetbalancetochangethemost.
Introduction
EachyearschoolsinEnglandspendover30bnofpublicmoney.Putanotherway,thestatespends
over50kperpupiloverherorhistimeinschool,andthisexpenditureismanagedbyschools.
Schoolsaremuchmorethansimplyateamofteachersinclassrooms,withthetypicalsecondary
schoolemployingover100peopleofwhomonlyaroundhalfmightberegularclassroomteachers.In
theprivatesectoranorganisationwith100employeeswouldcountasamediumsizedfirm,andjust
likesuchafirm,schoolshavecomplexmanagerialdecisionstomake.
Thefinancialdecisionsthatschoolshavetotakearealmostexclusivelyabouttheirspending.Toa
largedegree,schoolssimplyreceiveincomeonthebasisofthenumberandcharacteristicsoftheir
pupils(thoughtoasmallanddecreasingextenttheycanalsoseekandreceivespecificgrantstodo
specificthings).Schools,byandlarge,thenspendwhattheyregivenalthoughasshownlaterinthis
report,someschoolschoosetobuildtheirbalancesratherthanincreaseexenditures,inresponseto
increasesintheirincome.Soananalysisofschoolsfinancialdecisionsisessentiallyabouthow
budgetsareallocatedbetweendifferentitemswithinaparticularyear.
Itshouldbeobviousthatitmattershowmoneyisspentonadditionalresources.TheDepartments
ImprovingEfficiencyinSchoolsnotes:Whatmattersisnttheamountofmoneyspentperpupil,but
howthatmoneyisspent(para11).Schoolshaveagreatdealofdiscretionoverexpenditureon
capitalandlabourinputs,butaretheyspendingthemoneyeffectively?Thereisalargeliteratureon
overallschoolexpenditureandschooloutcomes,andoncertainindividualspendingitemssuchas
numberofteachersperpupil,butmuchlessonanalysingthedetailsofschoolexpenditurepatterns
andtheextentofschoolsdiscretionoverexpenditure.
Thisreportisconcernedwiththevariationinexpenditurebetweenschoolsandthepotentialfor
improvementsinresourceutilisation.Itexploitsanewdatasourcetoanalyseatavery
disaggregatedlevel,howschoolsallocatetheirfinancialbudgetsbetweendifferentinputs.Weare
abletousethisnewdatasourcetoask:Howmuchvariationisthereinexpenditurepatternsfor
schoolswhichappeartobeinverysimilaroperationalcircumstances?Dotheiractionsrevealan
implicitagreementonbestpractice?Orisdiversityofresponsethekeymessage?
Weanalysethedegreeofvariationinexpenditureitemsbetweenschools.Thishasbeenaddressed
beforeforsomeheadlinespendingtotals,forexampleintheDepartmentspublicationImproving
EfficiencyinSchools(DfE,undated),andbytheAuditCommission(2011).Weaddtothisevidencein
anumberofways:
1.Mostimportantly,weexploitanewdatasetthatallowsustodrilldowntosomeofthereal
operationaldecisionsthatschoolsmakeonhowtoallocatetheirbudgets.Thisisthefirstfullsweep
oftheSchoolWorkforceCensus,coveringallemployeesinallschoolsinthecountry.Thismeanswe
can,forexample,considerthefollowingfactors:
Expenditureonclassroomteachersandonseniormanagersperpupil;
Proportionofsupportstaffonshorttermcontracts;
Proportionofteachingstaffwithtenurelessthanoneyear;
AgeandpayoftheHeadteacher;
Proportionofteacherswithqualificationintheirmainteachingsubject;
Proportionofhoursofmathstaughtbyqualifiedsubjectteachers;
Estimatedschoollevelpaypremium.
2.Wecontrolinconsiderabledetailfortheschoolscircumstancessothatweareconfidentweare
focusingonschoolsthatarefacingthesameoperationalenvironment;
3.Weanalysewhatschoolsdowiththeirresidualincome,explainedbelow;
4.Welookathowschoolsadjusttheirspendinginresponsetochangesintheirincomeovertime.
Canweuseevidenceondifferencesinexpendituretoimproveschoolefficiency?Thisisdifficult
becausetheevidence(brieflyreviewedbelow)showsthatthereisatbestasmallandstatistically
weakrelationshipbetweenschoolsexpenditureandtheiroutcomes,thelevelofpupilattainment.
Thisisaproblemandapuzzle.
Itisaproblembecausetheallocationoflargergovernmentbudgetsistheusualmeansbywhich
governmentsattempttoimprovethepublicservicestheyvaluemost.Forexample,thefirstdecade
oftheLabourgovernmentintheUKproduceda56percentrealincreaseinschoolbudgetswithvery
largerisesforthemostdeprivedschools;yet,theempiricalevidencesuggeststhatthisattemptto
improveschoolsandtoclosethesocialclassgapinattainmentmaynotreachitspolicygoals.
Indeed,theincreasedexpenditurehasnotseenoutputsriseatthesamerate,andsoschool
productivityhasfallen(Wildetal.,2009).
Itisalsoapuzzle.Whydoesincreasedspendingnotnecessarilyraiseoutputsbymuch?Ittendstoin
othercontexts.Bydefinition,schoolsmustbespendingthemoneyineffectively.Aretheyspending
moneyonthewrongthings?Ifso,why?BeforethispublicationoftheSchoolWorkforceCensusit
wasnotpossibletoanalyseworkforcecompositionproperly,whichiscriticalinorganisationswhere
staffspendingaccountsforalmost80%ofcurrentexpenditure.Thisiswhywebelievethistypeof
analysisiscriticaltounderstandingopportunitiestoinfluencethebehaviourofschoolmanagers.
Thisreportcontributestotheanswertothispuzzlebyanalysingingreatdetailthethingsthat
schoolsbuy,andconsideringthepossiblereasonsbehindthepatternsthatemerge.
Ourresultsshowthatthereishugevariationintheallocationofexpenditurebyschools.Even
controllingingreatdetailforthespecificindividualcircumstancesofeachschool,muchofthat
variationremains.Forsomecomponentsofexpenditurethedecisionsappeartobelargely
6
unexplainedbyanyobservablefeaturesoftheschool.Theresultsthereforeshowthatmanyofthe
importantoperationaldecisionsarelargelyidiosyncratic.Thedegreeofdifferenceinexpenditureare
suchthatitseemsveryhardtointerprettheseasoptimalresponsestodifferentperceivedlocal
ratesofreturntoparticularfactorsintheeducationproductionfunction.Ofcoursewedrawthese
conclusionsonthebasisofthedataavailabletousandouranalysisemphasisesthegreat
importanceofmaintainingthenewlongitudinaldatabaseonschoolworkforce,theSWC.
Ifwearecorrectinassertingtheimportanceofdecisionsmadelessreflectively,perhapsdecisions
arebetterunderstoodassimplycontinuingtodothingsthewaytheyhavebeeninearlieryears.If
weseeaschoolsexpenditurepatternasareflectionoftheaccumulatedandcontinuedidiosyncratic
decisionsofitsrecentpast,thenitiseasiertoseehowschoolsmanagedtodivergesomuchintheir
expenditure.
Ifschoolsareindeedspendingmoneyinalargelyidiosyncraticfashion,thenwhydonttheydo
somethingaboutthis,suchastakingamorestrategicandoptimisingapproachtotheirbudgetsand
spendingplans?Therewillbeanumberofanswerstothisquestion.
Oneimportantfactorisconstraintsthatreducefreedomoverwhattospendincomeonandthat
pushschoolstowardsineffectiveexpenditures.Inthepastgovernmentshaveplacedconstraintson
howmoneycanbespentthroughpiecemealmoneyearmarkedforspecificgovernmentinitiatives
withnoopportunityforlongtermplanningonthepartofschools.Theinteractivewhiteboard
fundingandExcellenceinCitiesareexamplesofthis.Implicitintheintroductionoftheseschemesis
thatschoolsarenottobetrustedinmakingchoicesaboutspending,andpolicymakersknowbetter
thanschoolleadershowtheschoolsbudgetisbestspent.
Anotherimportantsetofrestrictionscomesfromtheinstitutionalsettingaroundteacherpayand
conditions,negotiatedbetweentradeunionsandgovernment.Whilesomeoftheserestrictions
havebeenrelaxedinrecentyearsforsomeschools,therehasnotbeenarushtoexploittherelease
fromthoserestrictions.Thatispossiblybecausethereareinstitutionalconstraintsonheadteachers
too,arisingfromthedifficultythroughoutthelabourmarketofimplementingnominalpaycutsor
forcingstafftoacceptreducedhours,forexample.
Butperhapsmoreimportantthantheconstraintsisthelackofincentiveforschoolleaderstoget
spendingdecisionsright.Acarefulandconsideredallocationofspending,approximatinganoptimal
allocation,makeslittledifferencetoaheadteacherandher/hisleadershipteamwhotendtobe
focusedonoverallpupilachievementanoutcomethatseemsverydistantfromresourceinput
decisions.Severefinancialmismanagementisobviouslyaseriousissue,butspending(say)three
timesasmuchascomparatorschoolsonsupportstaffisnot.
ThisissuehasalreadybeenhighlightedbyTheAuditCommission(2009),whonotethelackof
incentivesforschoolstobeeconomicalandefficient.Theysuggestschoolscouldachievebetter
valueformoneyasillustratedbythefactthatschoolsoftenholdexcessivebalances(greaterthan
8%and5%oftotalyearfundingforPrimaryandSecondaryschoolsrespectively),whichthey
considertobepoorvalueformoney.
ThesimplestanswertothequestionHowcanweimproveschoolsfinancialdecisions?isMake
themmatter.WeprovideamoredetailedcommentaryonthisintheConclusion,bringingin
insightsfromeconomics,psychologyandbehaviouraleconomics.
ReviewoftheEvidence
Theoverallrelationshipbetweenschoolincomeandquality
Theimpactofschoolresourcesonschooloutcomesisacomplexandcontroversialone.Itseems
obviousthatmoreresourcesforschoolsshouldimprovepupilattainment,andanemphasison
providinggreaterfundingforschoolsisalmostagivenforpoliticalplatforms.Andyetthisobvious
propositionisnotingeneralstronglysupportedbytheevidence.Therelationshipbetweenmoney
andschoolqualityhasbeenshowntobeweak,bothinthegeneralcasewhereschoolsaregiven
moremoneytospendastheychooseandinspecificcaseswheregovernmentsdictatehowthe
moneyshouldbespent.Thisstatisticallysignificant,yetnotablysmall,associationhasbeenfoundin
thefewstudiesthatdosupportcausalstatements.
ThesystemoffundingschoolsinEngland,withfundingdeterminedbypupilcharacteristics,makesit
almostimpossibletouseobservationaldatatoestimatethecausalimpactofresourcesonpupil
attainment.Thesimplecorrelationoffundinglevelsandaverageschoolattainmentisstrongly
negative,reflectingthegreaterresourcesdivertedtomoredeprivedschools.Evensimpleregression
analysisthatcontrolsforpriorattainmentandsocialbackgroundofthepupilstendstoreporta
negativeeffectoffundingduetounobservedschoolcharacteristics.However,severalstudiesinthe
UKandelsewherehaveattemptedtofindandisolatesomerandomorexogenouschangeinthe
levelofschoolresourcesandusethistomeasuretheresourceeffect.
