'Internal political challenges' around trusts pooling schools' cash hindering take-up

The “internal political challenges” around pooling school funding is hindering take-up amongst academy trusts, despite ministers advocating for the change.

A survey by global accounting network Kreston of 170 trust clients in December found that 17 per cent have now shifted to pooling their general annual grant (GAG), and another 39 per cent are considering doing the same.

GAG pooling sees funding for all schools in a multi-academy trust (MAT) centrally collected and allocated according to need. Trusts say pooling the cash means they can iron out funding inequalities by shifting money from rich to poor schools.

Lord Agnew and the ESFA continue to advocate this approach, but many MATs face internal political challenges

However, the Kreston benchmark academies report, published today, highlights the reluctance by many trusts to shift to GAG pooling, despite the trend towards centralisation and the enthusiasm for the mechanism by the Education and Skills Funding Agency.

The report, which analyses the finances of 360 trusts in charge of 1,500 schools, found many “fed back that their reticence is due to internal political issues, due to the perception that there will be winners and losers if they were to implement this”.

Pam Tuckett, chair of Kreston International’s academies group and head of education at accountants Bishop Fleming, said that the latest figures shows that uptake is “still very slow, considering how long it’s been around.”

The report shows that last year just 10 trusts involved in its report (5 per cent of MATs) indicated that they were GAG pooling, up from three trusts the year before.

It said: “Lord Agnew and the ESFA continue to advocate this approach, but many MATs face internal political challenges in convincing schools to move to this model, and it can be even harder to convince schools to join MATS if they feel they will lose control of their funds. For these reasons, the shift to GAG pooling has been a lot slower than we would have hoped.”

Tuckett added this remains one of the barriers to single academy trusts joining a MAT. “There is a feeling that if they join a MAT that is GAG pooling they may lose out financially but it can actually help finances.”

The report, which offers a useful snapshot of the financial health of the trust sector, reveals that close to half (44%) of trusts have at least one school in their group that is struggling financially, with larger trusts more likely to be in this position.

The impact of these ‘problem’ schools appears to be significant as these trusts have on average £51,000 less left over at the end of the academic year than other trusts.

Tuckett added: “Our findings show a trust supporting a ‘problem’ school is propping it up financially anyway and a move to GAG pooled funds may actually help, allowing for greater efficiencies in joint purchasing and economies of scale.”

The underlying situation remains bleak and we share the concern that the financial health of the sector is likely to deteriorate

The report warns against forcing MATs to adopt GAG pooling, however. “It will be interesting to see if the ESFA intervene at a future point to encourage more schools to adopt this model. Whilst this is a possibility, it is likely that mandatory GAG pooling could hinder the growth of MATs and this is counterproductive.”

It’s a major departure from the method used by most trusts, in which funding goes directly to schools first before the trust top-slices a percentage to fund its central operations.

Heads are uneasy about the loss of autonomy over their budgets, with one source previously telling Schools Week they now have to beg the trust for funding.

Rowena Hackwood, the departing chief executive of the David Ross Education Trust, said she was forced to pool her schools’ funding just to stay afloat, but added it “wasn’t as painful as you might think”.

Leora Cruddas, CEO of the Confederation of School Trusts, said GAG pooling “could help some trusts … but it may not be the solution for all. Care needs to be taken to ensure it is supported by headteachers, governors and other stakeholders across the trust.”

On the upside, the auditor’s report paints an improved financial picture for its membership with MATs on average showing a surplus position after many years in deficit.

But Julia Harnden, funding specialist at the Association of School and College Leaders, said: “The underlying situation remains bleak and we share the concern of the Kreston report that the financial health of the sector is likely to deteriorate again unless additional grants are announced.”