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Local Management of Schools Scheme for Herefordshire (LMS)

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Local Management of Schools Scheme for Herefordshire (LMS) THE HEREFORDSHIRE COUNCIL’S SCHEME FOR FINANCING MAINTAINED SCHOOLS OR LOCAL MANAGEMENT OF SCHOOLS (LMS) Revised 1st JANUARY 2019 Malcolm Green, Herefordshire Council, PO Box 4, Plough Lane, Hereford, HR4 0LE [email protected] www.herefordshire.gov.uk Telephone: (01432) 260818 Purpose The scheme sets out the rules and conditions governing the financial relationship between schools and the Local Authority (LA). It provides a reference for school staff and Governors towards understanding their duties and responsibilities as well as rights and entitlements. The Council strongly believes that governing bodies should have wide discretion to manage school-based resources. Accordingly, the Council aims - (i) to secure the maximum level of budget delegation for schools compatible with the LA's responsibilities and the wishes of schools; (ii) to keep to a minimum the disruption to any school; (iii) to ensure that the Council can meet its statutory responsibilities for the education service. The scheme addresses the resources needs of all types of school, including by providing support for the Council's many small schools. The main scheme (Chapters 1-14) were framed by the Department for Education (DfE) and adapted where local conditions vary. The supporting annexes provide more information and explanation about the formula, delegation and charging arrangements, as well as opportunities for central funding. HEREFORDSHIRE COUNCIL’S SCHEME FOR FINANCING MAINTAINED SCHOOLS LIST OF CONTENTS Page 1. INTRODUCTION 1.1 The funding framework 1 1.2 The Role of the Scheme 3 1.2.1 Application of the Scheme to the Council and maintained schools 3 1.3 Publication of the Scheme 3 1.4 Revision of the scheme 3 1.5 Delegation of powers to the headteacher 3 2. FINANCIAL REQUIREMENTS 5 2.1.1 Application of financial controls to schools 5 2.1.2 Provision of financial information and reports 5 2.1.3 Payment of salaries and bills and collection of income 5 2.1.4 Control of assets 6 2.1.5 Accounting policies (including year-end procedures) 6 2.1.6 Writing off of debts 6 2.1.7 Formula allocations for the Financial Year 6 2.2 Pay and price base for budgets 7 2.3 Submission of budget plans 7 2.3.1 Multi-year budget forecasts 7 2.4 Best value 8 2.5 Virement 8 2.6 Audit: General 9 2.7 Separate external audits 9 2.8 Audit of voluntary and private funds 9 2.9.1 Register of business interests 9 2.9.2 Declaration of interests 9 2.10 Purchasing, tendering and contracting requirements 10 2.11 Application of contracts to schools 10 2.12 Central funds and earmarking 10 2.13 Spending for the purposes of the school 11 2.14 Capital spending from school formula budgets 11 2.15 Notice of concern 11 3. BANKING ARRANGEMENTS AND FORMULA BUDGET INSTALMENTS 13 3.1 Frequency of instalments 13 3.2 Proportion of budget payable at each instalment 13 3.3 Interest on late budget share payments 13 3.4 Formula allocation for closing schools 13 3.5 Bank and building society accounts 13 3.5.1 Restrictions on external bank and building society accounts 14 3.5.2 Imprest accounts 14 3.6 Investments and borrowing by schools 15 3.7 Procurement cards 15 4. TREATMENT OF SURPLUSES AND DEFICIT BALANCES ARISING IN RELATION TO SCHOOL FORMULA BUDGETS 16 4.1 Carry forward between financial years 16 4.2 Reporting on the intended use of surplus balances 16 4.3 Interest on surplus balances 16 4.4 Obligation to carry forward deficit balances 16 4.5 Planning for deficit balances 16 4.6 Charging of interest on deficit balances 16 4.7 Writing off deficits 16 4.8 Balances of closing and replacement schools 17 4.9 Licensed deficits 17 4.10 Loan schemes 17 5. INCOME 18 5.1 Income from lettings 18 5.2 Income from fees and charges 18 5.3 Income from fund raising activities 18 5.4 Income from the sale or leasing of assets 18 5.5 Administrative procedures for the collection of income 18 5.6 Purposes for which income may be used 18 6. THE CHARGING OF SCHOOL FORMULA BUDGETS 19 6.1 General provision 19 6.2 Circumstances in which charges to schools may be made 19 6.3 General Teaching Council 20 7. TAXATION 21 7.1 Value Added Tax 21 7.2 Construction Industry Tax Scheme 21 8. THE PROVISION OF SERVICES AND FACILITIES BY THE AUTHORITY 22 8.1 Provision of services from centrally retained budgets 22 8.2 Timescales for the provision of services bought back from the LA 22 8.2.1 Packaging of services 22 8.3 Service level agreements (SLAs) 22 8.4 Teachers’ pensions 23 9. PFI CLAUSES 23 10. INSURANCE 24 10.1 Insurance