Recommendations of the Schools Block Working Group Annex
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LANCASHIRE SCHOOLS FORUM Date of meeting 4 July 2017 Item No 6 Title: Recommendations of the Schools Block Working Group Annexes 1, 2, 3 and 4 refer Executive Summary On 20 June 2017, the Schools Block Working Group considered a number of reports, including: o 2016/17 Schools Budget Outturn Report – Schools Block; o School Balances and Clawback 2016/17; o Schools Block Budget; o Schools Heading Towards Financial; o School Expansion Policy (Growth Fund); o Devolved Formula Capital (DFC); o Charging for Admissions Appeals; o Payment and Recoupment of DSG Funding for Non Maintained Establishments; o Urgent Business Procedure: DfE Consultation: Changes to the criteria for agreeing loan schemes; o Schools Financial Value Standard (SFVS); o Surface Water and Highways Drainage Charges; o Schools Forum Annual Report 2016/17; o Any Other Business; o Venue for Future Meetings. A summary of the key issues and recommendations arising from the Working Group's considerations of the items are provided in this report. Recommendations The Forum is asked to: a) Note the report from the Schools Block Working Group held on 20 June 2017; b) Ratify the Working Group's recommendations. Background On 20 June 2017, the Schools Block Working Group considered a number of reports. A summary of the key issues and recommendations arising from the Working Group's considerations of the items are provided in this report. 1. 2016/17 Schools Budget Outturn Report – Schools Block In advance of expected national regulations to ring-fence the Schools Block ahead of the proposed Schools National Funding Formula (SNFF), the Forum has agreed that in principle the Lancashire allocations will be ring-fenced in the first instance. A report was presented providing information on the Schools Budget outturn position for 2016/17, for the Schools Block. The table below shows the Schools Block outturn position for 2016/17. Budget Actuals Variance £m £m £m Central Services 1.278 1.288 0.010 Commissioned Services 2.399 1.982 -0.417 Schools Delegated 612.757 611.383 -1.374 De-delegated 2.330 2.330 0.000 DSG Grant -618.764 -616.392 2.372 Total 0.000 0.591 0.591 Commentary The overall Schools Block budget at 31 March 2017 shows an overspend of £0.591m. Further details were provided on the individual budget lines. Key variances were largely attributable to reduced income and expenditure relating to schools that closed/academised in year and to an underspend on the School Re-organisation budget, as fewer pupil were admitted at expanding schools than were forecast. Reserves and Provisions A number of earmarked reserves and provisions are maintained by the Authority for specific purposes. As at 31 March 2017 these amounted to a total of £72.390m for Schools, as set out in the table below: Opening Transfers Transfers Closing Schools Reserves and Provisions Balance In Out Balance £m £m £m £m DSG Reserve Opening Balance 20.152 20.152 Underspend 16/17 0.593 0.593 Other Adjustments -0.468 -0.468 1 DSG Reserve 20.152 0.593 -0.468 20.278 Schools in Financial Difficulty Opening Balance 4.546 4.546 Schools Clawback for 15/16 0.054 0.054 Underspend 16/17 0.613 0.613 2 Schools in Financial Difficulty 4.546 0.667 0.000 5.213 De-delegated Reserve Opening Balance 0.712 0.712 Overspend 16/17 -0.049 -0.049 3 De-delegated Reserve 0.712 0.000 -0.049 0.662 Supply Teacher Reimbursement Opening Balance 0.689 0.689 Underspend Teaching Supply 16/17 0.294 0.294 Overspend Non Teaching 16/17 -0.026 -0.026 4 Supply Teacher Reimbursement 0.689 0.294 -0.026 0.956 School Reserves Opening Balance 53.713 53.713 Schools operating in year surplus 5.157 5.157 Schools operating in year deficit -13.874 -13.874 Closed school deficit moved to DSG 0.499 0.499 Academy School closed in year -0.215 -0.215 5 School Reserves 53.713 5.656 -14.089 45.280 Total Schools Reserves and Provisions 79.812 7.210 -14.632 72.390 Commentary The Total Schools Reserves and Provisions at 31 March 2017 of £72.390m is a reduction from the position in previous years, which equated to £79.812m at 31 March 2016 and £89.890m at 31 March 2015. This equals a reduction in overall reserves of £17.5m over the last two years, although it was noted that in overall terms the reserves remained in a fairly stable position. Further information was provided in connection to the 2016/17 movement in Schools Reserves and Provisions. Assurances were provided that the premiums would be adjusted in future years to ensure the non-teaching element of the Staff Supply Scheme became self financing and it was noted that reports would be provided to a future meeting about proposals for 2018/19 scheme arrangements The Working Group: a) Noted the report and the 2016/17 Schools Budget final financial outturn position in relation to the Schools Block; b) Noted that further reports would be presented about the staff supply scheme in due course. 