Answer 1:  According to the governments own guide regarding management of Surpluses and deficits existing pre-transfer to an Academy, the answer is NO for Schools choosing to become an Academy rather than being forced to due to poor performance

The document says –

“4 Converter academies with a deficit balance on conversion

4.1 Deficit balances unlike surplus balances are not covered in the same way by primary legislation and regulations. The Department’s policy, however, is to treat deficits in a similar way, so the Department reimburses LAs and recovers the money back from the academy through abatement of General Annual Grant (GAG). The Department has to ensure the amount due is a true reflection of what is owed and will only pay once the amount is agreed by both parties. In the event of a disputed deficit balance, the AT may apply to the SoS for a review. The SoS will base her decision on the evidence provided by both parties.”

Abatement is a fancy word for decrease.

So as we interpret this the school will not have a deficit as an Academy but its Grant will be reduced in order for the Government to recover the deficit.  So if the school is not able to balance its budget at the moment and has a deficit, once they become an academy they will not have a deficit but they will have even less money that they currently do.  Also they will not have the LEA to help them or bail them out. So unless as part of the transfer plan there is also a plan to ensure the school can operate to its budget, it will find itself in a similar if not legally more difficult situation once it becomes an Academy.

Link to relevant document – school_balances_on_conversion_submission

Answer 2: We have found an article from the BBC which suggested that when a School was forced to become an Academy due to poor performance then the relevant LEA was responsible to clearing the deficit.

The current proposal is a voluntary conversion to Academy and as such not covered by this.

Also in the article the point is made that even in these case Birmingham LEA has refused to clear these deficit for Schools taken over by Academy Groups.

BBC Article Sept 2015

The new Guidance states:

“6 Sponsored academies with a deficit on conversion

6.1 Where a school with a deficit is to join the AT of an external sponsor and open as a sponsored academy, the deficit remains with the LA, to be funded from its core budget. School deficits are not an allowable charge on the LA’s schools budget (funded by its allocation of Dedicated Schools Grant); however, if the schools forum has agreed to delegate a contingency provision, then the deficit may be funded from that contingency, depending on the criteria agreed for its use.”

This suggests that if a school is forced to become an Academy by being taken over by an external sponsor due to poor performance then the Deficit remains with the LEA. The proposal for the Kings Heath Schools does not follow this pattern and as such they are not covered by this guidance.

Link to relevant document – school_balances_on_conversion_submission


3 thoughts on “When an LEA school becomes an academy, all its debts and deficits get cleared? – False

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