13 June 2019
The pooling of the General Annual Grant (GAG) is permitted by the Academies Financial Handbook and has been since 2013. However, in practice, most academies prefer to top slice rather than pool the GAG. With increasing financial pressures facing the sector, this is likely to be considered by more MATs in the future, especially as Lord Agnew, Under Secretary of State for the school system, considers this to be one of the greatest freedoms for MATs.
Why pool GAG?
GAG pooling can be used as a way to further increase efficiencies and improve the overall effectiveness of the MAT and supports the fact that MATs are single financial entities which are responsible for all schools within the MAT.
The centralised fund can then be used to meet the normal running costs of any of its constituent academies within the trust, so the additional funds could be used to:
- Support financially weaker schools within the MAT
- Direct funds to a school that requires investment
- Reduce the disparities in the funding between schools within a MAT.
Factors to consider
If there are extremes within a MAT where some schools have a large surplus and others with deficits, then there is a case to pool the GAG, and although the ESFA is interested in individual school performance, it is more concerned with the overall sustainability of the MAT. On the other hand, if all the schools in the MAT are at breakeven or in deficit, then pooling the funds is not likely to achieve the desired results.
If a MAT does go down the road of pooling GAG funding, it must consider the funding needs and allocations of each academy within the trust and must have an appeals process in place as per the Financial Handbook. The more specific you are with your policies on how the pooled resources will be allocated or used, the more you will reduce the chance of potential issues later on. Lack of detail can sometimes cause distrust between the schools and the MAT.
The National Funding Formula aims to balance funding across all schools but from discussions with various clients this is still not the case. If it does achieve its goal, then GAG pooling is likely to not be required going forward.
There really isn’t a one size fits all answer as to whether MATs should pool GAG funding. Each MAT should consider its own financial position and whether it could benefit from GAG pooling. For any additional advice please speak to your local academy expert.
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