England’s biggest academy trust has just over half the amount of reserves that it estimates are needed for “stability and sustainability”.
Accounts for Academies Enterprise Trust published today and covering September 2017 to 31 August 2018, show that it has £5.3 million in reserves (2.3 per cent of total annual income) compared to its aim of keeping £12.2 million (5 per cent) in reserves.
The accounts state that the trust's reserves policy is to “build and maintain a sufficient level of funds in order to create stability and sustainability, and to serve every academy’s short and long term plans, including future capital expenditure”.
The document adds that it intends to work towards building its reserves through maximising income by increasing the number of pupils in its schools and implementing cost-saving plans in the academies in the group which are in deficit.
The accounts show how the trust, which ran into financial difficulties earlier this decade, has moved from a deficit of £5.8 million in 2016-17 to an operating surplus of £171,000 in 2017-18. And the trustees say there are no material uncertainties about the trust’s ability to continue as a going concern.
AET had 77 academies at its peak, but the DfE issued it with a financial notice to improve in October 2014 and banned it from expanding. Several of its academies were transferred to new sponsors.
Julian Drinkall joined as chief executive in January 2017 and the financial notice was lifted in July 2017.
Today Jack Boyer, chair of the AET trustees, says in his statement in the accounts that it has been a “year of hard grind” for everyone” but “a significant corner has been turned” and a “more constructive relationship” has emerged with the Department for Education.
The turnaround plan agreed with the DfE has meant some schools leaving the trust, but the DfE has allowed AET to take on Hockley primary school in Essex. The accounts state that the trust now has 63 academies.
It has also introduced professional chairs to each of the local governing boards and to ensure a community voice the boards have been supplemented by new parents and community advisory boards.
But it adds that “the recruitment of strong school leaders and teachers continues to be a challenge, particularly in some areas of the country and in core subject areas”.
And it points out that the education sector faces “uncertainty over the level of future finances” with the methodology of allocating funding under the National Funding Formula “unclear” and contributions to pensions due to rise.
The accounts show that Mr Drinkall was paid between £290,000 and £295,000 during the year ending 31 August 2018.
