The Vale of Glamorgan Council

Learning and Culture Scrutiny Committee: 19th June 2018

Report of the Director of Learning and Skills

Schools Balances as at 31st March 2018

Purpose of the Report

To inform Members of the level of school balances as at 31st March 2018.

Recommendation

Members note the level of school reserves and the arrangements in place to monitor and challenge school balances where appropriate.

Reason for the Recommendation

To ensure the Learning and Culture Scrutiny Committee is aware of the level of school balances.

Background

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.
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.
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.
Schools are encouraged to spend current funding on current pupils and should not accumulate balances greater than 5% of the budget share.
Governing bodies are required to report to the Director of Learning and Skills on the planned use of surplus balances that exceed 5% or £10,000, whichever is greater.
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.
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.
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.
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.
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.
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

There are 55 schools maintained by the Vale of Glamorgan Council inclusive of 2 nursery schools, 44 primary schools, 7 secondary schools, one all through school (age 3-19) and one special school.
The 2017/18 delegated schools budget totalled £82,957,000 and a further £15,094,000 was allocated to schools via grants from the Welsh Government.
The overall level of school balances on 1st April 2017 was £2,321,817 which increased to £2,622,733 by 31st March 2018. This increase to school balances of £300,916 is largely due to a last minute unforeseen Welsh Government School Maintenance grant awarded in March 2018 amounting to £610,807. Schools were permitted to offset expenditure incurred in 2017/18 against this grant which in effect then inflated the year end school balances. Had this grant not been awarded, school balances would have decreased by £309,000.
Total school balances have decreased by 34% over the eight year period from April 2011 to March 2018. A full list of schools balances over the last eight financial years is included at Appendix A.
Three schools ended the 2017/18 financial year in a deficit position:

Pendoylan Church in Wales primary school ended the 2017/18 financial year in a deficit of £49,736. This is the fifth consecutive year that the school has out-turned in a deficit position. The reason the deficit has occurred is that the school had offered a full time nursery provision whilst Vale of Glamorgan Schools only receive funding to offer a part time nursery provision. The Governing Body and Headteacher have implemented a recovery plan which should see the deficit eradicated by the end of the 2019/20 financial year. The school has now registered with CIW as a registered childcare provider. The recovery plan is reliant upon the income generated from offering an afternoon childcare provision to existing nursery pupils.
Ysgol Bro Morgannwg has ended the 2017/18 financial year in a deficit of £52,067. The Governing Body and the Headteacher are working on a sustainable budget and a recovery plan to eradicate this deficit over the next three financial years.
St Brides CIW Primary School has ended the 2017/18 financial year in a deficit of £9,247. This deficit has arisen as a result of additional capital works carried out at the school which resulted in an overspend on the capital scheme of £63,000. The school also funded the VAT on the capital project which amounted to £109,000. The council is unable to reclaim VAT on Voluntary Aided faith schools and therefore this VAT bill was payable from the schools balance.
St Cyres Comprehensive School is no longer in a deficit position and has recovered the previous deficit budget two years sooner than originally planned.
Fairfield Primary school and Ysgol Gymraeg Sant Baruc are also no longer in deficit positions.

Nursery school balances amounted to £36,353 at the 1st April 2017 and increased to £36,919 by 31st March 2018. This increase of £566 equates to an increase of 1.5% on the opening balance position. The school maintenance grant awarded to Nursery schools in March 2018 was £5,423. Without this last minute grant the nursery school balances would have decreased by £4,857. 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.
Primary school balances totalled £1,640,123 at 1st April 2017 which increased to £1,806,520 by 31st March 2018. This increase of £166,397 amounts to an increase of 10% on the opening balance position. The School Maintenance grant awarded to primary schools in March 2018 was £379,820. Without this grant, primary balances would have decreased overall by £213,423. There were 19 primary schools with a balance in excess of 5% on 31st March 2018 and 21 schools held balances in excess of the £50,000 specified by Welsh Government. Two primary schools were in a deficit position at 31st March 2018.
Secondary school balances totalled £529,299 on 1st April 2017 which increased to £731,790 by 31st March 2018. This increase of £202,491 amounts to an increase of 38% on the opening balance. The school maintenance grant awarded to secondary schools in March 2018 was £193,121. 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.
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 £55,514 on 1st April 2017 but the school ended the financial year in a deficit of £52,067. This movement of £107,581 in in addition to a balance reduction of £195,032 in the previous year. The school is currently working on a sustainable budget and a recovery plan to eradicate the deficit over the next three years.
The special school's balance totalled £60,528 on 1st April 2017 which increased to £99,571 by 31st March 2018. This increase of £39,043 equates to a 65% increase on the opening balance.
The schools balances will be reported to the schools Budget Forum on June 6th 2018.

Resource Implications (Financial and Employment)

Governing bodies must submit spending plans for schools surplus balances in excess of 5% of the schools budget share by 29th June 2018.
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.
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.
Governing bodies wishing to make changes to approved spending plans will need approval from the Head of Strategy, Community Learning and Resources.
Schools with deficit balances will be monitored against approved recovery plans.
The Council will remove the governing body's right to a delegated budget in the event of financial mismanagement.
There are currently three schools in a deficit position. Schools in a deficit position must submit recovery plans by May 31st 2018.

Sustainability and Climate Change Implications

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

Legal Implications (to Include Human Rights Implications)

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

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

Equal Opportunities Implications (to include Welsh Language issues)

There are no equal opportunity implications arising from this report.

Corporate/Service Objectives

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

Policy Framework and Budget

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

Consultation (including Ward Member Consultation)

Not applicable.

Relevant Scrutiny Committee

Learning and Culture Scrutiny Committee.

Background Papers

None.

Contact Officer

Nicola Monckton, Finance Manager, Learning and Skills

Officers Consulted

Lisa Lewis, Operational Manager Strategy Community Learning and Resources

Trevor Baker, Head of Strategy, Community Learning and Resources

Carolyn Michael, Operational Manager, Accountancy

Responsible Officer:

Paula Ham

Director of Learning and Skills