Overpaid academy schools must return £15m by July

Overpaid academy schools must return £15m by July

BBC |May 4, 2012

By Judith Burns Education reporter, BBC News
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Dozens of academies must return nearly £15m by July because of a government funding blunder, say accountants for some of the affected schools.

Figures obtained under a freedom of information request show 128 academies have been overpaid by the government.

On average, each affected school must pay back almost£118,000, according to UHY Hacker Young Accountants.

Ministers would like all English state schools to become academies, which are funded directly by Whitehall.

A government spokeswoman said: “Where pupil numbers don’t match estimates, we claw back excess funding.”

In a statement, the Department for Education said the current problem was caused by an old funding formula used to allocate the budgets of the older academies.

“A small proportion of academies… receive funding based on pupil estimates, not pupil numbers. This is because of the way their funding agreements were written.

The spokeswoman added that the government was working to simplify the system and ensure that all schools were funded fairly in future.

‘Serious cashflow problems’

But Allan Hickie, a partner at UHY Hacker Young, told BBC News there were also errors in some of the government calculations.

“The increase in the number academies meant the government agency responsible for allocating the funding was swamped by work and this led to some of the errors.

“Some schools may not yet know they have a problem. It all depends whether their business manager has noticed they have been overpaid.”

Mr Hickie added that schools with tight cash flow could be seriously affected by having to pay back the money which could amount to 10% of their budget.

He said his firm was acting for one primary school that had been overfunded by £190,000, a sum that could pay for five teachers.

This particular school only became an academy last summer.

He added that about one in 10 academies would now have significantly less money than anticipated, and many would have already spent the money.

“It is difficult to see how that much money could be cut from the existing budget without adversely impacting educational standards.

“Significant adjustments to funding two-thirds of the way through the academic year can cause serious cashflow problems.”

He called for the Education Funding Agency, which recently took over responsibility for allocating academies’ funding, to ensure that future adjustments were kept to a minimum.

Russell Hobby, general secretary of the National Association of Head Teachers, said the clawbacks were a symptom of confusion in the school funding system and feared it could even lead to staff redundancies at the academies affected.

“It will be a big blow to these schools and plans will be disrupted,” he said.

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