Payback: academies to return #163;15m by July

Funding blunder means some schools will repay 10% of budget

4th May 2012, 1:00am

Dozens of academies will be forced to return nearly pound;15 million within three months after a government funding blunder led to the schools being given too much money.

According to figures obtained under a Freedom of Information request, 128 academies have received too much cash from the government. Each school will have to pay back an average of almost pound;118,000 by the end of this academic year.

The move to claw back the money means many of the schools, particularly primaries, will lose a sizeable chunk of their annual budgets, which they had thought was theirs to spend.

The full extent of the problem was revealed by accountancy firm UHY Hacker Young, which obtained the figures. The company believes that many of the academies will be forced to cancel planned investment or put it on hold as a result of the errors.

Allan Hickie, a partner at the firm, said that in many cases the repayment equates to nearly 10 per cent of the school’s overall budget. “A number of academies will now have significantly less money than they anticipated, and many will already have allocated this funding,” he said. “Schools have to work to long time frames when planning investment in areas like IT.

“Significant adjustments to funding two-thirds of the way through the academic year can cause serious cash-flow problems.”

UHY Hacker Young said it had dealt with one primary school that had been overfunded by pound;190,000, a sum equivalent to about five teachers on average salary.

Mistakes with funding allocations to academies first emerged at the end of last year, as reported by TES. But this is the first time the full scale of the errors has been identified.

The Department for Education has blamed the problem on an overly complex funding model used by the Young People’s Learning Agency (YPLA), which has recently become the Education Funding Agency.

Academies are funded on a per-pupil amount equivalent to state-maintained schools in the same local authority. They receive additional money to finance services previously paid for by the council, called the Local Authority Central Spend Equivalent Grant. It emerged last summer that grant miscalculations meant one academy was overfunded by pound;300,000.

The Association of School and College Leaders (ASCL) said that the funding model worked when just 200 academies were in existence, but is no longer up to the job now that more than 1,700 of the schools are open.

Malcolm Trobe, deputy general secretary of the ASCL, said that, while the YPLA could not be blamed for the funding model it used, it was “unacceptable” that schools were being subjected to clawbacks.

“The problem lies with how they have to calculate the budgets of academies. It is a system the YPLA has inherited from the DfE and has led to a number of inaccuracies in funding, and that is not an acceptable situation to be in,” Mr Trobe said.

The DfE said it was aware of the funding problems and was working to solve them.

“A small proportion of academies, mostly older sponsored academies, receive funding based on pupil estimates, not actual pupil numbers,” a DfE spokesperson said. “This is because of the way their funding agreements were written. In cases where actual pupil numbers don’t match estimates, we claw back excess funding, based on the terms in funding agreements. We are working to ensure that all schools are funded fairly.”