1. Tshwane University of Technology
Faculty of Humanities
Department of Education Studies
Educational Management
(EDU401T & EDU402T)
Presenter:
Dr Muavia Gallie (PhD)
Session 9
Week: 3 May 2011
Content
1. Introduction
2. Financial Education Management
defined;
3. Legal requirements;
4. Legislation relations relating to financial
matters;
5. Guidelines for Financial Management;
6. Fundraising and strategies;
7. Financial budgeting;
8. Conclusion.
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2. Test 3
You will write a test, during the
first 30 minutes of our next
session. This will be our last
test, and therefore ensure that
you do you best in preparing
for the test. It will count
towards your year-mark.
1.1 Introduction
We will focus in this theme on:
• The legislative requirements when
managing finance in schools;
• Sources of finances available to the
school;
• Importance of budgeting when
managing finances.
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3. 1.2 Financial Education Management defined
“The distribution and use of money for the purpose
of providing educational service and producing
student achievement.”;
Aims of financial management (FM) is to:
• Estimate the needs of local education training;
• Obtain finances in accordance with the estimated
needs;
• Administer the finances thus obtained in a legally
correct manner.
2.1 Legal Requirements for FM
• General legislation
- Companies Act 61 of 1973 (Companies without gain -
Section 21 company exempted from paying income tax
= main objective is to furtherance of education; does not
preclude you for making a profit; must stay in company);
- Income Tax Act 58 of 1962 (tax deduction in respect of
donations made to recognised education funds; not
applicable to compulsory school fees; maximum is R500
or 2%);
• Education legislation
- SASA (MEC must provide public funds; SGB must
administer funds and control property; reasonable use
of facilities by school and community; state must fund
schools on equitable basis; financial tasks of SGB;
financial year of public schools)
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4. 2.2 Legislation relating to F-Matters
• Obtain additional funds to improve quality of education;
• Devise strategies to obtain funds from parents, community and
private institutions;
• Can’t spend funds on unnecessary luxuries;
• Must establish and maintain account for funds;
• School funds consist of compulsory and voluntary funds;
• SGB must draft budget to estimate income and expenditure for year;
• This will assist in determining school fees payable by parents;
• Must establish rules and procedures for full or partially exemption;
• Budget must be approved at parent meeting - school can legally
enforce payment of school fees;
• Keep financial records of funds received and spent, assets and
liabilities, financial transactions;
• Financial statements within 3 months after end of financial year -
must be audited and copy to HoD;
• New category of schools - No Fee Schools!!
3.1 Guidelines for FM
1. Education spending by central government
of various countries - 14% to 22%;
2. 1995/96 - S.A. spent 20.8% of total budget;
3. 2010 - Total budget was R164 Billion;
4. Largest of any other developing country;
5. Focus of financial education management
differs from commercial financial
management;
6. One focuses on ‘service’ and other on
‘profit;
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5. 3.2 Fundraising
• School fees (primary source of funding;
supplement through school functions; admissions
and subscription fees for sporting events; letting of
facilities);
• Marketing (public relations; positive image);
• Support network (school activities; positive
attitudes of school);
• Marketing of facilities and services (libraries;
swimming pools - share with community; offering
courses like literacy and preparatory courses;
offset poor parent contribution with service to
school; utilise expertise);
• Alumni culture (attracting students back to school;
when they received outstanding education);
3.2 Fundraising … cont.
• Financial resources:
- contribution to education fund;
- donations;
- fundraising campaigns;
- letting of sport facilities;
- interest-free loans from parents;
- creation of education trust.
• Diverse sources of income:
- net profit from sales;
- interest on savings, investments and bank accounts;
- fundraising enterprises such as bazaars, concerts, etc.;
- insurance investments like unit trusts;
- sponsors through service by banks;
- commission made from selling insurance;
- income from farming.
