To undertake scrutiny monitoring of the position of School Balances in Powys.
· School budgets 2018-19 update as at 31st December 2018
The report lacks detail to provide scrutiny with confidence that necessary actions are being taken.
There is a requirement that reports are limited to four pages and there is a limit to what can be shared in open session if information relates to matters which are subject to HR processes. Additional information can be provided in appendices.
The report would be enhanced by including trends over the last five years and benchmarking with other authorities.
It would be possible to include trends but benchmarking is more complex as different authorities delegate in different ways.
In 2014 the PwC report concluded a High School needed 750 pupils to be viable. As there are 8 High Schools in Powys with less than 750 pupils are the authority setting schools up to fail?
The Portfolio Holder for Learning advised that she did not accept the PwC (PricewaterhouseCoopers) report as it did not take into account transport costs. If pupils were moved to larger units then it would be necessary to top slice more money for transport costs meaning less funding would be available for education. The Portfolio Holder advised that at present transport costs are £68k a day but these could rise to £98k a day if schools were closed. When pressed, the Portfolio Holder was unable to substantiate this figure. Given that this appears to be underpinning policy in relation to school organisation scrutiny are concerned that a policy developed in an apparent vacuum of evidence may be exposing pupils to a less than ideal educational environment and the authority to unnecessary expenditure.
The Portfolio Holder for Finance advised that the viable size for a High School had been set by the council not PwC and that it would be necessary for any future changes to the structure of schools would need to be evidenced.
The Head of Learning advised that there are some small high schools who are able to manage their budgets and have good learning outcomes whilst some of the biggest schools are struggling the most.
He advised that Welsh Government consider small schools to be less than 91 pupils which in Powys would be considered a more viable school. It will be necessary for all to consider how small schools fit into the network in Powys for example by closer inter-school working both at primary to primary level and at primary to high school level. There are opportunities for federation, all-through schools and collaboration but if there are local solutions which would work but for which there are no permissions then it will be necessary to discuss this with Welsh Government.
The Chair noted this as an area which scrutiny may wish to explore further.
What information is available to ascertain what the costs of transport would be if x number of high schools closed?
This information is taken into account when proposed changes are considered for example when looking at the arrangements for secondary provision at Ysgol Calon Cymru.
What capacity does the schools service hold to help schools who are experiencing difficulties balancing their budget and who is charged for this support?
The Head of Schools confirmed that if schools request additional support in working towards a balanced budget, there will be a charge for this. If a school receives a Warning Notice and the authority act within these parameters, then the costs of this are met centrally. This is resource intensive and the schools service do not have the capacity to undertake this level of work across the county.
He observed that there needs to be additional Governor training to draw attention to the link between finance and outcomes. If for example a school has a heavy TLR (Teaching and Learning Responsibilities) structure, then this impacts not only on the financial position of the school but also on the teaching workload as, at secondary level, a TLR removes the teaching commitment by one third. The Council budget for 2019/20 includes an additional £1milllion which is welcome but this does not cover the additional costs and therefore there is a real term cut in delegated funding.
There are opportunities to change which will result in reduced cuts. For example, better contracting can save costs, not having subject leads in every subject (no longer affordable), school teachers need upskilling (for which ERW has not been sufficiently pro-active) and using senior tier teachers for appropriate whole school’s tasks. These changes need to take place at pace over the next three to six years.
The Portfolio Holder observed that there was a role for Bursars to take the lead in finance management to enable the Head Teacher to focus on teaching and learning.
Will reports be produced of the intensive work undertaken with schools who have received a Warning Letter so other schools can learn from this information?
Reports of this work could be provided but are extremely resource intensive and have limited value as each school has individual circumstances. There is however potential for school to school learning and an improved network of cluster heads meetings could be a way for this information to be shared.
What is the definition of licensed, unlicensed and approved budgets?
An unlicensed position is where a deficit budget has been set with no means of bringing the budget back to balance. A licensed position is where a deficit budget is set with a plan to bring the budget back into balance within 3 or 5 years. An approved budget is one which is in balance in the current year and may or may not remain in black over the next 3 years.
Schools with approved budgets get little additional in year support. Schools with licensed budgets get some support whilst schools with unlicensed budgets get a higher level of support and challenge.
What capacity has the authority to provide sufficient support and challenge?
