This morning (9 March), academies across the country will have received their funding letters from the Education and Skills Funding Agency (ESFA), notifying them of funding cuts to their budget allocation for the next academic year (1 September 2018 to 31 August 2019). 
In areas that currently receive the highest levels of funding, the forecast cuts have been stopped from reaching the classroom by the implementation of minimum funding guarantees (MFG). For a primary school in Coventry, this temporary funding amounts to 9% of their total funding or £353 per pupil. The concern of the headteachers of these schools is that when this is removed, for the average-sized primary school (eg 210 pupils), they will see a reduction of funding of £74,000 per annum. 
Secondary schools will feel an even greater impact. Sticking to the same Coventry authority as an example, the MFG of a secondary school equates to 3% of their total funding or £150 per pupil. While cuts may be lower per pupil than that of a primary school, the average-sized secondary school will educate a greater number of students, thereby meaning the potential future loss of funding of £112,500. 
The expectations of most schools were that the introduction of fair funding would eliminate the variations across different local authorities. However, the data collected from MLG clients, shows that this is not yet the situation[1]. Extremes of primary funding show a variation of up to £415 per pupil and secondary, £662 per pupil. For average-sized schools, this gives a difference in funding of £87K for primary and £497K for a secondary. 
While the year-on-year average reduction in total funding for schools is approximately just 0.4% (based on a sample of 28 MLG client academies) for 2018-19, this means that the estimated savings required, to keep pace with costs which will inevitably increase, are likely to be for a primary school circa £36,000 and £165,000 for a secondary. 
So, what can be done? The Department for Education’s mindset seems to be that academies are still running inefficiently. 
For many academy trusts, the only option will be to join larger multi-academy trusts to capture the benefits of economies of scale. 
With increasing costs and reduced funding, schools can still financially prepare themselves by ensuring that their three-year budget forecasts are prepared as soon as possible. These should include updated assumptions around funding, costs and must be submitted to the ESFA by 30 July 2018. 
School leaders can also attend specialist workshops that cover income generation and cost efficiencies to ensure that best practice is shared. In taking these actions, funding will be safeguarded so that pupils are guaranteed of receiving the maximum allocation of money possible towards their education. 
By implementing three-year forecasts, not only will this encourage academies to take proactive steps to mitigate financial catastrophe but also warn the ESFA of trusts in need of attention. Companies such as MLG Education Services are already working with trusts in conducting efficiency audits and, where necessary, putting in place the steps to implement smart restructuring. 
More information on upcoming workshops on income generation and cost efficiencies can be found at: 
By Mike Giddings, managing director at MLG Education Services 
Tagged as: Academy funding
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