Academies - efficiencies and governance are central issues

28th February 2019

Bishop Fleming's Head of Academies, Pam Tuckett, highlights a central issue for academy trusts.

 

One area of the 2019 Academies Benchmark Report that I will expand on here is how the maturing sector is generating efficiencies and better governance through centralisation.

 

Centralisation provides improved financial governance and is a key area on which auditors will focus.

 

It is not an easy position to create as it can be painful for some staff to adapt, but the rewards for MATs are there in terms of economies of scale, reduced deficits, simpler processes and a better allocation of resources.

 

A simple example can be the bank account. A MAT can have one centralised account covering every school, resulting in much tighter systems and controls administered by qualified and experienced people.

 

It’s a bit like saying: let the professionals do their job - let financial people look after the finances and let the educationalists look after the education.

 

Good practice is where you have effectively one system that is used throughout for all of your finances, because that means everybody knows what is expected and everybody is using the same system. A really well-structured scheme of delegation or finance policy that is properly applied and that everyone understands is the best way to achieve good governance. The starting point could be a single piece of software that everyone uses.

 

The sector is changing and is beginning to realise that in order to use funds more efficiently and to improve governance, there is a need to centralise.

 

How much you can centralise depends on your geography and size. Schools that are geographically close are easier to run from a central office, but where they are spread far and wide there may be a need for local management hubs as well.

 

MATs can also achieve a lot around central procurement, such as the supply of staff. A MAT may have its own pool of supply staff which individual schools can book. It may not work perfectly, but it will allow for a greater chance of an expert teacher or teaching assistant being in the right class.

 

There can also be a central roll out of school improvement models or methodologies to drive governance and efficiencies, allowing schools to tap into a MAT’s central team of experts, which will be cheaper than external procurement.

 

In the latest Benchmark Report we discuss how a Trust with a decentralised model can reduce the duplication of work at both the academy and Trust levels through centralisation of procurement of teaching staff. The centralisation of these resources can ensure a consistent approach and delivery as well as generating cost efficiencies. The Benchmark report can assist with this.

 

The report shows that more centralised MATs have smaller deficits. They also tend, on average, to be the larger MATs, so there is evidence that economies of scale are being realised.

 

GAG pooling

Although there is a trend towards slightly larger and more centralised MATs, we have yet to see any significant uptake in the number of Trusts that are GAG pooling. This is where the Trust receives its funding centrally and then allocates budgets to the individual schools, rather than schools receiving their income and then just paying a top slice to cover central costs.

 

This can make a great deal of sense as it allows the MAT to receive the funding and then allocate it in the way that it considers will be most effective for all of the pupils within the Trust.

 

Schools Minister, Lord Agnew, supports this approach and has highlighted in his letter to academy auditors that MATs are single financial entities and GAG pooling would simplify the provision of support to weaker schools in a MAT.

 

Such pooling does require a shift in thinking and can be challenging for schools that are reluctant to give up their autonomy. But GAG pooling is the direction of travel and we can expect to see more of this in the years ahead.

 

MATs are becoming more business-like and the back-office teams and the services they provide are becoming more efficient and effective. MATs have to become better at communicating the benefits of centralisation to get their schools on board with the concept.

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