Almost all of a school's income comes from their LEA through a process known as Fair Funding. Through this process, each governing body receives a delegated budget (unless they are a new school or their right to a delegated budget has been suspended), intended to cover all day-to-day running costs.
Governing bodies may spend their delegated budget for the purposes of their school, although they will need to be aware of services that their LEA provides and funds centrally. Accumulated surpluses and deficits are carried forward from one year to the next. These provisions extended to include Maintained Nursery Schools from April 2004.
Through the Schools Forum, governing bodies have a means to engage with the LEA in the process of setting the Individual School Budget (ISB) from which each school's budget share and therefore delegated budget is drawn.
Schools are free to raise extra funds through voluntary contributions from parents and from letting of the school premises.
The governing body decides how to spend the school's delegated budget and is required to produce an annual budget plan. The governing body must ensure that accurate accounts are kept and that income and expenditure returns conform to the Consistent Financial Reporting framework.
The Scheme for Financing Schools(pdf, 847KB) sets out the financial relationship between the LEA and the maintained schools that it funds. It contains requirements relating to financial management and associated issues, binding on both the LEA and on schools.