TherecentstudiesintheUKhavefoundsucheffectstobesmall.Holmlundetal.(2008)exploit
randomdifferencesinhowlocalauthoritiesdistributetheirfundstoinvestigatetheimpactofextra
resourcesonKeyStage2examsinprimaryschools.Overall,theyfindthatanincreaseof1,000in
averageperpupilspendingwouldincreasetheproportionsofpupilsachievingexpectedlevelsatKS2
byaround2percentagepointsinEnglishandmaths.Levaietal.(2005)andJenkinsetal.(2006)
bothusethepoliticalaffiliationofthelocalauthorityasaninstrumenttopredictvariationinper
pupilspending,arguingitisnotrelatedtothedemographiccharacteristicsofpupilsinschools.They
findthatpositivebutverysmallimpactsofresourcesonKeyStage3andKeyStage4attainment,
respectively.
Morebroadly,inaseriesofliteraturesummariesHanushek(1986,1989,1996a,1997,1998,2003)
conductsametaanalysisofover400estimatesinmorethan50studiesintheliteratureand
invariablyconcludesthatresourcebasedpolicieshavebeenineffective,remarkinginhis2003study
Byconcentratingoninputsandignoringtheincentives,theresourceshaveyieldedlittleintheway
ofgeneralimprovementinstudentachievement.Hanushek(2004)suggeststhislackofrelationship
mayalsobeduetoteacherqualityandresourcesinteractingintheeducationproductionfunction,
withtheresultthatthereisnoconsistentbestpracticeintheresourcingofschools.Krueger(2003)
reanalysesthestudiesusedinHanushek(1997)butappliesdifferentweightinginhismetaanalysis
essentiallygivingonevotetoeachstudyasopposedtoonevotetoeachestimateineachstudy
8
andconcludesthatreducingtheteacherpupilratiowasaneffectivewaytoimprovestandards.The
implicationsofKruegersstudyarethatresourcescanimproveeducationalstandardsifutilised
effectively.
Fortheremainderofthissection,wefocusonindividualitemsofschoolexpenditure.Aswillbe
evidence,forsometypesofinputtherearelargeliteratures,andamuchweakerevidencebasefor
theeffectivenessofexpendituresonothertypesofinput.
Classsize,thequantityanddeploymentofteachers
Theimpactofpupilteacherratiosonstudentperformancehasbeenextensivelystudiedinmany
countries.SomestudieshavebeenabletouseexperimentaldatasuchasintheTennesseeSTAR
experiment.Intheproject,theperformanceofstudentsinlargerclasses(2425students)was
comparedtothatofstudentsinsmallerclasses(1517students).Whilstthereisstillsome
controversyovertheclasssizefindingsintheSTARexperiment,oneoftheauthorsoftheoriginal
study(KreugerandWhitmore,2001)arguesthatOverall,ProjectSTARindicatesthatreducingclass
sizeisareasonableeconomicinvestment:thebenefitsaresizeableandlonglasting,especiallyfor
blackstudents,andtheoverallbenefitsoutweighthecosts.(Schanzenbach,2006).Itisimportantto
notethattheexperimentandtheevidencerelateonlytoyoungpupils,injuniorelementaryschool.
Someinterestingnewresearchhowever,suggeststhatthereallessonofprojectSTARmightliein
teacherandpeergroupqualityratherthanclasssize(Chettyetal,2010).
TurningspecificallytoUKevidence,asetofstudiesusetheNationalChildDevelopmentStudy
(NCDS),acohortofindividualsbornin1958,toestimatetheimpactofclasssizesonattainmentand
stayingonrates.Theestimatedimpactsarealleitherzero(e.g.FeinsteinandSymons,1999;
Deardenetal,2002)orrelativelysmall.Forexample,Dustmann,RajahandvanSoest,2003,finda
onestandarddeviationincreaseinaverageclasssizedecreasestheprobabilitythatpupilsstayonin
educationbyabout4percentagepoints;Deardenetal.,2002,findsomewageimpactforwomen
only.
Thereisalittleevidenceontheimpactoflearningsupportandindividualisedlearning.Machinetal.
(2007a)useadifferenceindifferenceframeworktoanalysetheeffectsoftheExcellenceinCities
(EiC)programmeintheUKonKeyStage3outcomes.Theprogrammeallocatedadditionalresources
todisadvantagedschoolswithinparticipatingLocalEducationAuthorities(LEAs),withschools
requiredtospendthemoneyononeormoreofthreecoreareas:learningmentorstoovercome
educationalorbehaviourproblems;LearningSupportUnitstoprovideshorttermteachingand
supportfordifficultstudents;aGiftedandTalentedprogramme,toprovideextrasupportfor510
percentofpupilsineachschool.Theauthorsfindthatovertimetheprogrammehadapositive
effectonschoolattendanceaswellperformanceinmathematics,althoughnotinEnglish.
Teacherquality
Evidenceonthelargevariationinteachereffectivenessmakesitclearthatalmosteveryschool
resourcingdecisionismarginalcomparedtolargepotentialgainsfromimprovingteacherquality(for
exampleAaronsonetal.2007andRivkinetal.2005intheUSandSlateretal.2009fortheUK).The
problemcomesintryingtoachievethosegains,sinceschoolsareunabletoobserveteacherquality;
particularlyatthetimeofhiring(Hanushek,2010).Howtoattracteffectiveteacherstoaschoolis
9
oneareawheremoreresearchisclearlyneeded,butwedoknowthatteachers,likeallworkers,are
attractedtohigherwageopportunities,withstudiesconfirmingthatsalariesandworkingconditions
affecttheprobabilityofapplyingforajobandleavingaschool(e.g.,DoltonandVanderKlaauw
1999).Economistsarenowstartingtoquantifyclassroompracticesandcorrelatethesewith
measuresofstudentattainmentandteachereffectiveness(seeKaneetal(2010)andLavy,2011).
TeachingAssistants
ThenumberofTeachingAssistants(TAs)trebledfromaround60,000in1997overthenextdecade.
AsubstantialfractionoftheadditionalresourcesavailabletoschoolswasspentonTAs,inpartin
responsetotheWorkloadAgreementaimedatremovingsomedutiesfromteachers.Whiletoour
knowledgetherehavebeennorandomisedcontroltrialsevaluatingtheirrole,aseriesofstudies
thathavebeencarriedbyBlatchfordandothershaveconcludedthatthepresenceofTAshaslittle
directimpactonthegradesachievedbytheirpupils(Blatchfordetal(2007).Theremaybeindirect
effectsontheeffectivenessofteachers,forexamplemoreindividualisedteacherattentionbutitis
unclearwhetherthishasanymeasurableimpactonattainment.
Resources
Machinetal.(2007b)usesaninstrumentalvariablestrategytoinvestigatetheeffectofICT
investmentoneducationalstandardsandfindsapositiveimpactofincreasedICTexpenditureon
primaryschoolperformanceinEnglishandScience(butnoeffectinMaths).Thiscontradictsthe
previousliteraturewhichtendstofindnoeffectofextraICTfunding(AngristandLavy(2002),Fuchs
andWoessman(2004),GoolsbeeandGuryan(2006)).OfparticularnoteisLeuvenetal.(2004),
whichusedaregressiondiscontinuitydesignframeworktoanalysetheeffectofapolicyinthe
Netherlands.Thepolicyprovidedprimaryschools(whereatleast70percentofethnicminority
pupilsor70percentwerefromdifferentdisadvantagedgroups)withextrafundingforpersonnel
andcomputers(andsoftware)respectively.Theyfindnoeffectoftheadditionalpersonnelfunding
onattainmentandfindevidenceofnegativeeffectsofthecomputersubsidy.Theauthorsdoexplain
intheirconclusionthatthepersonnelfundingwasunlikelytoreduceclasssizes(duetolowpupil
teacherratiosinpredominantlyminorityschoolsalready).
10
Data
Ouranalysiscombinesfourdatasets,Edubase,theNationalPupilDatabase(NPD),theConsistent
FinancialReporting(CFR)accountsdatabaseandthefirstfullcollectionoftheSchoolWorkforce
Census(SWC).Thedataislinkedusingtheschoolestablishmentnumberwhichiscommonacrossall
datasets.OurcriteriaforinclusionissimplythattheschoolmusthaveeitheranSWCrecordin
November2010oraCFRrecordfor2009/10.Manyschoolsweincludedonothaveboth:notably
academiesarenotrequiredtosubmitCFRaccountsandnewlyopenedschoolsinSeptember2010
willnotyethaveCFR.WecategoriseallschoolsaseitherprimaryorsecondaryusingtheDfE
standardapproachfornonstandardentryschools.Allspecialschoolsareexcludedfromthe
analysis.
NationalPupilDatabaseandEdubase
Edubasecontainsanadministrativerecordforallschools,whethermaintainedorprivate,in
England.Weusethistoconstructinformationonthestructuralcharacteristicsofeachschoolsothat
weareabletocompareschoolstosimilarschoolsinouranalysis.Thedistributionofthestructural
factorsweusefromEdubasearesummarisedinDataAppendixTable1andinclude:
governmentregionindicators(withadditionalindicatorsfortheInner,OuterandFringeLondon
payregionssincetheseareimportantunavoidablefactorsthatdeterminecostsforaschool);
fourindicatorsforwhetherschoolisrural,inavillage,townordenseurbanarea;
schoolagespan(highestandlowestagesofpupils);
schoolgovernancetypeandwhetheritisasinglesex,grammarorboardingschool;
thenumberoffulltimeequivalentpupils(alsosquared,cubedandtopowerfour)andalsothe
officialschoolcapacity;and
nurseryschoolpresenceindicatorandsize,sixthformindicatorandsize.
WeusetheNPD,aDfEadministrativedatabaseofallpupilsinstatemaintainedschoolsinEngland,
tomeasurethedemographicbackgroundoftheschool.TheNPDcontainsawiderangeof
informationonpupilcharacteristicsincludingtestscorehistories,ethnicityandage.Pupil
characteristicsandtesthistoriesareaggregatedattheschoolleveltoallowustogroupsimilar
schoolstogether.ThedistributionofthedemographicfactorsweusefromtheNPDaresummarised
inDataAppendixTable2andinclude:
fractionsofpupilswithEnglishasanadditionallanguage;
thefractionandtypeofspecialeducationalneedsofpupilsattheschool;
theproportionfemale(alsosquared)andethniccompositionoftheschool;
thefractionofpupilseligibleforfreeschoolmeals(alsosquared);
measuresoftheaverageneighbourhooddeprivationoftheschoolspupils(alsosquared);
themeanpriorattainmentofpupilsinmathsandEnglishattheschool(usingKeyStagetwo
scoresforsecondaryschoolsandFoundationStageprofilemeasuresforprimaryschools)
11
ConsistentFinancialReporting200910
DfEhaspubliclyreleasedtheCFRaccountsfor2009/10infullforthefirsttime.Thedatacontains
informationonincomeandexpenditureinallstatemaintainedprimaryandsecondaryschoolsin
EnglandwiththeexceptionofAcademies.Theincomeandexpendituredataaresplitinto17and32
categoriesrespectively;allexpenditureorincomeofaschoolisincludedinexactlyonecategory.
Duetothelimitednumberofstreamsofincomeschoolsreceive,theincomecategoriesare
generallyspecific(e.g.incomedelegatedbytheLA,SENFunding,andsoon),whereasthe
expenditurecategoriesoftencompriseofmanysimilaritemsgroupedtogether(e.g.teaching
assistants,learningmentorsandbehaviouralmanagersstaffcostsareallgroupedintotheeducation
supportstaffcategory).
