The University of Chester Academies Trust (UCAT) has been told to get its finances in order after racking up a £3 million deficit.
The shortfall in the chain’s latest financial forecast breaks the terms of its funding agreement, which insists it returns a balanced budget. This has led to an official financial notice to improve from the Education and Skills Funding Agency.
The trust runs three primary and four secondary schools across Chester, Warrington and Staffordshire. Two of its schools are rated ‘good’, three ‘requires improvement’, and two ‘inadequate’ by Ofsted. It was set up in 2009 and is backed by the local university.
Last year, the university-based trust was criticised by Ofsted for failing in its school improvement strategies and “below average” standards in some of its schools.
Now the ESFA, which has been monitoring the trust since 2017, has issued an official warning over its failure to improve a “weak financial position and management”. The trust must now improve financial management, control and governance.
Having broken the rules, it will have most of its spending powers suspended and must run financial decisions past the government until the notice is lifted.
A letter sent to UCAT by Mike Pettifer, the ESFA’s director for academies and maintained schools, set out the conditions the trust must meet to have the notice removed and avoid the termination of its funding agreement.
The trust is now required to supply monthly financial management accounts on the first day of each month, starting in June and continuing for at least six months, which should be approved by its accounting officer and chair.
It must also provide a new financial recovery plan to show the economies being made, work with the Department for Education to strengthen its governance arrangements, and carry out curriculum based financial planning.
The trust will be expected to show evidence of improving financial projections in its next Budget Forecast Return until it reaches a surplus position, and complete all financial returns by the dates required.
UCAT has until September to demonstrate strengthened governance arrangements and must submit its financial recovery plan by June 8. Its 2017-18 audited accounts are due by December 31 at the latest.
When these conditions are met, the ESFA will write to the trust to confirm that the notice has been lifted.
A spokesperson for UCAT said: “UCAT has been working very closely with the ESFA for a number of months to address financial pressures and is working towards financial health.”