risk management

Sarah Finn

Local Authorities in England have responsibility of ensuring there are sufficient school places to meet the demands of the population now and in the future. When new housing developments are proposed which result in a demand for additional school places, options include the expansion of an existing school, provision of a new school, or relocating an existing school to a new building on a new site.
The assessment of school relocation proposals is a complex process, impacted by financial constraints and silo-thinking within the public sector.

The project designed a School Relocation Assessment Tool (SRAT) which encourages officers to outline the financial impact of school relocation within the context of the council’s corporate strategies, and to consider short-term and long-term impacts of a variety of evaluation criteria in a holistic way, with weighting to support balanced decision-making. Critically, collaboration is a central factor of the tool.

Key points
• Where appropriately located land is available, some councils are starting to consider the option of relocating and expanding an existing school to a new site.
• Councils are currently only able to request developer contributions to fund the additional places required to mitigate the impact of the development, whereas re-provision of existing places must be met by council borrowing.
• The SRAT tool requires information to be gathered about multiple factors horizontally, across vertical silos within the Council to enable consideration of council priorities in a holistic way rather than being in competition with each other, thus mitigating the negative impacts of silo- thinking by making the assessment joined-up and strategic.
• The project identified several factors to evaluate when assessing school relocation opportunities, including home to school travel distances, community use, and school condition.

Background
Local Authorities in England have a statutory responsibility for education and have a duty to ensure there are sufficient school places to meet the needs of the population now and in the future. Traditionally, mitigating strategies adopted to provide additional pupil places generated by proposed new housing will involve either the provision of an entirely new school setting or an expansion to an existing provision. However, where appropriately located land is available, some councils are starting to consider a third option of relocating and expanding an existing school to a new site (school relocation).
The financial impact is particularly pertinent as councils are currently only able to request developer contributions to fund the additional places required to mitigate the impact of the development, whereas re-provision of existing places must be met by council borrowing.

What we knew already
Where strategic perspectives are not aligned within organisations there is a risk that obstacles to successful collaboration are created across administrative silos, where organisational parts of government [work] in isolation from each other. It’s been argued that reduced budgets have encouraged retreat into departmental silos, rather than collaboration.
Successful strategy relies on several overlapping strategic decisions being made in conjunction with one another, with financial constraints balanced against strategic priorities.
This research project involved both a systematic literature review and a group discussion with four senior council officers concerned with school standards, performance, and infrastructure.

What this research found
Financial and short/long term decision making
The current financial pressures faced by LAs encourages decision-makers to pursue the ‘least-cost’ option, without concern for externalities. The impact of school relocation should be considered within the context of wider council corporate strategies. A strategic perspective encourages LAs to take a longer-term approach to their decision-making.

The SRAT tool requires information to be gathered about multiple factors horizontally, across vertical silos within the Council to enable consideration of its priorities in a holistic way rather than being in competition with each other, thus mitigating the negative impacts of silo- thinking by making the assessment joined-up and strategic.

The project identified several factors to evaluate when assessing school relocation opportunities, including home to school travel distances, community use, and school condition.

School Relocation Assessment Tool (SRAT)

Conclusions
The aim of this research was to formulate an assessment criteria framework for school relocations. To achieve this, the project sought to understand how school relocation decision-making processes were impacted by financial constraints and silo-thinking, and to explore what criteria should be assessed when school relocations are considered.
The resultant SRAT has been successfully designed to encourage officers to outline the financial impact of school relocation within the context of a council’s corporate strategies, to consider short-term and long-term impacts of a variety of evaluation criteria in a holistic way with weighting to support balanced decision- making. Most significantly, it guides officers to collaborate with other teams across the council to ensure joined-up strategy is achieved.
During the research process, the researcher recognised that the literature around school relocation was lacking. The creation of a tool to assess both numerical and non-numerical evaluation factors of school relocations, drawing upon both practical and academic research, appears to have not previously been attempted until now. To build upon this research, different occupational viewpoints should be sought regarding the effectiveness of the tool to improve its validity, particularly from a financial perspective.

