Financial sustainability in schools

This has been the buzz phrase of the year and has been discussed by many boards of trustees. So it is very timely that it is now the subject of the latest report on the School sector by the Public Accounts Committee (PAC). The report was published on 4 March 2022 and can be found here.

The report states that the data shows that 88% of maintained schools and 93% of academy trusts in England are in surplus, but that these national figures mask significant variation and challenges for individual schools.

PAC remain concerned about the financial sustainability of the school system especially how the more deprived schools are faring worse than less deprived schools under the Department’s new funding system. This is despite the Government committing an extra £4.7 billion for school funding under the 2021 Spending Review.

Schools have taken action in recent years to remain financially sustainable but this has adversely affected children’s education, such as cutting staff, dropping subjects from the curriculum, and reduced support for pupils with special educational needs and disabilities.

Recommendations by the PAC to the Department for Education (the Department) in the report:

• The Department should thoroughly investigate the geographical variation in in the financial health of maintained schools, determine the underlying causes and decide whether some schools or local areas need extra support from 2022–23 to be sustainable.
• The Department should write to us, within one month of this report being published, with details of the specific actions it has taken where it has concerns about academy trusts holding significant reserves; and
• The Department should investigate those academy trusts with reserves equivalent to more than 20% of their income to establish whether the reserves are justified (including the extent to which they are designated for specific purposes), and write to us within six months with an update on the results of this work and any action it plans to take.
• In carrying out its research, the ESFA should collect sufficient, reliable evidence on the impact of financial pressures on schools at local level, including on whether they are leading to schools narrowing their curriculum and reducing staffing.
• The Department should set out, in its Treasury Minute response, when it plans to publish the results of the ESFA’s research.
• The Department should set out in the SEND review (which it has committed to publish in the first quarter of 2022) what improvements it is aiming to achieve and over what time period, and make clear what specific metrics it will use to assess whether the support system is improving and becoming more sustainable.