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6. 3.3 Strategies in fundraising
• Multiple, small and uncoordinated fundraising
drives by well-meaning staff and voluntary
workers should be avoided;
• Utilisation of learners during fundraising
should not be seen as ‘exploitation of
learners’;
• Take care of ‘competitive spirits’ and
‘learners who want to impress teachers and
their peers with their performance’ so that
they coerce their parents to assist;
• Must be economically viable - look at the
social and incidental cost (time and effort).
4.1 Financial budget
• Planning and proper control of funds are
extremely important;
• Create harmony between the people who
are involved and the objects to gain, which
will contribute to the success or failure of
financial education management;
• Budgets is one of the most important tools
used in the financial management of a
school.
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7. 4.2 What is a budget?
• It is a detailed plan, expressed in
monetary terms, of activities that have to
take place within a specified period.
• The school budget should be a scheduled
plan which balances estimated future
income and expenditure;
• Budget serves as control mechanism -
enables one to establish at any stage
whether expenditure exceeds the
budgeted amount and to take remedial
steps timeously.
4.3 Advantages of a budgetary system
• Is a source of information regarding finances of the
school;
• A macro-programme designed to advance the goals
of a school;
• Forces everyone concerned to think in financial
terms;
• Makes it possible for the needs of all sections of the
school to be noted and evaluated;
• May encourage savings by all concerned;
• Forces people to set clear targets within the
financial means of the school;
• Is a control mechanism that readily reflects
deviations in expenditure.
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8. 4.4 Disadvantages of a budgetary system
• Instead of being used as a tool for
management, the budget is often applied
purely as an accounting system;
• Goals are adjusted according to the
availability of funds - first goals, then
priorities, then availability of funds;
• A budget may act as a mental straitjacket - a
budget may at any time be amended as extra
funds become available.
• See examples on p.221.
4.5 Goals and actions
• Budget does not consist merely of
words and figures - gives a financial
reflection of all activities of a
school;
• Activities should be linked to a
goals or objective - set clear goals;
• Budget should agree with mission
of school.
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9. 4.6 Budgeting principles
• Must be realistic;
• All sources of income should be identified;
• All possible expenditure must be determined;
• Financial projection must be done (expected price
fluctuations, short-, medium- and long-term goals);
• All parties concerned should be involved;
• Financial means of community should be
considered;
• Schools with hostels should budget separately for
them;
• To build reserves, one should budget for a surplus.
4.7 Elements of the budget
• Sources of Income (school fees, contributions,
interests, etc.);
• Costs (obtaining quotations; problems due to
unrealistic demands - convince people, establish
priorities; don’t undermine efficiency; get away
from ‘each one fighting for own interests’);
• Assets (fixed assets - machinery, motor vehicles -
depreciation; current assets - temporary and
fluctuate from day to day);
• Liabilities (long-term liabilities - loans; current
liabilities - creditors, overdraft facilities).
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10. 4.8 Budget Management
• Not the task of one person;
• Control (compare actual and budgeted figures to detect
discrepancies timeously; exercise budgetary control; guard
against overspending by departments; successful control needs
adjustment of budgets from time to time, regular reports from
budget committee and dealing with discrepancies);
• deviation analysis and interpretation (make recommendations to
SGB with deviations are detected);
• Internal audit and control of calculations (internal audit to trace
problems; check calculations);
• Accounting and reporting back (in meeting with SGB; get reports
from departments through budget committee; early detection of
problems to be eliminated);
• Corrective measures (under-budgeting; deficiencies in school
structure; friction among staff; lack of communication;
negligence in handling of finances; protect CEO against criticism
from teachers and parents)
5. Conclusion
• Exercise financial discipline by curbing
unnecessary expenditure in accordance with
the list of priorities;
• Involve as many persons from the community
as possible to assist in planning the budget;
• A budget is not a secret document, drafted by
a secret committee. SGB should
communicate its contents to all involved and
as widely as possible in order to minimise the
possibility of friction.
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11. List of examination
questions will be
available by
Wednesday on
www.slideshare.net
Thank You!
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