The 2021 Kreston Academies Benchmark Report reveals that 67% of multi-academy trusts (MATs) with at least 8 schools have at least one school in their Trust that is struggling financially. This is based on data from 300 Trusts.
The deficits in these schools are effectively being covered by other schools in the trust or a central trust fund.
In comparison, only 29% of MATs with 4 or fewer schools have a school in a cumulative deficit position. Smaller MATs will find it more difficult to financially support a school in deficit so this statistic is not surprising.
The impact of these ‘problem’ schools is that these Trusts have on average £37K less left over at the end of the academic year than other Trusts that do not include a school in deficit – a figure that is equivalent to the cost of funding one NQT.
So why do MATs take on financially failing schools if it makes their financial position more vulnerable? Our clients tell us it is because they consider they have a moral obligation to ensure that every child receives the education they deserve, and this occasionally means taking on a high-risk school. The skill is to ensure that the risk taken on does not put the whole MAT at risk of financial failure. Sadly, we do still see some examples of this in the sector so these decisions should not be taken lightly. It also raises the importance of carrying out robust due diligence, to ensure that the Trust knows exactly what it is taking on, what actions will need to be taken to turn it around, and critically how quickly these decisions will need to be made and action taken. If a failing school is left for a further academic year before the hard decisions are made, then it can have serious financial implications for the MAT.
The report also examined the adoption of GAG pooling across MATs, a practice still being championed by the government where funds are collated from all schools in a trust and distributed centrally according to need. In the 2021 report there are now 20 trusts (11% of the MATs in the data) who were GAG pooling. Although the practice of GAG pooling has grown since last year when just five trusts reported using it, uptake is still slow. Resistance is often down to individual schools in a trust feeling there will be winners and losers financially if implemented. 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.