Many schools are now considering whether to convert into a self-governing academy school. The FJG Academies Team, headed up by Senior Partner Tony Fisher, can offer advice on all aspects of the conversion and provide ongoing support. Our range of expertise and experience includes the following areas:
The FJG Academies Portal contains tailored and evolving content, collated from a variety of sources. This information will help you and your school move forward through the conversion process.
If you are a school considering academy status, a school already on the road to conversion, a converted academy, a sponsored academy, or any other party with an interest in Academies, then please contact 01245 890110 or email [email protected].
The Academies Act passed in July 2010 enables all schools to become academies. Schools which are judged by Ofsted to be outstanding or good with outstanding features are automatically eligible to apply for academy status. Other schools are able to apply if they are in partnership with an outstanding or good (with outstanding features) school.
There are, however, issues that apply to specific types of schools converting to academy status. The aim of this guide is to provide a brief overview of these issues; as they apply to four different types of schools:
VA schools are maintained by the local authority but are supported by a charitable foundation; which is usually religious in character. The governing body of a VA school employs all the staff and acts as the school’s admission authority. Land and buildings are normally owned by the foundation; although in many cases the playing fields are owned by the local authority.
The foundation appoints the majority of Governors. It is also likely to have contributed financially to the costs of establishing the school; and any capital projects.
Until recently foundations were reluctant to promote and support the conversion of VA schools into academies. They were concerned that the Academies Act did not contain sufficient assurances to protect the religious ethos and assets of VA schools.
The Department for Education has however recently published legal documents which have been approved by the National Society and Catholic Education Service. These documents provided the assurances sought by foundations. Which means there are likely to be a significant number of VA schools acquiring academy freedoms; in the lifetime of this Parliament. Either as a single entity or as part of a chain or federation.
However, there are still some specific issues which the governing bodies of VA schools need to take into account when considering conversion to academy status.
The Academies Act 2010 requires a VA schools to obtain the consent of its foundation before it can apply to the Department for Education to become an academy.
Governance. A maintained school has only one level of governance – the governing body. However, an academy has two levels of governance – the members of the academy trust itself and governors of the academy trust; the body which actually runs the academy.
The foundation of a VA school is likely to have a role to play in both levels of governance. The extent of the involvement the foundation has in the academy trust is likely to match the level of involvement it had when the school was local authority maintained. The precise details for each individual will need to be discussed between the foundation and the school; but in general, it is expected that the foundation will appoint:
A majority of the members and A majority of the governors of the academy trust
Both the governing document of the academy trust and the funding agreement have been tailored by the Department for Education, the National Society, and the Catholic Education Service; to ensure that the religious ethos of a VA school is protected.
In addition, provisions in the School Standards and Framework Act 1998 which affect voluntary schools in relation to reserved teachers, the religious beliefs of staff, the teaching of religious education, and the requirement to provide collective acts of worship, have been carried over in the funding agreement.
The freehold of land held by the foundation of a VA school is not expected to transfer to the academy trust on the school’s conversion. Instead, as with community schools, a 125-year lease will be entered into by the foundation, and the academy trust and the freehold ownership of the land will remain with the foundation.
The recent approval by the National Society and Catholic Education Service of the legal documents that protect the religious ethos and assets of VA schools, will lead to a significant number of VA schools converting to academy status in the next few years. However, governing bodies of VA schools considering conversion should open a dialogue with their foundations as early in the process as possible to gain the necessary consent and to identify and address potential problems prior to application.
VC schools are similar to VA schools but differ in a number of important respects.
In a VC school, it is the local authority, not the governing body, which employs the staff working at the school and controls the school’s admissions policy. The foundation supporting a VC school manages the school’s land and buildings in the same way that the foundation of a VA school does, but it will normally only appoint a minority of governors and is unlikely to have supported the school financially.
The issues facing a VC school considering conversion are the same as a VA school with the exception of the appointment of governors to the academy trust.