SomeitemsintheCFRarecensoredwhentherearesmallnumbersofemployeesinaroleinaschool
orwhenschoolsspend(orreceive)lessthansomethresholdinastaffrelatedcategory.Asaresultof
thisthereisamissingdataproblemforsomeprimaryschoolsbutsecondaryschoolsremainlargely
unaffected.Duetothelimitationsofthedata,whenwewishtoconductanalysisonspecificroles
(e.g.expenditureonteachingassistantsorseniormanagementstaff)wemustrefertotheSWC
dataset,describedbelow.
WeuseCFRdataintwowaysinouranalysis.Firstly,weoftenwanttocompareschoolswithsimilar
incomesandwherewedothisweusethetotalincomefromallsourcesperpupil,withpowersof
two,threeandfourincludedwhererelevant.Secondly,wecreateaseriesoffinancialcharacteristics
oftheschoolthataresummarisedinDataAppendixTable3andinclude:
Totalincomeperpupil;
Totalexpenditureperpupil;
Teachingexpenditureperpupil;Expenditureoneducationsupportperpupil.
SchoolWorkforceCensus
TheSchoolWorkforceCensus(SWC)isindividualleveldataonallstafffromlocalauthorities,state
maintainedschoolsandacademiesinEngland.ThecensuswastakeninNovember2010andthisis
thefirstyearinwhichthecensushasincludedallschools.Theunitofobservationisanindividual
role,soitispossibleforanindividualwhoisbothaclassroomteacherandDeputyHeadtohavetwo
observationsinthedata.However,theredoesnotappeartobeconsistenttreatmentofthesplitting
ofrolesacrossschools.
ThefullSWChas1,292,494observationsfrom21,423primaryandsecondaryschoolsincluding
informationonover400,000teachersand270,000teachingassistants.Thecensusincludescontract
informationsuchasthestartandenddate,hoursworked,annualpayandallrolesanindividualhas
withinaschool(teacher,headofdepartment,lunchtimesupervisoretc.)aswellasanindicatorfor
whetherthememberofstaffisemployedbythelocalauthorityortheschooltheyareworkingat.It
alsoincludespersonalcharacteristicssuchasdateofbirth,genderandethnicity.Thedataincludes
anindicatorofwhetherateacherhasattainedqualifiedteacherstatus(QTS);informationonother
qualificationssuchassubjectstudiedandthelevelofthequalification(degree,PGCEetc.);and
informationontheamountoftimespentintheclassroomteachingeachsubject.
12
TherearetwomajordataqualityproblemswithSWC:somevariablesaremissing,andforother
variablesincluded,thereareapparentlymissingobservations.Themissingnessonvariablesisa
particularproblemforindicatorssuchasteachersqualification(65%missing)andsubjectstaughtin
theclassroom(68%missing).AlthoughtheSWCincludesinformationonallstaff,detailedpay
informationwasonlymadeavailableforteachers(includingheadteachers)andteachingassistants.
Asaresultofthispayinformationismissingforaround90%ofsupportstaffand10%ofteaching
assistants.Theverylargevariationinstaffpupilratiosacrossschoolsleadustosuspectthatsome
schoolshavefailedtosubmitareturnforeverymemberofstaffandthisshouldbeborneinmind
duringtheanalysissection.ThismayalsobeanaspectforfuturewavesofSWCtotightenupon.
WeuseSWCtocreateaseriesoffinancialandoperatingcharacteristicsoftheschoolthatare
summarisedinDataAppendixTable3andinclude:
Expenditureonclassroomteachersperpupil,definedasthesumofgrosspay,adjustedbyfull
timeequivalentindicators,forclassroomteacherswhoarenotassistant,deputyorhead
teachers;
Expenditureonseniormanagementperpupildefinedasthesumofgrosspay,adjustedbyfull
timeequivalentindicators,forassistant,deputyandheadteachers;
Number(FTE)ofseniormanagersinschool;
Proportionofteachingstaffunderage30;
Proportionofteachingstaffwithqualifiedteacherstatus(QTS);
Proportionofsupportstaffonshorttermcontracts;
Proportionofteachingstaffwithtenurelessthanoneyear;
AgeoftheHeadteacher;
PayoftheHeadteacher;
Proportionofteacherswithqualificationintheirmainteachingsubject;
Proportionofhoursofmathstaughtbyqualifiedsubjectteachers;
ProportionofhoursofEnglishtaughtbyqualifiedsubjectteachers;
Proportionofhoursofsciencetaughtbyqualifiedsubjectteachers;Estimatedschoollevelpay
premium,calculatedbyaveragingacrosstheschooltheresidualfromateacherpayregression
thatcontrolsforyearsoftenure(includingsquaredandcubed),sex,age(inaveryflexibleform),
whetherQTS,whetherparttime,phaseofeducation.
13
ResultsSummary
1.Thefocusofouranalysisisonthedegreeofvariationinexpendituredecisionsandonhowmuch
ofthatvariationisduetotheschoolsoperatingenvironment,broadlydefined,andhowmuch
reflectsidiosyncraticdecisionsmadebythatschoolthatcannotbeexplainedbyobservablefactors.
Wedothisforseventeendifferenteducationalparametersthattheschoolhasleverageoverand
whichmightbeexpectedtobeimportanttotheschoolseffectivenessinraisingattainment.
2.Theresultsbelowshowthatthereisaverysubstantialamountofvariationinsomeexpenditure
decisionstakenbydifferentschools.Thisistrueinbothprimaryandsecondaryphases.Theresults
alsoshowthattheamountofvariationandthedegreetowhichthesereflectrealdecisionsareboth
differentacrosstherangeofoperationaldecisionswemodel.
3.Intheitemsthataccountforalargeshareofthebudgetthereisratherlessvariation,butitisstill
nontrivial.Takingteachingexpenditureperpupil(whichaccountsforcloseto60%oftotal)asan
example,itsstandarddeviationis13.5%ofthemeanvalueof3,043insecondaryschools.This
translatesintosubstantialvariationwithagapofabout1000perpupilbetweenaschoolatthe
bottomquartile(25thpercentile)andaschoolatthetopquartile(75thpercentile).60%ofthis
variationcanbeexplainedbythestructuralanddemographiccharacteristicsoftheschool,risingto
70%ofvariationifweincludevariationintotalincome.Nevertheless,thisleavessome30%ofthe
variationinteachingexpenditureunexplainedoridiosyncratic.
4.Attheotherendofthescale,weanalysemeasuresofdetailedoperationaldecisionsthatreveal
theschoolsdecisionmaking.Thesearegenerallylessbudgetconstrainedgivingtheschoolsmore
scopeforchange.Forexample,thenumberofseniormanagersinaschoolvariesenormously,with
theinterquartilerangeforallsecondaryschoolsexceedingthemean(of17).Controllingforthe
schoolcontext,wefindthatthreequartersofthisvariationisidiosyncratic.Essentiallyequivalent
schoolsaremakingverydifferentdecisionsonhowmanyseniorpositionstohave,alsoonhowmany
supportstafftohave,andsoon.
5.Ourresultsshowthatthemoredisaggregatedthefactoris,themoreidiosyncraticthe
expenditurelevelsare.Accountingingreatdetailforschoolcontext,wecanexplainverylittleofthe
variationsinexpenditureonseniorschoolleaders,supportstaff,Headteacherpay,teacherturnover,
andthedeploymentofteachersbysubject(thatis,howmanyhoursofasubjectaretaughtby
specialists).
6.Ouranalysisofunexplainedorresidualincomesuggeststhatthisisprincipallyassociatedwith
expenditureonteachers,educationalsupport,theHeadteacherssalaryandtheschoollevelpay
premium.
7.Schoolsreactinverydifferentwaystochangeinincomebetweentwoyears.Only42%of
secondaryschoolsincreaseexpenditureonteachersmorethananyotheritem.Theremaining58%
ofschoolschoosetoincreaseexpenditurethemostonotheritems,orallowtheirbudgetbalanceto
changethemost.Essentially,almosteverypossibledecisiononexpenditurechangeisobserved
somewhereinthedata.
14
DetailedResults
Wefirstcharacterisethedifferencesinschoolsdecisionsontheirspendingpatterns.We
supplementthatwithananalysisofhowtheresidualincomeschoolsreceiveisspent,andan
analysisofhowachangeinincomeisallocatedacrossspendingitems.
Part1:Howmuchvariationinspendingisthereforlikeschools?
Inthismainbodyofanalysisforthereportweanalysethevariationinschoolexpenditurepatterns
forschoolsfacingverysimilarcircumstances..Weanalyseschoolexpenditurepatternsforthe17
variablesderivedfromCFRandSWCthataredescribedinthedatasection.Thequalityofthedatain
SWCrestrictstheindicatorsweareabletocreatefromit.Forexample,thedataonthegrosspayof
teachingassistantsandonthenumberofteachersandteachingassistantswasnotofsufficiently
goodqualitytouse.Otherssuchasthegrosspayofteachers,seniorstaffandthequalificationsof
teachersarelikelytohaveconsiderableinaccuraciesandthisshouldbeborneinmindwhen
inspectingthedistributionofthesevariables.
Methodology
Wedescribetheamountofvariationineachvariableofinterest,separatelyforprimaryand
secondaryschools,throughaboxplotandreportsofthemeanandstandarddeviation.Ineachchart
weprovidedataonallschoolstakentogether,andalsoongroupsofschools.Itneedstobe
emphasisedthatwhenweconsiderlikeschoolswecontrolinfargreaterdetailfortheschools
circumstanceswithineachofthesegroups.Thegroupsare:
Allschools
Largeandsmallschools;schoolseithersideofthemediansize(separatelyforprimaryand
secondaryschools);
Disadvantagedschoolsandnondisadvantagedschools;schoolseithersideofthemedian
percentageofstudentseligibleforFSM(separatelyforprimaryandsecondaryschools);
LondonschoolsandnonLondonschools.
Wealsoconsideredasplitbyschoolperformance,definedintermsofexamresults.Thekeyisthat
schoolsize,locationanddegreeofdisadvantagearegenerallyfixedformostschoolsandcanbe
thoughtsofasgiven.Obviouslythereissomeyeartoyearvariationinthepercentageofstudents
eligibleforFSMandinthenumberofpupils,butitisveryrareforschoolstodramaticallychange
theircategoryhere.Thuswecanusethesegroupsasasoundbasisforthebriefofthisstudytrying
tounderstandschoolsfinancialdecisionsonthebasisofthereasonablyfixedcharacteristicsofthe
school.Asweaddfurtherexplanatoryvariablesinthemodel,whilewecertainlydonotmakeany
strongclaimofcausality,thesevariablesarenotobviouslyoutcomemeasures.However,asplitby
schoolperformanceisclearlyanoutcome,andislikelytodependdirectlyontheexpenditure
variationsweareanalysing.Thisdirectendogeneitywouldmakeanyinterpretationofsuchfigures
extremelyproblematic.Itwouldbeatleastasmuchaboutunderstandingschoolacademic
performanceasunderstandingschoolfinancialdecisions.Thisisthereforecompletelydifferentto
ourchoiceofthethreegroupings,andourviewisthataperformancesplitwouldnotbehelpful.
