New GAG Pooling clause available for funding agreements

Trusts can choose to adopt this clause without transitioning to the latest version of the model MFA.

Currently, the permission to pool GAG funding is provided through the Academy Trust Handbook. This change allows Trusts to include this right in their existing MFA, aligning GAG pooling with other 'academy freedoms'.

There is no obligation for Trusts to adopt this clause, and they are free to choose their preferred financial operating model. Trusts that wish to take advantage of this option can do so by arranging a Deed of Variation to their existing MFA through their usual DfE contact channels.

What is GAG Pooling?

GAG stands for General Annual Grant, the main source of government funding for academies. GAG pooling allows MATs to combine their yearly GAG income into a central fund, which the central finance team then allocates fairly among the schools to cover running costs.

Why Consider GAG Pooling?

There are numerous potential benefits of GAG Pooling:

• Economies of Scale - centralised funds can lead to better procurement and cost savings.
• Consistency -provides more stable income for each school, helping those struggling financially.
• Central Projects - allows funding for Trust-wide initiatives and resources.
• Emergency Reserves - creates a larger central reserve for unforeseen needs.
• Focus on Education - ensures more money is spent on students' education rather than sitting in reserves.
• Financial Control - encourages better budgeting and resource allocation across the Trust.

There are of course various challenges that you may encounter if you are proposing GAG pooling within your Trust:

• Staff can be resistant to change, perceiving GAG pooling as a loss of autonomy.
• You will need a robust and fair appeals process for addressing any grievances.
• You may need to consider adjustments to accounting software to handle pooled funds.
• If you are looking to expand your MAT, financially strong schools might be hesitant to join if you have pooled funds.
• Additional work may be required to calculate reserves for departing schools.

Interested in GAG Pooling?

There is no right or wrong answer and GAG pooling is definitely not a ‘one-size fits all’ solution. If you're considering GAG pooling or pooling other funds, contact our education specialists for guidance.