Agenda item

[Debra Boniface, Finance Manager to update the Forum on the balances held by schools as at 31 March 2018]

Debra Boniface, Finance Manager presented the School Balances report and highlighted key points. In addition to the information contained in the report, several points were raised.

It was queried what the Department for Education [DfE] attitude was to devolved formula capital (DFC); there had been work done on this and the Forum were advised that:

·         there was a time limit of three years and five months in which to spend the money

·         the money could be used during April – August terms [this extension was due to work being done over the summer]

·         the return to the DfE was related to how much surplus remained

·         If a school was carrying surplus for longer than three years, this would be investigated to find out why

A report on DFC balances could be brought to the next Forum

One of the cases highlighted was that of the Orchard Centre with a balance of £1.2 million. It was explained that the PRUs work budgets as a whole and the case had been considered at the Arbitration Panel. In this case, there were genuine plans to utilise the money to fund the construction of a large sports hall. The build had been fully costed and was of a considerable size and it was stated that it would also be available for wider community use.

A concern was raised about the projected deficits and the Authority were advised by Forum members to keep these in check with appropriate recovery plans. In the specific case discussed, the school had grown in size and the Forum were assured that plans were in place to take the deficit down to zero within two years.

This led to a discussion on the subject of schools being converted to academies and the risk of this causing a deficit. The Forum were advised that, in one case where a school converted, the existing deficit of £899,000 was reduced to £500,000. Another case was highlighted where a deficit of £150,000 increased to £250,000 following conversion; the concern here was that the debt would be passed on to other schools. The Forum were assured by Bill Hague that the point had been noted, that each case was different and treated as such and that deficit balances were absorbed by the Local Authority General Fund, and not passed to other schools, in line with DfE regulations. The key issue was that schools were supported effectively and that any extra money was used for the benefit of pupils. 

The point that schools that planned to convert to Academy under the convertor mechanism (as opposed to the sponsored mechanism) carrying deficit took it with them was raised and Claire Nye, Director of Finance explained that Senior Executives and elected Members within the Council were aware of the deficit and the importance of monitoring and efforts were being made to make schools more accountable for spending. It was, however a challenge to prevent spending and it was queried whether there was a facility to take financial control.

A licensed deficit application could be put in place which was a form of monitoring which required regular returns from the schools in order to keep track of their balance. Most applications resulted in monitoring for three years and, in some cases, up to four.

Resolved:

            That Debra bring a paper to the next Forum on DFC balances.