Hampshire County Council

Schools Forum Item 11

22 October 2014

Schools Budget Update – 2014/15 and 2015/16

Report of the Director of Corporate Resources – Corporate Services and Director of Children’s Services

Contact: Contact Name, 01962 847545; [email protected]

1 Summary

1.1 The report provides the latest forecast on the schools budget for 2014/15, showing a forecast £2.3m underspend as at the end of August 2014. 1.2 Some early consideration of the 2015/16 budget is provided and Schools Forum’s support for the continuation of the funding of de-delegated and central services is sought. However, the 2015/16 budget will be considered in more detail at Schools Forum in December before being finalised at the January 2015 meeting.

2 2014/15 Budget

2.1 The total Dedicated Schools Grant for 2014/15 is £850.4m, prior to any recoupment for academies. The DSG is broken down over the blocks, as follows:

Block Amount

£000

Schools 700,233

Early Years 49,878

High Needs 90,396

Non-block addition 9,877

Total 850,384

2.2 The cash limit figures in this report reflect adjustments made to date for any schools that have converted to academy. They also reflect previous

- 1 - decisions made by Schools Forum to release one-off funding brought forward from previous years. The DSG figure in Appendix 1 is £687.653m (£728.405m less specific grants of £40.752m).This is made up as follows:

£0 £000 00

DSG allocation (June) 692,4 23

Adjustment for Berewood (255) Academy

692,1 68

Early years adjustment 790

Brought forward amounts:

3 Early Years (bal from 2009/10) 52 9

4 Early Years flexibility 50 0

5 Glazing Surveys 35 1,379 0

Less: CERA (managed by (6,684 P&R) )

Total 687,6 53

5.1 The forecast year end position for 2014/15, as at 31 August 2014, is an underspend of £2.348m. This is summarised as follows:

Current Forecast Forecast variance Block budget outturn £000 £000 £000 % Schools 541,359 539,692 (1,667) (0.3) Early Years 61,863 60,447 (1,416) (2.3) High Needs 84,431 85,166 735 0.1

- 2 - Total DSG 687,653 685,305 (2,348) (0.3) Grants (Pupil Premium etc) 40,752 40,893 0 0

Total 728,405 726,057 (2,348) (0.3)

5.2 Further breakdown of these figures is provided in appendix 1. The main variances include underspends on: Two year old free entitlement, Pupil Growth / Infant Class Sizes and Combined Locality Teams. Pressures on High Needs top-up funding and Independent and non-maintained special schools are also highlighted.

5.3 The forecast has been pulled together from the new Business Planning and Consolidation (BPC) system. BPC produces automated forecast using one of eight forecast drivers e.g. actual to date. Therefore, some forecasts may not reflect any management actions that would have previously been captured.

Two year old free entitlement - £1.543m underspend

5.4 The forecast underspend is 16.6% of the budget. This primarily relates to a lower take up of hours.

5.5 Significant work is being undertaken to encourage and reach out to all eligible children. However, it is still an ongoing challenge to engage all eligible families. The targeted number of two year old children has been identified and places made available within Hampshire provision. However, there are several reasons why parents are still not choosing to engage in the programme, such as:

 Parents believe children are too young.

 The setting of their choice does not provide for 2 year olds. Services for Young Children have engaged with the settings where parents prefer to take up their 2 year old places and have offered additional support from within the trajectory funds. Often the providers do not want to reduce their age range and parents do not want to go to another provider in the locality. Alternatively, settings think the hourly rate of £5.07 is not sufficient to cover their costs. Feedback from providers suggests they are running on a deficit by taking on 2 year olds. They have stated that 2 year old places do not generate much income outside of the free 15 hours for these children unlike the universal 3 & 4 year old offer.

 Parents feel that 15 hours is too much for children when they first begin early years education so children are taking up reduced hours.

- 3 -  Some parents believe there is a stigma attached with free funding, unlike the universal 3 and 4 year old offer.

