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Financial benchmarking for multi-academy trusts (MATs)
Effective financial benchmarking is harder for MATs than for standalone schools. Get expert advice on using internal and external benchmarking to improve your trust's financial health, and learn how to find trusts to benchmark against.
Our associate expert Graeme Hornsby has significant experience of school business management, including working with academies and multi-academy trusts (MATs).
We spoke to him about how financial benchmarking could work at MAT level, and relay his advice below.
Internal benchmarking is an important tool
Some of the most meaningful benchmarking a MAT can carry out is internal benchmarking between its schools. Internal benchmarking is easiest in large MATs, but small trusts also have a lot to gain from it.
As with a regular school-level benchmarking exercise, your trust's internal benchmarking might look at:
The amount of data you will have available means that you should be able to look behind headline benchmarking figures
- The percentage of each school’s budget spent on staffing
- Facilities spending
- Spending on course or curriculum materials
Look behind the headline figures
The amount of data you will have available means that you should be able to look behind the headline benchmarking figures.
For example, rather than simply looking at the overall percentage of spending on staff, you will be able to look at details such as the spread of teacher and support staff salaries across the pay scales, or the 'contact ratio' (the percentage of staff hours spent on pupil-facing activities) in each school.
This extra level of detail can provide you with greater insight into the strengths and weaknesses of each school’s operations. It can also help you to identify the kinds of support that individual schools might need.
For instance, if a school in your trust has high results but relatively high staff costs, this may be due to a high concentration of highly-paid, experienced teachers.
You could then consider redeploying some of those more experienced teachers to other schools in the trust, and bringing some less experienced staff to that school. This may be a way of balancing that school’s budget more effectively with no drop in results, at the same time as supporting higher standards of achievement in the trust’s other schools.
In addition to looking at historical spending, effective internal benchmarking should include benchmarking of proposed or planned spending.
It is particularly useful to do this in the periods before budgets for the next academic and financial year are set.
This is because it helps you recognise spending patterns in each of your schools, and to provide effective challenge at the local level on keeping spending tied closely to pupil outcomes.
How to conduct effective external benchmarking
External benchmarking for MATs is challenging as there are a lot of factors that affect a trust's financial performance, including:
- Number of schools
- Number of pupils
- Phases or types of school (for instance, cross-phase trusts, primary only, secondary only, or trusts with special schools)
- Pupil characteristics
- Level of centralisation
- Central services provided and delivery models
However, here are some suggestions to help you make benchmarking as useful as possible:
Finding trusts to benchmark against
The Department for Education (DfE) has a financial benchmarking website you can use to find other trusts to benchmark against.
Begin by searching for your trust. You can then choose trusts to compare yourself against. You can:
- Select trusts manually (most useful if you already know of trusts with similar characteristics to yours)
- Search for trusts similar to yours based on characteristics (number of pupils, number of schools, total income or school phase)
The charts generated by your search criteria will give you headline figures related to income and expenditure in key areas of your trust's budget.
You can see figures for trust-level spending, school-level, or trust and academies combined.
You may also wish to view the annual reports of similar trusts. These can provide more detail than is provided through the DfE's website.
Benchmarking against similar trusts
Trusts could work together to compare how the central finance functions add value
Where you have identified trusts with similar characteristics, you should work with them to look behind the figures you can get through the benchmarking website.
A crucial consideration during these benchmarking exercises is the value added by the MAT's central staff and services.
For example, trusts could work together to compare how the central finance functions add value through efficiencies or economies.
Working together in this way may give you inspiration on how challenges you're facing might be solved, and may provide an indication of what is possible within your budget.
Key performance indicators for trust financial health
Steve Gough is a director at Deloitte UK. His work focuses on the education sector and academy trusts.
Speaking at an Academy Ambassadors event in September 2016, he suggested benchmarking the following key indicators of financial health:
- Total general annual grant (GAG) income per pupil
- Total income per pupil compared to GAG (to show how much other income is being generated)
- Total expense per pupil compared to total income (as a measure of trading performance)
- Total staff employment cost per pupil
Benchmarking for individual schools
Benchmarking the spending of individual academies against similar academies can still be useful at MAT level.
For academies in MATs, in the DfE's benchmarking the MAT’s central spend is spread evenly across each of the schools in the trust. While this won't provide the trust with a perfect indicator of income and expenditure, it may still provide a basis for useful comparison.
Graeme Hornsby is an education consultant with significant experience of school business management at a senior level. He has particular expertise in strategic financial planning, HR and governance.
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