Item xx Subject of report by dfhercbml


									                                                                              Agenda Item No:


                                         7 July 2009

     Report by the Director Assistant Chief Executive Finance and Commercial
                                 Management and
          the Corporate Director of Children & Young People’s Services

                       Cabinet Members with responsibility for:
                            Finance: Councillor Bill Parker
                 Children and Young People: Councillor Joan Kirkbride

 Subject:                  School Balances Outturn and Dedicated Schools Grant (DSG)
                           2008-09 Report
 Recommendations:          That Cabinet notes the financial position of the schools balances
                           and DSG at 31 March 2009

1. Purpose of Report
     Cabinet to note the financial position of the schools balances and DSG at 31 March

2. Relevant Corporate Outcomes
    A more secure, healthy and independent future for our children, young people and our
3. School balances
3.1 The level of school balances is detailed in the table below. It shows the level of
    balances levelled off between 2005-06 and 2006-07 and between 2007-08 and 2008-

   Date       31/3/09    31/3/08    31/3/07     31/3/06   31/3/05   31/3/04   31/3/03   31/3/02

 Level of     £45.3m     £44.2m     £35.9m      £36.1m    £33.2m    £29.1m    £21.9m    £21.3m

3.2 Previous reports to Cabinet have explained the process for addressing the increase in
    school balances. This process includes the need for schools to be accountable for
    these balances, areas where carry forward are allowed, and the thresholds (5% -
    Secondary and Middle schools, and 8% - Nursery, Primary and Special schools)
    above which uncommitted balances could be clawed back.

3.3 The analysis in this report shows that the uncommitted schools balances for 2008/09
    are below the thresholds for any balances to be clawed back.

3.4 A summary of the Schools Balances Control Mechanism and Strategy is at
    Appendix A and includes an extract from a recent letter sent to schools.

3.5 A comparison of the year end balances by sector are as follows:

                   Sector                  2006-07 (£)     2007-08 (£)    2008-09 (£)

      Nursery                                2,235,570        2,085,130     2,491,780

      Primary                               20,772,443      25,944,750     26,041,910

      Secondary (including Middle
      schools)                              10,716,350      13,609,860     13,942,990

      Special                                2,200,490        2,612,750     2,895,920

      Total                                 35,924,853      44,252,490     45,372,600

     Note: the 2008/09 figures above are after a year end accrual of £4.4 million.

3.6 School balances are in part designed to provide for future increases in capital and
    revenue spending. Schools have, where they are able, put additional monies aside in
    relation to the three year budget cycle to which they now plan.

3.7 All schools were required to submit by 18 May 2009 an analysis (SB1 form) of their
    plans regarding the utilisation of their carry forward balances.

3.8 A summary of the schools’ returns compared to previous years is shown below. The
    figures distinguish between capital balances, committed and uncommitted revenue
    balances and balances held for extended schools (mainly Children’s Centres). A
    comparison with the previous financial years is also included.


                                        Committed            Uncommitted           Extended       Total
                                         revenue               Revenue             Schools       2008-09
                               £000                £000                  £000            £000       £000
      Nursery                   267                 259                   150           1,827      2,503
      Primary                 6,623              12,233                 3,755           3,941     26,552
      Secondary               2,869               9,512                   977             718     14,076
      Special                   852               1,051                   338               0      2,241
      Total 2008-09          10,611              23,055                 5,220           6,486     45,372
      Total 2007-08           8,961              24,475                 5,374           5,442     44,252
      Total 2006-07           7,255              19,737                 5,202           3,731     35,925

      2008-09%               23.4%               50.8%                  11.5%          14.3%      100.0%
      2007-08 %              20.2%               55.3%                  12.1%          12.3%      100.0%
      2006-07%               20.2%               54.9%                  14.5%          10.4%      100.0%

     Appendix B shows the analysis of these amounts set aside over the individual lines
     on the SB1 form. Further analysis and checks to the data will be made by the
     Schools Finance team and subsequent to this schools will be contacted to provide
     further information on significant unallocated balances.

     The table below shows the balances across school type compared to their final
     budget share:

                            2008-09                          2007-08                         2006-07

                                       Balance                           Balance                       Balance
                              Final                            Final                          Final
                   Total               as a %      Total                 as a %     Total              as a %
                             Budget                           Budget                         Budget
                  Balance                 of      Balance                   of     Balance                of
                             Share                            Share                          Share
                                       budget                            budget                        budget
                  £000's     £000's      %         £000's     £000's       %       £000's    £000's      %
      Nursery       2,503      7,149    35.0%        2,085      6,007     34.7%      2,236     4,421    50.6%
      Primary      26,552    223,320    11.9%       25,945    208,871     12.4%     20,772   195,671    10.6%
      Secondary    14,076    221,805     6.5%       13,610    216,807      6.3%     10,716   202,328     5.3%
      Special       2,241     22,209    10.1%        2,613     20,537     12.7%      2,200    17,109    12.9%
      Total        45,372    474,484     9.6%       44,253    452,221      9.8%     35,925   419,529     8.6%

     Note: The Final Budget Share includes the carried forward balance from the previous

     The uncommitted revenue as a percentage of the final budget share is:

                                                  2008-09                2007-08              2006-07
     Overall uncommitted revenue                  £5,220k                £5,374k              £5,202k
     Final budget share                          £474,484k              £452,221k            £419,529k
     Uncommitted revenue as % of                   1.10%                  1.19%                1.24%
     final budget share


 3.9 The above shows the amounts held for uncommitted revenue are significantly below
     the Government threshold of 5%.

