According to the Local Government Association (LGA), changes to how academies are funded should see some councils receiving compensation for top-slicing losses.
Since the Academies Act 2010, local education authorities (LEA) have had their funding cut by £413m to pay for central functions, such as financial administration and admissions. But the academy schools pay for such functions themselves.
And all the LEAs in England have had their funding top-sliced, even if they have no academy schools in their area, which the LGA says is wrong. Consequently, the funding method has been changed, so that authorities with no or few academies will get a refund.
However, if a council would have been worse off under the new method, no adjustment will be made, which means that no authority will be out of pocket.
According to the Education Department, academies should receive the equivalent level of per-pupil funding that they would receive from the local authority as a maintained school. Academies also receive funding to meet their additional responsibilities that are no longer provided for them by the local authority.
The department makes it clear that becoming an academy should not bring about a financial advantage or disadvantage to a school. However, academies have greater freedom over how they use their budgets, alongside the other freedoms that they enjoy.
Councillor David Simmonds, Chairman of the LGA’s Children and Young People Board, said: “School choice is something councils support but it has to come hand-in-hand with fair funding.
“The Government’s decision to repay around £58 million represents a welcome change of approach. There are still questions around the funding methodology for 2013/14 and beyond. Flawed Whitehall calculations could see the local government store cupboard being raided once more for hundreds of millions of pounds.”
As an accountant, Gill Freeman specialises within academy finances and charity tax.