Dozens of academies need a taxpayer bailout | Academies
The operators of dozens of academies have to rely on emergency aid from the taxpayer because of growing deficits that threaten to bankrupt some.
In the latest sign of the financial pressures currently weighing on schools nationwide, auditors for an operator that oversees 21 schools have raised concerns about its ability to continue operating after recording a loss of 2.5 million. pounds sterling last year.
The revelations follow a last week’s survey Observer who found that more than half of the largest multi-academy chains (MAT) had issued funding warnings, citing wages, staffing levels, building maintenance and growing deficits. It has now emerged that some smaller trusts have had to seek cash advances from the state to stay afloat.
The Birmingham-based Academy Transformation Trust (ATT), which received government funding of £ 59million last year and operates 21 schools educating nearly 12,000 students, is one of several chains that appear rely on future government handouts to keep operating. .
In a note to its 2016-17 annual accounts, ATT directors admit: “Although the trust’s balance sheet remains solvent, the net income fund position shows that the trust has a deficit of £ 2.513million. The trust also anticipates a further reduction in funds in 2017-18.
“The trust has taken steps to respond to this position and is in advanced discussions with the Department of Education. [and] Skills funding agency [ESFA] provide an advance to ensure adequate cash flow in 2017-18 and beyond.
An auditor adds: “There is significant uncertainty which may cast significant doubt on the ability of the trust to continue to operate. She specifies that ATT’s financial situation had “deteriorated throughout the year” and that its board of directors was not sufficiently aware of it due to “failures in financial reporting and reporting procedures. forecast of the trust ”.
The Rodillian Multi Academy Trust in West Yorkshire has revealed that it also needs a “cash advance … to be able to operate efficiently”. The trust, which operates four schools, reported a deficit of £ 1.5million last year.
“In common with all state-funded schools, the [trust] faces considerable funding pressures, ”its accounts indicate. “The trust supported two schools that had low student numbers, were not financially strong, and needed a managed staff cut to deal with legacy overstaffing.
“Managing month-to-month cash flow is difficult and… creditors have become uncomfortably high. A business case is being prepared to request a refundable cash advance from ESFA. ESFA recognizes that the trust requires an advance of funds to be able to function effectively.
Andy Goulty, CEO of Rodillian, told the Observer that he had been pressured to accept new schools and that he had suffered as a result. “It was truly missionary work to go into a community like mine and transform it. It was reversed. However, looking back, we probably wouldn’t take it. As things got strained over the years, we didn’t have the resource. The government keeps saying more money is going to schools. Well, yes, but we pay more in pensions, in national insurance. Less and less is spent on children.
Chapel Street community based in London Schools Trust, which operates five free schools and two academies, ran a deficit of £ 1.6million and said it was dependent on the government providing liquidity “beyond normal funding terms”.
Its accounts say, “The trust places great importance on continued government funding. This is expected to remain unchanged in terms of the per pupil funding rate, despite pressures on wages, pensions and general inflation. This increases the risk of deficits.
Plymouth CAST predicts that more than 90% of its schools will be in deficit by next year. Its listeners said: “There is significant uncertainty which may cast significant doubt on the ability of the academy trust to continue to operate. The trust reported a deficit of £ 1.54million for the year. He referred to the body that oversees the funding of schools last year.
ATT said a stimulus package has been developed “which shows confidence is returning to an in-year surplus in 2018-19 and an overall surplus no later than 2021 … Confidence [had] over £ 3million in the bank as of August 31, 2017. ”Rodillian said he had a plan to achieve a surplus in 2017-18 and a large surplus in 2018-19.
Chapel Street Trust said it had experienced historic financial difficulties associated with the establishment of new schools, but had achieved good academic results. He said his accounts clearly indicated he was on “a healthier financial footing”.
The Department of Education says funding for schools increases from nearly £ 41bn in 2017-18 to £ 43.5bn in 2019-2020, and that each school will receive an increase in its funding through the national funding formula this year.