10th January 2012
Schools must adapt budget planning to new financial circumstances
New research by Syscap, the leading independent finance provider to the education sector, shows that in just 18 months of operation, the Young People’s Learning Agency has been forced to provide £10.7 million worth of emergency funding to Academy schools.
A total of eight schools have been allocated emergency funding by the Young People’s Learning Agency (YPLA), including five new grants made since the start of the last academic year in September 2010.
Syscap says that these figures illustrate the impact that the tighter new funding environment is having on schools, and warns that Head Teachers may need to take a more strategic approach to financial planning in order to avoid experiencing major financial difficulties.
Local authorities are responding to these concerns, increasing their budget for school specific contingencies and schools in financial difficulties by 28% from £426.9 million for the 2010/2011 funding period, to £547.9 million for 2011/12.
Philip White, Chief Executive of Syscap, commented: “Academies receive more direct funding than most schools, and many benefit from additional grants from sponsors, so the fact that such a large amount of emergency funding has already been granted to Academies underlines just how tough schools are finding the new funding environment.”
“This situation is being mirrored in Local Authority run schools, with LEAs putting aside more money to deal with financial difficulties and contingencies such as staff redundancies than they did in the previous year.”
“The result is that after years of expecting an annual increase in their budget, many Head Teachers are now looking at different ways to ensure that they can continue to invest in their buildings, infrastructure and equipment over the longer-term.”
Lessons from first generation of Academy schools
Syscap points out that there are some useful lessons to be learnt from the first generation of Academy schools. Frequently replacing failing schools, and with the additional support of sponsors, they were established with generous funding, but after a few years faced difficulties replacing and updating obsolete equipment that was initially bought outright.
Philip White explains: “The first generation of Academy schools have already gone through the experience that all schools are going through now. After the initial cash injection drained away, facilities succumbed to wear and tear, and technology became obsolete, they found that buying everything outright was no longer a viable approach.
“They are now looking at leasing, because spreading the cost of new investment gives greater certainty that they will be able to make essential upgrades than the alternative of trying to carve enough money for an outright payment out of their annual budget allocation.”
www.syscap.com
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