This page outlines how maintained schools converting to academies will be funded. It also sets out the principles of academies' funding and how it is calculated.
The principle of academies' funding is that academies should receive the same level of per-pupil funding as they would receive from the local authority (LA) as a maintained school. In addition, they receive top-up funding to meet additional responsibilities that are no longer provided for them by the LA.
The Government is clear that becoming an academy should not bring about a financial advantage or disadvantage to a school. However, academies have greater freedom on how they use their budgets, alongside the other freedoms that they enjoy.
Unlike maintained schools that are funded on the traditional financial year basis (April to March), academies are funded from September to August to reflect the academic year.
The funding for academies comes in the form of a grant, known as the General Annual Grant (GAG), paid by the Young People's Learning Agency (YPLA). For schools converting in September, the YPLA will issue formal notification of grant funding for each school in August. This note explains how the grant will be calculated. The GAG is made up of different elements, as indicated below:
|Services and costs funded from a local authority's Schools Budget||Services and costs funded from other local authority sources|
Academies need to consider how they will obtain these services using the additional funding they receive. They are free to buy back the services from the LA or find them elsewhere. Depending on which LA the academy is in, it might be the case that the school is already responsible for some services, and will already receive money rather than services from their LA.
The LA also retains some funding for services that it has to continue to provide, and related costs. These are:
If LAs retain funding for services for pupils with SEN, a grant in respect of this is paid to the academy using numbers of children registered as School Action and School Action Plus attending the academy. Some authorities retain little or no SEN funding centrally, choosing to delegate this funding for services to schools through the formula funding (budget share).
For academies in these LA areas, the SEN element of the central spend equivalent for these authorities will be much lower than for academies in other authorities, as the funds will already be included in their budget share. Individually assigned funding for children with statements will continue to be paid as normal, through the LA. The LA will continue to have a legal duty to ensure that the statement of SEN is fulfilled and does this by paying the individually assigned funding, and monitoring provision made by the academy.
Academies also receive grant funding to meet the additional VAT they incur because they cannot use the LA's VAT reclaim facility and to meet their insurance costs. All other specific grants, including Standards Fund grants and Schools Standards grants will continue to be paid as normal by the LA up to 31 March 2011. Arrangements for these grants after that date, for all schools, are still under consideration.
Academies are not allowed to run a deficit without remedial action. Any that open with a transferred deficit will need to agree with the YPLA, at the earliest opportunity, a plan to repay it from GAG instalments. Any that develop a deficit after opening will have to agree a restructuring plan with the YPLA.
Further pages on this site provide detailed information on academy funding. They include: