AGENDA ITEM 4

POOLE SCHOOLS FORUM

26 JUNE 2013

SCHOOLS BUDGET: FINANCIAL OUTTURN 2012-13, BUDGET MONITORING 2013-14

AND FUNDING DEVELOPMENTS 2014 ONWARDS

1.  Purpose of the Report

To update Members of the Schools Forum on the following issues:

(a)  The Financial Outturn 2012-13 for Schools

(b)  School Balances 31 March 2013

(c)  Budget Monitoring 2013-14

(d)  Funding developments for 2014-15

2.  Decisions

2.1  The decisions for this meeting are to determine the carry forward arrangements for the DSG at 31 March 2013. The recommendation is to agree that the DSG under spend of £473,000 detailed in paragraph 3.5.2 is carried forward as follows:

2.1.1  The balances of the School Improvement Support Group of £297,000 and Targeted Mental Health of £86,000 are initially carried forward in full as agreed at the last meeting. The LMS working party to continue to oversee the deployment of funding.

2.1.2  The remaining balance of £90,000 is earmarked to support the financial position of Ashdown Technology College on transfer to Academy status in September 2013.

3.  Financial Outturn - Schools Budget - Dedicated Schools Grant 2012-13

3.1  Summary of Movement on Schools Budget Reserves at 31 March 2013

The Schools Budget was under spent by £898,000 for the year after allocating brought forward reserves of £771,000 in support of 2012-13 expenditure. The Schools Budget Reserves position at 31 March 2013 is as follows:

£ School Block Reserve (pre DSG) 370,000

DSG under spend at March 2012 1,175,000 * Schools Budget Reserves brought forward March 2012 1,545,000

Reserves allocated to 2012-13 Budget (771,000)*

DSG from 2012-13 earmarked for carry forward to 2013-14 101,000

Under spend of Schools Budget 2012-13 898,000

Schools Budget Reserves carried forward at March 2013 1,773,000

Allocated to Age of Transfer – see 3.2 below (370,000)

Allocated to the 2013-14 Schools Budget – see 3.3 below (930,000)

Balance of School Budget Reserves £473,000

* A total of £404,000 of DSG reserves was not allocated to the Schools Budget 2012-13 but earmarked for 2013-14 to support the additional costs from the Age of Transfer and funding reform.

3.2  The School Block Reserve of £370,000 was committed in July 2011 to provide for the potential redundancy costs from the change in the age of transfer at September 2013.

3.3  The amount of £930,000 was committed in support of the Schools Budget 2013-14 at the February 2013 meeting as follows:

. £

2011-12 under spend DSG 404,000

2012-13 DSG earmarked for carry forward 101,000

2012-13 DSG predicted under spend at December 2012 250,000

Earmarked balance at January 2013 755,000

2012-13 additional under spend allocated for Early Years 175,000

Total Reserves allocated to 2013-14 Schools Budget £930,000

3.4  The balance in reserves of £473,000 is considered further in paragraph 3.8 below.

3.5  Summary of the Schools Budget Outturn 2012-13

3.5.1  The full budget monitoring detail is provided in Appendix 1, where the information has been scheduled in a format comparable with the budget statement for 2013-14 where possible. The net under spend for 2012-13 is £898,000.

3.5.2  The table below summarises the main budget variances for the year, including a comparison with the forecast position at February.

February Variances / Budget Area £000’s / Note / Year End
Variances
(92) / ISB - School Budgets / 3.6.1 / (94)
315 / ISB - Nursery payments / 3.6.2 / 360
209 / School Improvement (SISG) / 3.6.3 / 297 / *
52 / Targeted Mental Health (TMHS) / 3.6.4 / 86 / *
120 / Contingency / 3.6.5 / 77
118 / High needs budgets / 3.6.6 / 63
30 / School admissions / 3.6.7 / 59
34 / Schools in financial difficulty / 3.6.8 / 32
47 / Other / 18
833 / Total DSG Budget / 898
(250) / Committed to 2013-14 / (250)
(175) / Committed Early Years 2013-14 / (175)
408 / Balance / 473
(261) / Earmarked / See 3.7 / (383) / *
147 / Balance not earmarked / 90

3.6  The reasons for significant variances are as follows:

3.6.1  ISB - School Budgets are over spent by £94,000 due to business rates.

3.6.2  Nursery Payments – under spent by £360,000 due to a reduced take up in the free entitlement to nursery education. The increased under spend since February of £45,000 has implications for the 2013-14 DSG as it is the result of lower FTE nursery pupils at the January census than forecast. The DSG budget has been updated to reflect a reduction in funding and expected lower costs for nursery education.

