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Agenda Item No. 4

The Vale of Glamorgan Council

 

Learning and Culture Scrutiny Committee: 17 October 2016

 

Report of the Head of Strategy, Community Learning and Resources

 

St. Cyres Budget Recovery Plan 2016/17 - 2020/21

 

Purpose of the Report

  1. To inform Members of the financial deficit at St. Cyres Comprehensive School and the five year budget recovery plan submitted by the Governing Body.

Recommendation

  1. The financial position of the school and plan of budget recovery over the five year period is noted.

Reason for the Recommendation

  1. To ensure the Learning and Culture Scrutiny Committee is aware of the financial deficit and budget recovery plan submitted by St. Cyres Comprehensive School.

Background

  1. The funding framework for schools is outlined within the Vale of Glamorgan Council Fair Funding Scheme for Schools, the School Funding (Wales) Regulations 2010 and the School Standards and Framework Act 1998.
  2. The Council's Fair Funding Scheme and legislation provides for maximum delegation of school budgets, however, the Local Authority can suspend the Governing Body's right to a delegated budget in the case of financial mismanagement.
  3. Schools do not have the authority to spend more than their allocated budget in any financial year, but may be allowed after consultation with the Director of Learning and Skills.
  4. If a school does spend more than its budget share in any financial year, the deficit will either have to be met from unspent balances brought forward or from the school's budget share from the following financial year.
  5. Schools that find themselves in an unplanned deficit position are required to submit budget recovery plans which have been authorised by the Governing Body to the Director of Learning and Skills detailing how the deficit will be eliminated in a period not exceeding five financial years.
  6. Schools which are not able to provide a robust and complete recovery plan will lose their right to a delegated budget in accordance with the Council's Fair Funding Scheme, the Schools Funding (Wales) Regulations 2010 and the School Standards and Framework Act 1998.

Relevant Issues and Options

  1. The 2014/15 budget for St. Cyres Comprehensive School was £4,934,538. The school spent more than its allocated budget share and ended the 2014/15 financial year in a deficit of £47,392.
  2. The 2015/16 budget was £4,946,294 but the deficit carried forward from the previous financial year reduced the budget available to £4,887,146. The Governing Body submitted a balanced 2015/16 budget plan to eradicate the deficit within the 2015/16 financial year.
  3. In October 2015, the Headteacher requested an urgent meeting with the Head of Strategy, Community Learning and Resources and the Chair of the Governing Body. At this meeting the Headteacher declared a potential deficit of £408,000 for the 2015/16 financial year.
  4. The Head of Strategy, Community Learning and Resources agreed to fund a number of one-off purchases of a capital nature from the school's rationalisation reserve. These one-off purchases took into account the transitional and one-off costs of opening the new school building as part of the Penarth Learning Community. The total contribution to the school amounted to £91,934.
  5. The Headteacher was advised that no further funding was available and that the school would need to submit a recovery plan as part of the 2016/17 budget setting process which would identify how the deficit would be eradicated in a period not exceeding five financial years.
  6. Additional support to the Headteacher of St. Cyres from the Education Finance Support Team was made available. In addition, Headteachers from Bryn Hafren and Llantwit Comprehensive Schools shared best practice and advice on possible areas on which to make savings.
  7. The school identified immediate savings within the 2015/16 financial year and managed to outturn with a reduced adverse variance of £174,587. The school made an annual budget saving of £60,000 on the maintenance contract for the new school alone.
  8. The Headteacher and Governing Body have submitted the five year recovery plan attached at Appendix A as part of the 2016/17 schools budget setting process.

Details of the Recovery Plan

  1. The full recovery plan is attached at Appendix A. The plan intends to bring the school's balances back into a positive position within the five year period ending 31st  March 2021.
  2. The plan will be regularly monitored and reviewed annually by the Council; the annual review will be submitted to the Director of Learning and Skills in line with the annual budget deadlines.
  3. Staffing savings identified in this plan have arisen from restructuring, reductions in working hours, resignations, reductions in Teacher Learning Responsibility Allowances (TLRs) and forecast retirements over the five year period. Where it becomes apparent that a forecast retirement will not take place, additional savings will be identified through restructuring to ensure that a balanced budget is still achievable by 31st March 2021.

Calculation of Required Savings

  1. Cumulative savings will need to be identified to close the gap between the school's initial budget and the adjusted formula allocation amounting to £1,049,822 over the five year period. Further savings of £643,595 are required to meet the projected cumulative cost of increments, pay awards and inflation amounting to a total savings requirement of £1,693,417.

