The DfE has recently published details of the revenue balances held by academies and Trusts. Academy trust revenue reserves 2019 to 2020 – GOV.UK (www.gov.uk) Unlike maintained schools that follow the local government financial year, the academies financial year follows a September to August pattern, broadly in line with the annual cycle of school life. The different financial years would make comparisons between the two sectors difficult, but doesn’t prevent comment and analysis about the state of finances in either sector.

The DfE document contains this useful summary

Summary

At the end of the academic year 2019/20

• 95.9% of trusts had a cumulative surplus or a zero balance.

• 4.1% of trusts had a cumulative deficit.

• The average revenue reserve across all academy trusts was £1.15 million.

• The average surplus balance, of trusts with a surplus, was £1.22 million.

• The average deficit balance, of trusts with a deficit, was £376,000.

• The total cumulative surplus across all academy trusts was £3.17 billion.

• The total cumulative deficit across all academy trusts was £42.1 million.

• The total net financial position of all academy trusts was a cumulative surplus of £3.13 billion.

Trusts average reserves – In 2019/20 average revenue reserves across academy trusts were £1.15 million, compared to £0.96 million in 2018/19, an increase of 20%.

In 2019/20 the average surplus balance was £1.22 million, compared to £1.05 million in 2018/19, an increase of 16%.

The average deficit balance in 2019/20 was at £376,000, compared to £381,000 in 2018/19, a decrease of 1.3%.

Trusts average reserves as a percentage of income – average academy trust reserves as a percentage of a trust’s income stood at 11.4% in 2019/20, compared to 10.8% in 2018/19.

This last fact will no doubt raise some eyebrows, as putting more than one pound in every ten received into reserves doesn’t suggest a system in the financial crisis that is the regular message from the frontline in education. Of course, putting cash aside to pay auditors bills and other future expenditure is a prudent idea. However, saving across a Trust for a specific project benefiting only one school is somewhat against the spirit of budgets being devolved to schools, and one of the criticism that used to be levelled at local authorities when they were responsible for schools.

Removing local democratic accountability for schooling should not have allowed unelected bodies to either build up large reserves or to favour certain schools over others. I have always maintained that the concept of revenue funding is to provide the funds to educate the pupils of today and not to save for the future education of others. Perhaps it is time that the National Audit Office had another look at the nature and purpose of these reserves held by academies and the Trusts to which they belong?