Current system of funding academies is unsustainable says DfE

Janet Downs's picture
In a consultation paper (round one) into school funding, the DfE admits that funding academies at the present level is “unsustainable” and is “not suitable for a system where the number of Academies is growing rapidly.” The DfE goes as far as to admit that “it is not possible, under the current system, to deliver transparent and absolutely comparable funding for maintained schools.”

The DfE wants to introduce a fairer school funding system which will ensure that schools with similar levels of pupil intake receive similar levels of funding, and that more resources should be targeted at schools with disadvantaged pupils. This move to fairer funding is to be applauded. However, it should be a warning to schools rushing to convert because they think they will receive more money. The consultation paper makes it clear that academies should only receive money needed to fund their increased responsibilities which include central staff costs, costs of certain employment terminations and costs of a local authority's statutory/regulatory duties. Schools wanting to convert may think this extra money is not worth the considerable administrative and legal burden.

The consultation paper asks whether school funding should be based on a national formula or should permit flexibility to allow funding to respond to local circumstances. The latter option immediately raises a problem for academies and free schools. If their funding were affected by local flexibility, then that funding would be affected by decisions made by LAs. The DfE recognises that this would be inconsistent with their independence.

So the DfE is already foreseeing problems with academy conversion and free schools. These problems should have been anticipated and resolved before promoting these schools so aggressively. Will schools who have hastily changed to academies wish they had heeded this warning: Convert in haste - repent at leisure?

PS There is a companion consultation paper running alongside the above. It deals with academy funding for 2012/13. I haven’t read it yet. I’ll post comments later.
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Francis Gilbert's picture
Sat, 16/04/2011 - 14:41

This is the worry, isn't it? Grabbing the extra cash now may mean that schools lose out without the extra care and attention an LA can give to a school in the long run.

Allan Beavis's picture
Sat, 16/04/2011 - 15:09

The government knew before they took office that there was a national debt to be tackled and that cuts to public spending had to be made so how did they reach the conclusion that there was surplus cash to inject into academies and new free schools?

It was always going to be unsustainable and that is why the DfE recently stemmed the barrage of free applications by making it harder for people to apply in the first place- something the DfE should have done from the beginning, if only to ensure that the details of financial and operational planning had been thoroughly thought through.

But the the DfE don't appear to have thought this whole policy through at all either. If they had, there wouldn't be all this backtracking. The reduced education budget would have been better spent on tweaking and improving the present structures rather than demolishing them and replacing them an experiment which in hindsight might be leading a lot of people up the garden path.

Janet Downs's picture
Sun, 17/04/2011 - 07:55

The consultation document re academy funding for 2012/13 reveals more problems.

The document describes the current system. Academies receive a General Annual Grant (GAG) which “seeks to mirror the local school funding formulae.” In addition, academies receive LA Central Spend Equivalent Grant (LACSEG). This is to cover the costs of providing services which a Local Authority would provide for a maintained school. The document makes it clear that “LACSEG gives Academies funds to provide these services, at an equivalent rate to which the LA would have provided the services.”

Note the phrase, “equivalent rate”. Academies will not be able to water down these services in order to save money but must provide the same level of service as that provided by the LA.

There is a constant refrain in the document: the principle “that Academies should receive equivalent funding to a similar maintained school in the same area”. This repetition should be a warning to schools hoping to receive extra money over and above that needed to replicate LA services if they convert.

The DfE recognises problems which should have been anticipated before embarking on a mass conversion process. These include: lack of transparency, administrative burden of calculating finance for a large number of academies, and unsustainability.

The DfE foresees further difficulties with calculating finance for academies. If the DfE moves to a single formula for academies only this risks giving academies a financial advantage over LA schools which the DfE strenuously hopes to avoid. If the formula were based on LA calculations then this would undermine the autonomy of academies.

These consultation documents show that the government has not thought through its academy and free school policies. It was reckless, foolhardy and irresponsible.

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