Midlands Schools face funding shortfall

An investigation into the future of academy school finances has revealed that many Midland schools face running out of money unless they act now to address the impact of rising costs and reduced revenues.

Specialist education accountancy firm, MLG Education Services, has consulted with more than 80 academy schools in the Midlands and hosted a number of workshops to help them prepare budgets for the next three years.

The MLG consultation shows that the impact of changes in funding and costs for a typical academy school by 2020-21 could be as much as £135,000 for primary schools in Coventry and Birmingham or £844,000 for a secondary school.

Schools in Dudley may be heading for shortfalls of up to £55,000 in primary and £344,000 at secondary and schools in Solihull predicting a potential funding gap of £34,000 in primary and £212,000 in secondary schools (see tables below).

The organisation is arranging to present its findings to the Education and Skills Funding Agency (ESFA) to influence guidance for academy schools.  It says that the real-world view of finances shows that the majority of academy schools will see a rise in costs and a drop in income. The shortfall could result in potential job losses, and lead to poorer outcomes for children, unless schools take action now.

Managing director of MLG Education Services, Mike Giddings explains: “The introduction of National Fair funding in 2019 will see the funding of some schools increase and others decrease. The grant statements received by academies for 2018-19 are very misleading, as the future changes in funding are hidden in the detail. Minimum funding guarantees will end in March 2019, which in some of the higher funded areas, such as Birmingham and Coventry, could reduce the funding of a secondary school by as much as £250,000 per annum.

“The one certainty that all schools face is that costs are due to rise, staff costs are predicted to increase by at least 10% in the next three years which when staff costs are typically 80% of a school’s budget, will put make any budget difficult to balance. Even the areas where funding is due to increase, such as Dudley and Solihull, the funding increases will not be as high as the predicted cost increases.

“In order for frontline education services to continue to thrive, schools need to look for ways to address this shortfall and ESFA needs to give them the right advice to do this now, before the budget deadline in July.

“Schools will need to face the fact that they have to look for economies, either by restructuring, sharing resources, including key staff and combining purchasing power to achieve economies of scale. We are already helping schools to explore options but there needs to be national guidance for all schools or many may find themselves in crisis,” said Giddings.

Predicted impact on schools based on Midland regional consultation involving 80 schools.

Typical school funding:

  • Primary school, one form entry (210 pupils), total income £800,000 per annum
  • Secondary school, five form entry with post 16 (1,050 pupils), total income £5,000,000 per annum
  • All schools are assumed to spend 80% of their budget on staffing and that their current budget is break even.
Primary

Coventry /

Birmingham

Dudley Solihull
£’000 £’000 £’000
Income
General Annual Grant (GAG) -20 36 40
Pupil Premium -5
Expenditure
Staff Costs -86 -77 -64
Overheads -24 -14 -10
TOTAL IMPACT -135 -55 -34
Secondary

Coventry /

Birmingham

Dudley Solihull
£’000 £’000 £’000
Income
General annual grant (GAG -125 225 250
Pupil Premium -31
Expenditure
Staff Costs -538 -481 -400
Overheads -150 -88 -62
TOTAL IMPACT -844 -344 -212

Close