The big budgeting question for MATS: should you centralise financial management?

Trust CFOs have one question they need to answer above all else: should they centralise all their financial operations or let schools control their own budgets?

Get that question right, and you’re well on your way to a transparent system that helps leaders make fast, informed decisions and put resources where they are needed most.

However, the correct decision is different depending on your multi-academy trust (MAT). Because of this, we brought together two MAT finance experts to discuss why they landed on either side of the centralisation question.

Making the case for centralised financial management

The Prince Albert Community Trust has seven schools (six primaries and one secondary, many of which are geographically close to one another). Matthew Douglas, its Director of Finance, advocates a centralised budgeting model. There are signs it’s working, too: the trust has successfully turned around the four schools who joined following an Ofsted “Inadequate” or “Requires Improvement” and all schools have now achieved either “Good” or “Outstanding” ratings.

Matthew believes centralised financial management has been instrumental in the trust’s success.

“We really lean into that kind of a budgeting model,” he said. “Everything we can manage centrally, we pretty much do, and that’s with the goal of relieving as many burdens from heads of school and teaching staff as possible.”

He added that most of the trust’s schools are geographically close together and that they wouldn’t want to provide an uneven educational experience for families. Therefore, they employ a GAG pooling model. He said, “We’re really big advocates of not having ‘rich schools’ and ‘poor schools’, so every child that enters our trust has an equal opportunity and an excellent education.”

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The benefits of centralisation

Here are the main features which Matthew says make a huge difference in the operation of The Prince Albert Community Trust.

1. Efficiency and economies of scale: Centralising functions such as HR, estates, ICT, and marketing allow the trust to achieve significant economies of scale. For example, by centralising supply staff management, the trust can negotiate better rates with agencies and ensure consistent quality across schools.

2. Resource allocation: GAG pooling and distributing according to need ensures that resources are distributed equitably across all schools. “Everyone is in it together”, Matthew explains. “We are one trust. Schools might not always get what they want, but they will get what they need.”

3. Specialised roles: The trust can budget for specialised roles, such as a fundraising leader, who can secure additional money for the entire MAT.

4. A focus on student success: By centralising administrative tasks, headteachers and teaching staff can concentrate on educating students. This lets them focus on educational outcomes and not burdensome administrative duties.

Why one MAT is (currently) sticking with decentralised financial management

Manor Hall Academy Trust has 16 very different special schools across five local authorities. These local authorities have varied approaches to funding.

According to Kate Staples, Chief Operating Officer, a one-size-fits-all approach would be impractical. Each school manages a budget, and the MAT takes a top slice to deliver centralised services.

“We want our schools to have the flexibility to manage themselves effectively. Each school has its own strengths, but some may need support in specific areas. We also promote collaboration between schools. For example, some of our business managers excel in HR but appreciate additional support in health and safety, while others are highly skilled in finance but benefit from our involvement in estate management”

Furthermore, pooling funding and allocating according to need is not entirely out of the question in the longer term (i.e., GAG pooling). “It’s not something we’ve written off; it’s something we’re constantly revisiting,” she said. “At the moment, though, our central team is partially centralised.”

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The benefits of decentralised financial operations

1. Autonomy and flexibility: Schools maintain control over their budgets, allowing them to allocate resources based on their unique needs. Kate explains this is particularly important in a trust with diverse schools, such as pupil referral units and schools for children with disabilities.

2. Tailored support: The central team provides support where needed, but schools with strong capabilities can operate more independently in certain areas.

3. Collaborative culture: Despite not formally adopting centralised financial management, Kate’s trust fosters a collaborative culture where schools support one another. For instance, when one school needed funding for their mobile unit, other headteachers brought together resources to assist. “We are a family, we are a trust, and we will help people out,” Kate said.

4. Centralised services: The trust still centralises certain services, such as health and safety and HR, ensuring consistency and quality across all schools. This hybrid approach allows for both autonomy and central support.

How technology helps with budgeting

Both trusts in this article use technology to streamline their budgeting processes.

IRIS Financial Planner is a tool that can easily handle both centralised and decentralised budgeting, making it an ideal solution for MATs regardless of their chosen approach.

Here are three ways that IRIS Financial Planner helps:

1. Real-time data: The tool provides real-time financial data, allowing MAT leaders to make informed decisions quickly. This is crucial for maintaining financial resilience in a rapidly changing educational landscape.

2. Integration: IRIS Financial Planner integrates with other systems, ensuring seamless data flow and accurate reporting. This reduces the administrative burden and improves efficiency.

3. Customisation: The tool can be customised to fit the unique needs of any trust and its schools.

View the discussion – watch our on-demand webinar now

The discussion around budget centralisation, of course, doesn’t stop there.

That’s why you can view our webinar, MAT budgeting: to centralise or not? on demand. We go in-depth on the topic with Matthew and Kate, and we answer the big budgeting questions being asked by MAT leaders.

Learn about IRIS Financial Planner or click here to view our webinar.