Formula Review Project Board
21 June 2010
Item No. 8
The Appropriateness of Retaining Funding Centrally
The Formula Review Project Board has been asked to look at the
appropriateness of retaining funding centrally, in particular for staff costs.
The current amounts retained from the Schools Budget (2010/11) are shown
below:
Centrally Retained DSG £m's
Support for Schools in Financial Difficulty 0.50
School Specific Contingencies 7.72
Early Years Contingency 0.43
Provision for pupils with SEN 4.62
Support for Inclusion 1.42
Fees for pupils with SEN at independent special schools &
abroad 9.33
Fees to Independent Schools for Pupils without SEN 0.10
Inter-authority recoupment 0.16
Pupil Referral Units 3.62
Behaviour Support Services 2.21
Education Out of School 3.41
14-16 More Practical Learning Options 1.40
School Meals 0.14
Free School Meals - Eligibility 0.02
Milk 0.01
School Admissions 0.53
Licences/Subscriptions 0.25
Miscellaneous (not more than 0.1% total of net SB) 0.29
Servicing of Schools Forums 0.06
Staff Costs - Supply Cover (not sickness) 2.57
Termination of Employment Costs 0.10
Capital Expenditure from Revenue 1.85
Retained Budget 40.74
Less LA contribution (0.23)
Less DSG Carried Forward (0.22)
Retained Budget (net, rounded) 40.29
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Ref: Centrally Retained Funding Page 1 of 9
Created By: Martin Brock
Date: June 2010
Comparison to Other LAs (2009/10 data)
Norfolk’s total Schools Budget is larger than any of the statistical neighbours.
Norfolk’s centrally retained funding, as a percentage of total mainstream
schools budget, is below the average of statistical neighbours. Norfolk
retained 8.3% of total mainstream schools budget in 2009/10, with only
Devon, Herefordshire, and Suffolk retaining lower percentages of 6.9%, 6.0%
and 7.0% respectively. These percentages exclude LA contributions and
DSG carried forwards.
The average percentage retained by statistical neighbours (i.e. excluding
Norfolk) was 8.9% in 2009/10. At this average level, Norfolk would have
retained a further £2.6m in 2009/10.
Appendix 4 shows the centrally held amounts of Norfolk and its statistical
neighbours.
For 2009/10, the total amounts held centrally were equivalent to:
Norfolk £354 per-pupil
Other LA’s £373 per-pupil (Average)
Lowest £273 per-pupil (Devon)
Highest £468 per-pupil (Derbyshire)
Therefore, Norfolk’s centrally held amount was below the average of the
statistical neighbours in 2009/10 when compared on a per-pupil basis.
A detailed breakdown is shown in Appendix 5.
2010/11 Changes
Norfolk’s retained percentage rose to 8.7% in 2010/11. Statistical neighbour
data is not yet available so it is not possible to compare the latest position.
The lowering of the ISB with the conversion to academies has an impact on
this percentage.
The changes for 2010/11, taken from the Section 251 Budget Statement,
were:
Support for Schools in Financial Difficulty £0.50m
School Specific Contingencies £1.41m
Support for Inclusion £0.22m
Fees to Independent Schools (Pupils without SEN) £0.10m
Behaviour Support Services £0.45m
Education out of School £0.23m
14-16 More Practical Learning Opportunities £0.23m
Termination of Employment Costs £0.10m
Other Standards Fund – Non Devolved £0.61m
Capital Expenditure from Revenue £0.85m
Other small reductions (£0.11m)
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Ref: Centrally Retained Funding Page 2 of 9
Created By: Martin Brock
Date: June 2010
Miscellaneous (Due to less LA money) (£1.94m)
Net Increase £2.65m
Centrally Held Staff Costs
The main focus of this paper is the retained budget for ‘Staff Costs – Supply
Cover’, although the following budgets also contain staffing costs:
Provision for Pupils with SEN
School Admissions
Pupil Referral Units
Behaviour Support Services
Inclusion
Termination of Employment Costs
Staff Costs – Supply Cover
Some school staff costs, e.g. supply cover for special circumstances, are paid
from centrally held DSG. This budget heading also includes separate budgets
for disabled staff and redeployment. The appropriateness of retaining funding
to meet these costs is considered below.
This budget can be broken down into the following areas:
Supply for Special Circumstances £0.27m
Maternity £1.77m
Suspended staff £0.27m
Disabled staff £0.06m
Redeployment £0.17m
Other £0.03m
The HR Manager is responsible for these budgets.
Supply for special circumstances – This budget provides supply cover for
teachers who are required to perform jury service, approved union business,
JCC duties and other similar special circumstances. In each of these cases,
the need for supply cover is brought about by circumstances beyond the
control of schools.
