Our research shows that the value of emergency funding given to academy schools hit a record high of £28m last year*, nearly double the £16m given out the year before.
Emergency funding was given to 77 academies following public sector funding cuts to education, with schools having seen funding per pupil cut by around 8% over the last decade**. These cuts have made the financial environment for academies more difficult than ever before.
Academies faced these increased financial pressures even before coronavirus. However, the impact of the pandemic means many schools are facing huge costs. The value of emergency funding now provided is likely to be dwarfed by the amount needed from the Government to cover coronavirus.
The Government has allocated a fund worth up to £75,000 per school to cover directly coronavirus related costs such as PPE, as well as an additional £650m fund intended for ‘catch-up’ learning costs.
However, there is no indication if more funding will be available for the coming school year. Many schools are concerned that if they don’t receive financial help, the costs of making schools safe will be far beyond their current budgets.
The pandemic has meant that as well as additional costs, schools have also been hit by a loss of income. Many schools depend on secondary income from renting out facilities such as sports halls or after school clubs, which haven’t been possible during lockdown.
Allan Hickie, partner in our Sittingbourne office, says: “While the Government has provided some help during the pandemic, it is unclear how much money it will take for schools to comply with safety restrictions. This could push some who are already struggling over the edge.”
The amount of emergency funding awarded last year brings into sharp focus the need for academies to have the right financial management expertise to effectively manage major budgets. Management teams should consist of qualified individuals, including a trained accountant as director of finance, to prevent major deficits requiring emergency bailouts from the Education and Skills Funding Agency (ESFA).
ESFA is much more likely to provide the funding needed for academies that have flagged budget problems to it in advance, allowing the agency to assist the organisation in turning around the situation and therefore, avoiding the need for larger emergency funding.
Some academies are also struggling to find trustees with the right financial skills. Whilst trustees generally are not involved day to day, they have an oversight responsibility, and it is important that each trust has at least one trustee on its board who can challenge on finance. Without the right expertise it can be difficult to spot signs of poor financial management and in worst cases fraud.
Adds Allan Hickie: “School budgets have been squeezed, causing more and more academies to draw on emergency funding to keep them afloat.”
“Academies require the right leadership with appropriate skills and expertise to manage the school’s budgets. This is even more important as schools around the country are facing financial challenges due to coronavirus.”
“Academies should make sure they seek professional financial advice from an expert as soon as they spot a problem.”
