For richer, for poorer – should MATs have a joint bank account?

27 Mar 2019, 10:58

What are the pros and cons of pooling funds across a multi academy trust? Mat Smith takes a look…

Lord Agnew, the under-secretary of state for the school system, stated that one of the greatest freedoms a multi academy trust has is the ability to pool its schools’ funds into a central pot. His stance was unambiguous – collecting general annual grant funding centrally and then allocating budgets to individual schools, GAG pooling, is a route for MATs to improve best practice, both financially and from a governance perspective.

Yet, a survey reveals just 5% are considering this route, despite support from the Department for Education.

So, where are the sticking points and what is the best way forward?

Wider focus

There are advantages to MATs receiving the funding and then distributing it as needed.

However, one complication trusts face is their duty of care to every school and child.

It’s possible to have two schools geographically close to each other, with different needs, receiving very different funding.

GAG pooling could even this out, allowing MATs the discretion to raise standards across the board and support weaker schools.  However, this would require a change in how headteachers and local communities view their schools, widening the scope from the children in one school to encompass all pupils across the trust.

At the heart of this approach would be a commitment to communication and transparency about how funding is allocated, and why. Close relationships between the MAT and its headteachers are essential so funding can be discussed and agreed, allowing informed decisions about where investment will bring the greatest improvement.

Taking a slice

Some head teachers may be reluctant to give up autonomy and budgetary control of their schools, especially when the trend is for trusts to take a small percentage to cover their central services.

This figure (averaging around 3 to 5% of member schools’ income) often forms part of the decision-making process for schools considering joining up. Increasing this, places expanding MATs in a precarious position when attracting schools.

However, a very low percentage as a deciding factor could be a false friend. MATs may feel pressure to keep this figure low, which could come at the detriment of the quantity or quality of otherwise strong and effective services.

For schools, it can be equally misleading as a decision-making factor – what specific support is offered in return for this top-slice is more important. More informative still are the values, cultural fit and ethos of the trust, which should be considered and prioritised by schools thinking about joining.  Joining a MAT is a long-term partnership, so aligning ethics and beliefs are key.

Finding harmony

Even with the barriers to GAG pooling, more centralised trusts have shown to perform better financially. Pooled funding can mean better resources for more schools, benefitting more children too; independently of their postcode.

Given the complexities, perhaps the best option is to move away from an all-or-nothing approach. Instead, MATs could appoint a central bank account to manage certain transactions on a group-wide basis. Combining finances could help a trust and its schools benefit from economies of scale to reduce high administration or premises charges. Schools could then maintain their own bank accounts for local purchases and resources specific to their needs.

MATs can also move towards GAG pooling with teaching resources. One trust I know employs newly qualified teachers who provide cover and support across the group. This can reduce high agency costs, offer a familiar face to students, and NQTs gain teaching experience in the trust’s primary and secondary schools.

Taking cautious steps can embed sustainable and effective internal structures for the longer-term. The aim is a happy long-term marriage, so it’s imperative individual schools can represent themselves and feel secure that their wishes will be considered.

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  1. As a MAT finance chair, but an accountant working in the NHS, I find this debate fascinating as it goes in completely the opposite direction to the debate in healthcare.

    For years we have been moving away from pooled funding to allocating it down to the lowest possible level for two reasons – it tells us what areas are costing more or less than they should, and it drives accountability.

    The degree of financial engagement I have experienced from Headteachers is far higher than that I’ve seen from clinical leaders so we need to be careful we don’t lose this. How do you hold a Head to account for overspending their budget when they can claim “their” money is being spent on other schools? The crucial element is a transparent mechanism for allocating funding – but can a MAT really do better than the national formula? There may be complaints about its fairness, but it is at least independent and transparent.

    The key is how you gain the benefits of working together without losing Headteacher accountability for their school. The top slice mechanism is flawed – 3% may just pay for the CEO and their expenses account, whereas 7% or even 10% may provide a host of cost effective benefits you would otherwise have to pay for – but as the article notes there is always pressure to keep this figure low.

    As always, working together is the answer, and whatever approach you take needs to work in three scenarios – crisis (people will always pull together) and good times are the easy ones – the challenge is whether it will work in bad times and drive the right behaviours from the whole team.

  2. pauline mary faill

    Sorry juts read this as we are currently undergoing academization, but you must know that the difference is ownership. Schools are local, heads are usually local. consultants are not. Healthcare is run is run by finance not local needs. the hospitals have no little or no interest in patient care they are run by budgets. Schools are currently run more often than not by Local Head Teachers who know what is best for their own communities. Hence the difference between the two ethical dilemmas.