The 2010/11 budget is £265,550, which if distributed through AWPA would
equate to approximately £2.65 per-pupil. An average Primary school (139
pupils) would receive funding for approximately 2 days of supply cover if the
budget was distributed through AWPA, based on the average cost of supply
teaching (£177 per day).
Sickness cover is not provided through this budget. Schools are expected to
make their own arrangements for sickness cover, which in most cases is likely
to be for short periods. An amount for supply teachers is built into the current
and proposed AWPAs in recognition of this. In addition, schools have the
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Ref: Centrally Retained Funding Page 3 of 9
Created By: Martin Brock
Date: June 2010
opportunity to buy into a Sickness Insurance Scheme run by the authority
which offers protection against costs incurred due to long-term staff absence.
This budget had an underspend of £193,403 in 2009/10. The surplus amount
was credited to the schools’ contingency fund.
Conclusion
If funding for supply in special circumstances was delegated to schools, it
would be spread thinly, and would not pay the costs of even one day’s supply
cover in smaller schools. It seems appropriate where cover is needed for staff
performing special duties that the funding should be allocated on a case-by-
case basis from a central budget.
Maternity/Paternity Leave – The maternity/paternity leave budget is the
largest of the centrally supply cover budgets. The budget supports schools to
maintain staffing levels when they have a member of staff on
maternity/paternity leave. The budget is £1.77m, which would be equivalent
to approximately £17.70 per-pupil if distributed through AWPA. In many
cases it is unlikely that distribution of the budget through AWPA would provide
sufficient funds for a school to cover the costs of even one member of staff
during the period of maternity cover.
e.g. An average Primary school has 139 pupils. The school would receive a
total of £2,460 through AWPA (possibly less as this is based on an average
AWPA amount of £17.70 per-pupil). In the case of a Teacher, this is unlikely
to be sufficient to meet the costs of a month’s full-time salary, and certainly
would not be sufficient to provide cover for the length of maternity.
Furthermore, the worst case scenario would be if delegation of the maternity
budget meant that the possibility of requiring maternity cover and the
associated financial implications became factors in decision-making for
recruitment. This would be an unacceptable situation for all concerned.
A centrally-held budget overcomes this issue, supporting schools for the cost
of maternity/paternity cover on a case-by-case basis.
Alternative – Insurance Scheme
An alternative option, adding maternity to the Sickness Insurance Scheme,
would allow schools to buy-back maternity insurance from delegated funds.
The costs would need to be covered by the premiums received. Expenditure
has been increasing over the years, although the budget has been sufficient
to cover the costs in the last two years. The amount required for 2009/10 was
£1.43m.
The 2009/10 budget, £1.77m, would be equivalent to approximately £17.70
per-pupil if delegated through the AWPA.
As a guide, the additional premium per FTE would need to be:
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Ref: Centrally Retained Funding Page 4 of 9
Created By: Martin Brock
Date: June 2010
£1.77m/5,874 FTEs = £301 per FTE. (2009/10)
If we base the premium on the actual level of costs from 2009/10 (£1.43m),
the amount would be lower:
£1.43m/5,874 FTEs = £243 per FTE.
Therefore, the additional premium may need to be between £243 and £301
per FTE, making the cost of Sickness Insurance significantly more expensive
for all schools.
More detailed work would be needed to establish the different levels of
premium if this approach is recommended.
Alternative – Fixed Reimbursement
Another alternative would be allocation of an average fixed sum when
maternity/paternity cover is required, rather than meeting the actual costs.
This would provide a level of protection for all schools, but would not
guarantee that the amount allocated would cover all of the costs of cover.
The average cost would need to be determined.
Conclusion
It seems that maintaining a centrally held maternity/paternity budget is the
most appropriate way to provide for cover in schools, providing schools with
support when needed and helping to ensure that the recruitment process is
not affected by the financial implications of providing cover.
The maternity/paternity budget had an underspend of £351,218 in 2009/10,
with the surplus credited back to the schools’ contingency fund.
Suspended staff – This budget pays the salary of suspended staff. In such
cases, the school will need to be able to employ a temporary replacement
member of staff. The decision to suspend a member of staff should not be
affected by the level of budget available. Having a central budget removes
the financial element from the decision-making process, so that a school
should never find itself in the position of being unable to suspend staff due to
the cost of providing cover.
The 2010/11 budget is £269,430, equivalent to approximately £2.70 per-pupil
if distributed through AWPA, but the budget would be spread thinly amongst
schools and would certainly not cover the costs involved in circumstances
where a decision is made to suspend a member of staff.
This budget had an overspend of £375,177 in 2009/10, funded from the
schools’ contingency fund.