Financial Year

16/17

£'000

17/18

£'000

18/19 £'000

19/20 £'000

20/21 £'000

Five Year Saving £'000

Formula Allocation

5,309

5,309

5,309

5,309

5,309

 

Increased formula allocation for pupil numbers

0

49

97

94

120

 

Revised Formula Allocation

5,309

5,358

5,406

5,403

5,429

 

Initial Deficit BF

175

         

Initial Budget

5,556

5,556

5,556

5,556

5,556

 

Shortfall - Saving to Identify

422

198

150

153

127

1,049

Inflation, Pay Awards and Increments

n/a

134

175

199

135

644

TOTAL SAVING REQUIRED

422

332

324

352

262

1,694

             
  1. Total Savings of £1,694,204 have been identified over the five year period in order to ensure a balanced budget. This recovery plan will ensure a balanced current year budget is achieved in 2016/17 (year 1), however the debt carried forward will not be eliminated until 2020/21 (year 5) as demonstrated in the table below.
 

Balance BF

In year budget variance

Balance CF

2016/17 Starting Budget

Deficit £175,447

Deficit £246,833

Deficit £422,280

2016/17 Revised - Recovery Plan

Deficit £175,447

Surplus £30,826

Deficit £144,621

2017/18

Deficit £144,621

Surplus £30,656

Deficit £113,965

2018/19

Deficit £113,965

Surplus £34,223

Deficit £79,732

2019/20

Deficit £79,732

Surplus £2,128

Deficit £77,604

2020/21

Deficit £77,604

Surplus £78,388

Surplus £784

       
       

Summary of Identified Savings

  1. The table below summarises the savings that have been identified in order to eliminate the schools deficit over the next five years. A full breakdown of the savings is detailed in the recovery plan.
 

2016/17

2017/18

2018/19

2019/20

2020/21

5 Year Saving

Leadership

£45,501

£76,929

£76,929

£76,929

£76,929

£353,217

Teaching Staff (net)

£67,696

£39,516

£5,533

£1,782

(£11,840)

£102,687

Non-Teaching Staff

£78,806

£122,673

£122,433

£122,191

£121,947

£568,050

Supplies and Services

£46,650

£46,650

£46,650

£46,650

£46,650

£233,250

ICT Hardware

£12,000

£50,000

£80,000

£80,000

£80,000

£302,000

Increased Income

£27,000

£27,000

£27,000

£27,000

£27,000

£135,000

TOTAL Savings

£277,653

£362,768

£328,545

£354,552

£340,686

£1,694,204

             

Resource Implications (Financial and Employment)

  1. Schools must carry forward deficit balances within the school balances and offset them against the following year budget share. In the event that the Governing Body is not able to eradicate the deficit in the following financial year, schools must submit a recovery plan eradicating the deficit within a period not exceeding five financial years.
  2. St. Cyres Comprehensive School has ended the 2015/16 financial year in a deficit position of £174,587.
  3. The Governing Body has submitted a five year recovery plan which forecasts that the school will balance and eradicate all deficits by the end of March 2021.
  4. Expenditure must be monitored against the plan on a regular basis by the Headteacher and Governing Body. Any deviation from the financial plan must be reported to the Learning and Skills Directorate.

Sustainability and Climate Change Implications

  1. The new school meets modern building standards to ensure reduced carbon emissions which will achieve the highest rating of 'A' for the energy performance certificate. This will contribute to the financial sustainability of the school.

Legal Implications (to Include Human Rights Implications)

  1. The funding framework for schools is outlined within the Schools Funding (Wales) Regulations 2010 and the School Standards and Framework Act 1998.
  2. This budget recovery plan may lead to other implications which could include, for example, employment law, contract law and property law. Advice in relation to these matters is being taken will continue to be taken from the Council's legal advisors as appropriate.

Crime and Disorder Implications

  1. There are no Crime and Disorder implications arising from this report.

Equal Opportunities Implications (to include Welsh Language issues)

  1. There will be no disadvantages to the educational outcomes of any pupils as a result of this recovery plan. All pupils will continue to access a broad curriculum and will be supported to achieve their full educational potential.

Corporate/Service Objectives

  1. Schools' effective use of funding contributes to the Council's corporate objective: Raising Overall Standards of Achievement.

Policy Framework and Budget

  1. The recommendations of this report are within existing policy framework and budget.

Consultation (including Ward Member Consultation)

  1. Not applicable.

Relevant Scrutiny Committee

  1. Learning and Culture Scrutiny Committee.

Background Papers

None.

Contact Officer

Nicola Monckton, Finance Manager Learning and Skills

Officers Consulted

Paula Ham, Head of Strategy, Community Learning and Resources

Trevor Baker, Operational Manager Strategy and Resources

Carolyn Michael, Operational Manager Accountancy

Victoria Davidson, Operational Manager - Legal Services

Responsible Officer:

Paula Ham

Head of Strategy, Community Learning and Resources

 

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