Focus on funding
Multi-academy-trusts are the way to go, amid pre-election funding uncertainties
Joe Scaife
It is not easy to identify how much money is available in the CIF kitty – or whether this is more or less than was previously available under the ACMF. That will only emerge when the “winners” are announced some time after 20 March.
This uncertainty affects every Academy school at a time that is utterly crucial to their budget- planning process. It means that some Academies may need to use some of their capital reserves to fund capital projects in a way that they have not done before.
In truth, our survey revealed that many of the early-converting academies have been able to build strong cash reserves that can be used for this purpose. But that may not be an option for late-converters that missed out on the better funding available in the early days of Academy status.
Meanwhile, many Academies are having to budget for a deficit in the year to August 2016, with some predicting very large short-falls to August 2017.
In general, Academies must finalise their budget for the academic year by March each year. This is especially important if they predict a deficit and need to make staff redundancies: employment law dictates that this process takes time.
The General Election Factor
We’re all heading for a General Election in May. At the time of writing, there seems little prospect that Education will feature as a priority. Most seem to agree that the economy, the NHS, and immigration will be those priority issues. In a bid to reach young voters, tuition fees for university students may get some attention, but there is little hope that schools will be high on the agenda.
J
oe Scaife, head of the academies team at Bishop Fleming, Britain’s second largest provider of accountancy services to Academies, acting for more than 150 schools, explores the current funding landscape. Joe is also Chairman of the Academies Group at Kreston UK, the network of independent accountancy firms. Right now, every school – especially if it’s an Academy – is having to plan its budget for the academic year commencing in September. But there are big questions about funding for that academic year that cannot be answered ahead of May’s General Election.
So what do we know that could help inform that budgeting process?
Bishop Fleming, in association with our Kreston UK Network, have just published our benchmarking report on Academies. In summary, that report reveals that most Academies are in a stronger financial position than last year, with many sitting on cash reserves for investment in future expansion – and to provide a buffer against any fall in funding per pupil. But every school is different, whether by location or by the age of its pupils, so our report provides vital information to the head teachers and governors of all Academies, each of whom will draw different messages from its content.
What’s different for funding in 2015? There has been an interesting development that could be significant for the future, providing Academies with the ability to borrow money for capital projects.
Until November 2014, Academies could only receive non-refundable sums for capital maintenance and improvement schemes from the Education Funding Agency (EFA) under their Academies’ Capital Maintenance Fund (ACMF). Many bids for those funds were rejected, or severely downsized. The ACMF has now been replaced by the Condition Improvement Fund (CIF), which – for the first time – includes the potential for Academies to be granted loans for capital projects.
Those projects could be such building issues as repairs to roof, windows, or toilets, or such building compliance issues as fire regulations or asbestos removal. There is also scope for “special requirements”, like providing a dining room to meet the requirement for school lunches or a sports hall.
CIF bids were invited within the very broad range of £8,000 to £4m.
It’s too early to know how this new capital funding scheme is working. It came into effect on 1st November last year and the deadline for applications was 13th January this year, with successful applicants to be informed by 20th March.
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This means that none of the competing political parties have provided much in the way of information that can help Academy budget planners. We have little guidance from any of the parties as to their funding plans for education. Indeed, whichever Party wins the forthcoming General Election, it is unlikely that there will be a focus on increased spending in the first two or three years of their tenure. Sustaining the current funding, therefore, is the “best case scenario”. Ministers in the current coalition government have signaled their belief that all stand-alone Academy schools will merge into Multi-Academy- Trusts (MATs) within five years. Certainly, this has been the message from Tory ministers. So we know what a Tory Government would
back. We have no such signals from any of the other leading political parties, at a time when the pundits predict a hung-Parliament. Academies were created by the last Labour Government, and accelerated by the current coalition, so it’s not unreasonable to assume that Labour would sustain their support. Certainly, they have not attacked Academies in the way that they have turned on “Free Schools”. Unfortunately, however, schools need to finalise their budgets for the academic year beginning in September before they hear the results of the General Election.
To be an Academy or join a MAT? There’s no doubt that the early converters to Academy status have benefited from what was at that time a brave decision.
March 2015
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