Nearly half of trusts forecast deficit, report finds

IMP Software and the Confederation of School Trusts have published a finance report on multi-academy trusts. The study found that 37% of trusts forecast an in-year deficit in 2026/27.

The report draws on budget forecasts from 312 trusts covering 3,929 schools from 2026/27 to 2028/29. It also found that almost a third of trusts expect reserves to fall below 5% of income by 2028/29, a level the Department for Education considers a sign of potential financial vulnerability.

Among trusts included in both this year's and the previous dataset, the share forecasting a deficit in 2026/27 fell from 54% to 41%. Even so, 30% forecast a deficit in both planning rounds, suggesting some financial pressure remains persistent despite improved expectations in parts of the sector.

Reserve levels are expected to tighten over the forecast period. The proportion of trusts expecting reserves below 5% of income rises from 23% in 2026/27 to 32% by 2028/29, indicating weaker financial headroom later in the cycle.

Reserve pressure

The findings show reserve pressure is not evenly spread. Trusts with smaller schools are expected to face a steeper decline in reserves than those with larger schools. Among the quarter of trusts with the smallest schools, median reserves fall from 7.5% of income in 2026/27 to 6.2% by 2028/29. For the quarter with the largest schools, they fall from 8.3% to 8.0%.

Primary-focused trusts also face greater projected pressure on reserves, according to the analysis. The report says school size and phase do not by themselves determine financial health, but form part of a wider picture of uneven strain across trust budgets.

Staffing assumptions are another area highlighted by the data. In primary schools, teaching assistant full-time equivalent numbers are projected to fall by 3.8% between 2026/27 and 2027/28, while pupil numbers are forecast to decline by 1.6% over the same period. The reduction is concentrated in a minority of schools rather than spread evenly across the sample.

By contrast, secondary schools are forecasting modest pupil growth despite a national projection of decline. That gap between local planning assumptions and wider demographic expectations suggests trusts may need to test intake projections closely when setting budgets.

Funding variation

The report also points to differences in how schools experience funding pressure. Lower-funded schools are operating with higher pupil-to-teacher ratios while also devoting a larger share of income to teaching staff. In primary schools, teaching costs account for a median 39% of revenue income in the lowest-funded quarter, compared with 34% in the highest-funded quarter. In secondary schools, the equivalent figures are 49% and 40%.

Special schools also show wide variation in funding, even among schools with comparable need profiles. Median income ranges from about £17,000 per pupil in Broad Need - Communication and Interaction schools to about £26,000 in Primary Need - Social, Emotional and Mental Health schools. This may reflect differences in local authority approaches and pupil characteristics, making comparisons more complex.

For the first time, the study includes budgeted chief executive officer and chief financial officer pay. It found that typical salaries are about £160,000 for chief executive officers and £95,000 for chief financial officers. Pay rises with trust size, although the rate of increase slows as organisations get larger.

The analysis also examined operating models. Centralisation is rising gradually, with 24% of matched trusts now centralising all six functions reviewed, up from 21%. Median finance team costs range from £112 per pupil in small trusts to £94 in large trusts.

Pooling practices remain mixed. Some 55% of trusts pool reserves, while 18% pool general annual grant funding. The available data does not show that either approach produces a stronger financial position.

Will Jordan, Co-founder and Chief Executive Officer of IMP Software, said: "Trust leaders and boards are making financial decisions in an environment of continued budget pressures and changing expectations around accountability. Alongside sustaining educational provision, they must be able to explain how resources are allocated, demonstrate value for money and justify the assumptions underpinning their plans. Access to meaningful comparisons with other trusts has an important role to play in supporting those decisions.

"Our aim is to give trust leadership teams useful questions to take back to their boards, as well as data against which to test their answers. Throughout this report, context matters. A lower cost does not automatically mean a more effective service, and a deficit may reflect a planned investment of reserves rather than an underlying funding gap. Benchmarking is most useful when it prompts informed questions about provision, capacity and priorities. It is never a silver bullet, but it should be used to drive the right conversations.

"Overall, updated forecasts offer some encouragement, but declining reserve headroom and uneven pressures across school phases remain significant concerns. Sustaining educational provision and retaining the flexibility to meet changing needs will depend on robust pupil forecasts, considered staffing plans and ongoing scrutiny of budgets. We want every trust to be able to use this evidence to test its assumptions on reserves, staffing and pay, and explain the reasoning behind its financial decisions."

In the foreword to the report, Leora Cruddas, Chief Executive of the Confederation of School Trusts, said: "This report embodies two of the great strengths of the trust system: the ability to innovate, and the ability to connect. IMP Software itself was born out of the changing needs of school trusts, to provide software that supports the different ways of working that trusts have and continue to evolve. As our trusts help connect schools together, the systems that support us connect our data together so we can understand more about what works and what doesn't. Our own National School Trust Report highlights that trusts have a strong tendency to share and work together across the sector. This report is another example of that, with data from hundreds of trusts united to help us compare notes."