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Agenda Item No. 5

The Vale of Glamorgan Council

 

Learning and Culture Scrutiny Committee: 17th October 2016

 

Report of the Interim Director of Learning and Skills

 

Schools Balances as at 31st March 2016

 

Purpose of the Report

  1. To inform Members of the level of school balances as at 31st March 2016 and of the measures to be put in place to reduce excessive balances held by individual schools.

Recommendation

Members note the level of school reserves and the plans to claw back surplus balances.

Reason for the Recommendation

To ensure the Learning and Culture Scrutiny Committee is aware of the level of school balances and the directorate's plans for claw back and redistribution of individual excessive surplus balances.

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 funding framework 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. Individual schools are permitted to carry forward from one financial year to the next any underspend on its budget share plus/minus any balance brought forward from the previous year.
  4. Schools are encouraged to spend current funding on current pupils and should not accumulate balances greater than 5% of the budget share.
  5. Governing bodies are required to report to the Director of Learning and Skills on the use the school intends to make of surplus balances that exceed 5% or £10,000, whichever is greater.
  6. The council may direct the governing body how to spend a surplus balance in excess of £50,000 for primary and nursery schools or £100,000 for secondary and special schools.
  7. Where a governing body does not comply with the Council's direction to spend surplus balances, the Authority can require the governing body to pay back some or all of that surplus balance to the Authority to be applied as part of their school's budget for the funding period in question.
  8. 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.
  9. 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.
  10. 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.
  11. 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 2015/16 overall schools budget was £79,615,800 and a further £14,712,000 was allocated to schools via grants from the Welsh Government.
  2. The overall level of school balances on 1st April 2015 was £2,708,133 which increased to £2,946,346 by 31st March 2016. This increase to school balances of £238,213 is due to a net underspend against the schools' 2015/16 budget and equates to an increase of 9% on the schools' opening balances.
  3. Total schools' balances have decreased year on year until the recent increase in 2015/16. Schools' balances decreased by 31% over the four year period from March 2011 to March 2015. A full list of schools balances over the last five financial years is included at Appendix A and a further analysis is included at Appendix B.
  4. Three schools ended the 2015/16 financial year in a deficit position:
  • St Cyres Comprehensive school ended the financial year in a deficit of £175,447. The governing body has submitted a full recovery plan which will eradicate this deficit within a five year period.
  • Ysgol Gymraeg Sant Baruc has ended the 2015/16 financial year in an unlicensed deficit of £1,363. The governing body has submitted a balanced budget for the 2016/17 financial year offsetting this small 2015/16 deficit with 2016/17 funding.
  • Pendoylan Church in Wales primary school ended the 2015/16 financial year in an unlicensed deficit of £38,752 but submitted a balanced budget for 2016/17. This is the second consecutive year that the school has outturned with an unlicensed deficit position. Therefore, the Finance Manager has written to the Headteacher and governing body requesting a full recovery plan.
  1. Ysgol Bro Morgannwg amalgamated with Ysgol Nant Talwg during the 2015/16 financial year. The school maintained the two separate budgets until the end of the financial year and therefore for the purpose of this report the amalgamated balance at 31st March 2016 is shown as separate balances under the Primary and Secondary sectors. The closing balance of the amalgamated middle school amounted to £250,546 of which £58,402 is identified in this report under the primary sector and £192,144 is identified under the secondary sector.
  2. Nursery school balances amounted to £55,364 at the 1st April 2015 and decreased to £39,326 by 31st March 2016. This reduction of £16,038 equates to a reduction of 29% on the opening balance position. One nursery school continues to have a balance in excess of 5% of budget share.
  3. Primary school balances totalled £1,902,203 at 1st April 2015 which increased to £2,097,865 by 31st March 2016. This increase of £195,662 amounts to an increase of 10% on the opening balance. There were 24 primary schools with a balance in excess of 5% on 31st March 2016 and 17 of these schools held balances in excess of £50,000.
  4. Secondary school balances totalled £684,804 on 1st April 2015 and increased to £698,967 by 31st March 2016. This increase of £14,163 amounts to an increase of 2% on the opening balance. There were three secondary schools with balances in excess of £100,000 and two of these schools had accumulated balances in excess of 5%.
  5. The special school had a balance of £65,762 on 1st April 2015 which increased to £110,187 by 31st March 2016. This increase of £44,425 equates to a 67% increase on the opening balance.
  6. The schools balances were reported to the schools Budget Forum on May 18th 2016. Budget forum members were reminded of the councils ability to claw back excessive balances that have not been spent in line with approved plans. As specified in the funding framework, any claw back will be redistributed to schools.

Resource Implications (Financial and Employment)

  1. Governing bodies have submitted spending plans for schools surplus balances in excess of 5% of the schools budget share.
  2. Approved spending plans will be carefully monitored throughout the financial year. Where individual balances are not spent in line with approved plans without good reason, the directorate will advise schools how to spend surplus balances in excess of £50,000 for primary and nursery schools or £100,000 for secondary and special schools.
  3. The directorate will claw back surplus balances where a governing body does not comply with such a direction. Any claw back of funding will be redistributed to schools.
  4. Governing bodies wishing to make changes to approved spending plans will need to inform the Head of Strategy, Community Learning and Resources. Schools with deficit balances will be monitored against approved recovery plans.
  5. The council will remove the governing body's right to a delegated budget in the event of financial mismanagement.

Sustainability and Climate Change Implications

  1. Effective financial management supports the sustainable operation of schools and the consistent delivery of education.

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.

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 are no equal opportunity implications arising from this report.

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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