A multi-academy trust with mostly small schools saw its unrestricted reserves fall into deficit last year, which it says highlights the ‘imbalance’ between primary and secondary funding.
The Diocese of Norwich Education and Academies Trust (DNEAT) has 42 schools across Norfolk. All but one of these are primary schools, and around half have fewer than 100 pupils.
The trust continued to face a difficult financial position last year, its show.
Chief executive Oliver Burwood told Tes that “the tightness of finances in primary-based trusts, such as ours and REAch2 Academy Trust, have been well-publicised and should provide key evidence to the Department for Education around the imbalance between primary and secondary funding for both schools and trusts as they begin to reconsider the funding formula again.”
DNEAT’s unrestricted reserves fell to a deficit of £255,469 by the end of the year, from a small surplus of £96,821 the year before.
Its in-year deficit was £393,898 for 2023-24, smaller than the previous year’s in-year deficit of £726,458.
Not able to meet target level of reserves
The trust said it is currently not able to meet its trustees’ target level of reserves at 5 per cent of income, but will be looking to improve reserve levels over the next three years.
“For trusts like ours, where around 75 per cent of our schools are classed as small and around 50 per cent have fewer than 100 pupils, this situation is even more challenging as we need to provide a full support service to these schools that, in essence, do not contribute significantly financially,” Mr Burwood added.
Nationally, there was a 42 per cent jump in trusts falling below the 5 per cent of income reserves threshold from 2021-22 to 2022-23.
Many trusts had warned over the course of the year that finances were becoming even more difficult throughout 2023-24.
This is particularly difficult for primary-based trusts, which tend to have lower revenue reserves.
Mr Burwood warned last year the situation leaves primary trusts facing “perverse incentives”.
DNEAT’s latest accounts follow those of REAch2, which runs 62 primary schools and reported an in-year deficit of £1.1 million and an underlying deficit position of £2.1 million for 2023-24.
Introduction of central expenditure controls
DNEAT has been able to set a surplus budget for 2024-25 and is on course to deliver this due to improved finance software and controls, it said.
These central controls on spending were first introduced in April 2023.
Overseen by the CEO, they are used to decrease discretionary spending. The trust also has a staff appointment approval process in place to “ensure that where there is an opportunity to reduce expenditure, this is properly considered”.
DNEAT charges 5.5 per cent of the general annual grant (GAG) and educational services grant for central services for its primaries, and 3 per cent for its secondary, The Open Academy.
It had identified during the year that the trust would not receive £700,000 in anticipated funding due to the lack of the Trust Capacity Fund (TCaF) and because of the balances that new schools brought with them on conversion.
DNEAT was able to make £306,000 in savings during the year to offset this.
The trust had one school that was affected by the reinforced autoclaved aerated concrete (RAAC) crisis last year. It committed £413,000 for the removal and repair of this, which it said has now been done and funded by the DfE grant.
SEND outcomes ‘above average’
Despite funding challenges, 90 per cent of DNEAT’S schools were Ofsted rated “good” or above before headline grades were removed.
The trust has more disadvantaged pupils and pupils with special educational needs and disabilities (SEND) than the national average. Its reported attainment for SEND pupils with an education, health and care plan (EHCP) is “markedly above” the national average by 11 per cent.
“We are proud that well-targeted spend on SEND is having a clear impact. This has involved working with a nationally-recognised SEND expert, who has supported us to put in place a school-led peer review programme for SEND,” a spokesperson for DNEAT said.
The peer reviews are led by DNEAT’s Sendcos. It added many Sendcos have had support to achieve Specialist Leader in Education (SLE) status so they can then follow up on areas where schools need more support.
This account comes as a major academies benchmarking report found this week that nearly 60 per cent of trusts were in deficit for 2023-24 - triple the proportion that were in the red three years ago.
The analysis of trust accounts also found almost a third of trusts are now holding reserves worth less than 5 per cent of their income.
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