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This page outlines how maintained schools converting to academy status will be funded. It also sets out the principles of academies' funding and how it is calculated.
The Ready Reckoner will enable schools considering conversion to academy status to calculate the level of funding they should receive as an academy, and allow them to compare this with the funding they currently receive.
Academy funding is based on the principle of equivalence. Academies should receive equivalent level of per-pupil funding as they would receive from the local authority (LA) 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 Government is 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.
Unlike maintained schools that are funded on the traditional financial year basis (April to March), academies are funded from September to August to reflect the academic year.
The funding for academies comes primarily in the form of a grant, known as the General Annual Grant (GAG), paid by the Education Funding Agency (EFA).
The EFA will issue formal notification of grant funding for each school in the month prior to the date of conversion. This note explains how the grant will be calculated.
The GAG is made up of different elements;
Important note: LACSEG is not a uniform figure across the country and will vary between local authorities to reflect the amount the local authority holds back to pay for central services. This element of the grant is calculated by the EFA using a formula based on an academy's pupil numbers and the amount that the relevant local authority spends on the services. It is not based on the actual costs of the services supplied to the individual school.
The relevant services and costs within LACSEG include:
Services and costs funded from a local authority's schools budget
Services and costs funded from other local authority sources
Academies need to consider how they will obtain these services using the additional funding they receive. They are free to buy back the services from a local authority or find them elsewhere. Depending on which local authority the academy is in, it might be the case that the school is already responsible for some services, and already receive money rather than services from their local authority.
The technical note on LACSEG provides further information about the way in which LACSEG is calculated for all schools seeking to become academies, including special schools.
The following items do not become the responsibility of the academy and continue to rest with the local authority. These are:
The Finance Bill 2011, which received Royal Assent in July 2011, made provision for a VAT refund scheme for academies. Under the scheme, academies’ non-business VAT costs are reimbursed by HMRC through a refund scheme similar to the scheme that applies to local authority maintained schools.
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