Strategic financial planning for multi-academy trusts: Your guide to sustainability and success

Strong financial planning is the backbone of a successful and sustainable multi-academy trust (MAT). Running a MAT’s finances effectively means adopting the strategic rigor of a business while aligning with educational priorities.

Here are the key components you need for effective financial planning within your MAT:

Strategic financial planning

Your financial strategy should be a living document that evolves to meet your MAT’s strategic objectives, adapts to known changes, and aligns resources with educational goals to ensure long-term success.

Key areas to consider when developing a strategic financial plan:

• governance and leadership roles are filled by suitably qualified individuals who understand schools’ money management
• alignment with your strategic and school improvement plan goals
• proactively link to curriculum, account for staffing changes, predicted pupil numbers, and capital needs
• react promptly to external factors such as sector updates, exam results, post-Ofsted plans, and confirmed pupil numbers
• leverage Integrated Curriculum and Financial Planning (ICFP) to optimise resource allocation and finances (more details below).

Robust budget setting

With political and economic uncertainties, building a resilient school budget is crucial for leaders when planning the trust budget.

A robust budget setting process not only ensures financial stability but also provides school leaders and governors with the right level of assurance and confidence in decision-making. That’s why it’s also important to make sure that risks and assumptions are clearly identified and communicated.

Essential to a successful budget setting process are:

• accurate staff costs
• realistic pupil number projections
• guaranteed income streams
• an appropriate % of inflation built in
• a review of historical spending patterns
• understanding local government funding allocations
• scenario planning to anticipate potential challenges.

With all this in mind, it’s vital to consider the systems and processes you’ll need to support the budget setting process:

• Excel or budgeting software​
• integration with financial management system​
• payroll reconciliation​
• ease of updating pay scales​
• scenario planning​ tools for flexibility in financial projections
• clear, comparable reporting tools for financial transparency, e.g. reporting from the budget software vs financial management system​
• cost.

Reserves policy

Reserves are a link between an academy trust’s strategic planning and budgetary process. They can be used for future growth, investment or capital projects.

Understanding the financial situation of your MAT and developing a reserves policy in line with DfE guidance will enable the trust to plan ahead and avoid cash flow issues.

Setting the reserves policy:

• collaborate with trustees and trust leaders to determine appropriate level of reserves
• regularly review and adjust the policy to align with the school improvement plan
• mitigate financial risks – proactively identify and address as early as possible
• understand the financial vulnerability placed on the Trust if the level of reserves are too low.

Integrated Curriculum Financial Planning (ICFP)

ICFP is a process that combines financial management and curriculum planning, helping education leaders allocate resources effectively and align them with the prioritised initiatives within the Trust. The principles of ICFP are centred around target setting and benchmarking and can be tailored to individual school/academy needs.

The more variables you measure, the more accurately you’ll be able to predict the resources you can afford in the future.

Suggested metrics to consider are:

• average teacher cost
• staff pay as a percentage of total expenditure
• contact ratio (amount of time spent teaching)
• average class size
• pupil-to-teacher ratio (PTR)
• senior leaders as % of teaching staff
• cost per lesson.

The DfE offer an ICFP tool and detailed guidance to help educational leaders with the ICFP process.

Effective financial planning requires expertise and precision in managing education finances. Our Finance Team specialises in tailored solutions to help MATs navigate these challenges with confidence. Whether you need assistance in aligning financial plans with strategic goals or a financial health review, we’re here to support you.

If you’re looking for support or advice about financial planning within your Trust, or would like to learn more about our Finance service, along with relevant training, please talk to us.