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Ref: Centrally Retained Funding Page 5 of 9
Created By: Martin Brock
Date: June 2010
Conclusion
The funding would be spread thinly if delegated to schools, and the ability to
support schools financially following a decision to suspend a member of staff
would be lost. It therefore seems appropriate to maintain a central budget for
suspended staff.
Disabled staff – This budget is used to fund special equipment and
psychiatric consultations as required in order to help people with a disability to
return to work. Purchases may include items like ergonomic workstations or
chairs. Disability Services will usually fund part of the cost, but they do expect
large organisations like NCC to contribute a reasonable amount, and
therefore the shortfall is charged to this budget.
The 2010/11 budget is £62,600, equivalent to just £0.60 per-pupil if distributed
through AWPA. It is unlikely that £0.60 per-pupil would provide for special
equipment if it is required, and in smaller schools, the funding available would
probably not even allow for a reasonable contribution to be made towards the
costs.
The budget had an underspend of £3,005 in 2009/10. The surplus was
credited to the schools’ contingency budget.
Conclusion
It seems appropriate to retain this budget centrally, so that sufficient funding is
available to support people with a disability upon their return to work.
Redeployment – The redeployment budget supports schools receiving
redeployed staff.
Redeployment offers an alternative to severance and is usually cheaper. The
centralised budget facilitates the transfer of redeployed staff, taking less
money out of the funding system than the available alternatives in many
cases. The employee also benefits, as the process can prevent them from a
period of unemployment.
A settlement grant is allocated to the receiving school, so that residual training
issues can be arranged. Also, there may be some ongoing costs for staff that
are redeployed, including travel costs and safeguarded salaries (protection to
the employee’s previous level of salary) for a period 3 years. e.g. When a
Teacher with a TLR point is redeployed to a post with no TLR.
The 2010/11 budget is £175,730, which would be approximately equivalent to
£1.75 per-pupil if delegated through AWPA. Clearly, within some schools,
£1.75 per-pupil would be unlikely to meet the costs of redeployed staff if
salary safeguarding is required. An average Primary school of 139 pupils
would receive just £243. It therefore seems that centralisation of the budget is
the most appropriate way of ensuring that funding is available to meet costs
where staff are redeployed.
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Ref: Centrally Retained Funding Page 6 of 9
Created By: Martin Brock
Date: June 2010
The budget had an overspend of £297,584 in 2009/10.
Conclusion
A centralised redeployment budget supports schools with salary safeguarding
costs when filling a vacancy with a redeployed member of staff.
However, the need for a settlement grant is not so convincing, since training
may be needed for any new member of staff, not just those that have been
redeployed.
Supply Cover Budget (overall conclusion)
Most of the centrally retained budgets seem to be appropriate in order to
avoid spreading funding thinly amongst schools and removing the support that
schools can currently access from the central budget in special
circumstances. Only the need for a settlement grant for training of redeployed
staff is questioned, on the basis that training may often be needed when filling
a vacancy irrespective of the person appointed, but if this gives an incentive to
the receiving school to redeploy a person who would otherwise be made
redundant it would pay for itself several times over.
It seems, however, that the balance between the individual centrally held
budgets is in need of revision as some budgets have large overspends and
others have large underspends. There is also an overall overspend of £126k
on the total supply budget. In summary:
Supply cover – special circumstances (£193k) underspend
Maternity/Paternity (£351k) underspend
Suspended Staff £375k overspend
Disabled Staff (£3k) underspend
Redeployment £298k overspend
Total £126k overspend
Termination of Employment Costs
This budget has received a contribution of £100,000 in 2010/11.
The contribution relates to the ongoing costs of the Norwich re-organisation.
Other Budgets
The following budgets also contain staffing costs:
Provision for Pupils with SEN
This heading includes the following budgets with staff costs:
SEN Invest to Save (£258,790)
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Ref: Centrally Retained Funding Page 7 of 9
Created By: Martin Brock
Date: June 2010
Learning Support (£2,038,790)
Sensory Support (£1,521,270)
School Admissions
A total budget of £528,536.
Pupil Referral Units
A total budget of £3,619,528.
Behaviour Support Services
A total budget of £2,213,643, including £480k for Behaviour SRB’s.
Inclusion
A total budget of £1,418,523, split as shown below:
Critical incidents/LAC £303,034
Early Intervention money £1,003,098
Admin £112,391
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Ref: Centrally Retained Funding Page 8 of 9
Created By: Martin Brock
Date: June 2010
Action:
The Formula Review Project Board is asked to:
Discuss the appropriateness of retaining funding centrally, in
particular staff costs.
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Ref: Centrally Retained Funding Page 9 of 9
Created By: Martin Brock
Date: June 2010