Multi-Academy Trust finance ‘issues and trends’ report launched by IMP Software

New research by an Exeter software firm has revealed how Multi-Academy Trusts (MATs) are pooling funding and the opportunities and challenges facing leaders around centralising their operations.

GAG Pooling and Centralisation in MATs: 2024 Update has been developed by MAT finance specialists IMP Software and CJK Associates, who partnered to conduct a survey in November and December last year among 155 trusts in England exploring how they are evolving their approaches to needs-based budgeting.

The survey was designed to uncover the latest insights around how MAT operations are being managed, current and desired future plans around centralising functions, pooling reserves and General Annual Grant (GAG), and financial models being utilised by trusts which are already GAG pooling. It also gathers perspectives on the reported and expected benefits of GAG pooling, the reasons for doing this, and advice on consultation, piloting and implementation.

According to responding MAT representatives, based at trusts of all sizes across the country, 50% are already pooling GAG and reserves. Within this, 20% are specifically pooling GAG centrally before allocating to school and other budget holders, and a further 38% say they would like to adopt GAG pooling in the future.

For those already GAG pooling, 94% reported that looking after financially weaker schools or targeting additional resource is the main benefit of their approach. For those intending to GAG pool in the future, driving operational efficiencies is cited by 97% as the primary expected benefit. The main reasons for not GAG pooling are the perceived impact on school autonomy and colleagues feeling funds should be allocated specifically to students in their own school.

The study also found that a needs-based model/ICFP is by far the most common approach to funding allocation to academy budgets, both now and in the future. Significantly, around 80% rate their likelihood to recommending the approach they took to implementing GAG pooling as 8 out of 10 or higher. A further 47% of MATs already pool reserves centrally and a further 29% would like to pool their reserves in in future.

IT, finance and HR are the most likely functions to have fully centralised line management arrangements, at approximately 55%-60% of trusts. Facilities and safeguarding are more likely to have a mix of central and local management, and safeguarding is also most likely to have local operation teams line-managed by school leadership. MATs showed the strongest intent to further centralise procurement and finance.

Chris Kirk, Director of CJK Associates, said:

“GAG Pooling and Centralisation in MATs: 2024 Update demonstrates that an increasingly large number of MATs are already pooling or actively considering it, building on similar upward trajectory highlighted by other sector reports. Our latest survey findings also imply that in future, up to 80% trusts will pool reserves and nearly 60% will implement GAG pooling.

“The debate around GAG pooling, in particular, continues but practice is definitely evolving. Schools groups already pooling GAG focus on fostering equality between schools, providing consistent support, and efficiently allocating resources to meet the diverse needs of all students within the trust. The decision not to pool funds often revolves around trust in existing funding mechanisms, the desire for local control, concerns about bureaucracy, and considerations related to the size and context of the trust.

“For trusts not yet pooling GAG but intending to, the change is motivated by a desire for financial stability, equal opportunities, and strategic growth considerations.”

Will Jordan, Co-Founder of IMP Software, said:

“This report is valuable in highlighting shared learning from, and case studies of, trusts around consultation, piloting and implementation of their chosen funding allocations, as well as their own reflections of the process undertaken.

“We firmly believe there is no single right answer and no one-size-fits-all approach when it comes to pooling or centralisation. But there is a need, we think, to move beyond the ‘Rob Peter to pay Paul’ view that is often associated with GAG pooling, evolve perceptions around it, and provide MATs and schools with the information they need to make an informed decision on the approach that is right for their context.

“We hope the intelligence shared will further inform sector-wide developments around building a strong financial and operations strategy for MATs as presented in the MAT leadership development: CEO content framework, the DfE’s Commissioning high-quality trusts guidance, and CST’s Building Strong Trusts paper.”