Last year I wrote a blog on the issue of MAT budgeting and how a growing number of Trusts have started their financial centralisation journey. Centralisation, as a topic, fascinates me and is still where many conversations that I have with MATs lead to, so we have subsequently been on a mission to find out more.
Findings published in ‘Pooling Reserves and Budget Centralisation in Multi-Academy Trusts’, and follow-on discussions with MAT leaders, identified that the question is not so much about whether to centralise or not, but actually ‘how?’ and ‘to what extent?’. A gap was identified by trust chief executives, chief operating officers and chief financial officers around good practice and knowledge-sharing. There was a clear appetite for better, more in-depth, insight on centralisation journeys amongst this community.
We therefore commissioned further research with a small number of MAT leaders in autumn 2020 to explore how trusts have developed their operating models in light of academy freedoms – including financial and non-financial (e.g. estates, HR and IT) approaches to centralisation to provide more efficiencies. We asked them about the operating model they had chosen to take (and the strategic drivers behind it), their views and experiences of implementation (what worked and what they would do differently), and the benefits and impact this has had on their systems and the trust as a whole.
‘A Growing Philosophy: How are Multi-Academy Trusts developing their operating models through centralisation?’ provides compelling insight on how trusts in different UK regions and of different sizes are approaching this question, and with what effect. Significantly, this report also identifies the importance of centralisation as a strategic choice, linked to the ethos and culture of any one MAT. Centralisation, it says, should be viewed as part of a bigger discussion than simply one about financial management and related processes.
For some trust leaders interviewed for this report, centralisation was decided from the outset or at an early stage in the MAT’s journey; for others, it has become a change management programme as the trust has grown and evolved. What is clear is that those which began to centralise from the start are now reaping the rewards. Centralisation can still be a controversial topic but schools within the trusts featured appear to be generally supportive of the process. This is due to their involvement from the beginning and their belief in the wider purpose of the strategy, which is further supported by the benefits being felt at school level as they are pushed back to the classroom frontline.
Whilst practices and procedures stood out in a number of the MAT interviews and, as a systems provider ourselves, we would of course suggest that systems are a key component of the journey – systems, however, cannot be used in isolation, and systems should not lead the strategy. With all of the discussions that referenced systems, these were clearly used to help implement the vision, which was already established and communicated to all stakeholders, not the other way around. Therefore, a MAT’s systems strategy needs to ensure that core technologies are able to evolve with it throughout the trust’s journey to support the implementation. If systems cannot cope with the transition or the end goal, a systems review becomes very much part of the process after the vision has been set.
The pooling of general annual grant (GAG), where a trust receives its funding centrally and then allocates budgets to the individual schools, is often interpreted as one of the more explicit outcomes of centralisation. Whilst the textbook definition is a straightforward one, the reality is that culture, values and context will drive what GAG pooling means to each individual trust. The Kreston Academies Benchmark 2020 report found that whilst the level of interest from MATs in GAG pooling is growing, it is proving harder to establish and few trusts have adopted this approach. In the snapshot of MATs featured in this report, however, GAG pooling is implemented at a representatively high scale and therefore suggests an increasing move for more trusts to embark on such a journey.
The majority of MATs have centralised their financial and non-financial systems to a degree, the challenge being that each trust has chosen a different path and worked in a different way to achieve things. The reality is that every single example we see is different and there is no one-size-fits-all approach, or a blueprint that can be followed to ensure success; however, what is available is the experiences of others who have been through or are in the process of going through the development of operating models through centralisation. I am not aware of many MATs that are completely at either end of the spectrum; they are neither fully devolved to schools or fully centralised, and most are somewhere in between, but the general direction of travel is towards greater centralisation.
The MAT leaders interviewed for this report are well placed to share their learnings with other trusts. The importance of setting the vision and being clear on the direction of travel was strongly emphasised. Additionally, a clear message was that early consultation and communication with colleagues is vital to ensure schools are on board, especially in selling the benefits of centralisation as was the point that varying degrees of centralisation are feasible in Trusts of all sizes.
In summary, there is definitive evidence of the impact of financial (and wider) approaches to centralisation as many trusts evolve or grow. And, whilst some common learnings have been provided for other MATs embarking on the same journey, a core philosophy appears to be the most fundamental requirement for success.
Will Jordan is Co-Founder of IMP Software. ‘A Growing Philosophy: How are Multi-Academy Trusts developing their operating models through centralisation?’ can be downloaded here.