Tag Archives: school balances

Trends in academy accounts

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The 2024-25 accounts for academy trusts, covering the year up to the 31st August 2025, are now being posted at Companies House, for anyone to view. Not all Trusts have yet published their accounts. Some Trusts are large and complex, and others may not want to be in the first groups that might draw attention to their results.

This analysis is for 86 schools in one geographical area, and where the school has been in the Trust for at least two reporting periods. Two indicators are considered: the pay of the highest-ranking employee – often the Chief Executive, but in single academy trusts, normally it is the headteacher, and changes in declared reserves held by the school. This latter indicator is complicated, as some MATs pool reserves, while all others hold both reserves at the school level and for central services.

Salary Trends

So far, of the 13 Trusts reporting, there have been no really significant changes. The highest salary band reported band was £200,000-210,000, up by £10,000, the same increase of £10,000 as seen in 5 other trusts; one trust saw a £10,000 decrease; two trusts no change, and four increases in the £20,000 range. The lowest salary for the year was £100,000, for a trust with four schools.

Trusts with headquarters outside the geographical area tended to have higher salary bands for their highest paid employee than those headquartered in the local area. This might take into account the complexity of London weightings for salaries.

Changes in reserves

Here, two-year’s worth of data is available for 72 of the 86 schools in the area. The other 14 schools changed trusts, so the data for the two years is incomplete. Of the 72 schools with data for both years:

29 ended the 2025 reporting period with a deficit

43 ended with reserves

Of those schools in deficit at the end of the reporting period

14 increased their deficits over the year

5 schools went from surplus to deficit

Of schools with reserves

10 reduced the amounts of their reserves.

The other 33 increased their reserves.

The largest deficit reported in 2025 account, so far is £1,060,000 – an increase of £232,000 in one year, or more than 20%.

The largest reported surplus held by a school was £2,641,000 – up by £290,000 over the year. Another school in a MAT, but located outside the area reviewed, also had a balance of £2,400,000.

Comment

From the data on salaries, it seems that seven MATs had increases to their salary bands for the highest paid employee that were less than 10%; one MAT saw the incoming employee on a lower band than their predecessor. Five had increases in the band of the highest paid employee of more than 10%.

Four of the MATs surveyed paid their highest paid employee in a band above the salary of the local authority’s Director of Children’s Services. This is not surprising, since nationally, the highest starting salary for a headteacher in an advertised vacancy in 2026 has been £123,000.

On the issue of reserves, some schools are facing pressures while others are still adding to their reserves. I have always maintained that revenue funding should be spent in the year in which was provided, including up to 10% for a sensible reserve, based upon the profile of the past five years of expenditure where the reserve is not excessive.

Why do schools hold more than £2 million pounds of public money in their reserves? Schools in deficit, often seem to struggle to clear their deficit, and if they don’t attract pupils, then it is a challenge to ever return to a surplus without damaging the education of their pupils.

I will return to this topic when I have processed the data from the remaining MATs yet to file their accounts.

Revenue balances: a waste of money?

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The issue of high salaries paid to top officers by some academy trusts, highlighted in the previous post, isn’t the only financial issue facing the sector.  Now that more of the 2017-18 account are appearing a Companies house, it is possible to see the extent of the revenue balances being held by many academies; together with the occasional deficit.

So far, in Oxfordshire, 20 of the 39 Trusts operating academies or free schools across the county have reported their accounts and had them published on the companies house web site. In aggregate, they reveal around £4.6 million of revenue reserves held by primary schools and £4.3 million held by secondary schools. However, the deficits across both sectors total £1.1 million, mostly from one secondary school that has been in financial special measures for a couple of years and is gradually reducing its deficit.

One multi-academy trust, United Learning, operates six schools in Oxfordshire, but does not reveal revenue balances by school in their accounts. This MAT pools the money centrally for all their schools, and can then presumably use it where it can do the most good. Pooling also allows the total amount held in reserves to match the needs across the MAT in any one year and the amount can be set at a lower level than if the figure is chosen by each school. This was the approach taken in the past by local authorities, before schools gained control of their own budgets nearly 30 years ago.

A MAT operating say, 30 schools can decide that a reserve of five per cent overall might be appropriate to meet the contingencies and future needs in any one year of all schools in the MAT, whereas each school governing body might be more cautious and aim for 10% if setting a level on its own.

There is, however, a risk with pooling across geographical boundaries that schools in one area could be subsidising schools in another area. If parents discovered that a school in a MAT was taking this approach, they might choose not apply to that school, but to a school where the full funds were available for the education of their offspring.

This is an argument that balances are reducing because of the financial pressure that school currently face. There are certainly schools where revenue balances were lower in 2018 than in the 2017 accounts. But it is not yet a universal truth for all schools.

Could all schools in a local area be required to bank either with the local authority or an arm of central government? Such pooling would only work if these balances can be used rather than be treated as a deposit accounts. Pooling balances might also free cash being saved by schools for special projects at some point in the future for more immediate use, including cash being accumulated for capital projects. There seems little other justification for revenue balances of more than £1 million being held by some secondary schools other than future capital projects, especially while other school have insufficient funds.

Funding schools is a tricky business, but money should not be tied up in reserves when it can be released for improving teaching and learning.

School funding – is it ever enough?