3.6.3  SISG Budget - The £297,000 under spend is due to project delay and earmarking funds to set up a new organisation for school support activities.

3.6.4  Targeted Mental Health (TMH) - The £86,000 is due to project delay. This is included within combined services in appendix 1.

3.6.5  Contingency - The under spend of £77,000 relates to the early years contingency of £80,000 being unused offset by £3,000 of additional pupil growth funding allocated to schools.

3.6.6  The High Needs budget is under spent by £63,000 overall, including £25,000 from special school transitions (funded from reserves), £112,000 from statements, independent special school placements, specialist SEN and inclusion support offset by a net shortfall of recoupment income of £74,000.

3.6.7  School Admissions is under spent by £59,000 as the web based system has provided increasing efficiencies over time and the additional resources allocated for the Age of Transfer workload have not been needed.

3.6.8  The budget for schools in financial difficulty has been used to support the additional costs of the interim head teacher at Ashdown Technology College for two terms, with £32,000 remaining unspent from the £80,000 budget set aside from reserves.

3.7  Summary of Planned Use of Reserves at 31 March 2013 is as follows

£
Already Earmarked Reserves:
Age of Transfer 2013-14 (3.2) / 370,000
Deployed to 2013-14 budget (3.3) / 930,000
Recommendations
Review of SISG and TMH carry forward (3.5.2) / 383,000
Currently un-earmarked / 90,000
Total Reserves at 31 March 2013 / £1,773,000

3.8  Recommendations

3.8.1  The balances of the School Improvement Support Group of £297,000 and Targeted Mental Health of £86,000 are initially carried forward in full as agreed at the last meeting. The LMS working party to continue to oversee the deployment of funding.

3.8.2  The remaining balance of £90,000 is earmarked to support the financial position of Ashdown Technology College on transfer to Academy status in September 2013.

4.  Maintained School Balances - 31 March 2013

4.1  Summary

4.1.1  Total maintained school capital and revenue balances are £7.2 million at 31 March 2013, compared with a level overall of £6.7 million last year.

4.1.2  School revenue balances at the end of the year stand at £6.7 million, an increase of £875,000. Balances represent 12% of the current year budget shares in total (last year 11%). Three schools are in deficit at the end of the year, with one being significant at £115,000 (4%).

4.1.3  Schools are in the process of confirming their commitments but have been permitted to carry forward excess balances to manage the additional costs from the age of transfer. However, a number of balances have remained or become exceptionally large during the year. These balances will be subject to specific review in discussion with governing bodies.

4.1.4  School capital reserves total £0.5 million at 31 March 2013. This compares with £0.8 million last year. The decrease reflects the significantly reduced funding through devolved formula capital.

4.2  Analysis of Revenue Balances by Phase

4.2.1  The table below summarises school balances by phase:

Phase / March 12
£000’s / March 13
£000’s / Change
£000’s / % 13/14 Budget
First / 1,519 / 1,492 / -27 / 11%
Combined & Primary / 1,351 / 1,736 / +385 / 15%
Middle / 1,135 / 1,486 / +351 / 13%
Secondary / 1,660 / 1,746 / +86 / 10%
Special / 209 / 289 / +80 / 10%
Total / 5,875 / 6,749 / +875 / 12%

4.2.2  In total 63% of schools have increased their revenue balances over 2012-13. This includes all middle and special schools.

4.2.3  Overall, 70% of schools now have over 8% of the current year LMS budget in reserves. This should significantly reduce the call on the Age of Transfer Reserve and the Contingency set aside by maintained primary schools (through de-delegation) as most schools will be expected to fund their own additional costs.

4.3  The individual balances for each school are scheduled in Appendix 2.

4.3.1  In all phases there is a mixed picture with some schools maintaining exceptionally high balances compared with others.

4.3.2  In the primary phase, the majority of schools are in robust financial health with the exception of two schools which are expected to clear their deficits over 2013-14.

4.3.3  In the Secondary phase the financial health of schools shows greater variation, with two schools having increased balances from last year to £1.8 million between them. This compares with reductions for the other two schools and a significant deficit emerging for Ashdown.