Whereas, the foundation of VA school will appoint the majority of the members and governors of the academy trust, a VC will only appoint a minority of the members and governors.
Trust schools were enabled by the Education and Inspections Act 2006 and are maintained foundation schools with a charitable company (the trust) attached.
The governing body of the school invites individuals and organisations to form the trust; which supports the particular aim chosen by the governing body of the school.
The land and buildings are normally owned by the trust, although in many cases the playing fields are owned by the local authority. The trust does not get involved in the running of the school, which is run by the governing body, but the trust appoints either a minority or a majority of the governing body.
Trust schools are therefore able to formalise links and partnerships with individuals and organisations while still remaining within the local authority maintained sector.
Conversion is a logical next step for those trust schools which want the greater freedoms that academy status confers. However, there are some specific issues which the governing bodies of trust schools need to take into account when considering conversion to academy status.
The Academies Act 2010 requires trust schools to obtain the consent of the trust as the owner of the school’s land and assets before the school can apply to the Department for Education to become an academy. If the trust refuses to give its consent, the school can go through a consultation process to withdraw from the trust and revert to being a foundation school and then apply to become an academy. Usually, it will be possible to run both the consultation on withdrawing from the trust and converting to academy status simultaneously.
Although trust schools already have a charitable company which is very similar to an academy trust, it is not possible to convert this trust into the academy trust.
In the case of trusts which support just one school, the school can go through the conversion process to become an academy with their trust attached. Once the school becomes an academy, the trust would no longer be able to support the school. This is because trusts set up under the trust school legislation can only support maintained schools and not academies. The trustees of the trust would therefore be expected to wind-up the trust, leaving the school as an academy.
In the case of shared trusts which serve several schools, the above would still apply with the exception that the trust would not be wound up but would continue to support any remaining maintained schools. It could not however continue to support any of the schools within the trust that become academies.
Trust schools will need to consider how to deal with their existing trust partners (i.e. those individuals and organisations who are currently involved in the trust). Some trust partners may wish to be involved in the new academy (either as members or governors), while others may not. It is important to consult all existing partners to explain the new roles and responsibilities, that will result from an academy trust.
On conversion to academy status, the secretary of state makes an order transferring the land and buildings of the school held on trust by the trust to the academy trust. Schools that have not had their land transferred to the trust, negotiating with the local authority may cause a delay; but will not prevent the conversion.
Many trust schools have registered an interest in becoming academies and their current status is not a barrier. However, governing bodies of trust schools considering conversion should open a dialogue with their trusts as early in the process as possible to gain the necessary consent and to identify and address potential problems prior to application.
A PFI school is subject to a private finance initiative contract with a private-sector contractor.
In a PFI school, the contractor charges a monthly fee and has responsibility for constructing new school premises; and/or refurbishing existing ones. The contractor also provides a range of facilities management services including cleaning, catering, and maintenance.
A PFI contract usually lasts 25 years. At the end of the contract, the buildings built by the contractor are transferred back to the local authority, trustees, or governing body; depending on the type of school.
PFI schools have a governing body agreement with the local authority. This allocates certain rights and responsibilities to the governing body. The governing body agreement ensures that the governing body of the school is bound into the PFI for the full 25-year term. Because of this, conversion to academy status does not offer PFI schools an opportunity to extricate themselves from existing PFI contracts.
The Department for Education has stated it has no intention of buying out schools from PFI deals; it has also clearly stated that PFI contracts will not be barriers for schools wishing to convert to academy status. As part of the conversion process, the DfE’s proposal is that the PFI school will enter into a new school agreement with the local authority. Under this agreement, the academy will commit to meet its PFI obligations; and will also continue to receive the services it is entitled to under the PFI. The Department for Education will offer additional funding if the school has to carry out further due diligence.
