New report highlights financial struggles of some Hertfordshire schools

At least 23 schools – most of which are primary schools – ended the 2024/5 financial year “in deficit”. But there are others that have recorded significant balances, totalling many millions of pounds. And at least one secondary school in the county ended the year with more than £1m in the bank.

A report presented to the Forum shows that at the end of March, 322 of the county’s 345 maintained schools had financial surpluses – totalling £80.7m. And it points to a similar financial picture amongst the county’s 176 academies.

Academy data – collated in August (2024) – shows that 12 Hertfordshire academies were in deficit, with those deficits totalling £1.84m.

But 164 academies – including primaries, secondaries, all-through, special schools and alternative provision – were in surplus.

And the surpluses being held by those academies totalled more than £90.3m.

According to the report school balances have been “at a significant level” for some years, locally and nationally. And in November the Forum agreed to reintroduce “a balance control”, to challenge “excessively high balances with the potential to reclaim”.

Schools are to face challenges where they have had reserves in excess of 15 per cent of their school budget for three consecutive years – and where that exceeds a set amount.

Those amounts are £400k for a primary and £800k for a secondary. It is £300k for a nursery, £600k for a special school and £500k for an education support centre.

According to the report, 148 schools have had reserves for the past three years that exceed 15 per cent of their annual budget. And in 41 cases – including 29 primaries and four secondaries – the level of reserves has exceeded the financial threshold set.

Council officials will now write to those schools “to understand their longer-term commitments and utilisation of the funding”. But at the meeting it was acknowledged that there could be good reasons for the schools to be holding the money. And it was reported that many schools will be expecting to utilise reserves in order to be able to set a balanced budget in future years.

Presenting the report, county council finance officer for children’s services Ed Chaloner said that having conversations with these schools was “good governance”. And he suggested that in 99 per cent of cases, schools would have plans associated with the reserves.

“In the same way we look at schools in deficit, we should record that process with schools with significant balances,” he said. “In 99 per cent of cases there will be a plan.”

At the meeting it was acknowledged that a lot of schools expected the level of reserves to drop “really significantly” over the next 12 months.

And budget submissions for 2025/6, included in the report suggest the amount of reserves held by maintained schools is expected to decrease to £45.2m by the end of the financial year.

During the meeting, Forum chairman Alan Gray – chief executive officer of the Ambition Education Trust – acknowledged that it put the council in a “challenging position” when, on paper, schools had money.