15
Theboxplotisastandardtoolforgivingasenseofthedegreeofvariation.Itdisplaysthemedian,
andtheupperandlowerquartilesofthedistribution,thusshowingbothvariation(theinterquartile
range,IQR)andlocation(wherethemiddlehalfofthedatalie).Inadditiontheboxplotalso
indicatesthelocationofpointsfurtheroutfromthebulkofthedata.Thelinesextendingfromthe
boxfinishattheupperandloweradjacentvalues.Theupperadjacentvalueisthelargest
observationthatislessthanorequaltothethirdquartileplus1.5*IQR.Theloweradjacentvalueis
thesmallestobservationthatisgreaterthanorequaltothefirstquartileminus1.5*IQR.Outliersare
allvaluesthatfalloutsideeitherofthesepoints,andtheplotshowssomeoutliervaluestooto
illustrateveryextremeoutcomes.
Nexttoeachboxplotwesummarisehowmuchvariationinthevariableofinterestisexplainedby
schoolsstructuralfactors,thedemographicprofileoftheschools,andtheschoolsactualincome.
Wewanttodothistoassesshowmuchvariationisduetotheschoolscircumstancesandhowmuch
istheresultofdiscretion,decisionsthatschoolshavetakenonhowtodeploytheirresources.Todo
this,wepresenttheR2statisticfromaseriesofregressions,foreachvariableofinterest,foreach
groupandforprimaryandsecondaryschools.TheR2statisticmeasureswhatpercentageofthe
variationinthedependentvariableisaccountedforexplainedbytheexplanatoryvariable.Ahigh
value,closeto100%,showsthatthereislittlediscretionandmostofthedifferencesbetween
schoolsintheirspendinginthisparticularcategoryaresimplydrivenbytheirobservable
characteristics.AvalueoftheR2nearzerosuggeststhatdifferencesinexpenditureareessentially
idiosyncraticthatschoolsinthesamecircumstancesarespendingverydifferentamounts.TheseR2
statisticsarethereforekeyinansweringthequestionweareaddressinghere.WeuseR2ratherthan
(Rbar2)becauseweareinterestedinthetotalcumulatedexplanatorypowerofallthevariables
atourdisposal.
Foreachexpenditurevariableandeachschoolgroupwerunthreeregressions.Thefirstis
conditionalonwhatwecallstructural(S)factors,thesecondregressionaddsdemographic(S&D)
factors,andthethirdaddstheschoolsincome(S,D&I).Asdescribedinthedatasection,the
structuralfactorsarecreatedfromEdubaseandincludesizeandtypeofschool.Thedemographic
factorsarecreatedfromNPDandincludetheaveragepriorattainmentandaveragesocial
characteristicsofthepupils.TheschoolincomefromCFRistotalincomefromallsourcesperpupil,
withpowersoftwo,threeandfourincluded.
Theideaisthatwewanttoisolateandremovevariationconditionalonunavoidablestructural
characteristicsthatimposecostsontheschool.Second,wewanttoalsotakeoutvariation
conditionalondemographiccharacteristicsthatschoolsneedresourcestohelpdealwith 1 .Finally,
wewanttoconditionontheincomethatschoolsactuallyreceive,givingthemtheopportunityto
spendmoney.
Thereareanumberofpreliminarypointstomakeabouttheseregressionsthatapplytoallthe
chartsbelow.First,weexpectthatingeneralthefinalregression,whichaddsactualincomeontop
ofstructuralanddemographicfactors,willnotaddagreatdealofexplanatorypower.Thismay
Obviously,thesecharacteristicsarenotexogenousandareinpartafunctionoftheschoolsdecisions;so
thesearenottobethoughtofasfullycausalcostfunctionestimates.
16
seemcounterintuitivesinceincomeconstrainsexpenditure,buttheschoolsincomedependsquite
heavilyonthesestructuralanddemographicfactors,andthereforeimplicitlythesecondregression
iscontrollingforexpectedincome.SotheinterpretationofthefinalR2ishowmuchmoreofthe
variationinexpenditurecanweexplainifweknowtheschoolsresidualincomeaswell.Becauseof
theimportanceofthisissue,weundertakeamoreexplicitanalysisofthisinpart2oftheResults.
Second,addingfurtherexplanatoryvariableshastoalwaysincreaseexplanatorypower.Intermsof
theregressionsthen,thevalueoftheR2shouldalwaysincreasefromthefirst(S)tothethird(S,D&
I)regression.Inpracticethisdoesnotalwayshappenasthesamplevaries,particularlywhenweadd
income(whichismissingfornewschoolsandacademies).Wechosetoallowthistohappenandto
maintainthemaximumsampleperregressionratherthanusearestrictedsampleacrossall
specifications.
Results
Wepresentouranalysisofvariationinexpenditure,demonstratingdifferentapproachesto
measuringparticularexpenditureitems.Ourfirstresultsareforoverallexpenditure,andthenshow
resultsforteachingstaff,seniormanagementteamsandsupportstaff.
Variationintotalincomeandexpenditure
Incomeisclearlynotanexpenditureitembutweincludeitheretobenchmarktheoverallamountof
variationintheresourcesavailabletoschools.Followingtheapproachinthemethodology,Figure1
combinestheboxplotsoftotalincomeandtheR2resultsof3regressionspergroup.
Lookingfirstatsecondaryschools,thelevelsofincomeareasexpected:higherinpoor,smalland
Londonschools(thereisobviouslysomeoverlapbetweenthesecategories).Thereisalsomuch
greatervariationinincomeperheadamongsmallschoolsandschoolswithhigherfractionsofpoor
pupils.Theregressionanalysisshowsthatabouthalfofthevariationinincomeisduetostructural
factors,ratherlessinlargeandnondeprivedschools.Demographicfactorsaddanother20
percentagepoints(ppts)orso.Overallabout30%ofthevariationinincomeperpupilisunrelatedto
structuralordemographicfactors(thethirdcolumnis100%byconstructionasincomeisregressed
onincome).NotethatinlowFSMschools,demographicsaddverylittleexplanatorypoweratall,
andingeneralgroupswithhighervarianceofincomeperpupilalsoseeahigherfractionexplained
bythefactors.Inprimaryschoolsweseemuchthesamepatternsthoughperhapsslightlyless
marked.
Onereasonthevariationinincomeissogreatandisunexplainedbytheschoolscurrent
demographicandstructuralcharacteristicsisthathistoricallevelsofschoolfundinghavealways
beenusedtodeterminecurrentlevelsoffunding.Thishasbeenparticulartrueoverthepastdecade
becausestabilitymechanismswereintroducedtoprotectschoolsfromlargefallsinincome
(Chowdryetal.,2010).Twomechanismsareresponsibleforincreasinginertiaanddiminishing
responsivenessofschoolfundingtochangingneeds.TheMinimumFundingGuarantee(MFG)
guaranteeseachschoolaminimumincreaseinfundingperpupileachyear,thusreducingtheimpact
oflocalauthoritiesfairfundingformulae.Thespendplusmethodologycurrentlyusedbymost
localauthoritiestodeterminedistributionofgrantstendstofavouraflatrateincreaseonprevious
yeardistributions,plusanextraincreasedeterminedonthebasisofaformula.Whilethereissome
17
rationaleforbothMFGandspendplusintermsoffinancialstabilityandplanningconvenience,the
negativeaspectsofthesepoliciesneedtobeacknowledgedtoo.
Unsurprisinglygiventhesimilaritybetweentotalincomeandtotalexpenditure,thepatternof
resultsfortotalexpenditureinFigure2areverysimilar.Therearesomeextremeoutliersofvery
highexpenditureperpupil,particularlyforprimaryschools.Almostallthevariationisexplained
onceincomeisincluded,thedifferencebeingdrivenbyschoolsdecisionstoallowthebalance
betweenincomeandexpendituretoadjust(seealsosection3below).
Variationinteacherexpenditure
Figure3showsthevariationinallteachingexpenditure(includingseniormanagementandteaching
assistants)fromtheCFR.Itdoesshowconsiderablevariationinteachingexpenditureperpupiland
againthereisgreatervariationamongsmallthanlargeschools,amongdeprivedratherthannon
deprivedschoolsandinLondon.Butthedifferencesinvariationarelesspronouncedthanfortotal
expenditure.Betweentwothirdsandthreequartersofthevariationisexplainedonceweinclude
incomeasafactor,sothereremainsagreatdealofidiosyncraticvariationinthiskeyvariable.This
meansagreatdealofscopeforschoolstomakeindependentdecisions.Notethatmoreofthe
variationisexplainedamongpoorandsmallschoolsthannonpoorandlargeschools.Soitmaybe
thattheamountofunexplainedvariationinmoneytermsisaboutthesameacrosscategories.
WeareabletousetheSWCtomeasureexpenditureonactualclassroomteachers,i.e.teacherswho
arenotalsoassistant,deputyorheadteachers.ThishastheparticularadvantageoverCFRof
excludingteachingassistants,butwearealittleconcernedaboutdataqualityofvariablesthatare
aggregatedfromgrosspayinSWC.Figure5showsthatoverallthereislessvariationwithinand
acrossgroups,butthatthereisagreatdealofunexplainedvariation:evenaccountingforschool
income,lessthanathirdofthevariationinexpenditureonteachersisexplained.Notethattheissue
ofthesamplechanginginthethirdcolumnisquiteprominenthere,withtheR2fallingformost
groupsofsecondaryschools.
Unfortunatelythedataqualityisnotreallysufficienttosaymuchaboutteachingassistant
expenditure(duetoaverylargeamountofmissingnessonthepaydata),sowemoveontolooking
atvariationinsupportstaffexpenditure.ThedatainFigure4showsvariationinsupportstaff
expenditureintheCFR,soitdoesnotallowustodifferentiatebetweendifferentcategoriesof
supportstaff.Thereissubstantialvariationinthiscategoryofexpenditure,overallthestandard
deviationisabouthalfthemean.Abouthalfofthatvariationisunaccountedfor,andincludingthe
schoolsactualtotalincomeaddslittleconditionalonstructureanddemographics.Levelsof
expenditureperpupilarehigherinprimaryschoolswherewealsoseemorevariation.
Wenowturnourattentiontovariablesthatmightexplainvariationinteacherquality,ratherthan
expenditure,perse.Weareinterestedinwhetherthestructural,demographicandincome
characteristicsoftheschoolareabletoexplainhowsuccessfultheschoolisinrecruitingateacher
workforcethathasdesirablecharacteristics.Perhapsmostdirectlyrelatedtoexpenditureisthe
extenttowhichaschoolappearstobepayingitsteachersarelativelyhighwage,giventheirknown
individualcharacteristics.Thisisestimatedbyaregressionoverallteachersinaschoolandtakes
intoaccounttheircharacteristics,butdoesnottakeintoaccountschoolcharacteristicsorlocation.
18
(Notethatintheregressionsample,theoverallmeaneffectiszero,butisnothereasschoolshave
hadtobedroppedfromthisanalysissample.)
Figure18showsthatthereislittledifferenceintheaveragepaypremiumotherthanforLondon
schools,butsomevariationwithingroups.Theoverallstandarddeviationof2.5kissmallrelativeto
meanteacherpayofaround40k.Thisisperhapsnotsurprisinggiventheveryhighuseofthe
standardteacherpayscales.Abouthalfofthisvariationisexplainedbystructuralanddemographic
factorsandbyincome,sothereisevidenceofsomeuseofdiscretioninthis.
Thereareanumberofmeasuresforthelikelylevelsofqualificationsandexperienceoftheteacher
workforce.Firstly,Figure9showstheproportionofteacherswithqualifiedteacherstatus(QTS).
Thereisverylittlevariationinthisacrossschools.Theaveragesareallinthehigh90s,andthereare
onlyoutliersbelow90%.ThisisslightlylesstrueinLondon,andindeprivedschools.