4.3.4  Carter Community School became an Academy on 1 April 2013 and the small surplus will be transferred to the Academy.

4.3.5  Ashdown Technology College is planned to become an academy from 1 September 2013 with the deficit expected to more than double over the summer term. This will need to be met form Poole’s DSG as only a surplus can transfer to sponsored academies.

4.3.6  The deficit has arisen due to the school not taking timely action to reduce staffing in line with falling rolls, with inefficient timetabling in 2012-13 not allowing restructuring to take place to recover the deficit before conversion. This has occurred within the context of the school needing to make significant improvement.

4.3.7  The building project has compounded the budget pressures by reducing the capacity to raise income from lettings and preventing planned energy savings initiatives coming to fruition. It is unlikely any additional costs due to disruption and delay of the building project can be recovered but the council are seeking any claims possible.

5.  Schools Budget 2013-14

5.1  Funding Changes since the February Report

5.1.1  The table below summarises the funding changes since the February report

Schools Budget
Funding Estimate 2013-14 / DSG
£000’s / EFA £000’s / Reserves £000’s / Total £000’s
February Report / 85,429 / 86 / 755 / 86,270
Special academy places recoupment / (630) / (630)
High needs places adjustment / 506 / 506
Early years reduction from census / (284) / 175 / (109)
Mainstream maintained post 16 / 2,413 / 2.413
Revised Estimated Funding / 85,021 / 2,499 / 930 / 88,450

5.1.2  The final allocations from the EFA for post 16 pupils in maintained schools were received in time to be reflected in the Budget submission but these have no impact on the DSG budget as they are fully passported to schools. The £86,000 in the above table reflects the final year of EFA support to post 16 teachers performance pay. This funding is included within the post 16 factor in the mainstream schools funding formula.

5.1.3  The DfE made further adjustments to the High Needs Block DSG in late February and March to take account of finalised places to be funded directly by the EFA, including special academies, and to provide for growth in post 16 places to be funded by the DSG.

5.1.4  The DSG makes provision for Academy budgets to fund mainstream academies formula allocations as well as place funding for special academies (all pre 16 places and post 16 up to August in 2013-14), alternative provision and medical places. Funding is then recouped by the DfE to enable the EFA to provide funding to academies directly.

5.1.5  The initial budget statement for 2013-14 was required to be prepared to reflect academies open at 31 March 2013 only. Carter Community School (an academy) and The Quay School converted on 1 April 2013, with Ashdown and Longspee expected to convert from 1 September 2013. Budgets for mainstream Academies funded through the LMS formula remain included within the budget statement but academy place funding is removed. Therefore, in the budget statement to the DfE, DSG funding supporting Montacute Special School places is removed by the DfE recouping directly in advance (the £630,000 in the table in paragraph 5.1.1 above).

5.1.6  All in-year convertors, (including those converting on 1 April 2013) have been included in the initial budget as maintained provision. DfE will recoup funding to reduce the DSG during the year accordingly.

5.1.7  The funding estimate for early years has been reduced to take into account the estimated January 2013 census. Significantly fewer children were counted than had been allowed. This is also reflected in the increased under spend for the free entitlement compared with the February report. The under spend of £175,000 in 2012-13 for early years noted in the February report has been applied to support the 2013-14 budget as agreed at the February meeting.

5.2  Initial Schools Budget 2013-14

5.2.1  The final budget submission has reflected the late funding changes and related budget impact as required by the DfE.

5.2.2  A summary of the Schools Budget is provided in Appendix 1. Compared with the position at February expenditure includes an increase in SEN budgets to reflect the late funding noted in paragraph 4 and reduced spending on the 3 and 4 year old nursery entitlement to reflect the outcome of the January 2013 census.

5.2.3  Appendix 3 provides a reconciliation with the February report and this includes the movements from the 3 spending blocks to the final DfE reporting format.

5.2.4  As noted above, adjustments will be made in-year to take into account further academy conversions.


5.3  Schools Budget Monitoring 2013-14

5.3.1  It is too early in the year to predict the outcome for PVI nursery payments and SEN, the two most significant demand-led budgets. However, at this stage, there is no reason to expect expenditure will not be contained within budget.

6.  Budget Development 2014-15 Onwards

6.1  Work is now progressing to consider the mainstream funding formula for 2014-15 in the light of benchmarking analysis and funding announcements in early June. The 2014-15 revenue funding announcements are considered in a separate report on the agenda.