Dozens of academy schools need bailouts from taxpayers

Operators of dozens of academy are having to rely on emergency handouts from the taxpayer as a result of mounting deficits that threaten to put some out of business.

In the latest sign of the financial pressures now on the nation’s schools, the auditors of one operator that oversees 21 schools raised concerns over its ability to keep operating after it posted a £2.5m loss last year.

The revelations follow an investigation in last week’s Observer that found that more than half of the biggest multi-academy chains (MATs) had issued warnings about funding, citing pay, staffing levels, building maintenance and mounting deficits. It has now emerged that some smaller trusts have had to ask for cash advances from the state to stay afloat.

The Birmingham-based Academy Transformation Trust (ATT), which received funding from the government of £59m last year and operates 21 schools educating nearly 12,000 pupils, is one of a number of chains that appear to be relying on future government handouts to keep functioning.

In a note on its 2016-17 annual accounts, the ATT trustees admit: “While the trust’s balance sheet remains solvent, the net position of income funds shows the trust to have a deficit of £2.513m. The trust is also forecasting a further reduction in funds in 2017-18.

“The trust has been taking action to address this position and is in advanced discussion with the [and] Skills Funding Agency [ESFA] to provide an advance to ensure appropriate cashflow during 2017-18 and beyond.”

An auditor adds: “A material uncertainty exists that may cast significant doubt on the trust’s ability to continue as a going concern.” It states that ATT’s financial position had been “worsening throughout the year”, and that its board of trustees had not been sufficiently aware of this because of “failings in the trust’s financial reporting and forecasting procedures”.

The Rodillian Multi Academy Trust, in West Yorkshire, disclosed that it also needs a “cash advance … to be able to operate effectively”. The trust, which operates four schools, reported a deficit of £1.5m last year.

“In common with all state-funded schools the [trust] faces considerable pressures on funding,” its accounts state. “The trust took on two schools that had low pupil numbers, were not financially strong and needed a managed staff reduction to address the inherited over-staffing.

 

 

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