Figure8showstheproportionofteachingstaffunderage30andFigure11showstheproportionof
teacherswithtenurelessthanayear.Boththesemightactasgoodproxiesforteachersoverall
experienceintheabsenceofaSWCvariablethatmeasurestotalnumberofyearsinteaching.In
Figure8therearesmalldifferencesbetweengroupaveragesandrelativelylessvariation.Thereis
morevariationandmostlyunexplainedamongprimaries.Theseschoolsaresmallersomore
susceptibletorandomvariationinteacherage.
Figure10showstheproportionofnonteachingstaffonshorttermcontracts,butagainwehave
concernsaboutthedataqualityhereintheSWCasmuchofthisinformationisnotreported.The
meanis91%inallthegroupsinsecondaryschoolsandalittlebitlowerinprimaries.Overall,thereis
littlevariation.
TheshorttenurevariableshowninFigure11includesseniormanagementteamteachers.Quite
differenttowhatmighthavebeenexpectedgivenreceivedwisdom,wefindverylittlevariationin
theaveragesbetweenthegroupsofschools.Forexample,thereareonlyslightlymoreshorttenure
teachersinhighpovertyschoolsthanlow.Thisisafindingthatweconfirminourmoreextended
investigationoftenuredistributions.Thereisalsoquitealotofvariationwithingroupsandvariation
ismarginallygreateramongsmallschoolsandpoorschools.Thevariationisnotexplainedbythe
structuralfactors,norexplainedbydemographics,norincome(again,notethatthesamplevaries
considerablyinthefinalcolumnexplainingthefallintheR2).
Schoolsthathavedifficultyrecruitinggoodteachersmightbeexpectedtohavehighproportions
teachinginasubjectthattheydonotpossessaqualificationin.Herewedonotdistinguishbetween
thesubjectstudiedatundergraduateandtheteachertrainingspecialistsubject.Therearefewer
observationsforthesevariablesbecausesomeschoolsdidnotfillinthequalificationsand
curriculumpartoftheCensus(whichappliestosecondaryschoolsonly).
Figure14showstheproportionofteacherswithaqualificationintheirmainsubject.Thereisa
considerablerangeinthedatatakingschoolsasawhole,therangebetweentheupperandlower
adjacentvaluesisover60percentagepoints.Thereislessdifferenceinthemeanbetweengroups.
Thisisnotstraightforwardtointerpret:itisnotsimplyastatementaboutthequalificationsofthe
teachers,butalsoaboutthechoicestheschoolshavemadeabouttheircurriculum.Forexample,the
19
relativeimportanceofcoresubjectsagainstmorespecialistsubjects(suchasphotography,or
citizenship).
Figures15,16and17showtheproportionofpupilhourstaughtbyspecialistteachersinmaths,
Englishandscience,respectively.Againthereisasmallersampleofschoolshere.Thelevelsare
lowerinsmallschools,typicallytheywillneedmoreflexibleteachersandfewerspecialists.Figure17
showsthatthereareslightlymorespecialistsinscience.Thereisconsiderablevariationwithinallthe
groupswiththeinterquartilerangecoveringmuchoftheentirerangeofdata.Nomorethana
quarterofthevariationisexplained.
Variationinseniormanagementdeployment
WeareabletouseSWCtodistinguishbetweenstandardclassroomteachersandseniormanagers
suchasassistant,deputiesandheadteachers.Thedataqualityisnotashighaswewouldlikeitto
beandasaresultwecannotreliablyassesshowmuchtimetheseseniorteachersspendinthe
classroomasopposedtoonmanagementduties.Figure6showsthevariationofexpenditureon
seniormanagers,calculatedfromthegrosspaydatainSWC.Unfortunatelymanyindividualshave
paydatamissingoratafigureofzero,whichmayexplainwhythereisagreatdealofvariation
betweenschoolsthatismostlyunrelatedtotheschoolscircumstances.
Themeasureofnumberofseniormanagers(fulltimeequivalents)showninFigure7ispossibly
morereliableasitdoesnotusethepatchypaydata.Itisnotscaledthisisliterallythe(FTE)
numberofseniormanagerssothereareboundtobemoreinbigschools,althoughsizeis
controlledforinthestructuralfactors.Theresultsshowverysubstantialvariation,thestandard
deviationisapproximatelyequaltothemean.Onlyaboutaquarterofthevariationisexplained,so
againidiosyncraticdecisionsareveryimportant.Therearefewerseniormanagersandthereisless
variationinprimaryschools,principallyasprimariesarealotsmallerandhavefewermanagement
jobtitlestohandout.
WeareinterpretingageofheadteacherasproxyforexperienceinFigure12.Dataqualityishigh
withveryfewmissingvalueshere.However,thereareanumberofambiguouscasesonwhoisthe
schoolheadteacher.Inthesecaseswehavetakenthehighestpaidpersondesignatedas
headteacherwhoisworkingattheschoolforatleast50%FTE.Remarkably,therearenodifferences
inthemeanageacrossthesecategories,noralotofvariationwithineachgroup.Itisthesamestory
inprimaryschools.Essentiallynoneofthevariationisexplained.Thiscanbeinterpretedassaying
thatchoosingtoemployexperiencedorinexperiencedheadteachersseemstobeadecisionthat
schoolstakeinanunsystematicwaytheyarenottypicallymoreexperiencedinbiggerorpoorer
schools,orasexplainedbyanyofthefactorsincludedinourregressorgroups.
Thereisareasonableamountofdiscretiononthepayscaleastohowmuchgovernorschooseto
paytheirheadteachers.Figure13showsthevariationinthisheadteachersalary.Itisarawsalary
figurethatdoesnotcontrolfortheheadteacherpersonalcharacteristics,age,qualifications,andso
on.Nordowecontrolforschoolperformanceotherthanindirectlythroughthedemographics.
Thereareanumberofinterestingpointshere.Therearebigdifferencesbetweengroups:salaries
arehigherinlargeschoolsthansmall,higherinLondonthanoutside,thoughdisadvantagedand
nondisadvantagedschoolspayaboutthesame.Thereisconsiderablevariationwithingroupstoo
withastandarddeviationof16kinsecondaryschools,andmanyveryhigh(andlow)values.
20
Overall,abouthalfofthisvariationisidiosyncratic,thoughthisfractionishigherinthehighvariation
groups.Forexample,inlargesecondaryschools,only27%ofthevariationisexplained.Again,the
patternisthesameinprimaryschools,thoughtheR2ishigher.
21
Part2:Howistheresidualincomethatsomeschoolsreceivespent?
Adifferentwayofconceptualisingschoolsdiscretioninspendingistoconsiderhowtheyspendthe
incomethattheyhavethatisnotaccountedforbytheircircumstances.Wedescribethisastheir
residualincomebutitcouldequallybecalledunexpectedincomesincethetypicallikeschooldoes
notreceivethismoney.Onereasonthatthisresidualincomemightbeinterestingisthatitmighttell
ussomethingaboutthemarginaldecisionsschoolsmakeaboutspendingtheirlastpounds.So,it
mighthelpusunderstandwhathappensifaschoolisgivenalittleextramoney.
Wecalculateresidualincomebyregressingeachschoolstotalincomeonthestructuraland
demographiccharacteristicsdefinedabove,andextractingtheresidualfromtheregression
estimates.Wethenregresseachexpenditureitemwedefinedaboveonthisresidualincomeandall
thestructuralanddemographiccharacteristicsdefinedabove.Ineachregressionweusethe
coefficientonresidualincomeasameasureofhowtheextrapoundofincomeisspent.Aswe
noted,thisexerciseissimilartocomparingtheimpactontheR2ofaddingincometotheregressions
above,butherewefocusonwhichitemsseethegreatestchangeinexpenditure.
Table1columnApresentstheresultsoftherelationshipbetweenresidualincomeandexpenditure
itemsinsecondaryschool.Foreachexpenditureitem,wepresentinthetablethecoefficienton
residualincome,theestimatedstandarderrorandtheR2.Theremainderofthecoefficientsarenot
presented.
Thetoprowfortotalexpenditurehasacoefficientcloseto1,asitshouldhave.Thisimpliesthat
almostalltheresidualincomethatisgiventoaschoolisspentinthatyear.Manyotherexpenditure
itemshaveestimatesclosetozero,buttheitemswithsubstantialandsignificantcoefficientsare:
Expenditureonteachingstaffwherethecoefficientis0.2,meaningthatforevery1ofresidual
incomeaschoolgets,theyspendabout20ponteachingstaff;
Expenditureoneducationalsupportwherethecoefficientis0.08or8pinevery1ofresidual
incomereceived;
ExpenditureonclassroomteachersintheSWChasacoefficientof0.1implyingthatonly10pina1
ofresidualincomeisspentonclassroomteachers;
ExpenditureonseniormanagementintheSWChasacoefficientof0.01implyingthatonly1pin1
isspenthere(thoughnoteourconcernsaboutdataquality);
Schoollevelpaypremiumcoefficientis0.29,suggestingthataboutathirdoftheresidualincomeis
associatedwithahigherpaypremiumintheschool.
ThepayoftheHeadteachercoefficientis1.9.Takenliterally,thismeansthatmorethantheextrais
spentontheHeadteacherssalary.However,theseregressionsarenotintendedtobeunderstoodas
causal,theysimplymeasureassociation.Forexample,itcouldbeinpartthathighlypaid
Headteacherscanattractmoreincome.Also,bothcurrentresidualincomeandcurrentstaffing
structuresmightbeexplainedbyhistoricalincomeandstaffingstructures.
22
Table1columnBpresentsthesameanalysisforprimaryschools.Weseeasimilarpatternhere,
thoughwithsomeinterestingdifferences.Themoresubstantialcoefficientsare:
Expenditureonteachers(0.32)
Expenditureoneducationsupport(0.18)
ExpenditureonclassroomteachersintheSWC(0.13)
Expenditureonseniormanagement(0.07)
ThepayoftheHeadteacher(1.38)
Schoollevelpaypremium(0.28).
Inbothcases,thepayoftheHeadteacheristhemosthighlyassociatedwiththeresidualincome.
Part3:Whereincomechangesbetweentwoyears,howisitspent?
Wecomparedschoolincomeandexpenditurein2008/9and2009/10.Onlyafewschoolsseestable
income;forexample,only11%ofschoolsexperiencedanabsolutechangeinincomeoflessthan1%,
while22%sawafallinincomeand61%hadarisegreaterthan5%(allinnominalterms).Wearenot
chieflyconcernedabouthoworwhytheincomeincreased,butwewillusetheCFRdatatoanalyse
howthechangeisdeployed.NotethatasweonlyhaveoneSWC,wecanonlyconsiderchangesin
theCFRdata.Thisanalysisrelatesonlytosecondaryschools.
TomakethingsmanageablewegrouptheCFRexpenditureitemsasfollows:
Group1,"Teachers":Teachingstaffcosts
Group2,"EdSupport":Educationsupportstaffcosts
Group3,"Otherstaffandstaffrelated":Supplystaffcosts,Premisesstaffcosts,Administrative
andClericalstaffcosts,Cateringstaffcosts,Costsofotherstaff,Indirectemployeeexpenses,
Developmentandtrainingcosts,Supplyteacherinsurancecosts,andStaffrelatedinsurance
costs.
Group4,"Buildingsrelated":Buildingmaintenanceandimprovementcosts,Grounds
maintenanceandimprovementcosts,Cleaningandcaretakingcosts,Waterandsewagecosts,
Energycosts,Nondomesticratesexpenditure,andOtheroccupationcosts.
