Schools and Finance Presented by Christine Atkinson Schools

Schools and Finance Presented by Christine Atkinson Schools Management Accountant January 2015

Topics Why the need for the briefing sessions? • Overall funding position • Cost pressures facing schools • Budget plan preparation • Budget plan forecasts / and approval • Projecting the year end position • Deficit budgets and large surplus balances • Reminders and updates

Overall funding position

Council’s – proposed revenue budget 2015 -16 • Approved by Council 5/2/15 (includes the Schools Budget) • 2015 -16 Overall proposed budget £ 252. 383 m • Band D council tax £ 1, 212. 20 - freeze since 2010 -11 • Council’s funding has reduced by £ 68. 6 m between 2010 -11 to 2018 -19 • Savings of £ 23. 5 m have been identified for 2015 -16

LA funding position-per pupil - out of 151 LA’s 2010 -11 to 2012 -13 2013 -14 2014 -15 2015 -16 Schools block £ 4, 257(118) £ 4, 257 £ 4, 294 Early years block £ 4, 184 (60) £ 4, 184 High needs block £ 423(151) £ 457 £ 467 (151) £ 4, 984 (149) £ 5040 £ 5041 (151) Overall £ 4, 613. 11 (144)

Additional funding for 2015 -16 £ 1. 5 m from Df. E minimum funding level calculation £ 0. 220 m Gembling and Langtoft closing (15 -16 only) £ 0. 614 m ISB central balances (15 -16 only) Additional amount per pupil (Approximately) 2015 -16 2016 -17 Primary £ 48. 48 £ 25. 94 Secondary KS 3 £ 61. 13 £ 43. 82 Secondary KS 4 £ 85. 90 £ 60. 60

SEND consultation/ ISOS • ISOS fieldwork 12 -15 January ERYC (1 of 13 LA’s chosen) • SEND consultation- call for evidence responses to Df. E by 27 February 2015. Aim is to focus on finding new and improved formula factors for distributing funds relating to SEND. When dividing the funding the ERYC receives for SEND by the overall pupil numbers, we are the worst funded in the Country.

Cost pressures included within financial planning 2015 -16 • Inflation – primary and secondary £ 1. 428 m (pay awards) • Teacher pension £ 1. 01 m (£ 0. 721 m in 16 -17) • LGPS pension £ 0. 239 m • EFA sixth form funding reduction £ 0. 260 m Total £ 2. 937 m Additional for 2016 -17 £ 2. 43 m employer’s NI

Cost pressures facing schools built into the budget plans-sept 14 • Pay awards for teachers 1% Sept 2014 and Sept 2015 • Pay awards for support staff- 1% from April 2014 and April 2015. An increase in: • teacher pension employer’s contributions from September 2015 of 2. 3% (from 14. 1% to 16. 4%). • the contribution rate to the Local Government pension schemes from April 2015 of 0. 7% (from 19. 6% to 20. 3%). A further increase of 1% is anticipated from 2017 -18 (not in the plan yet). (history: April 2013 from 15. 3% to 17. 4%, April 2014 from 17. 4% to 19. 6%) • the employer’s national insurance rate for each contracted-out employee of 3. 4% from April 2016.

Additional cost pressures built in for April 15 budget plans • Teachers pay award 1% September 16 and September 17 (provisional) • Support staff pay award 2. 2% from January 2015. 1% April 2016, 2017 and 2018 (all provisional) (see notes when you log onto Orovia)

But • The additional Df. E funding is subject to the minimum funding guarantee (mfg) so the overall increase in funding may be reduced for these schools. • The additional funding moves schools faster towards their unprotected budget position.

Impact on individual schools • Changes in pupil numbers • Changes to teaching staff (and support staff) – Increments – Movement – Maternity – Change in the number of fte • Renegotiate contracts • Efficiency savings • Changes in pupil premium, UIFSM and high needs pupils • Mfg (minimum funding guarantee) and cap on gains

Pupil Numbers Year 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 projected Primary 23, 370 23, 320 23, 204 23, 631 23, 743 23, 918 24, 177 24, 301 Secondary 19, 650 19, 567 19, 222 18, 783 18, 433 17, 818 17, 176 16, 824 Total 43, 020 42, 887 42, 426 42, 414 42, 176 41, 736 41, 353 41, 125

Year group Jan 2011 (2011 -12) Reception Pupil numbers Jan 2012 (2012 -13) Oct 2012 (2013 -14) Oct 2013 (2014 -15) Oct 2014 (2015 -16) 3129 3515 3481 3403 3493 Year 1 3400 3302 3533 3524 3429 Year 2 3368 3423 3321 3561 3535 Year 3 3252 3400 3421 3343 3566 Year 4 3333 3255 3373 3428 3349 Year 5 3359 3356 3265 3378 3436 Year 6 3363 3380 3349 3281 3369 Total prim 23, 204 23, 631 23, 743 23, 918 24, 177 Year 7 3780 3492 3470 3337 3222 Year 8 3798 3804 3493 3491 3317 Year 9 3933 3814 3794 3480 3493 Year 10 3761 3927 3793 3737 3423 Year 11 3950 3746 3883 3773 3721 Total sec 19, 222 18, 783 18, 433 17, 818 17, 176

Number of schools predicting deficitsfrom the Sept 2014 budget plans 2014 -15 2015 -16 2016 -17 2017 -18 Primary No 5 27 58 87 Secondary No 2 7 11 11 Primary £ -£ 76, 819 -£ 666, 952 -£ 3, 522, 823 -£ 9, 048, 316 Secondary £ -£ 349, 615 -£ 2, 572, 266 -£ 8, 867, 730 -£ 16, 306, 545

Budget Plans

Why a 5 year budget plan? • Fact or fiction? If all the assumptions made in producing the budget plan turn out to be correct, then the forecast budgets will show the true position. (main areas) pupil numbers (and nursery hours) staffing funding • Important to know the assumptions that have been made. • Important to know what the impact any changes to the assumptions will have on the budget plan. Will it materially change the financial year end position?