2. School Balances and Clawback 2016/17 This report set out the year end position of schools' delegated budgets at 31 March 2017 and it was noted that the final outturn position against schools delegated budgets at 31 March 2017 was an overspend of £8.716m. This meant that school balances have decreased by £8.716m in 2016/17, to a total of £44.997m. Further analysis if the balances position was provided 2016/17 School Balances - In-Year Movement of Balances by Phase Opening Balance In Year Movement Closing Balance Phase 1/04/16 16/17 31/03/17 £ £ £ Nursery 846,543 -46,335 800,209 Primary 36,874,434 -2,871,201 34,003,233 Secondary 10,579,858 -6,157,401 4,422,457 Special 4,489,959 723,455 5,213,413 Short Stay 922,325 -365,000 557,325 Total 53,713,118 -8,716,481 44,996,637 The outturn position reveals that school balances have decreased by over 16% at 31 March 2017, which is largest single year reduction on record, and reflects the increasing financial pressure on school budgets. 2016/17 School Balances –In-Year Movement Count of Schools by Phase Count of deficit in Count of surplus in Phase year year Nursery 13 11 Primary 293 181 Secondary 47 15 Special 9 19 Short Stay 6 3 Total 368 229 Overall, 368 schools (62%) operated an in year deficit in 2016/17, spending funding from reserves. This compares to 276 schools in 2015/16 and 256 in 2014/15. 2016/17 School Balances – No of Schools in Surplus/Deficit by Phase Count of Deficit Count of Surplus Phase close balance close balance Nursery 5 19 Primary 17 457 Secondary 14 48 Special 2 26 Short Stay 2 7 Total 40 557 40 schools ending the year in deficit. This compares to 25 schools with deficit balances at 31 March 2016 and 18 schools with deficit balances at 31 March 2015. There are schools from every sector facing financial difficulty and ending the year in deficit. Forecasting The reduction in schools balances to £44.996m (including closures/academy conversions), compares to a forecast reduction in balances to £23.689m, which was indicated by schools’ spending plans for 2016/17. As the Forum are aware, it is not uncommon for the actual outturn to deviate from school forecasts and the table below has been updated for the 31 March 2017 figures: 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 £m £m £m £m £m £m £m £m Total Forecast outturn 18.466 24.722 30.018 38.687 35.526 39.103 31.648 23.689 Total Actual outturn 39.823 47.317 52.225 51.480 55.854 56.373 53.946 44.996 Total Variance 21.357 22.595 22.207 12.793 20.328 17.270 22.298 21.307 Percentage Variance 116% 91% 74% 33% 57% 44% 70% 90% Governors Financial Training The county wide finance governor training programme is now delivered by Schools Financial Services and a handful of schools have also taken the opportunity to request school specific training. This latter part of the programme is looking to be expanded subject to resources. School Closures/Academy Conversions During 2016/17, one secondary school closed, with a deficit balance which was a charge on the DSG reserve. The table below shows the impact of these closures/conversions on the school balances position at 31 March 2017. Balance Carried Balance Carried Balances paid Closed school Forward as at 31 Forward as at 31 to or accrued in 2016/17 March 2017 after March 2017 Phase for Academies balance deducting including schools Conversions transferred to Academy converted to 2016/17 DSG reserve conversions & Academy Closed Schools £ £ £ £ Nursery 800,209 800,209 Primary 34,003,233 34,003,233 Secondary 4,422,457 -197,067 -498,988 5,118,511 Special 5,213,413 411,872 4,801,541 Short Stay 557,325 557,325 Total 44,996,637 214,805 -498,988 45,280,820 These adjustments mean that the final level of aggregate school balances at 31 March 2017 equates to £45.281m. Individual School Balances Attached at Annex 1 to the report are details about the movement in balances at an individual school level in 2017/18. As previously requested by the Forum, in addition to the year-end balance by school, information is included in this annex setting out: Year-end balance adjusted for approved exemptions; Adjusted balance as a % of CFR income; Adjusted balance per pupil.