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The Education Policy Institute, where David Laws, ex-Education Minister is Chair of the Board, published a report on school revenue balances today. The data on school balances discussed in the report in maintained schools comes partly from the same DfE source discussed in a post on this blog on the 12th December 2018.

Simplistic analysis of the report produced comments that the Report showed schools were under-funded. This was because one in ten of the remaining maintained secondary schools had a deficit overall and many others were in deficit in the latest year data was available for from the government. In reality, as the EPI report discussed, the picture is both more nuanced and more complicated than a bald assessment that schools don’t have enough funding, although pressure on 16-19 funding almost certainly does need attention.

What is less clear is the extent to which the former funding formula created winners and losers and whether the new formula will help redress the balance in the future. Personally, I don’t think it will. However, there also needs to be more understanding as to why these one in ten maintained secondary schools cannot live within their means for several years and more schools are now in that position?

As EPI note, academy chains have fewer schools with deficits and are able to move money around between schools. Local Authorities cannot do this to help schools over a temporary crisis. Should the remaining maintained schools now be treated as if they were a Multi-Academy Trust, allowing cash to be moved between schools?  If local financial management means the cash provided for a school is for that school, then MATs should not be allowed to take any cash away from one school to help another and can only charge for services provided.

The EPI report covers this point in their policy recommendations

  1. With increasing financial pressures on schools – particularly in secondaries – the government should consider before the Spending Review whether higher per pupil funding is needed, or whether efficiency savings can make up part of the current shortfalls. It should especially focus on the strains faced by many secondary schools, and assess whether changes in pupil numbers are likely to ease financial pressures, or whether these will prove more enduring.
  2. Further consideration should be given to what extra help or advice can be offered to those schools facing large deficits.
  3. The government should determine the reasons for the lower level of in-year deficits in academy trusts, and whether there are any lessons to learn from this.
  4. The government should also look closely at the level of “excessive”, unallocated, surpluses and consider if existing rules allow for these resources to be used effectively.

The last recommendation from EPI is interesting, especially in view of the concerns over deficits. As I noted in December, some schools have balances equivalent to 20% of their annual income and there are schools with more than £1,000,000 in reserves. My view, as expressed in December, is that revenue income is for spending in the year it is provided ad for the current pupils, although setting a sum aside for depreciation is now acceptable.

Finally, TeachVac www.teachvac.co.uk was established to help schools cut costs by providing a free vacancy service to schools. I am delighted to record TeachVac handled nearly 55,000 vacancies in 2018 and has a great start to 2019, breaking records. Just why the DfE needs to run a rival scheme isn’t clear.

 

 

More signs of funding woes for some

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This week the DfE published the annual update on revenue balances and deficits for schools across England. Once again the data for 2017-18 shows a deteriorating position for many schools. It will also fuel the debate about how London schools are funded compared with those in the rest of the country. https://www.gov.uk/government/statistics/la-and-school-expenditure-2017-to-2018-financial-year

Overall, the figures seem to show schools diverging between those with a surplus and a growing number with a deficit. The percentage deficit as a share of revenue budgets is also increasing, especially among local authority maintained secondary schools. Data for schools that are academies or free schools is published separately and covers a different period of the year to the budgetary cycle for local authority maintained schools.

As a result of the conversion to academy status by some schools, the number of schools in the tables differs from year to year. However, the last two years have seen a slowdown in conversion to academies and there enough schools in each cohort to suggest the trends might be worth monitoring across all schools.

All maintained schools with revenue balances saw those balances, on average, hold steady at 6.3% of revenue (6.4% in 2016/17). However, those schools with deficits saw these increase from 6.3% to 7.3% on average. The number of such schools also increased, despite conversions to academies reducing the overall number of schools in the table this year.

In the primary sector, schools with positive balances slightly increased them as a percentage of income from 7.4% to 7.5% whereas primary schools with deficits saw those widen from 3.5% to 3.9% of income.

There must be more concern over the secondary sector, where those remaining maintained schools with a positive balance saw it decline to just 1.9% of income. The previous year the percentage was 3.0% across all schools. Of even more concern is the 300 or so maintained secondary schools with deficits where the figure increased from 8.4% of income to 9.8%.  Will these deficits increase in future or, as pupil numbers start increasing in the secondary sector, stabilize and eventually reduce in percentage terms?

Might the end of rising pupil numbers in the primary sector lead to an erosion of the relatively more favourable financial position of this sector when compared with the secondary sector? Certainly, the cash injection from the Chancellor in his budget might help at the margins, but, if there is a snap general election in 2019, school funding might just play a part in some contests alongside the dominant issue of Brexit.

Looking at the geographical distribution of schools with large percentage balances compared to income, the North East London area that includes, Tower Hamlets, Newham and Barking & Dagenham seems to be over-represented with schools showing large percentage balances; several for a number of years. Many schools, and especially secondary schools in f40 authorities will no doubt gaze in amazement at schools where the percentage balance is more than 20% of revenue.  Some might question why the percentage has stayed so high for a number of years in a few schools and whether these schools are producing the best possible outcomes for their pupils.

Personally, I believe that schools revenue is largely to be spent in the year it is received, with cash only set aside into reserves for the consequences of the depreciation of long-term assets to be added to reserves to ensure that these assets can be replaced. I don’t think such reserves require to be more than 50% of revenue, as is the case in a school that has been increasing its percentage each year for the past few years. I would be especially unhappy if that school were saving for a building project at the expense of the education of their present pupils.