The funding agreement for the school will allocate financial risk to the school where it fails to comply with its PFI obligations; and also where this results in a cost to the local authority. The DfE recognises that local authorities may be concerned about the increased risk of contracting with an independent academy trust. It, therefore, offers an indemnity to the local authority; which guarantees that its liabilities are not increased by the decision of the PFI school to become an academy. The Department for Education will also consider annual grant funding requests from an academy; where it can show that its continued involvement in the PFI scheme has led to increased costs.
It is clear that financial risk of a PFI school, which previously sat with the local authority, is borne to a much greater extent by The Department for Education. The business case underpinning academy conversion applications from PFI schools is therefore likely to be scrutinised much more carefully; compared to other types of school.
The process of converting into an academy will take longer for a PFI school than for other types of schools; due to the potential complexities. However, assuming the additional complexities are addressed and the financial consequences of ongoing PFI commitments are taken into account, there is no reason in principle that prevents a PFI school from converting to an academy.
In September 2011 the first Free schools will open in England. Thirteen free schools have had their funding agreements signed by the Secretary of State for Education; and a further seventeen have had their business cases approved and are in the pre-opening phase.
Inspired by charter schools in the US and the Free school movement in Sweden, the Coalition Government launched their Free schools programme soon after it came to power in June 2010.
Free schools are a type of academy and operate independently of Local Authority control. They are funded in the same way as other academies; by the state on a per pupil basis. The key difference between a Free School and a Converter Academy is that the former is a new school, which is set up in response to parental demand.
Proposals to set up Free schools have been received from a wide range of groups: charities, universities, businesses (on a not-for-profit basis), education groups, independent schools, faith groups, teachers, and parents.
Click here to see locations of the first free schools to have signed funding agreements and those that are in the pre-opening phase.
The Government has recently outlined plans to raise standards and improve the quality of teaching and school leadership; through school-to-school support, and peer-to-peer learning.
A key part of these plans will be a nationwide network of teaching schools.
They will be outstanding schools that take the lead in supporting and assuring initial teacher training; as well as professional and leadership development for teachers and leaders in their area.
It is envisaged that teaching schools will do three things:
Teaching school designation will be open to all schools in England (including primary, secondary, special, independent and recent academy converters) that have or show:
It is likely that there will be about 500 teaching schools by 2015.
In the event of too many applications, then schools will be selected on a fair and transparent process which is likely to take account the :
as well as other factors, such as the:
There are currently 28 teaching schools (including primary, secondary and special schools) in 3 pilot areas – London, Greater Manchester and the Black Country. A further 23 are scheduled to be designated as teaching schools in the near future.
There are also over 240 training schools in operation across England which have professional development and ITT in their local areas; and provide high quality, high volume school-led initial teacher training. A number of leadership partner schools have also been designated as part of the High Performing Specialist Schools programme.
Small groups of schools will be able to apply for teaching school designation together; as long as each individual school meets the criteria. This may include cross-phase teaching schools (which may include an outstanding special school). However, the funding for joint applications will be the same as for a single teaching school. So the funding will need to be shared according to the roles taken by each school in the partnership.
The level of funding for teaching schools has yet to be confirmed but they will receive funding for their core role and they will also be paid to deliver activity such as initial teacher training, CPD, middle leadership development and specific school-to-school support.
It is expected teaching schools will gradually develop more of their own income as their local partnerships develop. Teaching schools will primarily be accountable to their peers; other schools will choose whether or not to take advantage of the provision, and support that they offer.
Teaching schools and universities The Department for Education expects all teaching schools will have strong links with at least one university partner to support their work. The Government White Paper ‘The Importance of Teaching’ draws an analogy with teaching hospitals and it is anticipated that teaching schools and universities will work together to deliver accredited ITT Masters-level work and practice-based research, for instance through secondments and formal and informal sharing of staff.
You can find further detailed information about teaching schools on the Department for Education website at www.education.gov.uk.
The governing body of an academy trust is ultimately responsible for the governance of an academy; as well as safeguarding its assets, and ensuring that it is run in the most efficient and effective manner.
