Cash Management Practices and Financial Sustainability of Public Secondary Schools in Nakuru County, Kenya
DOI:
https://doi.org/10.53819/81018102t5393Abstract
Over Ksh 400 billion were given to the education sector in the 2017–2018 fiscal year, but an audit report released in 2018 found that almost a quarter of this money cannot be adequately accounted for. Another study by the Auditor General found that the government had spent 210.34 billion by the 2018/2019 fiscal year. Falsified enrollment numbers may be costing the government millions of shillings in capitation fees for public schools, according to financial data from the Ministry of Education. Thus, the study aimed to explore how various cash management techniques influence the ability of public secondary schools in Nakuru Town Sub-County to maintain a positive cash flow. The study was grounded in the Pecking Order Theory, Transaction Cost Theory, and a Monetary Theoretic Approach to cash management. An explanatory research design was employed for the investigation. The study focused on 33 public secondary schools in Nakuru Town Sub-County, with the analysis units being the principals, school bursars, and Board of Management (BOM) chairs. Given the relatively small target population, a census technique was used to include all the targeted respondents, resulting in a sample size of 99 individuals from the 33 schools. A questionnaire was used as the primary data collection method, and the Cronbach’s Alpha coefficient was applied to assess internal consistency. The data were analyzed using SPSS version 24, producing both descriptive and inferential statistics, with results presented in tables. The study adhered to ethical guidelines, ensuring voluntary participation and respecting participants' privacy. The findings indicated that cash budgeting, cash policies, cash disbursement, and cash flow forecasting all significantly impacted the long-term financial viability of the public schools in Nakuru East Sub-County, Nakuru County, Kenya. The study concludes that cash management practices play a crucial role in ensuring the financial sustainability of public secondary schools in the region. Based on these conclusions, the study recommends that school management teams, including principals and their deputies, should adopt a participatory approach to budgeting by involving all relevant stakeholders throughout the process. Additionally, schools should implement more aggressive credit policies to improve their working capital and achieve financial sustainability. School management should also embrace prudence in managing surplus funds, ensuring their maximum utilization through investments in viable projects. Finally, the Ministry of Education should organize regular training sessions for secondary school principals on cash flow forecasting, especially concerning operating, financing, and investing activities, to enhance their financial decision-making capabilities.
Keywords: Cash management practices, financial sustainability, public secondary schools, Nakuru County, Kenya
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