Lord Storey – 2015 Parliamentary Question to the Department for Education

The below Parliamentary question was asked by Lord Storey on 2015-12-08.

To ask Her Majesty’s Government what steps an academy school is legally required to take if it has a budget deficit.

Lord Nash

An academy trust is required by its funding agreement with the Secretary of State to balance its budget from each academy financial year to the next. Where the board of trustees of an academy is formally proposing to set a deficit budget for the current financial year, which it is unable to address after unspent funds from previous years are taken into account, it must notify the Education Funding Agency (EFA) within 14 days.

The EFA may issue a trust with a Financial Notice to Improve (FNtI) in cases of a deficit or projected deficit, setting out the actions it requires the trust to take. The trust must comply with all the terms of the FNtI which would include a requirement to implement a recovery plan to secure financial stability.