A free school which has been open for less than three years has been hit by a financial notice to improve after pleading for support from the Education Funding Agency (EFA) following a failure to balance its budget.
Grindon Hall Christian School, which opened in 2012, was served with the notice on Monday.
The move means it will lose some of its spending powers and remain under notice until it meets a set of conditions set out in the letter, including progress reports, a reduction in advances sought from the EFA and a detailed cashflow forecast.
A letter to the principal Chris Gray, sent by academies and maintained schools group director Sue Baldwin, said the financial health of the school had “deteriorated since opening” and that the trust had “requested recoverable financial support from the EFA”.
She said: “I am issuing this financial notice to improve which together with its annexes serve as notification that the trust must improve financial management, control and governance and move promptly to a position where it is operating with a balanced budget.
“You submitted a financial recovery plan to the EFA on December 2 2014. This recovery plan sets out the trust’s plans to achieve a balanced budget by 2016/17, but this is predicated on securing further recoverable advances from the EFA in the intervening period.
“I will consider, in January, whether additional recoverable funding would be appropriate for the remainder of the academic year. You should note that the EFA may revise and re-issue this Notice at any stage.”
Mr Gray told Schools Week: “We have produced a robust plan to put the school back on a firm financial footing in the near future and that is currently under review by the EFA.
“We are significantly strengthening our finance team to help us manage our financial performance so that we can adhere to the EFA’s requirements and have the notice to improve lifted at the earliest opportunity.”
The trust now has to ensure that financial recovery is consistent with the agreed recovery plan and sustained until August 31 2018.
A Department for Education spokesperson said: “We had issued Grindon Hall Christian School with a Financial Notice to Improve (FNtI) due to concerns about financial management. The FNtI will be in place until we are satisfied that effective action has been taken to address our concerns.
“Academies and free schools operate under a strict system of oversight and accountability – more robust than in council-run schools – which means any issues are identified and that we can take swift action.”