It is extremely important that all trustees are fully aware of their responsibilities. They must also understand the steps they need to take to ensure that the academy trust is properly governed. This paper outlines the key areas that trustees should focus on to ensure that their academy follows best governance practice. More detailed information can be found on the Department for Education website by following this link: www.education.gov.uk
The governing body (board) should take collective responsibility for all decisions. The governing body should also be involved in setting the strategic direction of the academy.
It is important therefore that there is the right number of trustees on the board. If there are too many trustees, it can impact on the board’s ability to make effective and timely decisions; too few and the board may lack the breadth of skills and experience required.
We recommend that you use a simple matrix to plot the existing range of skills and experience on the board so you can identify any significant gaps.
Every trustee needs to be properly inducted, trained, and developed. Before new trustees join they should receive a full information pack which will include as a minimum:
It is very important that it is clearly explained to every trustee what their role, responsibilities, and legal obligations are; as well as the amount of time and commitment they will be expected to give to the board.
A number of trustees will have specific functions which need to be clearly documented and understood. Where tasks are delegated there must be a clear process for monitoring the outcomes.
An effective board understands the interests of all stakeholders and gives them the opportunity to voice their views. There may well be conflicting demands between stakeholders; it is important to consider how these can be managed to the overall benefit of the academy. For example:
The academy’s objectives should be translated into a clear and understandable vision. Specific shorter-term objectives should be identified that will deliver the vision in practical terms. And there must be a process in place which allows the governing body to measure progress towards meeting these objectives.
Public benefit is an extremely important consideration and it is critical that trustees understand what is required and that public benefit activities are closely aligned with the objectives set out in the academy’s funding agreement.
Formal written policies need to be place covering key aspects of the academy’s operations. Areas to consider should include internal financial procedures, financial reporting, accounting, reserves, investment; staffing and HR matters; SEN; health and safety; complaints and grievance procedures (internal and external); data protection; equal opportunities, environmental matters; communication and confidentiality; disaster recovery; risk management; conflicts of interest; intellectual property.
Trustees have a duty to ensure that the academy always acts within the objectives laid down in its governing document and to consider the interests of the academy as opposed to any personal benefit. It can be easy to drift away from defined objectives where activities develop over time so the governing document should be regularly revisited to ensure current activities fall within the defined objectives.
Each trustee must understand the consequences of and the extent of their liabilities in law for wrongful acts. A register of interests must be regularly updated and all trustees should be asked for actual/potential interests to be declared at the start of each board meeting.
The overriding principle is that trustees act in a voluntary and therefore unpaid capacity. Trustees may only be paid for serving as a trustee where this is clearly in the interests of the academy trust and provides a significant and clear advantage over all other options. Payments made to trustees for services rendered in a capacity other than as a trustee must be in accordance with Charity Commission guidance; and provided there is no express exclusion of such payments in the trust’s governing document. There must also be a written agreement covering the contract terms.
Consider how the long and short term outcomes of planned actions might impact on the reputation of the academy both internally amongst its staff as well as externally. This is particularly important to consider when working in partnership with outside bodies where there may be influences which are outside the academy’s direct control.
An effective board communicates regularly and openly with all stakeholders. The short and long term objectives (as well as progress towards meeting them) should be clearly articulated. There should also be opportunity for all stakeholders to provide their feedback.
The annual trustee report should be used to explain the impact and outcomes of the year’s work; linking this to targets set at the start of the year and future plans.
The board must be fully involved in setting and approving plans and financial budgets and targets. All trustees will require regular reports detailing the current financial position of the academy and its future sustainability. As a minimum the trustee board must set and understand the policies in place for managing the academy trust’s investments, reserves and borrowing; even where these tasks are delegated on a day-to-day basis to a subcommittee or to third parties, such as investment fund managers.
