Nose in, hands out: Why school boards must understand their finances

This is the time of year when school boards are reminded, in very practical terms, where accountability sits. Annual financial statements must be approved, auditors engaged and the statement of responsibility signed. 

The board alone – not the principal or the accountant – carries that responsibility. 

When John Ruge MInstD took on the role of board chair at Avonhead School in Christchurch, he quickly discovered the scale of that responsibility. 

Like most school boards, Avonhead’s trustees were a diverse mix of parents and community members. Few came with formal governance experience. Even fewer felt confident interrogating financial reports. 

“In my experience, the majority struggle with the financials,” Ruge says. “It’s too easy to leave it to the person seen as the expert and assume it’s all okay – without actually interrogating it. But a board team is made up of people who are jointly and severally liable for all the board decisions.  Each trustee must be confident approving them.” 

This is an often-overlooked risk in New Zealand’s school governance model. Boards are legally responsible for their school’s finances. They sign the statement of responsibility, approve the budget and adopt the audited financial statements.  

Ruge, now Deputy Principal and Head of Senior College at St Andrew’s, has seen both sides – as staff trustee on one school board for nine years and a parent trustee and chair of another for seven years. His point is simple: boards cannot treat finance as someone else’s job.  

Learning to read the financial story  

“Finance is just a story,” Ruge says. “It’s a narrative. It’s written in numbers instead of words.” 

That mindset shift is crucial. For many trustees, columns of figures feel like a foreign language. The instinct is to defer to the principal, the business manager or the board’s resident accountant – anyone more fluent in that language. 

But deference is not governance. Ruge found one practical way to bridge the gap: dashboards. 

At Avonhead School, the board introduced a simple financial dashboard that tracked key budget lines against projections. The dashboard highlighted trends – where the school was tracking against budget and where questions needed to be asked. 

“It was a halfway house,” he says. “A less intimidating way of engaging board members in the story the numbers were telling.” 

The questions he expected trustees to ask were not technical. They were strategic: 

• • What are our key budget items? 
  • How are we tracking against budget? 
  • If we are significantly above or below, why? 
  • Is this cyclical, or is it a structural issue? 
  • Is there a new story emerging that we need to pay attention to? 

Three areas in particular demanded constant attention: staffing, operations, and repairs and maintenance. This last area is where boards most often come unstuck. 

Following the Canterbury earthquakes, many schools faced a freeze on 10-year property plan funding. Routine maintenance quietly slipped down the priority list. 

“We had other more pressing priorities,” Ruge admits. “And when the Ministry restarted the process, we got caught.” 

Schools were suddenly required to demonstrate accumulated maintenance allocations – funds that should have been set aside annually.  

Deferring maintenance is easy in tight times. Catching up is not. 

Budgeting: governance or rubber stamp? 

In most schools, the principal prepares the draft budget. That is appropriate.  

On less confident boards, Ruge observed a tendency to accept the draft largely at face value – especially if it appeared to sit within financial parameters. 

At Avonhead, he spearheaded a different approach. 

The principal prepared the draft. The board – often led by the chair – identified significant line items and interrogated changes year on year.  

One example was the government’s bulk funding option in lieu of parent donations. The decision was not operational – it was strategic. It required modelling financial risk, understanding community dynamics and considering long-term sustainability. 

“These were good board discussions,” Ruge says. “They were about the financial ramifications for the school.” 

Staffing, in particular, was complex. Teacher entitlements, roll fluctuations and funding adjustments created a fluid and often uncertain environment. Budgeting required judgement – and resilience. 

“If you stuff up your budgeting process,” Ruge says plainly, “you can get in a hole really fast. And it’s hard to get out.” 

Governance pitfalls: agendas and horizons 

Financial oversight does not occur in isolation. It sits within broader governance culture. Ruge identifies two recurring pitfalls. 

The first is single-issue trustees – those who stand for election to advance a particular cause. “We want a swimming pool,” or “We don’t want a swimming pool.”  

The second is confusion between governance and operations. 

Many trustees arrive via the PTA or school community activities. They are highly engaged and energetic, but their focus has often been solely on events and fundraising, with a very immediate and short-term focus. The boardroom horizon is very different. 

“In New Zealand, state school boards are the employer of all the staff. You’re responsible for health and safety. You’re responsible for the finances. You’re setting the strategic direction,” Ruge says. “That’s a completely different horizon.” 

Good governance, in his view, requires discipline. Discussions must remain strategic. Trustees must be “nose in, hands out” – informed and engaged, but not operationally entangled. 

That includes finance. Boards must understand what is happening. They must understand the story. But they must not start doing the bookkeeping. 

Stewardship under pressure: lessons from a rebuild 

Avonhead School was among the early Canterbury rebuild projects. The scale and complexity of the programme sharpened the board’s understanding of financial stewardship. 

Two factors proved critical: expertise and relationships. 

The board was fortunate to have a trustee with construction experience who could scrutinise plans and ask informed questions.  

“It was really important to build a healthy relationship with the Ministry,” Ruge says. “They’re not the enemy and we needed to work together well.” 

Constructive engagement enabled dialogue and negotiation. Avonhead ultimately invested around $600,000 of its own reserves into the rebuild to secure outcomes that would work for its community in the long term. 

Those reserves were the result of prudent budgeting in preceding years – financial resilience often reflects governance choices made years earlier. 

“It’s easy for parent representatives on school boards to focus only on the short to medium term, with vested interests in the impact on their own children. Governing requires trustees to separate out their own interests from the long-term good of the collective,” Ruge says. “In educational settings that might mean making decisions that your kids will never benefit from.” 

The one piece of advice 

As boards finalise their annual financial statements and set budgets for the year ahead, Ruge’s advice is pragmatic. “Don’t be afraid to use outside experts if you haven’t got the expertise there.” 

At Avonhead, the board outsourced its accounting to ensure accuracy and clarity. Where specialist capability is absent, it is worth paying for. 

“It’s too big an issue to make a mistake,” he says. “Money is often tight and making wise decisions is crucial.” 

Ultimately, financial governance in schools is about stewardship – ensuring scarce public funds are used wisely for students and communities. 

The numbers tell a story. Good boards make sure they know how to read it.