Whilst discussions around the government’s plans for total academy conversion for English schools in England have mainly focused around teaching standards, another key factor in their ultimate success will be whether academies can survive financially once they have total control of their budgets.
This is the view of leading business cost solutions specialists PES Business Ltd who have worked with a number of academies around the country.
Unlike the traditional LEA led schools model where pupil intake was determined by the local authority and there was little or no competition between schools, now that academies have the opportunity to determine the number of pupils they accept, those academies who are not as popular could well face reductions in their income.
The effective management of an academies’ income and accompanying expenditure can impact on the level of teaching resources available for pupils and will ultimately decide the survival of some academies.
Previously school’s expenditure levels were heavily influenced by their local council or by approved buying groups who would procure goods and services on their behalf. Now that future academies can determine their own procurement strategy, the emphasis is on how well the decision makers within the academies make these financial decisions.
Neville Snell, director of profit improvement at PES Business comments; “As Headmasters now become CEOs and Accounting Officers for these academies (effectively companies) it is clear that many academies lack the right skills or knowledge to best determine the large buying decisions that they make, and fulfil their duty to provide best value for any level of expenditure incurred.
“We have seen many examples of where a reliance by an academy on using incumbent buying groups or local council procurement instead of undertaking a full review of alternative sources of advice, has led to purchasing decisions which have turned out to be costlier than necessary for the academy.”
Amongst their clients PES Business have worked with a high performing secondary school in southern England that converted to an Academy. The Academy were facing increasing utilities costs but lacked the necessary procurement experience and expertise, and so brought PES Business in to help review current contracts due for renewal and implement a new procurement strategy.
As a result savings of 26% were made on a single gas supply contract and further significant savings identified on their telecoms spend plus future janitorial and business supplies contracts.
Neville adds; “As academies are required to operate more like businesses, their accountability has to be more like a business with a clear, transparent use of skills and knowledge available. Businesses are used to using outsourced expertise to provide a service with a higher level of knowledge and awareness of the markets, but at a fraction of the cost.
“Academies need to ensure financial propriety and ultimately financial survival, and so the markets that academies can access for their procurement requirements should not be limited to “education industry” experts. Rather best practice should dictate using alternative supply channels to secure the best value for money and not just settling for ‘more of the same’”.
Whatever decisions are made by the management of the academies, the ultimate winners or losers will be the pupils who will either benefit from the additional resources available for learning through good income and expenditure management or conversely lose out from a reduction in these resources.