There must be a clear understanding of the academy trust’s attitude to and acceptance of risk. Risk management should form an integral part of strategic planning. Risks must be assessed in light of the academy’s ability to absorb and manage them. This may be affected by internal circumstances such as staff skills and available financial resources; or even by external factors such as the impact of changing government policy on the funding environment. ‘Risk mapping’ should be used to analyse specific risks in terms of likely occurrence and severity of impact and a risk register maintained; which needs to be regularly reviewed in the light of changing circumstances and influences.
Good governance practice will provide several significant benefits.
The next wave of schools converting into academies will include many which choose to be part of a chain. This is because there are likely to be significantly more primary schools and Church schools opting for academy status in the next couple of years.
There are three options for schools considering conversion as part of a chain.
The Government is keen to encourage chains because they regard this collaboration between local schools as the key factor in a sustained improvement in school performance – particularly for ‘weaker’ schools in the chain.
Each school in a chain (irrespective of whether they are entering a Multi-Academy Trust, an Umbrella Trust or a Collaborative Partnership), will be entitled to a grant of £25,000 from the Department for Education to help with conversion costs. The grants can be pooled to support the whole chain, although they don’t have to be.
Model documents for schools converting as single academies and for schools converting as a multi-academy trust can be accessed by clicking here
Maintained school staff will be members of either the Teachers Pension Scheme (TPS) or the Local Government Pension Scheme (LGPS).
The Local Authority is the administrator in the case of the LGPS and collects and pays employer and employee contributions for both schemes. The Local Authority also submits an annual return of service for the TPS. These are ’employer’ responsibilities.
For the Teachers Pension Scheme conversion to an academy is relatively straightforward. Management decisions associated with the scheme are taken by Parliament, and therefore are the same whether it is the Local Authority, or the Academy employing the teacher. The difference is that an Academy will be required to undertake the employer responsibilities for making payments; as well as data transfers as required by the scheme.
Schools becoming Academies will need to register with LGPS to be a scheduled body employer (not an admitted body) and take on the responsibilities for payments, year-end certification, and data transfers for themselves. Where maintained schools apply to convert to academies existing staff who are already members of the LGPS by virtue of the Administration Regulations would not be affected by the conversion.
Their membership of the LGPS would continue unaffected. After conversion, new non-teaching staff will be eligible to join the LGPS and will be automatically enrolled in the scheme when employed, as long as their contract of employment is for 3 months or more but will have the option to opt out of the scheme if he or she gives notice within three months. It is also open to an Academy to pay contributions into private pension schemes, but this normally happens only if an Academy was previously an independent school, and some staff wish to remain in the private scheme. The Academy cannot do this as an alternative to the LGPS and all the non-teaching staff have the right of entry to the LGPS.
For the Teachers Pension Scheme, this is restricted to ensuring that payments and other administrative functions are made as required. The scheme can levy interest on late payments. An Academy is required to understand and meet its responsibilities, in a timely manner.
But for the Local Government Pension Scheme (for non-teaching staff), the academy becomes a scheduled employing body of the LGPS whereupon the administering authority should be asked for a calculation of the employer contribution rate for the Academy. The actuarial assessment will be done by the LGPS administering authority’s fund actuary but the school may wish to have their own assessment performed by an independent actuary. The employer contribution rate will be calculated on the basis of the academy’s staff profile and relates only to the Academy, whereas nearly all maintained schools in Local Authority pay the same pooled rate. This means the rate can be higher than the rate which applied to the school when it was maintained by the Local Authority. There is likely to be a charge for the actuarial calculation.
Unlike the TPS, the LGPS is a funded scheme and can be in surplus or deficit according to investment performance. Most pension funds are currently managing a deficit, and the deficit in respect of pensionable service prior to conversion transfers from the Local Authority to the Academy through the transfer agreement signed prior to conversion. The actuarial calculation of the employer contribution rate will take into account the amount needed to pay off any past service deficit and meet future accruals over a specified period, which is normally taken to be 20 years for Academies, although it is for the actuary to take a view on this.