4. Dedicated Schools Grant (DSG)
 4.1 2008-09 is the third year in which the DSG has operated. This means that specific
     areas of expenditure that are school related, based on the NCC Section 52 budget
     statement, are funded by specific ring-fenced Government grant rather than general
     council resource.

 4.2 The implications of this are that DSG resources can only be utilised on Schools block
     areas, unless the Schools Forum gives express approval for a virement, and the
     expenditure is in an area allowed (for education purposes) in the Department for
     Children Schools and Families guidance and regulations.

 4.3 In the DSG regulations there is a requirement that any DSG under/overspend must
     be carried forward into the following financial year. In addition, in the NCC statement
     of accounts there is a requirement to include a table stating the DSG resources
     utilised in the year and the value of the DSG carry forward.

 4.4 Attached at Appendix B is the final variation analysis of the DSG under spends to be
     carried forward to 2009-10. They relate to the central DSG Budgets rather than the
     individual schools budgets.

5. Alternative Options Considered
 5.1 Not applicable
6. Financial Implications
 6.1 See sections 3 and 4 of the report above.
 6.2 As part of the Balance Control Mechanism which is outlined at Appendix A, the
     annual balance returns submitted by schools are subject to a comprehensive
     checking regime by Schools Finance staff who concentrate on the following areas
     and challenge or request further justification as necessary:

          Comparison with previous 2 years returns to identify revenue balances carried
           forward year on year.
          Check all capital balances carried forward against ERP Oracle and action taken
           to resolve any discrepancies.
          Check that the amount included for Pay & Benefits for 2008-09 matches the
           most up to date estimate issued to schools.
          Check that the SB1 form lines for changes in pupil numbers reflect the schools
           pupil projections.
          Challenge any other Committed Revenue Balance items which are considered
           to be excessive.


       Clear plans to control or spend the committed balances are required to be provided
       by schools within a reasonable time frame. This is to ensure that monies committed
       by schools are spent on children and used to help deliver the Council’s major
       projects of Raising Pupil attainment and School Performance and Children and
       Young People’s Plan. Once these checks are completed a final report on will be
       made to Schools Forum.
 6.3 The Authority is currently obtaining information from other authorities on their level of
     balances and policies. This information will be presented to Schools Forum to review
     the scheme and to agree what changes are required for 2009-10.

7. Risk and Business Continuity Management

 7.1 The school balances scheme exists as a means of encouraging schools to utilise
     funding effectively.

 7.2 The monitoring undertaken by schools and Governors should ensure that funding is
     spent on the effective education of pupils, linked to their Improvement Plan.

 7.3 The benefits to be achieved by schools increasing their expenditure and investment
     in the pupils currently in the school system, so increasing personal development and
     results, far outweigh any currently identified risks.

8. List of Appendices

Appendix A: School Balances Control Mechanism and Strategy

Appendix B: Summary SB1 (School Balances return completed by schools)

Appendix C: DSG Underspend 2008-09


 Author:                                        Name: Bob Seaman
                                                Team: CYP Finance
 Contact details:                               Tel: 01604 237571
                                                Fax: 01604 237771
 Background Papers:                             None
 Does the report propose a key decision is      NO
 If yes, is the decision in the Forward         n/a
 Will further decisions be required? If so,     no
 please outline the timetable here
 Is this report proposing an amendment to       NO
 the budget and/or policy framework?
 Have the financial implications been           YES/
 cleared by the Strategic Finance Manager       Name of SFM: Karen Plant
 Have any capital spend implications been       n/a
 cleared by the Capital Asset Investment
 Group (CAIG)
 Has the report been cleared by the             YES/NO
 relevant Corporate Director or ACE?            Name of Director: Damon Lawrenson & Paul
 Has the relevant Cabinet Member been           YES/NO
 consulted?                                     Cabinet Member: Joan Kirkbride
 Has the relevant scrutiny committee been       NO
 consulted?                                     Schools Forum has been consulted.
 Has the report been cleared by Legal           NA
 Services?                                      Name of solicitor:
 Have any communications issues been            YES/NO/NA
 cleared by Communications and                  Name of officer: Click to begin typing
 Has an Equalities Impact Assessment            NO
 been carried out in relation to this report?
 Are there any community safety                 NO
 Are there any environmental implications:      NO

 Are there any Health & Safety NO
 Are there any human rights implications: NO

 Constituency Interest:                         All



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