In recent years, setting budget assumptions for Multi-Academy Trusts (MATs) has become increasingly challenging due to uncertainty in areas such as teacher pay awards and funding settlements.
The teacher and support staff pay awards for 2024/25 were finalised after most trusts had already submitted their budgets, leading to frustration. Had this information been available at the outset of the budget-setting cycle, as explored in our MAT Finance Sector Insight Report 2024 it could have prevented difficult conversations and decisions and allowed for more effective planning.
Ultimately, budgets are based on educated guesses, and as a result, there is a risk of over-analysing assumptions or creating false granularity. Striking a balance between effort and benefit is crucial – spending excessive time on minute details can divert attention from the bigger picture. However, having well-thought-through assumptions is far better than going in blind without any foundation for decision-making.
For some significant assumptions, there is now greater clarity on the horizon. Education Secretary Bridget Phillipson has outlined that teacher pay awards for 2025/26 will be set closer to 1st April, with a complete reset of timelines for future years. This reset is welcome news for schools and trusts. Hopefully, this becomes standard practice across all assumptions where possible, allowing for a more predictable and informed budget-setting process.
At the point of writing this blog, the Department for Education (DfE) has announced that the recent change in employer national insurance rates and thresholds from April 2025 will be funded. However, the specific details of how this will be funded are still unclear. With these types of uncertainties that will have a material impact on school budgets, MAT leaders look set to face ongoing challenges in creating reliable financial forecasts.
Alongside this, many trusts use planning tools that do not hold all their budget assumptions and, therefore, have to supplement their process with Excel spreadsheets and assumption documents, where changes to assumptions have to be continually updated and transferred to their planning tool, with the risk that budgeting data does not always reflect their latest assumptions.
By adopting a structured approach that leverages data, peer insights, and scenario planning, MAT leaders can develop well-researched and sensible budget assumptions that provide stability and foresight.
Here, we outline some areas to consider when arriving at your budget assumptions.
Leveraging Existing Data Sources
One of the most effective ways to develop budget assumptions is by using existing published data:
- The Association of School and College Leaders (ASCL) provide insights into government funding expectations and sector trends.
- The Office for National Statistics (ONS) publishes essential data on inflation, wage trends, and broader economic indicators that impact school budgets.
- Local Authority Reports often include projections on school funding, birth rates, and other demographic changes that influence pupil numbers.
It’s also important to regularly review DfE publications, which update essential funding rates such as the National Funding Formula (NFF), Pupil Premium, the Risk Protection Arrangement (RPA), and Devolved Formula Capital (DFC).
These sources provide the latest agreed rates and adjustments that may impact budget assumptions, so staying current is crucial for accurate financial planning. By utilising these resources, MATs can ground their budget assumptions in objective, widely accepted data rather than speculation.
Engaging with Networks and Peers
Budgeting does not happen in isolation. Engaging with other MAT leaders and sector experts can provide valuable perspectives on their assumptions and reasoning behind key budget estimates. Discussions with peers can help uncover emerging trends or risks that may not yet be reflected in published data. Lessons learned from previous years’ budgeting cycles can also offer practical insights. Platforms like sector forums, professional associations, and networking events provide opportunities to compare notes and validate budget assumptions with real-world insights.
Pupil Numbers: A Critical Budget Driver
Pupil numbers directly impact funding and staffing needs, making well-thought-through best-guess forecasting essential. MATs should utilise local authority and admissions data to assess expected intake. Analysing open day attendance trends can serve as an early indicator of demand, while demographic and birth rate data help anticipate future enrolment patterns. Reviewing historic application-to-enrolment conversion rates can refine assumptions further. Due to the impact changes to pupil numbers have on funding and, therefore, staffing levels, this area should be given the care and attention it deserves.
Understanding Your Trust’s Context
Each MAT has its own financial landscape, which must be carefully considered when setting budget assumptions. A MAT with low levels of reserves may need to adopt more conservative assumptions, while one with more of a buffer may have greater flexibility. Understanding whether the board is risk-averse or willing to take strategic financial risks can significantly shape budget assumptions. Reviewing past budget accuracy and financial performance can provide a benchmark for future assumptions and ensure that budget planning aligns with the Trust’s financial position.
Scenario Planning for Risk Management
Even with the best data and insights, unexpected changes can occur. Scenario planning allows MATs and schools to model the impact of different assumptions, such as lower pupil numbers or higher-than-expected pay awards. By quantifying risks and developing contingency plans, MATs can ensure financial resilience by preparing for best, worst, and most likely scenarios. This proactive approach helps mitigate risks and ensures that budgets remain flexible and realistic.
Flexibility: The Key to Effective Budgeting
A rigid approach to budgeting can be detrimental. MATs must remain agile and open to adjusting assumptions throughout the budget cycle. Continuously reviewing and updating forecasts as new data emerges is crucial. Using what-if analysis can help MAT leaders proactively manage financial risks and respond effectively to changing circumstances.
Conclusion
Developing well-thought-through budget assumptions requires a balanced approach that combines data analysis, sector collaboration, and contextual awareness. MAT leaders can create more accurate and resilient budgets by leveraging existing data, engaging with peers, understanding their trust’s unique financial position, and adopting scenario planning. However, flexibility remains key – staying adaptable and continuously refining assumptions throughout the cycle will drive better financial outcomes.
Warren Porter is Head of Education Strategy at IMP Software
What next? IMP Planner: Using Technology to Streamline Budget Assumptions
Relying on spreadsheets and manually transferring assumptions into budgeting tools creates inefficiencies and risks. Every time an assumption changes, the process must be repeated, increasing the chance that budgets become misaligned with the latest data.
IMP Planner eliminates this issue by embedding calculations directly within the system, ensuring that budgets remain ‘live’ and automatically update to reflect the most recent assumptions. Since assumptions are managed trust-wide, updates only need to be made once, guaranteeing consistency across all school budgets.
Additionally, our single database model makes scenario planning effortless – trust leaders can generate MAT-wide comparisons in minutes, enabling swift, data-driven decision-making.
Schools and trusts looking to improve the robustness and agility of their budgeting process can explore the capabilities of IMP Planner by booking a demo through our website.
Seeing the tool in action provides a clear understanding of how it can streamline financial planning and support better decision-making across the Trust.
