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10 / 19
April 2012

More than a third of secondary schools, 1,580 in total, are currently either operating as academies or are in the process of converting. Becoming an academy requires a greater understanding of the financial consequences and if those schools making the leap are to succeed, then getting the right mix of skills onboard is essential, say Martin Rogers and Barbara Moore.

Why have so many schools made the jump? The main reason is the greater freedoms that come with academy status. The freedom from the local authority; the freedom to set pay and conditions for staff; the freedoms around delivery of the curriculum; and the freedom to change the school term and days.

But with freedom comes responsibility. The main burden of responsibility falls firmly on the shoulders of the governing body which needs to have the skills to cope with a whole new raft of duties. Along with public relations skills to cope with potentially disgruntled stakeholders, there is the monitoring and funding of all costs to deal with. This includes dealing with complex issues such as VAT, increasing financial reporting, as well as overseeing past pension liabilities. 

From speaking to a variety of academies, schools and governing bodies, the implications of the Local Government Pension Scheme (LGPS) deficit that is transferred to the academy on conversion seems to be one of the most difficult aspects for governing bodies to deal with.

This scheme applies to all non-teaching staff and transfers over to the academy on conversion. However, based on recent economic performance, most LGPS funds are suffering a deficit, which then sits on the balance sheet of the academy following conversion.

Many governing bodies have disagreed with the fact that they were being made to account for a substantial liability not directly related to the academy. In response, the government has now said that academies have the choice to “pool" with the local authority for LGPS pension purposes, rather than being treated as a standalone employer within the fund.

This offers new choices for the governing body. If they choose the ‘pooled’ route it would mean the academy continuing to pay the same employer contributions as maintained schools in the local area. The decision to go standalone or pooled should involve a discussion with the pension fund to decide which approach is most appropriate ­­— discussions that would require a firm understanding of the issues.

Looking ahead, more change is forecast as ministers look to expand the academies programme further by increasing autonomy at a school level and focusing even more closely on driving up standards in low-performing schools.

There are already plans in place to turn around underperforming primary schools by setting tougher floor standards, rising each year, to ensure that all schools continue to improve. If schools do not improve, and local authorities do not have a grip on the issue, ministers will be able to intervene to secure the best possible result for the school.

So getting the right mix of skills going forward can mean the difference between success and failure.

Martin Rogers is a Partner and Barbara Moore is an Audit Manager, Mazars. Both are located at Mazars in the Midlands.

If you would like to ask the author a question on this or a related topic email: emc2@mazars.co.uk