To consider a report on School Budgets
Minutes:
Documents considered:
· School budgets 2018-19 update as at 30th June 2018
Introduction
This report is based on figures to the end of June which is nearly three months ago. Information to the end of August are showing an improvement but the next full report will be the half yearly position at the end of September. Since the last Cabinet report notices of concern were sent to schools with unlicensed deficits and also to those schools in a potential claw back position. A response has been received from all schools. The schools have until the 29th September 2018 to submit their recovery plans.
Discussion:
In 2020/21 six High Schools are showing projected deficits of £5.31million. Are these figures based on the recovery plans that have been put in place now?
The June figure does not include the impact of actions taken under recovery plans. Schools have until 29th September to submit recovery plans and interim figures which show the impact of the recovery plans on those schools who have submitted them shows an improving position of £400k by 2020/21.
In the case for example of Brecon High at what stage does the authority step in?
There are a number of issues in this case with a long history of a deficit budget position. The Funding Formula Review will provide information on appropriate levels of funding for different sized schools. It must be remembered that are children currently in education in these schools with deficit budgets. It is also clear that action needs to be taken to address this positon.
It is of concern that school funding is so cloudy. The Funding Formula Review will draw a baseline and provide clarity on school funding, based on evidence moving forward.
Scrutiny have been commenting on school budgets for a considerable length of time and at previous scrutiny the Portfolio Holder has indicated that delegation would be withdrawn. The position regarding Brecon High is deteriorating and Scrutiny are reaching the end of their tether. This is one of the biggest risks to the authority. Why is the position to June 2018 still deteriorating? Is there insufficient money or poor management?
This more complex than simply either of these options and this complexity is echoed across Wales. Powys is mid table in delegation to schools and to increase delegation increased confidence around financial management would be needed. This is a cross Wales issue.
In two years forecasts appear to show all schools will be in deficit. Two schools have recently closed with a combined deficit of £1.15million. Do schools which are due to close operate effectively with a blank cheque book?
Not all schools who are due to close exhibit poor financial management. In the case of the two schools that closed in August 2018 the Governors were required to attend to discuss this and delegation was then withdrawn. It would not be appropriate to withdraw delegation when a school is due to close as most schools exhibit appropriate financial management but the service should monitor this and act promptly if poor financial management appears to be in evidence. Delegated budgets is an area governed by legislation which any actions would need to be governed by.
This report to Cabinet is ‘to note’ but given the position the recommendation should be for action. Cabinet should display courage with regard to school delegated budgets.
A number of Officers were not in post over the past few years and whilst the policy and framework were in place to deal with deficit budgets this was not always applied with rigour. Notices of concern were not always issued when they should have been.
The Funding Formula Review provide evidence of spend and highlight differences amongst schools. The percentage spend on leadership needs to be easily identifiable and a clear baseline needs to be established. Difficult conversations will have to be had regarding financial management.
What happens to deficit budgets when schools are closed?
The deficit remains within the schools’ service and is not written off by the general fund.
As two of the schools with unlicensed deficits are dual stream will the Funding Formula review address the extra expense incurred in running a dual stream school?
This is contained within section 4 of the funding formula review.
Is it the case that schools are unwilling to address their budgetary position as they are more concerned with maintaining and improving standards? How should LEA Governors contribute to improving this position?
There is a need to improve trust and relationships between schools and the schools service. There is a need to improving the range of expertise amongst school governors together with their governance. The schools service are looking at this under the ALN Review Programme.
Deficit budgets has been discussed in scrutiny on numerous occasions and it appears that little progress is being made with the overall deficit position increasing. What will be done to address this?
The Funding Formula review will give an evidenced based position from which to challenge schools on financial management if necessary.
The process for intervention is now being followed which in the past, despite promises, was not the case.
There has been changes of staff in the schools service as well as changes in Elected Members in the recent past.
When the outcome of the Funding Formula review is known then the Portfolio Holder and schools service can plan accordingly.
What impact are Warning Notices having on schools?
Some schools are taking action as a result of warning notices but some schools are not taking appropriate action in sufficient time and it may be necessary to take further action which will also impact on the attitude displayed by other schools. Schools need to take ownership of the management of their budget and it is not the role of the local authority to undertake this function on their behalf. Secondary Schools need to employ appropriate Business Managers.
This report does not identify schools which currently have licensed budgets but are facing difficulties and will be unlicensed in future years. In particular it is difficult to understand how a new merged school has been opened that is forecast to have deficit budgets in the near future when one of the aims of the merger would be to improve financial viability. This is of importance when considering proposals coming forward for future school reorganisations.
Supporting documents: