Future-proofing academy finances

Pam Tuckett, partner at Bishop Fleming, and trustee at the Confederation of School Trusts, discusses why she believes the centralised MAT model is so effective

The pandemic has created many challenges for the academy sector, with reference to budgets, governance and IT. The last year has demonstrated the decision-making strengths of multi-academy trusts when it comes to flexibility and speed in managing continual changes in guidance, with the strongest trusts showing remarkable agility in coping with changing demands.

Budgets

Even before COVID-19, trusts were focused on spending their budgets as efficiently as possible, reviewing staffing levels and identifying cutbacks in non‐essential expenditure such as building maintenance.

While this year’s operating environment has been incredibly tough, the first lockdown actually allowed many schools to save money, improving the financial position of the academy sector – although these costs are likely to rise again as demand for things such as supply cover increases. This has meant that trusts have to be able to approve budgets that enable them to be agile in the face of the constantly changing demands which the pandemic brought, and continues to bring.

However, while additional income from government has been welcome, the way it has been made available has, in fact, made it near‐impossible for trusts to budget accurately; as a result, it is difficult to predict the financial outturn for this financial year. In these increasingly challenging times it is crucial that reliable management accounts are produced to aid decision‐making. Trustees should be prepared to robustly challenge both the management accounts and budgets to ensure delivery of educational objectives in the most cost‐effective way.

Our advice to clients when preparing budgets is to avoid falling into the trap of automatically placing

incremental increases on actual costs incurred in the previous year. It is by remaining focused on the

financial challenges that fresh thinking and considered alternatives emerge – and, in the end, budgets should be based on trust improvement plans to ensure resources are deployed effectively and sustainably.

Governance

The move to virtual governance has brought many benefits, such as time saving and increased inclusion and accessibility; most importantly, MATs have demonstrated the robustness, effectiveness and agility of centralised governance.

At a general level, COVID-19 has resulted in a greater focus on operational matters rather than strategic decisions. This change in leadership emphasis has meant that the skills and knowledge required of MAT trustees have continued to increase, with boards required to be far more effective in the way governance is undertaken. Their legal and moral responsibilities, both as employers and chief supporters of organisation leaders, has really come to the fore. It has also contributed to the annual rate of sector growth slowing from 10.8% in 2019 to 7.8% in 2020; however, this whole‐ sector trend disguises an unequal growth that has seen the strongest, and more centralised, trusts continue to lead.

Looking closer at the detail, we can see that while MATs overall are still growing, it is the fully

centralised MATs that are growing most; in fact, decentralised trusts have decreased in size, indicating that some have re-brokered schools while others have themselves been re-brokered. This is also consistent with feedback from our clients that moving to a more centralised model is often part of the conditions applied by headteacher boards.

In the past year it is non‐educational issues that have highlighted some of the benefits of being in a

MAT, particularly a larger one. The academy sector has many stakeholders to consider, which can hinder the necessary changes to the delivery of education. Having a central leadership team, with the time and expertise to respond quickly to external events, improves the impact a trust can make.

This has been a year of difficult choices, and we are not out of the woods yet. With more tough

decisions ahead, the crucial matters are how trusts go about making these decisions, how their

resources are spent and how effective their decisions are.

IT

IT has obviously played a critical part in the operations of schools since the start of the pandemic – and it has shown that schools do not necessarily have adequate IT resources. The government is stepping in to resolve the imbalance, but this is not the only issue to consider. There are two other key areas that every trust should be able to answer:

• Firstly, in relation to remote education, how robust is your infrastructure?
• Secondly, what is your IT strategy? Does it need to be streamlined?

In conclusion, the strongest trusts continue to lead the sector and share their best practice across all areas of operation. As we emerge from these troubled times, the centralised MAT model is increasingly demonstrating its potential to deliver schools that are free from financial and logistical distractions – and able to focus on education and community.