Five years ago, GAG pooling was described by Lord Agnew as “one of the greatest freedoms a multi-academy trust has”. Every year since, the sector has debated the pros and cons of pooling schools’ funds into a central pot.
In the past year, the definition of GAG pooling in the Academy Trust Handbook has changed significantly, indicating the growing sentiment from authorities that GAG pooling can be a powerful force to ensure resources are efficiently allocated.
Published this month, Kreston UK’s 2024 Academies Benchmark Report highlights a growing trend: 32 per cent of trusts pooled GAG and reserves in 2022/23 compared to 23 per cent the previous year. This jump in popularity is evident in both small and large MATs; over 40 per cent of the latter now pool.
Our own survey, conducted in November and December last year, and to be published in our new report next month, explores how MATs are evolving their approaches to pooling and centralisation and also points to an upward trajectory. We find that 50 per cent of trusts are already pooling GAG and reserves. Within this, 20 per cent are specifically pooling GAG, and a further 38 per cent say they would like to adopt GAG pooling in the future.
155 MAT representatives covering trusts of all sizes responded to our survey. For those already GAG pooling, 94 per cent reported that looking after financially weaker schools or targeting additional resource is the main benefit of their approach. Interestingly, for those intending to GAG pool in the future, driving operational efficiencies is cited by 97 per cent as the primary expected benefit.
GAG pooling is not for everyone. IMP Software’s 2023 research reported that of the 67.5 per cent of MATs which do not currently GAG pool, half are not considering it due to the negative impact it could have on schools joining their trust. This is backed up in our latest survey, which finds that the main reasons for not GAG pooling are the perceived impact on school autonomy and colleagues feeling that funds should be allocated specifically to students their own school.
We need to move beyond the ‘Rob Peter to pay Paul’ view of GAG pooling
We firmly believe there is no single right answer and no one-size-fits-all approach. But there is an evident need to move beyond the ‘Rob Peter to pay Paul’ view of GAG pooling.
MATs and schools need good information to decide what is right for them. And as evidenced by our research, there are, in fact, many forms of GAG pooling.
The needs-based model is by far the most common approach to funding allocation. Significantly perhaps, around 80 per cent of those who do this rate their likelihood of recommending it as 8 out of 10 or higher.
Then there is the top-slice MAT: a continuance of local budgets but with a high degree of pooling for central services, contingency and reserves. Kreston’s report shows that the average top slice is 7.4 per cent for small MATs, 6.3 per cent for medium MATs and 5.4 per cent for large MATs.
And the bottom-slice MAT: all funding is centrally managed and released for local requirements; revised funding models provide longer-term certainty and even out geographical differences.
And finally, bespoke pooling: For example, 47 per cent of MATs pool reserves centrally and a further 29 per cent would like to do so. Meanwhile, some adopt ‘general’ pooling, where other non-GAG/non-reserves income streams are pooled by trusts and shared out among schools.
As part of our research, we also invited MAT leaders to outline the key steps they have taken to introduce revenue pooling, spanning consultation, piloting and implementation. Our full report summarises these, together with case studies, to further inform sector-wide developments around building a strong financial and operations strategy.
School groups that are already pooling GAG focus on fostering equality between schools, providing consistent support and efficiently allocating resources to meet the diverse needs of all students across the trust. The decision not to pool funds often revolves around trust in existing mechanisms, desire for local control, concerns about bureaucracy and considerations related to the size and context of the trust.
The debate continues, but practice is definitely evolving.
GAG Pooling and Centralisation in MATs: 2024 Update publishes on 5 March. To register for the webinar, click here
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