Why MAT growth and mergers can challenge the finance team | iplicit

Ministers dropped the draft legislation that would have forced every school to be in a MAT of at least 10 academies by 2030. But bigger MATs are clearly still its preference – and there is no sign that a change of government would bring about a drastic shift in policy.

Whether growth happens by adding individual schools, or through mergers between trusts, it’s clear that larger MATs are the future for many schools. However, growth can present a challenge for the finance team if it’s not well-planned and managed.

Why MATs are set to keep growing

As iplicit reported from the Schools and Academies Show, the government believes MATs bring strength to the education system.

Baroness Barran, Minister for the School System, told the event that academies that are part of MATs are “really trusted anchor institutions in the community”, adding: “There’s greater interest than there has been for many years in conversion to become academies.”

Catherine McKinnell, Labour’s Shadow Minister for Schools, indicated that her party would not impose change for the sake of it.

“We know there’s been so much change in the sector, so our mission to improve standards doesn’t mean disrupting good schools,” she said.

“We want to learn from and build on what works whilst bringing a fresh approach to our education system.”

There are a host of reasons that it makes sense for MATs to merge or grow:

• Educational standards may be raised in lower-performing schools
• Economies of scale can reduce the cost of supplies and purchases, putting trusts on a more financially sustainable footing
• Costs per pupil can come down as resources are shared between more schools
•  Larger trusts are better able to direct resources to where they are most needed
•  Staff retention tends to become easier in a larger organisation
• It is government policy to expand, merge or create MATs in 55 priority areas known as Education Investment Areas.

Money is available from the government’s Trust Capacity Fund (TCaF) for growth projects approved by a regional director. However, the government discourages unplanned, incremental growth, preferring to see MATs expand in line with a well thought out strategy.

Challenges of MAT expansion 

Growth may make sense for a MAT but it also presents challenges – not least for the finance team.

Just as a MAT should consider financial stability when it plans its growth strategy, its leadership needs to assess how sound its financial systems are.

The MAT will need to address many of these challenges:

• GAG pool or top slice? Will the trust’s central organisation take a fixed percentage of each academy’s budget? Or will every school’s general annual grant (GAG) be put into a single pot to be handed out again from the centre?
• Autonomy or centralisation? The GAG pooling vs top slicing discussion is part of a wider challenge. It’s important to allow individual academies their autonomy and identity without sacrificing efficiency and standards across the trust.
• Disparate systems. Sites in the trust may be using separate and incompatible software for functions such as finance, MIS, HR and payroll.
• Adding more software licences: Licensing more academies to use legacy software systems can be expensive and complicated.

The growth process will be easier if these challenges are anticipated and planned for.

When do MATs need to centralise their finance function?

There comes a point in the growth journey when it makes sense to centralise finance operations in a regionally-based office.

It is not efficient to have a finance manager in every school when each site is part of a wider trust. What’s more, that arrangement can mean people are working in silos, unaware of what their colleagues on other sites are doing.

Moving over to a centralised finance function makes everything easier to manage. It should ensure the workload is spread evenly among the finance team, with each trust having a call on central resources. If accompanied by a move to a unified finance software system, it should also ensure there is a single source of financial truth for the whole organisation, with no contradictory information existing out of sight in another part of the system.

There is no cut and dried rule for defining the point where a centralised finance function makes sense – but experience has shown it often comes when a MAT reaches around six or seven academies.

Avoiding growing pains for MATs

Growth needs to be sustainable and planned.

As a trust expands, everything is likely to go more smoothly if you understand your “why”.

Are you growing for the right reasons? Is it the best thing for the education the trust is providing? Or is there a risk of expanding opportunistically in a way that doesn’t serve the students? You should consider not only the size of trust you’ll become, but the types of schools that will be covered and the geographical reach.

As the trust grows, a MAT’s leadership needs to consider the strengths, weaknesses and values of the schools or trusts it may partner with.

Are there financial issues that could restrict the trust’s growth? Is the financial model for an expanded trust viable? What are the governance and financial risks involved with expansion? All this will be easier to assess if you have a finance system providing good data.

Stick to the strategy

Growth is likely to remain an attractive option for many MATs – not just because it’s favoured by the government, but because in times of squeezed funding, it will often make financial sense.

But growth is not automatically good and it needs to be well planned.

If you’re driven by a clear vision and strategy, you can put in place the structure, the people and the systems to make it happen – and then pin down the financials that make it viable.

Find out more 

To find out more about how iplicit simplifies accounting for multi-academy trusts, you can talk to us about your growth plans at the Schools and Academies Show, watch the short video below or get in touch for a demonstration.