Is 3 the magic number for MAT budgets?

They say three is a magic number, but the ESFA’s announcement that academy trusts must now provide three-year budget forecasts (instead of one-year) may not have left MATs feeling too lucky.

The change will be brought in this year, and trusts must provide the DfE with ‘details of income and expenditure, as well as some capital spending and “non-cash elements’’’ by the 30thJuly. Academies that miss deadlines for ‘two or more of the annual financial returns in any year’ will be placed on a public ‘naughty list.’

The measure is supposed to reassure the DfE that MATs are planning ahead and, with worries over academy finances continuing to cast an ESFA-shaped shadow over the sector, you can’t really argue with the sentiment.

With that said, the forecast extension will no doubt be causing a few additional grey hairs for MATs which are already predicting budget deficits. That, on top of the age old question about how can you budget when the goal posts aren’t just moving but sometimes leaving the field of play all together, means that news has understandably been met with some concern.

So how do you address this new requirement effectively?

Finally, while academies need to be transparent about the finances – the DfE needs to be transparent about why they are asking for this. Is there a hidden rationale behind this? Is the ESFA prepared for what might come back?

Our big concern is that with a clear understanding of the whys smaller trusts may feel the pressure either grow before they are ready or withdraw at the fear of the future. As a result, the bigger trusts could be waiting in the wings to gobble up lots of smaller trusts deemed non-viable.

As with most things in life, balance really is the key. Done well, three-year budgeting forecasts could help MATs to think more strategically, giving themchance to find opportunities to generate revenue, work collaboratively with others to bring economies of scale, and possibly to consider merging sooner and restructuring the workforce to drive as much money as possible to T&L.

Planning ahead is something we know a bit about, having introduced MAT MOTs to help trusts to identify strengths and weaknesses across key areas such as finance, risk, growth, standards and people. Typically conducted over three years, we build a deep understanding of your organisation, offering considered guidance, support and external challenge to improve performance.

If you want to find out more about how we help trusts achieve their ambitions, just follow this link.