Group5,"LearningandICTresources":Learningresourcescosts(notICTequipment)andICT
Learningresourcescosts.
Group6,Other:ExamFees,Administrativesupplycosts,Otherinsurancepremiums,Special
facilitycosts,Cateringsupplycosts,Agencysupplyteachingstaffcosts,Boughtprofessional
servicescurriculum,Boughtprofessionalservicesother,Communityfocusedextendedschool
staffandCommunityfocusedextendedschoolcosts.
Group7,Balance:Totalincomeminustotalexpenditure
Wefocusfirstonaverageresponses,beforeconsideringtheheterogeneityofdecisionsmade.Table
2looksataveragechangesinschoolincomeandexpenditureitems.Inordertomakealltheitems
adduptothechangeinincome,wemeasurethechangeinexpenditureongroupKasfollows:
23
(expenditureonKin2010expenditureonKin2009)*100/(incomein2009).Summingupoverall
theseitemsplustheresidualbalanceaddsuptothepercentageincomechange:(incomein2010
incomein2009)*100/(incomein2009).Wesplitschoolsupintoquintilesofincomechangeand
displaytheresultsseparatelyforthesequintiles.
Changeinexpenditureonteachersisthebiggestsingleitem,butisbynomeansthewholestory.
ThedifferenceinthepercentagechangeonteachersshowsthebiggestgradientbetweenQ5andQ1
atabout4percentagepoints,butisconsiderablysmallerthanthegradientinincomechangesof
about15percentagepoints.Schoolsalsousetheirresidualbalancetotakethestrainofincreases
anddecreases.Expenditureonresourcesandonbuildingsfalls,eveninsomeschoolswithrising
income.Allquintilegroupsshowanaverageincreaseinspendingoneducationalsupportstaff,
thoughsomewhatgreaterinthequintileswithrisingincome.Spendingonteachersdoesfallinthe
schoolswiththelargestfallsinincome,butnotbyagreatdeal.
Itisinterestingthatthereisanasymmetrybetweenschoolswithsubstantialincreasesinincomeand
thosewithsubstantialfalls.Theformeronaverageincreaseexpenditureonteachersquite
substantially,thelatterdonotdecreaseitonaverage.Thisisbothamajortotalofexpenditureand
alsoonethatisdifficulttocut.
Wenowlookattherangeofdifferentresponsesschoolsmaketochangesintheirincome.Table3
exploreswhichexpenditureitemsschoolschoosetomakethebiggestchangein.Foreachincome
changequintile,wereportthepercentageofschoolsthatmakethebiggestincreaseinexpenditure
foreachgroup.Forexample,lookingatthebottomleftnumberinthetable,27.85%oftheschools
inthebottomquintilemadetheirlargestincreaseinexpenditureonteachers.
Table3arevealssomeinterestingfacts.Inparticularitshowsahugerangeofdifferentdecisions
takenbyschools.Fewerthanhalfofschools,42%onaverage,madeanincreaseinspendingon
teacherstheirlargestchange.Thispercentageisconstantacrossallthetopfourquintiles.Thenext
mostpopulardecisionineachquintileandoverallwastoletthebudgetbalanceadjust,22%of
schoolsoverall.Notethatgiventhedefinitionoftheexpenditurechange(asafractionof2009
incomelevel)theyareallinthesameunits.Betweenahalfandathirdofschoolsineachquintile
madeotherdecisionsonwhattoincreasespendingonthemost,withnooverallpatternamongthe
othergroupsofitems.Itisworthrepeatingthatonly41%ofschoolswiththebiggestriseinincome
chosetomakethebiggestspendingincreaseonteachers.Thepatternagainfitstheemerging
findingsofalotofvariationinschoolsdecisions.
Table3bshowstheexpenditureitemswiththelowestriseorbiggestfall,i.e.whichitemeachschool
makesthelowestincreaseinexpenditureon.Forthetopthreequintiles,themostcommon
decisionsareforresources,buildingsandotherstaffcosts,butthedistributionisfairlyflat:thereisa
widesetofdecisionsmade.
Figure19showsthefullvariationinthedecisionstakenbyschoolsinresponsetoachangein
income.Itusestheboxplotsintroducedabovetoshowthedistributionofthechangeinexpenditure
(asdefinedabove)foreachoftheexpendituregroupsacrossthefiveincomechangequintiles.
24
AswehaveseenfromTable3,expenditureonteachersshowsthebiggestaverageacrossall
quintiles.Butitalsoshowsthebiggestvariationintermsoftheinterquartilerangeandthebiggest
rangebetweentheupperandloweradjacentvalues.AsTable4shows,around60%ofschools
increaseexpenditurebymoreonotherfactorsthanonteachers.Inparticular,thevariationon
teacherexpenditureisgreatestinthetopandbottomquintiles.LookingatQ1schools,themedian
changeisaboutzero,butthereisverysubstantialvariationaroundthat.
Figure20adoptsthesameoveralllayoutasFigure19,butplotsthedistributionofthechangein
expenditureonanitemrelativetothechangeinincome:(expenditureonKin2010expenditureon
Kin2009)*100/(incomein2010incomein2009).Itislikelythatsomeelementswillbesubjectto
denominatoreffects:whenthedenominator(incomein2010incomein2009)isapproximately
zero,thevariablewillbecomeverylarge.Notethatnegativenumbersareperfectlypossiblehere,
andindeedthefigureshowstobeverycommon.Theseariseforexampleifaschoolseesarisein
incomebutreducesexpenditureonacertainitem.
Themessageofthefigureisagainthatthereisgreatvariationinthedecisionsthatschoolstakeon
howtodeploytheincreaseintheirbudget.Focussingonthetoptwoquintileswheredenominator
effectsarelessofanissue,weseenorealcommonalityofresponseinthesharesaccordedtothe
differentgroups.Someschoolswiththebiggestincreasesspenditallonteacherswhileothers
reduceteacherspending.Theevengreaterrangeofvariationinthelowerquintilesreflectswider
differencesindecisionsbutprobablyalsoderivefromthedenominatoreffect.
Figure21plotsthenormalisedpercentageexpenditurechange,(expenditureonKin2010
expenditureonKin2009)*100/(incomein2009),againstthepercentagechangeinincome,(income
in2010incomein2009)*100/(incomein2009)foreachK,alongwiththebestlinearfit.Each
observationrepresentsonesecondaryschool.Therearestrongpositiverelationshipsfor
expenditureonteachers,andfortheresidualbudgetbalance.Thereareonlyweakpositive
relationshipsforotherstaffexpenditureandforbuildingsrelatedexpenditure.Theselinearfitlines
capturetheaveragerelationship,butagainperhapsthemainfindingofthesechartsisthevarietyof
relationshipsbetweenbudgetchangesandspendingchanges.Therearemanyschoolsinoff
diagonalcellsforteacherexpenditureandothers.
Conclusions
Moneydoesmattertoschoolsbecausetheybuytheresourcesthatallowteachingandlearningto
takeplaceandthisreportwehavestudiedthespendingdecisionsofschools.Oneofthemain
contributionsistoexploitanewdataset,thefirstfullsweepoftheSchoolWorkforceCensus,which
enablesustoidentifyveryspecificstaffexpendituredecisionsmadebyschools.Wehaveshownvery
substantialvariationsinoperationaldecisions,andalsoshownthatmuchofthisvariationis
idiosyncraticratherthanexplainedbytheschoolscircumstances.Thishighvariabilityinresource
utilisationhasalsobeenshowninternationally(OECD,2008).
Inthisfinalsectionweconsiderwhethertherearepolicyresponsestothisknownvariationin
spendingpatternsthatmightbemoreeffectiveinimprovingschoolsfinancialdecisions.Thecurrent
policyapproachistoprovideschoolswithinformationtocomparespendingpatternswithlike
25
schoolsandtousepolicybriefingstodisseminatebestpractice.Webelievethereareanumberof
problemswiththisapproachandsuggesthowabehaviouraleconomicsapproachmightbecapable
ofimprovingschoolfinancialdecisions.
Difficultieswithcurrentpolicyapproachofdisseminationofbestpractice
Thecurrentapproachtohelpingschoolsmakeefficientfinancialdecisionsconsistsofatwofold
approachofbenchmarkingandbestpracticeadvice.TheDfESchoolFinancialBenchmarking
website 2 allowsschoolstocomparetheirCFRreturnstothoseofsimilarschoolsacrossthecountry
toseewheretheirownspendingissignificantlydifferentfrompeers.However,thewebsites
usefulnesstoschoolsisclearlylimitedbecauseitcannotdisaggregateteachingstaffexpenditure
betweenmanagementandclassroomteachers,andissilentonwhichofthesecomparisonschoolsis
asuccessfulschool.
Thewebsitedoesnotallowuserstoeasilyrelatethesehighlevelexpendituredatatoschool
outcomes.Itisthereforeaninadequatetoolforgivinganyexplicitadviceonbestpracticeon
spendingpatterns.Perhapsthislackofdirectedadviceexplainswhyonlyaminorityofheadteachers
andmanagershaveeveraccessedthiswebsite;inasampleof38schools,Dodd(2008,p.38)finds
that:Fewoftheschoolstakeagenuineinterestinorseemuchvalueinbenchmarkingtheir
performanceusingeitherparentlocalauthoritydataortheDfESbenchmarkingwebsite.Thisis
slightlysurprisingasoneofthecharacteristicsofthesampleschoolsisarefusaltoacceptthat
currentlevelsofperformancecannotbeimproved.TheDfEreportsthatusagehaspickedupin
morerecentyears(201011).
Therearemanysourcesofideasavailabletoschoolsonhowtospendtheirmoney(althoughsome
aremorefirmlybackedbyevidencethanothers),intheUKandfurtherafield 3 .Somerecent
exampleswhicharebasedonanalysisincludeaseriesofbriefsreleasedbytheAuditCommission
(2011a,2011b,2011c,2011d)outliningpotentialareasforcostsavingsandefficiencies.Thereports
coveredareasincludingclassroomdeployment,thecurriculum,andmanagingstaffabsenceand
cover.Althoughthereportssuggestedthereweremanyareasinwhichsavingsmaybemade,the
authorsconcludedmostareasheldlimitedscopeforcostreductionandsuggestedbetterutilisation
ofteachingassistantswastheareawhichmayholdthemostscopeforsavings.
Inasecondexample,theSuttonTrustreleaseddetailedguidance(Higginsetal,2011)onhowto
spendthepupilpremium,whichcitedresearchfindings.Thedocumentlistedpossiblechoiceswith
anevaluationofthelikelyimpactontestscoresandthecosteffectiveness.
Theseguidancedocumentsonbestpracticearenecessarilylimitedbythelackofastrongandrobust
evidencebasefromwhichwecanspecifywhatbestpracticeis,eitheringeneralorvaryingwith
circumstances.Thisisaseriousimpedimenttoimprovingschoolsfinancialdecisions.Aswenoted
above,whileitseemsunlikelythatthepatternsofsubstantialandlargelyidiosyncraticvariationwe
seeareoptimaldecisions,thereisnoagreedandwellsupportedviewofwhatwouldbeoptimal.
http://www.education.gov.uk/sfb
Forexample,someexplicitquantifiedguidanceforUSschoolsinImprovingTeachingandLearningWhen
BudgetsAreTight:http://www.edweek.org/ew/articles/2011/09/01/kappan_odden.html.