About the project
This research was a Master’s dissertation as part of the MSc in Public Management and Leadership, completed by Sarah Finn and supervised by Shailen Popat.

Lasse Oulasvirta & Ari-Veikko Anttiroiko

Business models in local government?

Since the 1960s a range of business management models have been introduced in the public sector, including accrual accounting, management information systems, activity-based cost management, human resource management, customer relationship management and the like, which in most cases are in line with the tenets of New Public Management (NPM). One of the newcomers in this list is comprehensive risk management, known as Enterprise Risk Management (ERM) in the private sector. This normative risk management model, of which the most well-known version is COSO ERM, developed by the privately run Committee of Sponsoring Organizations of the Treadway Commission (COSO), has been promoted widely to all organisations, local governments included. Using survey data, our article in Local Government Studies describes and explains the diffusion and adoption of comprehensive ERM in local government in Finland.

(Source: Kuntajohtajan johtajasopimus (”Director contracts for municipal chief executive officers”), a publication of the Finnish Association of Local and Regional Authorities, 2016, p. 20)

What explains local governments’ reluctance to buy the idea of comprehensive risk management?

Our survey results support the argument that if comprehensive risk management is not obligatory, it is not widely used in local government. Our statistical analysis reveals that financial constraints explain to some extent the existence of comprehensive management in municipalities, while structural factors such as the size of municipalities do not, even though risk management is slightly more advanced in larger cities than in smaller local governments.

This compels us to ask whether the slow adoption is because of the special nature of RM as a managerial innovation. Such considerations direct our attention to the kind of intuitive cost-benefit assessment public managers are likely to go through when evaluating the needs and preconditions for the introduction of a comprehensive risk management model. Our assumption is that as a managerial innovation ERM lacks immediate benefit when assessed against the efforts and costs of its introduction and maintenance. It seems that the risk environment and institutional characteristics of public sector entities, including persisting silo mentality, do not provide a particularly strong incentive neither for politicians nor public managers to pursue voluntarily the adoption of such a model.

A need for tailored solutions

The question is not only about the nature of comprehensive RM as such (and the COSO ERM model in particular). We claim that part of the slow adoption is due to the insensitivity of the developers of such models and consequently also their models and tools to the needs and realities of public sector organisations. Thus, if business management models are not sufficiently tailored to the factual needs of local governments, their voluntary adoption is likely to be meagre.

This observation relates to the interplay between developers, consultants and local authorities, and points to private sector parties in particular, who should do their homework before rushing their potential clients in the local government.

Local choice matters

Lastly, our research implies that providing a condition for proper local choice may produce system level benefits, for local politicians, public managers and the front-line staff are in the best position to assess the suitability and benefit of each business model. In the case of comprehensive RM, for example, representatives of local government may see that this particular models is not cost-effective or may even appear to be insignificant in terms of its added value. This hints that new business models and management tools should not be too lightly imposed by the legislature on local governments – spontaneous evolution is as a rule better for creating cost-effective and resilient solutions. We may conclude that local government organisations, when given a general competence to decide on the conduct of local affair, are generally more rational and selective in adopting business models than generally assumed.

Lasse Oulasvirta is Professor of Financial Administration and Public Sector Accounting in the University of Tampere, School of management. His research interests include public sector financial management, budgeting, accounting and auditing. He holds PhD (Administrative Sciences) and M.A. (Business Economics) degrees.

Ari-Veikko Anttiroiko is an Adjunct Professor based in the School of Management, University of Tampere, Finland. He holds a PhD (Administrative Sciences) and MPhil and Licentiate (Philosophy) degrees. His main research areas include local governance, local economic development, smart cities, creative cities and public sector innovations.

INLOGOV Blog

The Institute of Local Government Studies, University of Birmingham

An evidence-based assessment criteria framework for school relocations

Business models in local government?