Academies – benefits, financial freedom and limitations

Julia Sharman

Education Adviser and Support Teacher. Over 25 years teaching experience. Specialist areas: education health needs, SEND and mental health.

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Many schools are considering converting to an academy. With the prospect of greater financial freedom, coupled with flexibility in curriculum delivery and increased autonomy, becoming an academy looks like an attractive proposition. But what benefits do academies secure over schools, and is there truly greater financial freedom?

An obvious place to start is the freedom afforded to academies in the delivery of the school curriculum. Changes do not need to be approved by the Local Authority (LA) since decisions are made by school leaders to best meet the needs of their pupils. They can also offer a range of other qualifications, above and beyond those offered by LA schools. This means that academies can choose to specialise in one or two subject areas, such as Science or Languages, to reflect their expertise.

Academies are also responsible for their own admission arrangements and process management, which must comply with the law and the School Admission Code. This prevents schools becoming selective academies. They are expected, in addition, to increase their engagement with the local community, by sharing facilities, and promoting community cohesion.

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In terms of funding, academies receive the same level of per-pupil funding as LA schools, which is supplemented with additional funding to cover costs of services no longer provided by the LA. Consequently, academies can procure support that offers best value, matching their individual priorities, and independently of their LA. Funding comes in the form of the General Annual Grant (GAG), paid by the Young People's Learning Agency (YPLA), which is calculated on LA Central Spend Equivalent Grant (LACSEG), so this varies between LAs. However, the GAG value is only protected for 12 months from the academy opening, and any savings will not be allowed to be carried forward and will be taken into account in the payment of subsequent grants. Academies can also seek an Earmarked Annual Grant (EAG) to meet capital expenditure.

Although academies are able to set their own pay and conditions for staff, in addition, they must take control of pension scheme arrangements, including audit returns and deficits from the Local Government Pension Scheme (LGPS).

With financial freedom, however, comes greater financial responsibility. All academies must sign a funding agreement, which sets out the overall framework for their operation. Crucially, the funding agreement states that all actions should be transparent and accountable, which is particularly pertinent when it comes to dealing with public funds. As a result, academies must appoint a responsible accounting Academy Trust or outsource work to accountants that understand internal auditing in schools. In turn, it is imperative that School Business Managers are up to speed with changes in financial reporting, including reporting of schools voluntary funds.

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