26
Thelackofanyfirmrecommendationsatanaggregateiscompoundedbythefactthatschoolsdo
faceverydifferentoperationalenvironments.Thequalityofinstructionandaschoolsclimateare
complexandabstract.Whereascentralizedsystemsaregoodatimpartingsimplespendingrules,itis
notobviousthatremotelydesignedrulesareeffectiveindealingwithcomplexresourceuse.
Governmentagenciesdohavearoleinfacilitatinganalysisofaggregatedschoolsdataand
implementingcarefulstudies,bothofwhichshouldinfluenceunderstandingonbestpractice.
However,theyarelikelytobelessgoodatunderstandingthatcomplexresourcedevelopmentis
necessarilysensitivetospecificcontexts,sothelearntexperiencesofschoolswillalwaysbecritical.
Bottomupdevelopmentofknowledgeinthiswayalsoholdsthepotentialofsubstantiallongrun
productivitygrowththroughradicalinnovationatschools.Furthermore,teachersmayrespondmore
positivelytoasystemthatempowersthemtomakechoicesratherthanimposesrestrictions.
Usingbehaviouraleconomicstohelpimprovefinancialdecisions
Thebehaviouraleconomicstraditioniswellsuitedtoanalysinghowtoencourageheadteachersand
financialmanagerstotakeamoreproactiveroleinimprovingschoolefficiency.Interestingly,Dodd
(2006)reportsthatthemajorityofheadteachersbelievetheirschoolisefficient,butthisseems
unlikelygivingthatmanyheadsdevolveschoolresourceplanningtobursarswhosimplyproduce
budgetsbasedonrollingforwardhistoricalexpenditure.
Dolanetal(2010)characterisetheinnovationsprovidedbybehaviouraleconomicsas:Drawingon
psychologyandthebehaviouralsciences,thebasicinsightofbehaviouraleconomicsisthatour
behaviourisguidednotbytheperfectlogicofasupercomputerthatcananalysethecostbenefitsof
everyaction.Instead,itisledbyourveryhuman,sociable,emotionalandsometimesfalliblebrain.
Itisnowclearthatwemakedecisionsintwoways:reflectiveandautomatic(seeThalerand
Sunstein,2008).Thefirstiswhattraditionaleconomicsfocusesonandwedescribedtowardsthe
startofthisreport,basedoninformation,constraintsandincentives.Thesecondisbasedonmore
immediatestimuliandreflectsmuchmoreautomaticandseeminglyirrationalandinconsistent
decisions.Ithasbeendescribedaschangingbehaviourwithoutchangingminds.
Thereisadifficultyhere,mentionedabove,inthattheresearchbasedoesnotprovideabest
allocationthatwecanusethetoolsofbehaviouraleconomicstonudgepeopletowards.Unlike,
forexample,intryingtoaffectobesity,thereisnoobviousbestbehaviourtoadopt.Thegoalinstead
hastobetogetschoolstobemorereflectiveandthoughtfulindecidingtheirspendingpatterns.
ThistrendtowardsencouragingschoolstothinkmoreaboutspendingisevidentintheSchool
FinancialBenchmarkingwebsite.Herewemakefivesuggestions(drawingonDolanetal.,2010)asto
howbehaviouraleconomicscanhelptakethisapproachfurther:
1.Gettherightmessenger
Thereceptionthatpeoplegiveamessage,suchassuggestionsonschoolspending,dependsonthe
natureofthemessenger.Peoplearegenerallymoreopentoinformationfromotherswith
demographicandbehaviouralsimilarities,andwhoarecredibleexperts.Thissuggeststhat
headteachersofsimilarschoolspeoplegrapplingwiththesamedailyproblemsmightbepotent
messengers.Ofcourse,headteachersarenotcredibleexpertsintheresearchevidenceonbest
27
practice.However,whereaschoolisrequiredtocutitsbudget,theheadteacheroftheverysimilar
schoolthatalreadyoperatesonthelowerbudgetisacredibleexpertinhowthisisachievable.
2.Giveexplicitincentivesforschoolstosavemoney
Thecurrentfinancialsystemforschoolsoffersnoincentivestosavemoney.Indeed,forlocal
authoritymaintainedschoolsitisimportanttospendallincomereceivedtoavoidthebudgetbeing
reducedinfutureyears.Whiletherearereasonablyimportantincentivesforimprovingoutcomes
(viaschoolperformancetablesetc),theyareratherdistantfromthefinancialdecisionsandmay
evenbedisconnectedinthemindsofschoolleaders.Whilewedonotwanttoencouragearaceto
thebottomtoprovidethecheapesteducationpossible,schoolgovernorsmightbeencouragedto
offerbonuspaymentstoheadteachersandfinancialmanagersundercertaincircumstances.One
situationmightbewhereaschoolisidentifiedashavinghighercoststhanotherschoolsinidentical
structuralanddemographiccircumstances,andsoashareofanycostreductionachievedcouldbe
passedtoschoolleadersinbonuspayments.Anothersituationwherebonuspaymentsmightbe
appropriateiswhereaschoolisrunningadeficitandsohaslittleoptionbuttoreducecosts.Itmay
soundcounterintuitivetopaybonusesinthissituation,andwouldbepoliticallydifficultinatimeof
austerity,butbyaligningtheincentivesofschoolleadersandgovernorsitmayencouragedifficultor
eveninnovativecutstobemade.
3.Schoolsareattractedtofollowingtypicalbehaviourornorms
Schooloughttobeinterestedinwhatotherschoolsdo,andreportingpositivenormshasbeen
foundtoencourageindividualsinachievingdesirableoutcomes.Onceagain,ourproblemisalackof
understandingastowhatconstitutesbestpracticeinschools.However,encouraginghighcost
schools(giventheircircumstances)toexploredataonspendinginsimilarschoolsislikelytoimprove
theefficiencyofthesystemoverall.Thismaynothappenautomaticallybecausethebenchmarking
websiteisnotcurrentlyveryheavilyused.Oneapproachcouldbetousedatatoidentifyschools
withunexpectedlyhighcostsandproactivelytransmitwithinformationtotheirschoolleadership
teams,withtherequirementthattheybeconsideredbyschoolgovernors.Allschoolscouldalsobe
encouragedtocarryoutroutinewasteauditstoseewhetherfundsarebeingspentinefficiently
(seeforexample,GrubbandTredway,2010,andtheAuditCommission,2009).Clearly,these
suggestionsrelysomewhatontraditionalregulationratherthanbehaviouralnudges.
4.Preventrollingforwardhistoricalspendingbeingthedefaultbudgetplan
Almostallschoolbursarssetatentativebudgetforthefollowingyearbyrollingforwardcurrent
spending(adjustingforinflationandknownpayincrements).Thistraditionalincrementalbudgeting
approachmeansthatmanagersonlyneedtojustifyvariancesversuspastyearstothegoverning
body,basedontheassumptionthatthebaselineisautomaticallyapproved.Changingthisdefault
budgettosomeotherbudgethasbeenshowninbehaviouraleconomics,andindeedintheworldof
business,tobeaneffectivedeviceforforcingindividualstooptimisetheirspendingdecisions.The
problemisdecidingwhatthenewdefaultbudgetshouldbe.Themostpopularalternativeiszero
basedbudgetingwhereeverylineitemmustbeapprovedwithreferencetopreviouslevelsof
expenditure,butthisapproachcanbeverytimeconsuming.Analternativewouldbetotweakthe
budgetsoftwaretoencourageschoolstotakeamorereflectiveattitudetotheirspending.For
example,thesoftwarecouldreporttheaverageforpresetcomparatorschoolsalongsidethe
28
schoolsowndata.Thishasdangersofcourse:showingtheaverageforcomparatorschoolsmay
undermineahighperformingschooldoingsomethingverywell.
5.Nurturetheselfimageofheadteachersasoutstandingfinancialmanagers
Liketherestofus,theheadteachersegomakesthemwanttohaveagoodreputationintheir
school.Egodrivessomeheadteacherstoimprovetheirleaguetablepositionyearafteryear;others
wanttoincreaseschoolcapacityasasignalofsuccessortakeoverotherschools.Egomakessome
headteachersnurtureanimageasaradicalinnovatororagamechanger,butcurrentlytherearefew
plauditsupholdingtheeffortsofthosewhoachieveexcellenceonrelativelymodestbudgetsorwho
findinnovativewaystoreducecostsinaparticulararea.Givenconfidencebytheirgovernors,itmay
bethatattemptstonurturesuchaselfimagecanhelpsupportgreaterproactivecarebeingtaken
withfinancialdecisions.
29
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09/212
Sunstein,CandThaler,R(2008).Nudge:ImprovingDecisionsAboutHealth,WealthandHappiness.
