Research over MATs financial stability | iplicit

New research has revealed a sharp drop in confidence among the leaders of school multi-academy trusts (MATs) about their financial sustainability.

The survey of MAT chief executives shows the need for trusts to have a firm grasp of their financial position as costs rise.

The National School Trust Survey, organised by the Confederation of School Trusts, also suggests nearly two thirds of MATs intend to add new schools over the next year – a trend driven in part by the need to be financially secure.

Researchers found the number of trust CEOs who were very confident or quite confident of financial sustainability had fallen from 72% in 2022 to 46% in 2023.

Meanwhile 19% were either not very confident or not at all confident of financial sustainability, up from 4% last year.

The biggest risks cited to sustainability were staff costs (named by 40%), general inflation (36%), difficulty in planning (31%), energy costs (31%) and special educational needs provision (29%).

The report, produced by Edurio, says: “The whole economy has faced financial shocks over the last 18 months, with the war in Ukraine driving spiralling energy costs, food inflation, and resultant wider cost pressures.

“Most school trusts have also been faced with unbudgeted wage rises for teaching and support staff, as well as the disruption of strikes.

“The sector’s focus will always be primarily on education, but finance is a necessary consideration - and an increasingly fraught one.”

The research was carried out before concerns about reinforced autoclaved aerated concrete (RAAC) led to a wave of school building closures. Even so, 58% of CEOs reported that they had school buildings which were past their economic life or at risk of failure. More than a third expected estate management to be a focus in the coming year.

Most MATs are looking to expand

The government wants most MATs to get bigger. It is advocating that trusts should have more than 10 schools or 7,500 pupils.

“Growth is certainly on the minds of trust CEOs, with around two-thirds saying they expected to add new schools to their trusts over the next academic year through sponsoring or opening new academies, merging with other trusts, or rebrokerage,” the report said.

While 64% of CEOs expected their trusts to add more schools in the coming year, 22% were not sure and 14% did not expect to grow. Among those expecting growth, 62% anticipated adding two to four schools and 23% expected one more school.

“While some larger single academy trusts continue to enjoy robust health, for many smaller trusts financial and operational headwinds mean growth is essential,” the report says.

Key messages for MAT finance teams

The report’s authors call their findings about financial sustainability “deeply concerning”.

“With increasing energy costs and a backlog in building work, estimated by the DfE and the National Audit Office as costing billions to address, finance - rather than pupil outcomes - may be what keeps most CEOs up at night,” they write.

The research raises some questions for MAT finance teams.

• This was a survey of CEOs rather than finance heads. The fact that it found such a lack of confidence about sustainability might suggest that some chief executives don’t feel they have the complete overview they need of the trust’s financial position. It’s worth asking how comprehensive, visible and current your financial data is. Can the leadership see the real time position whenever they need to?
• The survey suggests many trusts will need to expand to be financially sustainable. It will be important to ensure that growth equals efficiency, with finance teams able to add new academies to the group at little or no cost.
• MATs have limited control over some of the major factors affecting their budgets. High energy prices are a reality everywhere, while staff costs are largely determined by national negotiations. In straitened times, it’s all the more important to maintain a firm grip of the costs that MATs can influence.
• When it comes to ongoing costs such as software, it is easy to let the existing arrangements drift. But whether it’s a student management system or finance software, if you’ve had a product for longer than around three years, it is important to reexamine the subscription. The process can save thousands of pounds a year.
  
  

The full National School Trust Survey can be found here.

• Find out how iplicit can help growing multi-academy trusts or get in touch for a demonstration of iplicit’s cloud accounting software.