How the pandemic has transformed academies finances

By Rachel Barrett – Director, Head of Academies at Duncan & Toplis

As schools begin the final term of one of the toughest, most unpredictable and exhausting academic years in decades, school finances have been put under unusual stresses and strains.

While the work of staff and teachers to provide quality education remotely and also to bring students back into the classroom safely has been monumental, it’s never been possible for school leaders to take an eye off the financial pressures they’ve faced.

As we went into the pandemic, schools were already facing budgetary challenges but now, a whole new set of issues and complications have transformed the situation.

How schools cut the cost of the first wave

Each year, Duncan & Toplis co-authors a major report into the finances of almost 1,400 academy schools in 300 academy trusts across the UK. The ‘Kreston Academies Benchmarking Report’ represents the finances of 15% of all academy schools in the UK, making it one of the largest surveys of its kind.

With academies accounting for 35% of all state funded schools in the UK, this report provides valuable insight into an element of the education sector which is normally excluded from official government and local authority data.

Rachel Barrett

As was widely reported during at the time, a major barrier during the first lockdown, and in subsequent school closures has been inequality in the technology needed for remote learning. This has meant significant differences between schools with some able to switch to online delivery almost overnight, while others struggled to secure the tools they needed, both for teachers and pupils, particularly in deprived communities and areas. This meant some schools had to rapidly make large investments in technology, while others were able to make fewer new purchases.

Another costly complication at the start of the first lockdown was the need for schools to consider issues around their suppliers, caterers and contractors, with questions about who they should pay and whether staff should be furloughed consuming much management time. Issues of this nature highlighted some of the benefits of schools being part of multi-academy trusts (MATs) as centralised leadership enabled more efficient decision-making.

Predicting the costs of the current school year

Clearly, analysing how the first lockdown and the reintroduction of in-classroom teaching for some year groups at the end of the last academic year can only give an indication as to the financial situation schools have faced throughout the pandemic as a whole. 

To get an insight into the more up to date expectations of school leaders, we carried out a survey in December 2020 which is included in the Kreston Academies Benchmark Report. In this survey, 85% said they will increase IT spending in 20/21 so they can build resilience into the teaching model or provide greater flexibility.

However, many of the support schemes are retrospectively awarded, meaning that schools must shoulder the immediate costs themselves, before claiming back for a reimbursement, putting pressure on already stretched reserves. Our report also highlighted that many schools have been unable to access these funds, either because the claim criteria is too narrow or because schools are expected to use up their reserves before claiming for government support.

This rule of reserves, introduced for the current school year, only entitles schools to make a claim if their free reserves are less than 4%, which equates to around two weeks’ worth of income/costs. Our survey shows this has made it harder for schools to make claims for exceptional costs, with very few schools having successfully claimed at the time of publication.

For example, in October 2020, Schools Week reported that only 16% of schools had made a successful claim, and 52% of those said the claim reimbursed less than half of their total additional spend.

With the economy reopening as lockdown is gradually lifted, there is a great deal of positivity and optimism emerging across the country. However, the challenges, exceptional costs and complications for academies across the UK continue to mount. With unprecedented costs and unanticipated savings having been made throughout the year, we will have to wait and see just how badly school finances have been affected.

This school year has been unlike any before, but hopefully the next year will bring back a sense of normality, helping to balance the books once again.

Click here to download the Kreston Academies Benchmark Report 2021 or click here to find out more about Duncan & Toplis’ services for academies.