Academy school budgets are currently under severe pressure with expected funding reductions, the planned increase in teachers’ pension contributions and increase in National Insurance contributions leading to school reserves being fully utilised.
The tranche of academies which converted approximately four years ago out of local authority rule generally received small amounts of reserves on transfer which were treated as donations into the new academy. These initial amounts along with start up grants provided by the Education Funding Agency allowed academies to establish themselves independently and to make plans for the future to strengthen their educational establishments. Most academies required a period of adjustment incurring additional and hidden costs which did not form part of the Education Funding Agencies annual funding package and hence were forced to use their reserves.
The Education Funding Agency request that all academies prepare a balanced budget on an annual basis but with funding in decline and staff costs and maintenance costs of school buildings on the rise, it will certain be difficult for School Business Managers to achieve this with little reserves to draw from. What remains to be seen is how the Education Funding Agency is going to react with such a significant number of schools likely to be in the same position at the same time.
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