Pupil Growth / Infant Class Sizes - £854,000 underspend

5.6 The forecast underspend is 15.5% of the budget and relates to a reduction in estimated costs relating to implementing additional classes to deal with the increase in primary age pupils (‘growing schools’), although the budget was supplemented by additional rate rebates, as agreed by Schools Forum. However, there is an emerging pressure on temporary classroom rentals, estimated at £500,000 for 2014/15, that has not yet been reported. Modular buildings (temporary classrooms) on school sites are generally used to address a short-term accommodation need. The pressure on this year’s budget has largely come about from the Hampshire school places system being full, a pressure from in year admissions and the increased cost of modular buildings. More detail will be included in the next budget report.

High Needs Top-Up Funding (Statemented Pupils) - £473,000 overspend 5.7 This overspend (8.5% of the budget), consists of:

 an overspend on the special discretionary grants of £228,000, which is in line with the overspend at the end of last financial year (£214,000).  an overspend on the statemented pupils budget of £244,000. This is due to the increased number of statements being issued.

Locality Teams - £301,000 underspend 5.8 This underspend (18.7% of budget) forecasting model, which does not take account of current vacancies that will be recruited to during the year. This is being reviewed with the relevant senior managers in line with Early Help structure development.

Independent and Non-maintained special schools - £440,000 overspend

5.9 This forecast overspend is 4.0% of the budget and reflects an increase in pupil numbers (from 217 at this time last year to 250 now) and an increasing number of placements following tribunals.

Other comments 5.10 As previously agreed by Schools Forum, provision has been made for the following one-off amounts in 2014/15:

 £350,000 for glazing risk assessments in all schools

- 4 -  £500,000 to allow early years providers to increase their flexibility in service provision. 5.11 Schools Forum also agreed the transfer of £700,000 from revenue (trajectory funding) to capital to support proposals to develop capacity for places for two year olds. This was subject to the approval of the secretary of state. Approval in principle has subsequently been received.

6 2015/16 to 2016/17 budget

6.1 There are no changes to the underlying assumptions for 2015/16 that were set out in the previous budget report to Schools Forum in July 2014 i.e. a ‘flat cash’ settlement, which means that there will be no increase in cash for any pay increases or inflation. 6.2 Schools Forum has made some commitments in terms of the 2015/16 to 2016/17 budget: 7 £1.643m to be applied to Early Years Services currently funded by the local authority (to be reviewed as part of the 2017/18 budget setting process)

8 Continuation of £2.1m funding for Early Years in respect of funding previously used on a one-off basis through DSG carry forward (£1.6m on two year olds, £0.5m on three and four year old provision)

8.1 The impact of the above proposals is that the balance of funds brought forward from previous years, excluding the equal pay fund, will almost be exhausted by March 2017. Any underspend in the current fincial year will give some additional capacity for one-off funding in future years. 8.2 There is about £1m that could be released on an ongoing basis from 2014/15, arising primarily from an increase in rate rebates. Further ongoing funding could also potentially be released from the Growth Fund in the future. However, further work will be required on this to ensure that future capacity can be met. 8.3 In order to assist with budget planning, Schools Forum is requested to confirm ongoing support into 2015/16 in respect of those services that are currently de-delegated and other services that are managed from centrally retained budgets. De-delegation of services 8.4 The EFA has confirmed that there will be no changes to those services that are de-delegated, or the processes and procedures for this. As a result, de-delegation is still not an option for academies, special schools, nurseries or education centres. 8.5 The services that are de-delegated in 2014/15 are:

- 5 - Service Basis Prim Se Tota ary co l nd ar y £000 £0 £000 00 Contingencie AWPU 96 35 131 s Licences and AWPU 87 31 118 Subscriptions Staff Costs AWPU 302 18 490 8 Behaviour IDACI and Low 1,87 73 1,94 Support attainment 5 8 Ethnic EAL and 1,05 16 1,22 Minority and AWPU 5 7 2 Traveller Achievement Service (EMTAS) Total 3,41 49 3,90 5 4 9

