If a school has a surplus balance when it converts to academy status, the surplus stays with the school.
The Academy Conversions (Transfer of School Surpluses) Regulations 2013:
- The LA must determine and notify the amount of the surplus within four months of the date of conversion;
- If that amount is agreed, the LA must pay it to the Academy Trust (AT) within one month following the AT’s agreement to the determination;
- The LA and AT must work together to reach an agreement on the determination within the four-month timescale. However, should an agreement not be possible, the AT has a right to apply to the Secretary of State for a review. This must ordinarily be done within one month of the determination, giving reasons for the disagreement and an account of what endeavors have been made to reach agreement;
- An AT may also make a request for a review at a later time, but only in exceptional circumstances. The AT must set out why it considers there to be exceptional circumstance, and it is for the Secretary of State to determine whether exceptional circumstances exist;
- The Secretary of State has three months from receiving the request for a review, or deciding that exceptional circumstances apply, to make a decision. However, she can extend the period for reviewing a determination;
- The LA then has one month in which to pay over the surplus following receipt of this decision.
If an academy has made commitments against an anticipated surplus, advice should be sought from the Education and Skills Funding Agency (ESFA) in respect of an advance of funding to meet this commitment. In this instance, partial payment of an agreed amount of the anticipated surplus would be preferable.