Understanding the financial responsibility of becoming an academy
Back in August 2015, David Cameron asserted that he wanted all schools to become academies in the next few years. Whilst this was good news for those in support of the academy programme, many schools remain apprehensive about what the long-term changes will be for both staff and pupils. With this in mind, Howard Jackson, Founder and Head of Education at HCSS Education, part of the Access Group, discusses some of the viewpoints when it comes to academisation and explores the financial pressures that newly converted academies face.
Those in favour of academy conversion suggest that the positives outweigh the negatives for many schools, in particular for those that are struggling to meet targets. For example, as academies are responsible for managing their own finances they are able to manage the budget exactly the way they see fit. Academy status also gives schools the power to make decisions about key issues, such as what is taught within the curriculum.
However, despite the benefits, there has also been a substantial amount of criticism and opposition to the academisation process. The National Union of Teachers (NUT), for example, is openly opposed to academy status and has raised major concerns over the long-term implications of the move towards academies. They argue that academisation is detrimental for some teachers because it can result in pay reductions, as all academies are able to set their own pay, conditions and working time arrangements for newly appointed teachers.
A recent parliamentary report entitled ‘Free Schools and Academies’ has suggested that currently there is ‘no convincing evidence of the impact of academy status on attainment’ and that academisation is ‘not the only proven alternative for a struggling school’. It instead supports the viewpoint that there is a place in the education system for both academies and state maintained schools and that each school should be looked at on a case by case basis.
Deciphering between conflicting reports
To try to gain a deeper understanding of these conflicting opinions, HCSS decided to conduct its own research. The aim of the research was to investigate the main reasons for converting to academy status, the concerns that staff had about converting and what the biggest challenges around converting are perceived to be.
The results revealed that 82 per cent of schools do approve of the key principles of an academy: that giving heads, teachers and governors greater freedom over their budget can help improve the quality of the education they provide. However, interestingly another 82 per cent of schools admitted that they feel pressurised to convert and when teachers and school leaders were asked whether they would actually want their school to convert to an academy, 59 per cent said no.
When asked what their main concern was about the conversion process, 47 per cent of schools cited losing support from the local authority and 34 per cent were concerned specifically about the implications of having complete control over finances and procurement.
The results from our research suggest that greater control and independence are key factors influencing school’s decision to convert. However, despite the benefits of greater autonomy, there are still a number of reservations teachers have about what the transition will mean in the long run for schools.
Increased financial responsibility
One of the key concerns schools have at present is whether they will be able to cope with the increased amount of responsibility when it comes to managing the school’s finances. With this in mind, it is important that school leaders make steps to ensure they have the right systems in place to manage the transition to academy status as smoothly as possible. Below are some of the key financial considerations for newly converted academies.
- Internal controls
Once a school becomes an academy it is necessary for the Board of Trustees to appoint a finance committee to manage the budget and offer financial scrutiny and oversight. A key role within this committee is the Chief Financial Officer (CFO). The CFO plays an integral role within an academy and should have both technical and leadership expertise. It is the role of the CFO to ensure good financial management, as well as to oversee the preparing and monitoring of the budget and ensuring that all accounts are delivered annually. It is not uncommon for a newly converted academy to recruit someone new for this role as existing staff may not have the necessary expertise.
- Teachers’ pay
Critics of academy status have raised concerns over whether academisation could lead to a drop in teachers’ pay. This is because when converting to an academy, schools are able to adapt elements of teachers’ pay and conditions to try to ensure that their time is used as effectively as possible. In a teacher’s timetable, planning, preparation and assessment time (PPA) is calculated to make up 10 per cent of a teacher’s time. To save money, academies can make the decision to release teachers from assembly and registration duties to reduce the overall PPA time, and in some cases, the use of support staff within a school has also been reviewed. It is worth considering, however, whether reducing PPA time and consequently lowering teachers’ pay will have a negative knock-on effect on the satisfaction levels of the staff and on the morale of the entire school.
- Managing procurement
Once a school becomes an academy, it is the responsibility of the finance committee to ensure procurement is handled as effectively as possible – this means showing complete transparency when it comes to purchasing. Effective procurement can help ensure financial savings are made which can then be reinvested in the academy – this can help to drive up standards and ensure that all services are fit for purpose. Savings can be made on areas such as energy, food ingredients, exam fees and printing. In May, the Government published a comprehensive guide to help academy schools effectively manage procurement; this guide gives schools practical ways to strike the right balance between quality and cost and achieve value for money on all purchases.
- Invest in financial management systems
To assist the finance committee, it is recommended that schools invest in a financial management system to help simplify operations and keep track of exactly how the budget is being spent. There are a number of financial management systems on the market, however it would be wise for academies to install one that is designed especially for the education sector. A specialised financial management system can help academies with all of their financial needs such as ordering and payments, ledgers for recording and totaling all transactions and having an inventory to record assets. Installing a financial management system that is specific to the education sector can help to increase the speed and accuracy of managing and recording the budget. It can also be used to produce detailed reports, which can then be passed on to the board of trustees.
Despite academisation leading to increased autonomy for schools, those undergoing the transition have a lot of changes to adapt to when it comes to managing finances. Our results show that schools feel considerable pressure from the Government to convert and have apprehensions over the long-term effects of academisation. To ensure that the conversion process runs as smoothly as possible, it is important that schools take steps to ensure they are fully prepared and have a strong finance committee in place. It is also recommended that the necessary financial management systems are installed to help deal with the increased responsibility and to ensure that the budget is managed in the most efficient way possible.