8.6 De-delegated services must be agreed yearly by Schools Forum members representing primary and secondary maintained schools, voting separately. Members are asked to confirm that these services should continue to be delegated in 2015/16. Centrally retained services 8.7 Funding for some services can continue to be centrally retained before allocating the school formula. Schools Forum agreement is required on an annual basis to continue with the centrally retained services. 8.8 Below is a summary of services and 2014/15 budgets: Service £000 Growth Fund (Growing Schools, Falling Rolls, 5,497 New & Reorganising schools, Infant Class Size, Temporary Classroom rentals)

- 6 - Admissions 996 Prudential Borrowing 25 Termination of employment costs 658 Fees to Independent Schools for pupils without 220 SEN Servicing of Schools Forum 39 Capital Expenditure from Revenue Account 6,684 (CERA) Contribution to combined budgets (Early Help, 1,943 NEET) Total 16,062

8.9 Schools Forum will continue to be informed of any unspent growth or falling rolls funding remaining at year-end. Any balances held against any centrally retained funding may be carried forward to the following financial year. Minimum Funding Guarantee (MFG) and Cap 8.10 A separate paper on this agenda considers options for reviewing the impact of the Minimum Funding Guarantee (MFG) and the Cap applied to budget shares. Subject to Schools Forum consideration, it might be possible to consider a mixture of permanent funding and one-off funding over the next two years. Other DfE consultations 8.11 A number of recent Department for Education (DfE) consultations will also impact on the budget proposals. These are considered briefly in the following paragraphs and in more detail in other papers on this agenda.

8.12 In the budget paper to Schools Forum in July 2014, there was reference to a DfE consultation on proposals for an Early Years Pupil Premium for 3 and 4 year olds and a move to participation for 2 year olds – effective from April 2015. The consultation closed on 22 August 2014. No further information has been received. The consultation document can be found at: https://www.gov.uk/government/consultations/early-years-pupil- premium-and-funding-for-2-year-olds 8.13 The DfE is currently consulting on the ‘School and Early Years Finance (England) Regulations 2014’, due to come into effect on 1 January 2015. The proposed changes to current regulations reflect known changes to the school funding formula and other issues within the operational guidance. These are considered in another paper on this agenda. The consultation can be found at: https://www.gov.uk/government/consultations/school-and-early-years- finance-england-regulations-2014

- 7 - 8.14 At the meeting in May 2014 Schools Forum agreed a response to the Government’s consultation on ‘Fairer Schools Funding 2015/16’. The key outcomes of this are:

9 Allocation of £390m to the ‘least fairly funded authorities’ (increased from £350m in the consultation) – nothing for Hampshire

10 Outline intentions to reform systems for funding high needs and early years pupils in the future

11 Two changes to the operation of the sparsity factor (discussed in the school funding formula paper)

12 Move towards a single system of funding for academies – no impact on Hampshire

13 Minor changes to how schools will contribute towards meeting obligations under the Government’s carbon reduction commitment. This is a £7.51 per pupil reduction in DSG from 2015/16 (after adjusting for minimum funding levels)

14 A number of technical changes to high needs funding arrangements for 2015/16 (covered in a separate report on this agenda)

14.1 The outcome can be found at: https://www.gov.uk/government/publications/fairer-schools-funding- arrangements-for-2015-to-2016.

Other comments 14.2 At Schools Forum in July there was some discussion on Government proposals for the ending of contracted-out pensions for employers and employees from 6 April 2016, as a new single tier state pension scheme is phased in. The Government has recently consulted on these proposals, including the potential impact on employer costs. This is an extract from the consultation: “This will mean an increase in respect of each contracted-out employee of 3.4 per cent of relevant earnings”. The full document can be found at: https://www.gov.uk/government/uploads/system/uploads/attachment_dat a/file/309004/occupational-pension-schemes-contracting-out-abolition- consultation.pdf

14.3 The financial impact will depend on the numbers and salaries of staff. This is a pressure that is also being factored into local authority financial planning assumptions. 14.4 On the local authority non-schools budget, children’s services is preparing for further significant savings from 2017/18, in the order of £20m as its share of the overall estimated savings requirement of about 100m. This programme is referred to as ‘Transformation to 2017’, and is included as a separate discussion item on this agenda.

