These guidance notes are from 2010 – but they confirm the content of the guidance provided by government regarding the handling of deficits and surpluses when a school transfers to an academy
If the school is forced to become an academy due to poor performance –
- and has a surplus – the surplus is transferred to the Sponsoring Academy Trust
- and has a deficit – the LA has to clear the deficit as it was run up under their management.
If the school chooses to become an academy –
- and has a surplus – the LA has to pay that surplus to the new Academy Trust once it is setup
- and has a deficit – the council is paid the deficit by the government, who then alters the new trusts funding agreement to recover the money. In summary the deficit is transferred to the new Academy Trust once it is set up.
For more information please read the source article –