The proportion of multi-academy trusts GAG pooling their schools’ funding could triple in the future, a new survey suggests.
GAG pooling is the process whereby a trust takes all of its schools’ general annual grant (GAG) funding and then distributes this money to its schools based on need.
Presenting the survey findings at the Confederation of School Trusts’ (CST) trust finance conference, IMP Software co-founder Will Jordan said the sector could be set to see a marked increase in GAG pooling and the number of trusts pulling together the cash reserves that its individual schools hold.
In a survey of academy trusts run by IMP Software, which provides tools for multi-academy trust finance, at the end of 2023, nearly 50 per cent of respondents said they were already pooling their reserves, and 20 per cent were GAG pooling.
In the same survey, 30 per cent of the 154 participating trusts said they did not pool reserves but would like to in future, and 40 per cent said they did not GAG pool but would like to in future.
If all of these trusts eventually pooled as they would like to, 80 per cent of those surveyed would be pooling their reserves and 60 per cent would be GAG pooling.
On the increase in trusts pooling, Mr Jordan told Tes: “I think there will be quite a lot of changes in the sector in the next few years, but I’m not expecting the trajectory [of more trusts GAG pooling] to reverse.”
Mr Jordan also pointed out that the government’s 2023 Academy Trust Handbook had added extra lines on GAG pooling compared with the 2022 version.
The 2023 version says: “The ability to amalgamate and direct funds to meet improvement priorities and need across the trust’s schools can be integral to a trust’s successful financial operating model.
“This practice can enhance a trust’s ability to allocate resources in line with improvement priorities and running costs across the trust’s constituent academies.”
Opponents of GAG pooling
However, still 34 per cent of trusts surveyed said they did not want to GAG pool.
Respondents to the survey cited concerns such as schools with strong finances not wanting to join the trust if its money would be redistributed across the MAT, and also over the impact on school autonomy.
In a recent report on the future of the school system, think tank EDSK called for GAG pooling to be banned in its proposals.
The EDSK report authors said: “If the aim is to create an open and transparent school system, this questionable practice can no longer be tolerated.”
The shift towards centralisation
The Kreston UK Academies Benchmark Report 2024, which has also been published today, says that 32 per cent of trusts reported pooling their income and reserves.
The Kreston report says the number of MATs that are fully centralised has also increased. This is defined as a trust where all functions are centralised across all schools, such as finance, estates, HR, IT and procurement.
Kreston UK and Bishop Fleming accountants said that they expect to see more MATs becoming fully centralised “in an effort to identify financial efficiencies”.
