What is GAG pooling?
GAG pooling is a flexibility given to Multi-Academy Trusts to depart from the Education and Skills Funding Agency’s (ESFA) formulaic allocation of General Annual Grant. A proportion of GAG is amalgamated into a central fund, which is then reallocated to any of the constituent academies as required. PFI funding cannot be pooled. Reserves can be pooled, but this can be unpopular.
The Academies Financial Handbook (Sections 3.7.2 and 3.7.3) provides formal guidance, including the requirement for an appeals mechanism. Pooling is not permitted where a trust has academies funded on estimated pupil numbers (3.11).
How many trusts are pooling GAG?
Evidence is varied. The DfE’s Academy Trust Survey (2017) (Table 12) showed 18% of 267 MATs redistributed GAG and a further 31% planned to do so in the future. A Schools Week investigation in 2017 indicated 5 out of 52 trusts (9.6%) responding were pooling or considering it.
Successful GAG pooling can achieve a strategic, needs-led approach to resourcing, promoting the ethos of one trust looking after all pupils’ interests. It can give confidence to constituent academies that they will receive help in the future if needed, strengthening the sense of collaboration.
The practical benefits are the ability to:
- resolve inequalities during the transition to the National Funding Formula, especially if you cover multiple LAs with very different local formulae;
- target funding more effectively, e.g. driving rapid improvement in individual academies or improving facilities;
- have greater flexibility to respond to specific needs in individual academies, compared to top-slicing of GAG for specific services delivered to all;
- support recovery plans for academies in financial difficulty, strengthening the trust’s overall financial sustainability in the medium term.
The low take-up of GAG pooling reflects the cultural challenges that can arise, particularly in asking academies to accept joint responsibility for all pupils across the trust rather than just their own. In the Kreston Benchmarking Report 2019, 46% of trusts surveyed said internal political challenges had presented obstacles.
The nature of the academies in your trust is a major factor in whether pooling will work. It is undoubtedly easier where failing schools have joined the trust and have to accept the trust’s terms and conditions. In contrast, high-performing schools are likely to resist the loss of autonomy and control over their finances.
Other common drawbacks are:
- It is much harder to achieve if all academies are under financial pressure;
- There can be resentment where money is moved out of one local area into another;
- It weakens accountability in individual academies, enabling those with poor leadership to blame the removal of resources for any problems or to be less assiduous about budgetary control if they know a contingency fund is available;
- GAG pooling undermines the National Funding Formula and will prevent the ‘Hard NFF’ from ever being achieved;
- It can cause resentment within the Trust, e.g. some may feel penalised for being efficient, or be critical of an academy which receives extra funding but fails to control its budget or improve standards in the expected timescale;
- It requires everyone to be satisfied that all academies are working efficiently;
- It can cause cash flow problems at individual academies and complexity at Trust level;
- Financial benchmarking is problematic, as DfE data contain original funding levels.
If you are considering growth, be aware that GAG pooling may be perceived as a barrier to schools that are considering joining the trust. This usually manifests itself as fear of losing their hard-earned reserves and/or some of their future funding.
More academies are being re-brokered than ever before (255, i.e. 3.3% in 2017/18); GAG pooling adds even more complexity on both sides of the transaction.
What it needs to be successful:
The most important features of successful GAG pooling are openness and transparency, achieved through a clear policy agreed with your academies, including the required appeal mechanism. The policy should state the rationale and purpose for operating pooling. There should be clear success measures, regularly monitored in order to inform an annual review of the policy.
Underlying this is the need for all academies to acknowledge that the trust is the legal entity and owner of all the funds. It is vital that constituent academies see the value in supporting each other for the good of pupils across the whole trust. You should consider the introduction of pooling as a change management process.
In practical terms, it is essential that you have an objective set of criteria for collecting and re-distributing the pooled funding, which everyone can understand and agree is fair.
Want more details?
On Thursday 27 June at 4pm, I’m delivering a webinar on the benefits of GAG pooling and how to implement it successfully, with an opportunity for questions. Register to attend >