- 8 - 14.5 A detailed report on the 2015/16 schools budget will be submitted to Schools Forum in December 2014, with final approval to be made in January 2015.

15 Recommendations

15.1 It is recommended that Schools Forum notes the current position on the 2014/15 budget. 15.2 It is recommended that member representatives of primary schools and secondary schools, voting separately, agree to continue with de- delegated services as set out in paragraph 3.7. 15.3 It is recommended that Schools Forum agrees to continue to make provision for centrally retained services in 2015/16, as set out in paragraph 3.10. 15.4 It is recommended that Schools Forum notes the current position on the 2015/16 budget.

- 9 - Appendix 1 – Schools Budget position as at 31 August 2014

CHILDREN'S SERVICES DEPARTMENT 2014/15 Budget Monitoring Summary Position as at 31st August 2014 Description Current Budget Period 5 Forecast 2014/15 Period 5 Variance

£000 £000 £000 % SCHOOLS BUDGET

2 Year Old Free Entitlement Funding 9,278 7,735 (1,543) (16.6) 3-4 Year Old Free Entitlement 49,254 49,278 24 0.0 Early Years ISB 540 540 0 - Early Years Central Expenditure 2,791 2,894 103 3.7 Early Years Block 61,863 60,447 (1,416) (2.3) Schools Budget Shares 526,794 526,794 0 - De-delegated: - Schools Contingency 131 131 0 - - Licences / Subscriptions 118 107 (11) (9.3) - Staff Supply Cover (Not Sickness) 490 479 (11) (2.2) - Behaviour Support Teams 1,948 1,829 (119) (6.1) - Support to UPEG and Bilingual Learners 1,222 1,168 (54) (4.4) Combined Budgets: - Locality Teams 1,610 1,309 (301) (18.7) - NEET Tracking 333 242 (91) (27.3) Central Budgets: - Central Management 656 608 (48) (7.3) - Copyright 475 475 0 - - Headteachers Conference 147 140 (7) (4.8) - Pupil Growth / Infant Class Sizes 5,497 4,643 (854) (15.5) - Termination of Employment costs 658 658 0 - - Admissions Service 996 970 (26) (2.6) - Servicing to Schools Forum 39 39 0 - - Prudential Borrowing 25 0 (25) (100.0) - Fees to Independent Schools without SEN 220 100 (120) (54.5) Schools Block 541,359 539,692 (1,667) (0.3) Special schools Place Funding 21,427 21,427 0 - Resourced Provision Place Funding 4,402 4,402 0 - Education Centre Place Funding 4,192 4,192 0 - Special Schools - Top-Up Funding 13,676 13,676 0 - Resourced Provision - Top-Up Funding 2,259 2,259 0 - Education Centres - Top-Up Funding 3,910 3,910 0 - Statemented - Top-Up Funding 5,567 6,040 473 8.5 Post 16 - Top-Up Funding 7,091 7,091 0 - OLA - Top-Up Funding 2,600 2,630 Early Years SEN Funding 2,196 2,250 54 2.5 High Needs Contingency 0 2 2 - Hospital Education Provision 259 238 (21) (8.1) Support for Inclusion - EOTAS/EIS 1,504 1,406 (98) (6.5) Independent & Non-Maintained Special Schools 10,922 11,362 440 4.0 Specialist Teacher Advisory Service (STAS) 2,182 2,182 0 - SEN Other 1,729 1,584 (145) (8.4) Support for Inclusion - SfYC 515 515 0 - High Needs Block 84,431 85,166 735 0.9 Pupil Premium and Other School Grants 39,406 39,406 0 - Music Grant 1,346 1,346 0 - Grants 40,752 40,752 0 - Total Schools Budget 728,405 726,057 (2,348) (0.3)

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