Key Strategies for Budgeting and Forecasting in MATs

Multi-academy trusts (MATs) are under increasing pressure to maintain financial sustainability while continuing to deliver high-quality education. This is especially true in today's climate, as MATs face increased scrutiny from regulatory bodies, rising operational expenses, and unsteady government funding streams.

Even with ongoing uncertainties, it's possible for your MAT to build long-term financial stability through clear, effective budgeting and forecasting strategies. The approach to forecasting and financial planning in schools is more than just guesswork. Instead, you'll need to use practical, sustainable methods that support lasting growth.

In this blog, we'll explore the common financial challenges that MATs face today and discuss the most effective strategies for better budgeting and forecasting.

What Are the Current Financial Challenges in School Funding?

MATs face an uncertain and complex funding scenario. While the Department for Education (DfE) continues to support finance in schools with funding allocations for every pupil, various other challenges affect any given school's financial management plans.

Key financial challenges your MAT may be facing include:

Rising Staff Costs

Staffing costs take up the highest portion of your MAT's budget. Pay scale increases, pension contributions, and National Insurance contributions further tighten your trust's financial position.

Increase in Utility Expenses

Sudden and unpredictable energy and utility costs affect long-term financial planning of schools, especially if your MAT operates in multiple locations.

Gaps in SEND Provisions

With inconsistent funding provisions from local authorities, you may find yourself stretched thin trying to deliver adequate support for Special Educational Needs and Disabilities (SEND) within your existing budget.

Ongoing COVID Recovery Costs

Interventions to close learning gaps formed during the COVID lockdown, recovery programmes, and mental health support still need sufficient funding.

Growing Pressure from Inflation

Like many individuals and businesses across the UK, your MAT is likely feeling the pressure of rising inflation and the increasing cost of essential goods and services. From classroom materials to catering, the growing pressure of inflation impacts your school's financial management and day-to-day operations.

Given these pressing challenges, budgeting and forecasting finance in schools and MATs are no longer a compliance exercise, but a strategic necessity. As a financial advisor for schools, we can help your academy trust mitigate these challenges with our tailored budgeting and forecasting plans.

Budgeting and Forecasting Techniques

Robust financial planning in schools means you need to commit to all-encompassing budgeting and forecasting approaches, including:

1. Multi-Year Budgeting

Planning your MAT's budget for 3 to 5 years instead of a single year can allow your team to anticipate the long-term impact of strategic decisions, such as opening new schools. Here's our list of essential steps for multi-year financial planning.

2. Scenario Planning

Things may not always go as planned, which is why it's important to consider the best-case, worst-case, and most likely scenarios when making any decision. With these scenarios in mind, as well as considering the changing circumstances (government policies, pupil numbers, etc), you can identify potential vulnerabilities and prepare backup plans accordingly.

3. Integrated Curriculum Financial Planning (ICFP)

In ICFP, schools look at what financial resources are needed to deliver the curriculum and school environment they want to - not just last year's budget being amended up or down by a few percent.. Unlike traditional incremental budgeting approaches, this technique can help you pinpoint inefficiencies and make sure every pound you invest reaps its strategic benefits.

4. Rolling Forecasts

Unlike conventional forecasts, rolling forecasts take a more in-depth approach, allowing you to update financial predictions regularly (for example, quarterly or half-yearly) and quickly respond to evolving conditions.

Tools and Systems to Improve Financial Accuracy

When you're creating a financial plan for your school, you'll find the following tools and systems helpful in the process:

1. Integrated Financial Management Systems

Make the most of cloud-based platforms specially designed for the education sector, especially those with specific modules for financial budgeting, accounting, and reporting.

2. Forecasting and Scenario Modelling Tools

Engage in real-time scenario planning and consolidate multiple school data to improve accuracy in forecasting.

3. Data Dashboards and KPI Monitoring

Your school and trust leaders should monitor financial and operational key performance indicators (KPIs), including cost per enrolled pupil, budget vs actual performance, and efficiency of staff.

4. Benchmarking Tools

Understand DfE benchmarking data to compare your trust's expenditure against similar schools or MATs and discover opportunities for savings or reinvestment.

5. Collaboration and Communication Tools

Make the most of platforms like Microsoft Teams or SharePoint to make it easy for your teams to collaborate and ensure everyone is working on the same dataset. 