cover 24 10.2 Insurance – Additional covers 25 11. MISCELLANEOUS 26 11.1 Right of access to information 26 11.2 Liability of governors 26 11.3 Governors expenses 26 11.4 Responsibility for legal costs 26 11.5 Health and Safety 26 11.6 Right of attendance for Chief Finance Officer 26 11.7 Delegation to new schools 26 11.8 Optional delegated funding 27 11.9 Spending of resources 27 11.10 Interest on late payments 27 11.11 Whistleblowing 27 11.12 Child protection 27 11.13 School meals 28 12. RESPONSIBILITY FOR REPAIRS AND MAINTENANCE 29 13. PROVISION OF COMMUNITY FACILITIES IN SCHOOLS 30 13.1 Introduction 30 13.2 Consultation with the Council-financial aspects 30 13.3 Funding agreements –LA powers 30 13.4 Other prohibitions, restrictions and limitations 31 13.5 Supply of financial information 31 13.6 Audit 31 13.7 Treatment of income and surpluses 31 13.8 Health and safety matters 32 13.9 Insurance 32 13.10 Taxation 32 13.11 Banking 32 For a full list of annexes, please see page 33. THE OUTLINE SCHEME References throughout this statutory guidance to: “the Act” are to the School Standards and Framework Act 1998 ; “the authority” means the local authority; and “the Regulations” are to the School and Early Years Finance (England) Regulations 2012 made under the Act. The Regulations state that schemes must deal with the following matters: 1. The carrying forward from one funding period to another of surpluses and deficits arising in relation to schools’ budget shares. 2. Amounts which may be charged against schools’ budget shares. 3. Amounts received by schools which may be retained by their governing bodies and the purposes for which such amounts may be used 4. The imposition, by or under the scheme, of conditions which must be complied with by schools in relation to the management of their delegated budgets and of sums made available to governing bodies by the authority which do not form part of delegated budgets, including conditions prescribing financial controls and procedures. 5. Terms on which services and facilities are provided by the authority for schools maintained by them 6. The payment of interest by or to the authority. 7. The times at which amounts equal in total to the school’s budget share are to be made available to governing bodies and the proportion of the budget share to be made available at each such time 8. The virement between budget heads within the delegated budget. 9. Circumstances in which a local authority may delegate to the governing body the power to spend any part of the authority’s non-schools education budget or schools budget in addition to those set out in section 49(4)(a) to (c) of the 1998 Act. 10. The use of delegated budgets and of sums made available to a governing body by the local authority which do not form part of delegated budgets. 11. Borrowing by governing bodies . 12. The banking arrangements that may be made by governing bodies. 13. A statement as to the personal liability of governors in respect of schools’ budget shares having regard to section 50(7) of the 1998 Act 1 14. A statement as to the allowances payable to governors of a school which does not have a delegated budget in accordance with the scheme made by the authority for the purposes of section 519 of the 1996 Act. 7 15.The keeping of a register of any business interests of the governors and the head teacher 16. The provision of information by and to the governing body. 17. The maintenance of inventories of assets . 18. Plans of a governing body’s expenditure. 19. A statement as to the taxation of sums paid or received by a governing body. 20. Insurance. 21. The use of delegated budgets by governing bodies so as to satisfy the authority’s duties imposed by or under the Health and Safety at Work etc Act 1974. 22. The provision of legal advice to a governing body . 23. Funding for child protection issues. 24. How complaints by persons working at a school or by school governors about financial management or financial propriety at the school will be dealt with and to whom such complaints should be made . 25. Expenditure incurred by a governing body in the exercise of the power conferred by section 27 of the 2002 Act. 2 SECTION 1: INTRODUCTION 1.1 The Funding Framework The funding framework which replaces Local Management of Schools is set out in the legislative provisions in sections 45-53 of the School Standards and Framework Act 1998. Under this legislation, local authorities determine for themselves the size of their schools budget and their non-schools education budget – although at a minimum an authority must appropriate its entire Dedicated Schools Grant to their schools budget.
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