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Agenda Item No. 8

The Vale of Glamorgan Council

 

Learning and Culture Scrutiny Committee: 16th October 2017

 

Report of the Director of Learning and Skills

 

Schools' Balances as at 31st March 2017

 

Purpose of the Report

  1. To inform Members of the level of school balances as at 31st March 2017 and of the measures put in place to reduce excessive balances held by individual schools.

Recommendation

  1. Members note the level of school reserves and are aware of the plans to claw back surplus balances where schools do not comply with the Council's direction to spend them.

Reason for the Recommendation

  1. 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 balance.

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 planned use 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.
  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 2016/17 delegated schools budget totalled £81,009,000 and a further £14,245,000 was allocated to schools via grants from the Welsh Government.
  2. The overall level of school balances on 1st April 2016 was £2,946,348 which decreased to £2,321,817 by 31st March 2017. This decrease to school balances of £624,531 is due to a net overspend against the schools' 2016/17 budget and equates to a decrease of 21.2% on the schools' opening balances.
  3. Total school balances have decreased by 41.3% over the six year period from April 2011 to March 2017. A full list of schools' balances over the last seven financial years is included at Appendix A and a further analysis is included at Appendix B.
  4. Four schools ended the 2016/17 financial year in a deficit position:
  • St. Cyres Comprehensive School ended the financial year in a deficit of £141,388. The school has an approved recovery plan in place which will eradicate this deficit over the next four financial years.
  • Ysgol Gymraeg Sant Baruc has ended the 2016/17 financial year in a deficit of £8,390. The school has an approved recovery plan in place which will eradicate this deficit over the next three financial years.
  • Fairfield Primary School has ended the 2016/17 financial year in a deficit of £35,471. The school has an approved recovery plan in place which will eradicate this deficit over the next three financial years.
  • Pendoylan Church in Wales Primary School ended the 2016/17 financial year in a deficit of £40,573. This deficit is unlicensed as there is no approved recovery plan in place. This is the fourth consecutive year that the school has outturned in an unlicensed deficit position. The Governing Body is in the process of completing a recovery plan with the new Headteacher.
  1. Nursery school balances amounted to £32,597 at the 1st April 2016 and increased to £36,353 by 31st March 2017. This increase of £3,756 equates to an increase of 11.5% on the opening balance position. One nursery school continues to have a balance in excess of 5% of budget share but neither school has a balance in excess of the £50,000 specified by Welsh Government.
  2. Primary school balances totalled £2,046,194 at 1st April 2016 which decreased to £1,640,123 by 31st March 2017. This decrease of £406,071 amounts to a decrease of 20% on the opening balance position. There were 16 primary schools with a balance in excess of 5% on 31st March 2017 and 14 schools held balances in excess of the £50,000 specified by Welsh Government. Three primary schools were in a deficit position at 31st March 2017.
  3. Secondary school balances totalled £506,824 on 1st April 2016 which increased to £529,299 by 31st March 2017. This increase of £22,475 amounts to an increase of 4% on the opening balance. There were two secondary schools with balances in excess of £100,000 but only one of these schools had accumulated balances in excess of 5% of budget share.
  4. Ysgol Bro Morgannwg is the Council's only all-through school encompassing both primary and secondary pupils from age 3-19. This school's balance totalled £250,546 on 1st April 2016 which decreased to £55,514 on 31st March 2017. This decrease of £195,032 amounts to a decrease of 78% on the opening balance position.
  5. The special school's balance totalled £110,187 on 1st April 2016 which decreased to £60,528 by 31st March 2017. This decrease of £49,659 equates to a 41% decrease on the opening balance.
  6. The schools' balances were reported to the schools Budget Forum on 17th May 2017. Budget Forum members were reminded of the Council's 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.
  6. There are currently four schools in a deficit position. Three of the four schools already have an approved recovery plan in place which will eradicate deficits over the next three to four years.
  7. Pendoylan Church in Wales Primary School is the only school in a deficit position that does not yet have a recovery plan in place. Following challenge from the Local Authority, the governing body and new Head teacher agreed that a revised recovery plan would be submitted to the Director of Learning and Skills in September 2017. If this plan is not agreed, then the Local Authority has indicated an intention to remove the school's delegated budget in line with the Local Authority's Fair Funding Scheme, the School Funding (Wales) Regulations 2010 and the School Standards and Framework Act 1998.

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

Trevor Baker, Head of Strategy, Community Learning and Resources

Carolyn Michael, Operational Manager, Accountancy

Victoria Davidson, Operational Manager, Legal Services

Responsible Officer:

Paula Ham, Director of Learning and Skills