Yale:YaleUniversityPress
Wild,R.,Munro,F.,&Ayoubkhani,D.(2009).Publicserviceoutput,inputandproductivity:
Education,WorkingPaperno.09/212.RetrievedfromOfficeforNationalStatisticswebsite:
http://www.statistics.gov.uk/articles/nojournal/educationproductivity.pdf
33
Fig.1Boxgraphshowingthevariationintotalincomeperpupil
(a)Secondary
(b)Primary
Note:DataondependentvariablefromCFR
34
Fig.2Boxgraphshowingthevariationintotalexpenditureperpupil
(a)Secondary
(b)Primary
Note:DataondependentvariablefromCFR
35
Fig.3Boxgraphshowingthevariationintotalexpenditureonteachersperpupil
(a)Secondary
(b)Primary
Note:DataondependentvariablefromCFR
36
Fig.4BoxgraphshowingthevariationinTotalExpenditureonsupportstaffperpupil
(a)Secondary
(b)Primary
Note:DataondependentvariablefromCFR
37
Fig.5BoxgraphshowingthevariationinTotalExpenditureonteachersperpupil
(a)Secondary
(b)Primary
Note:DataondependentvariablefromSWC
38
Fig.6BoxgraphshowingthevariationinTotalExpenditureonseniormanagementperpupil
(a)Secondary
(b)Primary
Note:DataondependentvariablefromSWC
39
Fig.7Boxgraphshowingthevariationinnumberofseniormanagers
(a)Secondary
(b)Primary
Note:DataondependentvariablefromSWC
40
Fig.8Boxgraphshowingthevariationinproportionofteachingstaffunder30
(a)Secondary
(b)Primary
Note:DataondependentvariablefromSWC
41
Fig.9BoxgraphshowingthevariationinproportionofteacherswithQTS
(a)Secondary
(b)Primary
Note:DataondependentvariablefromSWC
42
Fig.10Boxgraphshowingthevariationinproportionofsupportstaffonshorttermcontracts
(a)Secondary
(b)Primary
Note:DataondependentvariablefromSWC
43
Fig.11Boxgraphshowingthevariationinproportionofteacherswithtenurelessthanayear
(a)Secondary
(b)Primary
Note:DataondependentvariablefromSWC
44
Fig.12Boxgraphshowingthevariationinageofheadteacher
(a)Secondary
(b)Primary
Note:DataondependentvariablefromSWC
45
Fig.13Boxgraphshowingthevariationinsalaryofheadteacher
(a)Secondary
(b)Primary
Note:DataondependentvariablefromSWC
46
Fig.14Boxgraphshowingthevariationinproportionofteacherswithqualificationinmain
teachingsubject
Note:DataondependentvariablefromSWC(secondaryschoolsonly)
Fig.15Boxgraphshowingthevariationinproportionofmathsteacherswithqualificationinmaths
Note:DataondependentvariablefromSWC(secondaryschoolsonly)
47
Fig.16BoxgraphshowingthevariationinproportionofEnglishteacherswithqualificationin
English
Note:DataondependentvariablefromSWC(secondaryschoolsonly)
Fig.17Boxgraphshowingthevariationinproportionofscienceteacherswithqualificationin
science
Note:DataondependentvariablefromSWC(secondaryschoolsonly)
48
Fig.18Boxgraphshowingthevariationingenerosityofteacherpay
(a)Secondary
(b)Primary
Note:DataondependentvariablefromSWC
49
Figure19:Detailsofthevariationinpercentagechangeinexpenditureondifferentcategoriesacrossthequintilesofincomegrowth
50
Figure20:Detailsofthevariationinthepercentageshareofthechangeinincomeacrossthequintilesofincomegrowth:
51
Figure21:ExpenditurecategorychangeagainstIncomechange
52
Table1:RelationshipbetweenResidualIncomeandExpenditure
SecondarySchools
Expendituretotal
Expenditureteachers
Expendituresupport
Teachingassistant
Teacherexpenditure
Seniormanagementexpenditure
Numberofmanagers
Ageofyoungteachers
ProportionwithQTS
Nonteacherpermanentstaff
Shorttenured
AgeofHeadteacher
PayofHeadteacher
Teacherrelativepay
Qualificationmainsubject
Qualificationmaths
Qualificationenglish
Qualificationscience
Coeff(SE)
0.886(0.009)
0.204(0.008)
0.082(.005)
0.005(.005)
0.102(0.015)
0.008(0.012)
0.001(0.001)
0.000(0.000)
0.000(0.000)
0.000(0.000)
0.000(0.000)
0.000(0.000)
1.927(0.447)
0.288(0.065)
0.000(0.000)
0.000(0.000)
0.000(0.000)
0.000(0.000)
Rsqd
No.Ofobs
0.941
2680
0.710
2680
0.571
2680
0.687
81
0.769
2585
0.184
2534
0.215
2680
0.202
2680
0.173
2674
0.054
2676
0.054
2680
0.051
2581
0.385
2522
0.505
2628
0.164
2125
0.137
2122
0.095
2107
0.051
2124
PrimarySchools
Coeff(SE)
0.949(0.004)
0.325(0.004)
0.184(0.003)
0.000(0.001)
0.129(0.005)
0.073(0.003)
0.001(0.000)
0.001(0.000)
0.000(0.000)
0.001(0.000)
0.000(0.000)
0.000(0.000)
1.384(0.104)
0.276(0.065)
Rsqd
0.939
0.735
0.638
0.500
0.226
0.508
0.601
0.096
0.061
0.061
0.045
0.019
0.595
0.509
No.Of
obs
12994
12592
12592
335
12690
12832
12994
12983
12978
12974
12983
12486
12375
11934
53
Table2:Changeintotalschoolincomeandexpenditureitems
Quintilesof%
Mean%ChangeinExpenditureon:
ChangeinTotal
Mean%
Otherstaff
Income
Changein
andstaff
TotalIncome
Teachers
EdSupport
related
Largestfall
3.675
0.206
0.519
0.484
2
1.227
1.296
0.765
0.13
3
3.688
2.076
0.834
0.021
4
6.166
2.442
0.955
0.178
Highestrise
12.172
3.719
1.183
0.453
Buildings
related
0.484
0.23
0.159
0.072
1.226
Learningand
ICT
resources
0.923
0.396
0.213
0.333
0.912
Other
Balance
0.393
0.096
0.452
0.701
1.843
1.598
0.281
0.753
1.432
2.913
54
Table3:Whatitemsschoolchangethemost:
(a)Percentageofschoolsforwhicheachitemhadthehighestincreaseinexpenditure
Percentageofschoolsforwhichthisitemhadthehighestincreaseinexpenditure:
Quintilesof%
Otherstaff
Changein
andstaff
Buildings Learningand
TotalIncome
Teachers
EdSupport
related
related ICTresources
Other
Largestfall
27.85
15.7
7.85
6.58
7.34
16.71
2
41.06
12.74
4.42
5.84
6.02
11.86
3
48.71
6.83
2.58
3.69
5.9
8.67
4
46.36
7.51
1.99
3.53
7.95
9.05
Highestrise
41.37
2.16
1.8
7.19
8.27
12.59
Total
41.69
9.45
3.76
5.15
6.9
11.46
(b)Percentageofschoolsforwhicheachitemhadthebiggestfall/lowestriseinexpenditure
Percentageofschoolsforwhichthisitemhadthebiggestfall/lowestincreaseinexpenditure:
Quintilesof%
Otherstaff
Changein
andstaff
Buildings Learningand
TotalIncome
Teachers
EdSupport
related
related ICTresources
Other
Largestfall
19.49
1.27
8.1
9.11
18.23
12.15
2
9.03
2.83
10.97
15.4
21.59
10.62
3
4.24
2.03
14.76
18.27
26.75
11.99
4
3.09
4.19
18.32
19.65
20.09
17.88
Highestrise
4.68
4.32
18.35
22.66
22.66
13.31
Total
7.97
2.82
13.79
16.75
22.08
13.03
Balance
17.97
18.05
23.62
23.62
26.62
21.59
N
395
565
542
453
278
2233
Balance
31.65
29.56
21.96
16.78
14.03
23.56
N
395
565
542
453
278
2233
55
DataAppendix
DataAppendixTable1:DescriptivestatisticsforstructuralfactorsfromEdubase
InnerLondonPayregion
OuterLondonPayregion
FringeLondonPayregion
Boysonlyschool
Girlsonlyschool
Selectiveadmissionspolicy
Schoolhasboarders
Schoolhasnurseryagedchildren
Schoolhasatleast10over16s
Officialschoolcapacity
Numberof2and3yearoldsinschool
Numberof17,18and19yearoldsinschool
Numberofyeargroupsinschool(impliedbyASC)
PupilstakeKS2(primary)orGCSEs(secondary)in
theSchool
EastMidlands
EastofEngland
NorthEast
NorthWest
SouthEast
SouthWest
WestMidlands
YorkshireandtheHumber
TownandFringe
Village
Rural
Academies
FoundationSchool
VoluntaryAidedSchool
VoluntaryControlledSchool
FTEpupilsfromCFRsummary
FTEpupilsfromCFRsummary,squared
FTEpupilsfromCFRsummary,cubed
FTEpupilsfromCFRsummary,topower4
N
Mean
19722
0.022
19722
0.020
19722
0.009
19722
0.008
19722
0.011
19722
0.008
19722
0.003
19722
0.335
19722
0.084
19674 374.153
19722 13.584
19722
8.317
19722
5.993
SD
0.145
0.139
0.095
0.090
0.104
0.090
0.053
0.472
0.278
346.431
22.090
31.648
1.716
Min
0
0
0
0
0
0
0
0
0
19
0
0
2
Max
1
1
1
1
1
1
1
1
1
2740
155
514
17
19722
0.864
0.343
0
1
19722
0.097
0.295
0
1
19722
0.121
0.326
0
1
19722
0.053
0.225
0
1
19722
0.142
0.349
0
1
19722
0.154
0.361
0
1
19722
0.109
0.312
0
1
19722
0.108
0.310
0
1
19722
0.106
0.308
0
1
19704
0.110
0.312
0
1
19704
0.141
0.348
0
1
19704
0.037
0.188
0
1
19722
0.006
0.077
0
1
19722
0.060
0.237
0
1
19722
0.211
0.408
0
1
19722
0.131
0.338
0
1
19722
352.3
334.8
2.0
2620.0
19722
236k
510k
4.0
6.9E+6
19722 2.45E+8
8.16E+8
8.091 1.8E+10
19722 3.2E+11 1.44E+12 16.24449 4.71E+13
56
DataAppendixTable2:DescriptivestatisticsfordemographicfactorsfromNPD
ProportionofpupilswithEAL
MeanschoolIDACIscore
MeanschoolIDACIscore,squared
Proportionofpupilswithotherethnicity
ProportionofpupilswithAsianethnicity
ProportionofpupilswithBlackethnicity
ProportionofpupilswithChineseethnicity
Proportionofpupilswithmixedethnicity
ProportionofpupilswithWhiteethnicity
ProportionofpupilswithSEN,statemented
ProportionofpupilswithSEN,nonstatemented
ProportionofpupilseligibleforFSM
ProportionofpupilseligibleforFSM,squared
Proportionofpupilswhoarefemale
Proportionofpupilswhoarefemale,squared
Schoolmeanintakeability,1
Schoolmeanintakeability,2
Schoolmeanintakeability,3
N
Mean
19722
11.604
19722
21.670
19722 673.711
19722
1.064
19722
6.584
19722
3.752
19722
0.302
19722
3.554
19722
81.112
19722
1.574
19722
18.237
19722
14.378
19722 376.927
19722
49.014
19722 2464.838
18314
0.003
18314
0.002
18314
0.001
SD
20.039
14.288
886.365
2.862
14.779
9.192
0.616
3.503
23.740
1.666
9.152
13.047
641.050
7.907
898.366
0.997
0.997
0.997
Min
Max
0
100
2.109
94.885
4.449 9003.251
0
100
0
100
0
93.496
0
11.765
0
54.667
0
100
0
23.474
0
75.573
0
79.752
0 6360.391
0
100
0
10000
7.981
3.604
8.560
3.673
7.500
3.593
57
DataAppendixTable3:DescriptivestatisticsforkeyoutcomevariablesfromSWCandCFR
Totalincomeperpupil
Totalincomeperpupil,squared
Totalincomeperpupil,cubed
Totalincomeperpupil,topower4
Totalexpenditureperpupil
Totalteachingexpenditureperpupil
Totalsupportstaffexpenditureperpupil
Teachingassistantexpenditureperpupil
Classroomteachingexpenditureperpupil
Seniormanagementexpenditureperpupil
Numberofseniormanagersinschool(FTE
adjusted)
Proportionofteachingstaffunder30
ProportionofteacherswithQTS
Proportionofsupportstaffonshortterm
contracts
Proportionofteacherswithtimeinschoolless
thanoneyear
Ageofheadteacher
Headteachersalary
Proportionofteacherswithqualificationin
mainteachingsubject
Proportionofmathshourstaughtbyqualified
subjectteacher
ProportionofEnglishhourstaughtby
qualifiedsubjectteacher
Proportionofsciencehourstaughtby
qualifiedsubjectteacher
Generosity(%)ofteacherpaygiventeacher
andpostcharacteristics
N
17071
17071
17071
17071
Mean
4504.082
2.15E+07
1.11E+11
6.30E+14
SD
Min
Max
1104.564 2433.47
16808.54
1.30E+07 5921802
2.83E+08
1.44E+11 1.44E+10
4.75E+12
1.83E+15 3.51E+13
7.98E+16
17071
16666
16666
581
19230
19349
4469.390
2275.429
653.198
2.064
1439.549
424.086
19722
19710
19696
9.179
19.715
98.298
10.310
13.718
4.458
0
0
0
211.169
100
100
19687
88.827
13.576
100
19710
18885
18663
10.833
49.552
62248.39
11.461
7.251
14758.50
0
28
33
100
77
227613.0
2317
70.651
12.977
14.815
100
2316
74.110
22.417
100
2305
78.943
19.281
100
2315
87.302
15.512
100
18331
461.462
2776.150 9996.12
9980.219
58
Ref: DFE-RR183
ISBN: 978-1-78105-056-9
CUBeC
March 2012