By Paul Connew, CIPFA Academies Advisor
The financial aspects of running an academy trust have increasingly moved up the agenda as funds become constrained, costs continue to increase and the number of pupils rises. Providing excellent education to children of the local community must always be at the front of a trust's decision making. However, the trust can only do this if it is financially viable and has the resources to implement its plans.
The often promoted idea of procuring goods and services more effectively to save money is necessary but will not be adequate to deliver the level of savings required to balance the books. All staffing costs need to be reviewed, not just support staff. Delivering the curriculum more efficiently should be considered including class sizes, the range of subject options and the potential of IT to transform teaching and learning.
Trusts need to consider whether they have an efficient and effective organisation. Are the management structures optimised? Are the support, finance and administration functions appropriate? Does the trust need to expand or be reorganised to enable a higher proportion of funding to be directed to education delivery?
The shape of the trust needs to be considered and the opportunities for economies of scale across its activities need to be explored. How IT can play its part should also be understood. Being financially secure is the foundation of any organisation and is just as important for academy trusts.
Five areas needs to be addressed when building a sustainable trust:
- Balance the budget
Including financial forecasting, value for money reviews and benchmarking.
- Ensure effectiveness of governance and financial oversight
Including governance processes across the trust, governance structures, management and financial reporting to senior leaders, governors and directors, and financial management effectiveness.
- Optimise curriculum costs
Including curriculum planning, using technology to enhance the curriculum and reduce costs, financial modelling and scenario testing.
- Obtain economies of scale
Through centralising functions, outsourcing and collaboration.
- Fraud prevention and corruption
Through effective counter fraud strategies, awareness and training.
To successfully grow, trusts need to have sufficient capacity and the skills to manage the implementation. They also need to set up the governance structures that allow them to exercise appropriate oversight once schools have joined. Assessing capacity to grow and establishing options for the future are essential.
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