Calling schools to transition to academies

Tina Allison discusses what schools need to be aware of as they move towards academy transition, and what it means to have responsibility for finances without local authority support.

The Chancellor’s pledge to make every school in England into an academy shows a continued effort to place education into the hands of head teachers and teachers rather than bureaucrats, despite the heavy distraction of the European referendum.

Under the plans, schools will either have to have converted by 2020 or have an Order in place to commit them to converting by 2022. Those schools who do not meet these deadlines risk an intervention by the government and control of their organisation surrendered.

Transitioning schools will face responsibilities far more expansive than in their current form including legislation – meeting the needs of both the Companies and Charities Acts - and managing their finances without local authority support. The academies model is attractive to boards of governors and school leaders as there is greater flexibility with setting curriculum outside the constraint of the National Curriculum, staff pay scales and admissions procedures.

Whilst the government may believe converting all the remaining schools in England into academies will provide a better platform for the transformation of poor performing schools, there needs to be careful consideration of the additional investment needed in the funding budgets for the sector as a whole. Many existing academies are looking at the forthcoming academic year’s budget and are wondering how they will make their finances break-even.

Good schools, however they are constituted, need to continue to attract talented teachers and inspirational leaders to succeed. Without a much stronger funding model, this will not be possible and it is doubtful that the standard within our publicly funded schools will be improved.

Depending on a school’s position before they enter academy status for some, managing their own finances and meeting the demands of legislation may be a significant challenge. State funded primary schools currently receive a significant amount of support with their finances from the local authority.

Many have never prepared full financial accounts, most only keeping a note of payments made.

In the first place they will need skills in‑house to help with the basic concepts of bookkeeping and managing a budget. For any small school the challenges that come with more regulation are impractical to undertake as a single entity; they will be much better placed to join a Multi Academy Trust and share in the central support functions they can supply.

For other types of school often when they have needed additional financial support the local authority has been their first point of call. A number of existing academies still use the local authorities in this way, in particular for payroll services.

The advantage academy status brings is that going forward they will have more choice in finding outsourced suppliers which should make for a more competitive market. This must be balanced against the challenges of finding good quality, sustainable business partners to work with the school and the time involved in undertaking due diligence to make sure the businesses they engage with can meet the organisation’s needs.

As exempt charities limited by guarantee, they will need to meet the requirements of both the Companies and Charities Acts.

The wider responsibilities which come with being a charity trustee are often not well understood. As a trustee they have ultimate responsibility for the charity and its property. This means: making sure the charity complies with its governing document and charity law; acting responsibly and in the interests of the charity and its beneficiaries; and using reasonable care and skill in acting in charity matters.

This includes drawing on personal skills and experience and knowing when to seek professional guidance.

The most significant problems are often encountered with governance arrangements. On occasion, the awareness of what it means to make sure all business transactions are in the best interests of the charity and its beneficiaries are not understood. Whilst well meaning, it is not unusual for boards to find themselves encountering conflicts of interest by either using board member’s companies or close contacts to support the school. It may well be that these are the most suitable companies for the school to be dealing with but the Boards need to use procedures which demonstrate a degree of rigour has been used when selecting suppliers. A good school board needs to have a diverse mix of skill sets, experience and business knowledge. Unfortunately, poor governance can act as a hindrance to the school’s performance, in some instances leading to a breakdown in the relationship between trustees and school management.

Measuring the improvement made in academies can be challenging. It is important that management and the governing body are skilled at measuring their progress. The government’s plans to make every school into an academy are predicated by the fact they believe this will make significant improvements in the educational outcomes. However, it has to be noted that some educationalists have commented that by changing the status of a school to an academy in itself is no guarantee to the improvement in educational outcomes. We have yet to see evidence that proves academies are working; not all academies have reached a good or outstanding status, some are failing.

The landscape going forward
As every school becomes an academy we will see further Multi Academy Trusts (MATs) evolve. For many of the reasons already outlined above the new responsibilities will be too burdensome for many small schools and they will find the only way to balance the benefits and responsibilities of academy status will be to join a MAT. That in itself will have challenges. In any working partnership, for it to be successful for all, there needs to be synergies around ethos, culture and values. Finding a MAT in the right geographical location, that shares the school’s vision and has the resources and infrastructure in place to take on these additional schools, may be difficult.

Looking to the future, for this initiative to be successful the sector as a whole will need to be better funded, the educational outcomes will need to be able to be measured more accurately and an improved basis for comparison between MATs identified. This is because often the academies joining MATs are of varying success and therefore measuring progress between them without knowing the exact position of each academy within the group is difficult.

Many additional academies will also put greater pressure on the sector’s regulator, The Education Funding Authority and the newly established Regional School Commissioners. The number of schools they will be responsible for within their jurisdiction could grow exceptionally making it very difficult to monitor the progress of their academies, one of the key purposes of their role.

Tina Allison is the head of education at audit, tax and advisory firm, Crowe Clark Whitehill.

Further Information