Whatever arrangements apply currently for remitting contributions as a maintained school, the Academy will itself be responsible for remitting employer and employee contributions to the administering authority, although a payroll provider may do this on its behalf. If there is a deficit in the relevant pension fund, the Charities Statement of Recommended Practice (SORP) requires that the Academy’s statutory accounts show the deficit as a liability in the balance sheet. The total deficit can be substantial. However, the Charity Commission has advised that this liability, even if it exceeds the academy’s assets, does not mean that the academy is trading while insolvent because the deficit is being reduced by the contributions made, using the grant payable to the academy.
When a school is converting, it is, therefore, vital to obtain details of the administering authority contacts as quickly as possible (usually from the HR/pay department of the Local Authority), to ensure that staffing information required by the administering authority’s actuary can be supplied by the school or the maintaining authority, and to ensure that the implications for the Academy have been fully discussed with the administering authority. The Department for Communities and Local Government (CLG) are currently preparing further advice and this will be provided as soon as it becomes available.
We would be delighted to discuss the legal aspects of your particular pensions situation in more detail. To arrange for an informal, no-obligation discussion please call us on 01245 890110. Please note that we are not authorised to give financial advice on the performance of any particular scheme, and we will only advise on the legal responsibilities you will have in relation to the School’s pension schemes and the practical implications of the transfer.
The aim of this page is to provide brief answers to the questions most commonly asked by heads and governors considering whether their school should become an academy.
It is only a guide and is not a substitute for the professional advice a school should take before registering their interest with the Department for Education.
Further advice is available from the Department for Education website.
There are 3 key steps as outlined in the chart below:
The process – from the school first registering an interest with the DfE to opening as an academy – will normally take about 3 months. However, the process can take longer if there are complex property and employment issues to be resolved.
All schools judged by Ofsted to be outstanding or to be good with outstanding features are automatically eligible to become academies.
All other schools can become academies if they work in partnership with a school that is automatically eligible. Outstanding schools are expected to enter into some form of collaboration with at least one other school to help tackle that school’s underperformance. Funding agreements for new academies will include a requirement to promote “community cohesion”.
The governing body determines whether the school should apply for academy status and there is a statutory requirement upon them to consult with “appropriate persons” which might include parents, staff, pupils, and the local authority. If your school is a church school, you must gain the consent of the school’s foundation.
The governing body will be dissolved when the school becomes an academy and a new governing body will be established by the academy trust. The new governing body will have to include at least two parent governors. Members of staff can make up no more than a third of the governing body; there can also be no more than one governor from the local authority.
Yes. All existing staff will transfer under TUPE regulations.
Yes. The governing body can set its own pay and conditions but staff who transfer do so with their existing terms and conditions.
Funding will continue on per pupil basis. New academies will be able to claim a share of the money that is held centrally by the local authority. The amount each academy receives from the local authority ‘pot’ can vary considerably from one local authority to another.
Academies will be able to apply for capital funding from the government as before.
Academies will be able to reclaim VAT on all (non-business) costs related to providing free education. This will put academies on the same footing as maintained schools whose VAT is recovered by the local authority. Schools are eligible for a grant of £25,000 to help with conversion costs.
The local authority has no power to intervene in the process. However, the school can still buy services – eg. energy, banking, and insurance – from the local authority once it becomes an academy; but will be under no obligation to do so.
An academy will be required to produce accounts that comply with the Companies Act; as well as comply with charity and company law. The accounts will normally be for an accounting period ending August 31st. The Academies Financial Handbook contains a sample set of accounts.
Any surplus or deficit has to be agreed before the school becomes an academy.
Academies are not allowed to run a deficit. Any academy that opens with a transferred deficit will need to have a plan agreed with the Young People’s Learning Agency (YPLA) to repay the deficit from its annual grant.
If an academy develops a deficit after opening it will be required to agree a restructuring plan with the YPLA.
No. Once a school has become an academy, it is not possible to go back to maintained / voluntary status.
The major responsibilities will include: