Academy trust raids £7.7m reserves to resist cuts

An academy trust has set aside half of its reserves to prop up its budget rather than make cuts to balance its books.

Trustees at Southfields MAT used £1 million from its reserves last year as a “contribution” to the budget of Southfields Academy, and plan to use another £3 million until 2020-21.

Reserves will be used in the short term to maintain the level of education

The London-based trust which has two schools, Southfields Academy secondary school and Linden Lodge, a special school that joined in September, had £7.7 million of reserves in August 2018.

Julie Cordiner, an education funding specialist from the publisher School Financial Success, said the trust was “not doing anything wrong” by using its reserves.

“They should be planning over a multi-year period,” she said.

But Antony Power, a partner at the law firm Michelmores, warned that contributing £1 million a year could just be a “sticking plaster”.

He said lots of schools have been predicting “eye-watering deficits in five years”, but most reorganised and found savings.

The 2017-18 accounts state Southfields Academy will use reserves to “maintain the current assets and to invest back into the school” after a reduction in pupil numbers and flat funding rates had increased “financial pressure”.

“Reserves will be used in the short term to maintain the level of education and the trustees have approved a five-year plan to review all costs and work towards increasing student numbers.”

In 2016-17, average reserves in a multi-academy trust were £791,000. That year, Southfields reported reserves of £8.3 million.

Power said it was “an extraordinary amount of money”.

“We talk about building up reserves and prudent planning for the future, but effectively that money is meant to be spent in year to cover the teaching of the children,” he said.

“To manage to rack-up £8 million as a single secondary, I find that amazing.”

The trust declined to comment.