The leader of one of England’s largest academy trusts has revealed she was forced to pool her schools’ funding just to stay afloat, adding it “wasn’t as painful as you might think”.
Rowena Hackwood, chief executive of the David Ross Education Trust, told a Westminster Education Forum seminar this week that her chain “doesn’t have a glorious financial history”, and set out the drastic measures she had to take to deal with a rising deficit.
My schools that had the cumulative deficits were never ever ever going to recover, so having that constant millstone around their neck was actually preventing them from moving forwards
Hackwood, a former education director at Capita, took over at DRET in May 2017 following the high-profile resignation of former CEO Wendy Marshall and a number of other leaders earlier that year.
Last year, the Education and Skills Funding Agency warned that the trust, founded by Carphone Warehouse founder and Tory donor David Ross, was in a “vulnerable” financial position, having forecast a deficit of £4.9 million in June 2017. The trust’s latest accounts show a deficit of £1.4 million as of August 2018.
Schools Week revealed in 2017 how academy trusts are increasingly pooling their general annual grant – a process known as “GAG-pooling” – rather than top-slicing funding for central operations from money allocated directly to individual schools.
The practice has prompted concerns among headteachers because of a loss of autonomy over their budgets. The allocation of school budgets is also done by academy bosses behind closed doors.
But Hackwood, the only leader of a large multi-academy trust not to come from an education background, told delegates at the event in London on Tuesday that the deficits at some of her schools acted like a “constant millstone around their neck”, forcing her to act.
“We did pool our GAG funding very early, and we pooled deficits and surpluses as well,” she said.
“That wasn’t as painful as you might imagine. I had some schools that were running an annual in-year deficit of around £1 million. I had some schools that had cumulative surpluses of well over £500,000.
“My schools that had the cumulative deficits were never ever ever going to recover, so having that constant millstone around their neck was actually preventing them from moving forwards.”
Hackwood also revealed that she also had to put in place a number of new systems to get the trust’s financial health on the right track.
“You may be surprised to know that in a business of our size we have no corporate HR system, we’ve only recently implemented a corporate finance system. Those kinds of things have really held the organisation back from being able to understand the sufficiencies.”
She was also able to smooth the change over with heads, she said.
“I felt it was quite a brave move to address this with heads, but actually in a multi-academy trust we have a collective endeavour.
“We’re all sharing our aims as an organisation to move the educational outcomes of our children and young people forward. So taking that decision about how to fund our schools fairly on the basis of what they need and not accidentally on the basis of what they historically had had, felt to me as the right moral as well as the right business choice.”
DRET has also had to review the published admissions numbers – or “PANs” – for all of its schools after Hackwood discovered some were not financially viable.
“Some of our PANs are totally bonkers. I have a school which has a PAN of 48. It’s a secondary school. It’s very difficult to ever make those schools make financial sense.
“We’ve had to rethink not only what our pupil numbers are, but also about the PANs that we have, the numbers of pupils we have in each school year and trying to work out in a clever way how we shape that, how we plan for the future, so we are not in the position that we find that our schools are unaffordable.”