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Budget planning in schools is like navigating a ship through unpredictable seas, awash with rising costs, fluctuating pupil numbers and financial vulnerability. All schools must balance resources carefully to deliver financial stability and quality education – a growing challenge for England’s state-funded multi-academy trusts (MATs).

Academy trusts vary in size and location, collectively educating of pupils in England. Their financial situation can therefore directly affect the schooling of millions of children. Our recently published examined budget forecasts for 267 MATs with more than 3,000 schools up to 2026/27. It revealed that one in three trusts may struggle financially due to funding uncertainty and rising costs over the next three years (IMP Software, 2024). This blog post highlights three key themes that stood out: the impact of soaring costs on staffing, how pupil numbers shape budget planning, and what this all means for children’s learning.

‘One in three trusts may struggle financially due to funding uncertainty and rising costs over the next three years.’

Rising costs and fewer teachers

Education budgets worldwide have faced inflationary pressures, which affect everything from lesson resources to buildings maintenance and staffing costs (UNESCO, 2023).

In England, MATs anticipate teacher hiring costs will rise by nearly 17 per cent in 2026/27, from under £60,000 to over £70,000 (outside London), with national insurance and pension contributions factored in.

Figure 1: Average teacher cost, including on-costs

Cost savings are achievable perhaps through cheaper energy tariffs, or bulk-buying software licences, but many MATs plan staff cuts, which suggests other savings options have already been exhausted. MATs with mostly primary schools expect nearly 5 per cent fewer teachers and 6 per cent fewer teaching assistants (TAs) by 2026/27. Secondary-majority trusts project teacher numbers will drop by 1 per cent and TA numbers by nearly 2 per cent. These reductions may seem small, but in a 10-school MAT, they could mean the loss of six teachers and six TAs in a trust with mostly primary schools, or six teachers and three TAs in secondary-majority trusts. Bigger class sizes could follow; and with fewer staff, schools will need to think carefully about how they support children with additional needs.

Pupil numbers and budget planning

The report underscores just how much a trust’s overall financial outlook is influenced by pupil numbers. MATs with mostly primary schools expect pupil numbers to drop almost 2 per cent by 2026/27. Trusts may face tough choices to offset the resulting funding shortfalls, potentially putting the classroom refurbishment or annual school trip on hold. As David Clayton, chief executive at Endeavour Learning Trust, has pointed out:

‘It’s difficult for a small primary school with declining pupil numbers to reduce costs without impacting on children’s learning or pastoral support. One way to mitigate this is to share financial and teaching resources across a trust, which can help ensure children have equity in education’ (personal communication, 14 February 2025).

Notably, trusts with mostly secondary schools anticipate a 3 per cent rise in pupil numbers over the next three years – a more optimistic outlook than official forecasts. A financial safety net will be crucial if numbers fall short.

A grim financial outlook

A major concern is the 37 per cent of trusts expecting to hold less than 5 per cent of reserves as a percentage of income by 2026/27 – a potential sign of financial vulnerability according to the Education and Skills Funding Agency (ESFA), which oversees education and skills funding in England (DfE & ESFA, 2019). Primary majority trusts are particularly vulnerable, as 40 per cent anticipate falling below the 5 per cent reserves level over the next few years. This contrasts with fewer than 15 per cent of secondary-dominant trusts that expect to drop into the reserves danger zone.

Figure 2: Revenue reserves as a percentage of income

Falling reserves could dampen future investment in critical areas such as teacher training and curriculum development. MATs repeatedly relying on reserves to balance budgets could struggle to maintain the quality of education, retain teachers or adapt to future budgetary constraints. As Stephen Morales, chief executive at the UK’s Institute of School Business Leadership (ISBL), says,

‘Trusts need assurance that the funding they receive will fully cover the cost of delivering a quality education’ (personal communication, February 14, 2025).

Global perspective

The challenges facing MAT funding mirror global concerns about sustainable education financing and its impact on teaching quality and student outcomes. Key questions on how to best balance budgets, stabilise income and prevent fluctuating pupil numbers from harming education quality need answers.

References

Department for Education & Education and Skills Funding Agency [DfE & ESFA]. (2019). Academy trust financial management good practice guides.

IMP Software. (2024). MAT finance sector insight report.

UNESCO. (2023). Education finance watch 2023.