The Portfolio Holder for Finance noted that well run schools (green under categorisation) should not be requiring resource from the authority to provide support and challenge on financial matters. These schools are taking resource from those schools more in need (those categorised as red).
It seems perverse to charge schools who are struggling for support.
All support provided incurs a cost and funds are limited.
Does the additional £1million provided within the school’s budget include inflation, pension and salary uplift?
The Portfolio Holder confirmed that the additional costs resulting from inflation and the teachers’ pay award (funded by Welsh Government) are included within the additional £1million. To date there has been no information regarding the additional costs relating to teachers’ pensions from Westminster. This may result in additional costs in Powys.
What impact will the newly agreed funding formula have on the figures contained within this report? What help and support will be available to those schools adversely affected?
The Portfolio Holder for Finance confirmed that the new funding formula would be phased in over two years but that the detail of the phasing methodology had yet to be confirmed.
The Finance Manager advised that over the next two months’ meetings would be arranged with all schools to go through their budgets. Two potential ways of phasing the changes are being examined:
· 50% this year 50% in the following year for all schools
· If the changes are less than 3% the new formula is immediately applied. If the changes are greater than 3% the new formula is phased in over 2 years
It will be essential that the overall budget balances in each of the two years.
Can scrutiny have sight of the populated model that has been run for each school?
This information has been calculated for High Schools first as High Schools undertake their own budgets. The information for Primary Schools will be shared with schools during their financial surgeries.
The Head of Learning confirmed that detail for individual schools had not been closely examined but modelling shows the majority of schools sit close to their current position although there are some outside it. This is a full reset of the £77million delegated schools budget.
Are special schools subject to the same budgetary arrangements as mainstream schools?
Are Governors always represented at School Finance meetings?
Yes, with either the Chair of Governors or the Chair of the Finance Committee attending.
It appears that small schools are being protected at the expense of larger schools who are being forced to teach pupils in ever larger classes to keep a balanced budget.
The Portfolio Holder for Learning advised that the authority are closing schools for example in Newtown where four are being closed to be replaced by two. The authority is also changing schools for example by federating (Carno, Glantwymyn and Llanbrynmair are a good example of federation which has resulted in very pleasing Estyn Inspection outcomes). It is necessary to ensure that if schools are closed it is for sound educational and financial reasons and that communities are worked with. Cost savings from the Newtown proposals are considerable and will mean money can go back into schools.
The Head of Learning confirmed that there are a number of schools on the cusp of viability and there is a limit with what he can do with the deficit in the schools delegated budget. Working with schools however has reduced the projected deficit in 2020/21 from -£7.6million to -£5.1million.
The Portfolio Holder for Finance confirmed that the level of school balance deficits is a risk to the Council. Schools and the Schools Service are working hard to bring down the levels of deficit but it is of particular concern that the overall balances are in deficit (a slight surplus in primaries is written off by the deficit secondary’s). The funding formula review will help get clarity going forward but it is necessary to look at the pattern of schools and provision across Powys. Decisions will need to be evidence driven. Learning is the biggest budget in the Council (approximately 40%).
The Portfolio Holder for Learning advised that when the top slice for school transport and ALN was removed Powys spend an average amount on schools. There are pupils in special education who would not be accessing this provision elsewhere and the work undertaken by the ALN transformation should mean that more money will be available for delegated funding. It should be noted that much hard work has been undertaken to reduce the projected deficits in the schools delegated budget and the reducing the funding for ALN.
· Scrutiny would encourage the use of appendices in formal Cabinet reports as it believes the rigorous enforcement of a four-page report model hampers scrutiny and the general public from understanding and being able to question officers and Portfolio Holders during the pre-cabinet scrutiny process
· That those schools who have worked to improve their forecast budgets are commended and those who still have work to do are urged to take necessary and urgent action to bring their budgets back into balance
· That Learning and Skills Scrutiny continue to monitor school budgets both delegated and central
· That Learning and Skills Scrutiny would highlight the comments of the Portfolio Holder for Finance regarding the need to be evidence driven and believe that greater resource should be deployed to ensure that relevant information is available to inform any future reconfiguration process
· That consideration is given to improving the opportunities for peer to peer support for schools struggling with budget issues
· That consideration is given as to how the role of governors, and specifically local authority governors can be supported to enable them to fulfil their role whilst acting with a full understanding of the local authority position