The chief executive of a Yorkshire academy chain that has been hit with a financial notice to improve as result of “historic failures” of governance and a failure to balance its budget has described it as “a short-term hiccup”.
The notice, which was issued by the Education and Skills Funding Agency (EFSA) yesterday, means that many of the Rodillian multi-academy trust’s spending powers have now been suspended, and decisions have to be run past officials.
Last year it emerged the Leeds-based trust was being investigated by the ESFA after it found a number of “significant failings and weaknesses”, including paying almost £8,000 for the CEO, Andy Goulty, to stay in a four-star hotel for 78 nights.
Despite acknowledging that that trustees have taken “positive action” following an initial governance review last March, the notice said some of those issues remain “unresolved”.
And subsequent reports by the ESFA, as well as the trust’s financial statements, reveal “a number of weaknesses in accounting practices and internal control systems”, as well as a “failure to balance its budget”.
However, Mr Goulty told The Yorkshire Post that despite reporting a deficit of £1.5m last year, the trust would be back in surplus by the end of August 2019.
He said: “The notice is simply about the deficit position. The breaches are things we talked about nearly a year ago. The letter adheres to the fact we’ve made great progress in sorting this out.
“We have been asked to provide an action plan to move things forward. We met with EFSA officials on Thursday to go through the fine detail of that and we expect to be back in surplus by the end of the next academic year.
“We do see it as a short-term hiccup and the viability of the trust is not in any doubt.”
Mr Goulty blamed the debt on being asked to take on two financially-stricken schools.
He said: “£1m of the debt comes from Featherstone Academy, the first academy we took on in 2014 after it was re-brokered by E-Act. We were put under a lot of pressure to take that as our first sponsored academy. We were offered a lot of support, which has never really materialised, and we have struggled to make that one pay. Even though the school has gone from special measures to good with outstanding features, pupil numbers haven’t significantly risen. Making it pay with 300 kids is very difficult.”
Mr Goulty said a plan was in place to make it break even from next year and then go into surplus.
“There’s a positive position going forward and there are no plans to try and rebroker it,” he said.
As well as a “contingency” of £300,000, Mr Goulty said the remaining debt was due to taking on Brayton Academy in 2016, which was a school in Selby that was earmarked for closure by North Yorkshire County Council.
He said: “We were asked to take that on as part of a move to create a new hub of schools further north. We took it on as a loss leader, however the hub that would have financed the debt never materialised.
“Brayton moved into a surplus this year and there will be a surplus going forward.”
Mr Goulty stressed that the notice, which was issued by Mike Pettifer, director of academies and maintained schools, was done so against a backdrop of the trust being amongst the top-performing in the country for GCSEs this year.
He added: “The trust is educationally and long-term financially viable.”