Expert Insights to Strengthen Financial Planning in MATs

1. Centralised vs Delegated Budgeting: Strike the Right Balance

As MATs grow, they often struggle with balancing central oversight and school-level autonomy. A centralised budgeting framework can drive efficiencies in procurement, HR, and estates, but excessive centralisation can stifle innovation at school level. Consider a hybrid financial model: centralise major cost centres like IT and estate management, while allowing schools flexibility over teaching and learning budgets. This ensures control while encouraging local responsiveness.

It's vital that your MAT has a clearly articulated reserves policy — not only to weather funding delays or emergencies, but to strategically invest in transformation projects. Reserves shouldn't be seen as unused funds but as a strategic tool. Consider aligning your reserves usage with long-term goals like digital transformation, estate condition improvement, or trust-wide SEND strategy enhancements.

Integrated Curriculum and Financial Planning (ICFP) is a powerful but underused technique to align educational and financial planning. Encourage school leaders to link staffing decisions with curriculum delivery plans to ensure cost-effective deployment.

Metrics to monitor include:

• Pupil-to-teacher ratios (PTR)
• Staff contact ratios
• Average class sizes
• Senior leaders as a % of teaching staff
• Staff cost as a proportion of total spend

ICFP also helps you justify difficult decisions — such as restructuring or subject consolidation — using objective financial data. Tools from the DfE and trusted third parties can help you embed ICFP effectively across your schools.

Introduce a trust-wide procurement strategy that leverages economies of scale and long-term supplier partnerships. Tools like Crescent Purchasing Consortium (CPC) or DfE-approved frameworks can help you achieve best value. Consider implementing a contract register to avoid ad-hoc renewals and to plan proactive renegotiations. Many MATs unlock 5–10% savings annually just by tightening procurement practices.

5. Stress Testing Your Financial Plans

Borrow a page from financial institutions — stress test your MAT's financial resilience under multiple adverse conditions. What would a 5% drop in pupil numbers do to your budget? What if teacher pension contributions increase again? Use stress testing to inform contingency plans and decision-making frameworks, especially ahead of trust expansion or capital investments.

6. Financial Governance and Board Development

Strong governance is the foundation of effective financial planning in MATs. To support strategic decision-making and ensure accountability, trusts should focus on the following key areas:

• Trustee and committee training: Equip trustees and finance committee members with the skills to interpret financial data, understand ICFP insights, and assess financial risk. Annual finance training for SLT, trustees, and budget holders strengthens financial literacy across the organisation.
• Finance and resources committee: Establish a dedicated committee with clear KPIs and defined financial reporting timelines to enhance oversight and drive strategic outcomes.
• Reserves policy as a strategic tool: A well-defined reserves policy isn't just for emergencies — it should be aligned with long-term priorities, such as digital transformation, estate development, or SEND initiatives.
• External risk management support: External partners like Keystone Knowledge can provide expert risk management services, strengthening your governance structure and ensuring regulatory compliance.

7. Efficiency Reviews and Value-for-Money Audits

Periodically commission internal or external efficiency reviews to assess how funds are deployed across the trust. Benchmark your spending not just against DfE averages but against high-performing, similarly-sized trusts. This helps you spot inefficiencies, areas for investment, or even opportunities to share services between academies.

Aligning Financial Planning in Schools with Strategic Goals

Financial planning in schools means committing to a plan that needs to align with your trust's strategic objectives. This will help you achieve a desirable impact in key areas such as:

• Curriculum Design and Delivery

Your budget should include the expense of a comprehensive and updated curriculum with appropriate staffing ratios and resources.

• School Improvement Plans

Your school finances should support your school-wide improvement plans, which may include staff development, digital learning, and well-being initiatives.

• Managing Estates

This includes capital expenditure planning for long-term estate plans.

• Inclusivity and Well-being of Students

Planning your school finances strategically can help you support inclusive education practices, with the aim of improving student well-being.

Partner with Keystone Knowledge for Efficient School Financial Management

You're probably well aware of the financial challenges that MATs face, and hopefully, this guide has helped you to create a well-rounded budgeting and forecasting strategy to help your academy build financial resilience.

Keystone Knowledge can support navigating financial challenges with financial management and interim cover support. Whether you're reviewing your reserves policy or implementing ICFP, we'll provide expert guidance every step of the way.

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