Budget Plan preparation • A list is always sent out before the plan visitthis hasn’t eliminated schools being unprepared Demonstrate the funding template

What takes the time at plan visits 1) School unprepared Often the first words the plan officer hears is ‘sorry we haven’t had time to prepare’ 2) School called away to deal with ‘school business’ ie reception/phone/delivery/sick child etc.

Possible solutions Be prepared for the budget plan visit Have a pre-meeting (Head, Governors, SBM) Complete and return funding template Pay for an additional visit (pre budget plan) Pre-arrange another member of staff to cover the office/ phones etc • Dedicate this half day budget plan visit (twice a year) to focus purely on finance • • • (as well as other times throughout the year)

Benefit • The budget plan will be more accurate and well thought through • There will be time left at the end to review the financial position on the budget forecast and look at scenarios. Demonstrate BASC

Budget cycle Pre-plan meeting Complete template & return to Schools Finance Budget plan visit- submit plan GB discuss and approve plan If a deficit, school need to seek approval Chair to approve plan on-line Upload onto East Riding Financials virements

Approving the Budget • Ensure the Governing body meeting is before the deadline for budget approval of : -31 May and 31 October • Ensure the Chair of Governors is aware of how to approve the budget on- line. • Ensure that a budget of at least 3 years is presented to the Governors • Budgets will not be loaded onto East Riding Financials until it is approved.

Deficit Budget Approvals • If the current year is projecting a deficit, then the school need to seek approval from the Local Authority, as the Governors cannot set a deficit budget without it. • Future year deficit budget forecasts do not need approval but need to be noted by the Governors and the school should commence a process to address the shortfall so it doesn’t materialise. • The school will be asked to demonstrate how it will recover the projected deficit position.

Deficit budgets in future years • Predicting a deficit in 2016 -17? Do I need to take action? This seems a long way off! Yes, or at least have a plan of action Timeliness and decisiveness are key Redundancies should be avoided if at all possible. Consider temporary contracts, that can be terminated.

Redundancy statistics • 2013 -14 £ 263, 000 (52 redundancies) • 2014 -15 £ 597, 000 (59 redundancies up to 30 -9 -14) • Default position- redundancy costs charged to the LA. However, there are instances where costs will be charged back to schools and schools must try to minimise costs.

What to show Governors in relation to the budget From Orovia § Summary forecast § CFR forecast § Funding Allocation Summary ( all of these for at least 3 years but preferably 5 years) Also provide: • a summary of assumptions and an explanation of changes in balances • Latest budget monitoring report (from LA) • Workings to demonstrate anticipated current year end position (spring term) • List of SLA’s and contracts entered into • 6 year actuals

Forecasting the year end budget position • What is the revised forecast position? • How does it vary to the original predictions. April and September budget plans • Why is it different- what’s happened? • How will this impact on future years?

Forecasting current year end position • It’s a good idea to look at this each month after receiving the budget monitoring reports. • Staffing lines – look at ‘variance to date’ are these on target. If not why? • Non-staffing- look at ‘budget remaining’- ask will we spend the amount left, how much will be left or overspent? • Take into account the amount in reserves Demonstrate our spreadsheet

Things to remember at year end • Energy bills paid on actual meter readings • Have a cut-off point for ordering goods • Monies banked in school fund move across to school budget – Check educational visit income and expenditure – Check music tuition income and expenditure • Chase up outstanding invoices and income • Charge other schools for meals etc – even if last period is only an estimate

Pupil Premium-deprivation (fsm) 2011 -12 started, initially announced for 4 years to 2014 -15 2015 -16 Primary £ 1, 320, Secondary £ 935 TA hours- relationship Has the introduction of Universal Infant Free School meals (UIFSM) affected take-up? • Pupils listed on ‘Key to Success’ Article - bbc news education on 19 December 2014 • • • Schools Minister David Laws says he is working on a way of automatically identifying those who qualify. • He said he was "confident" the free school meal scheme could be delivered without any adverse effect on pupil premium funding. • He added: "There is no way we're going to allow that policy to be undermined, I can assure you of that. "

SEN funding (including targeted SEN funding) • First £ 6, 000 to be met from School block funding • If at the start of the year there are more than 1 in 75 pupils with a top-up value, then additional funding is given. A pupil leaving in July will be counted as 0. 34 fte • Rate in 2014 -15 £ 4, 500 • Example- school of 130 pupils with 2 top-ups all year and 1 leaving in July. 2. 34 -(130/75 =) 1. 733 = 0. 607 *£ 4500 = £ 2, 731 £ 601 k was allocated to 61 schools in 2014 -15 (a school can build this funding in)

Early years funding • Early years sparsity funding This funding is due to continue as long as the provision in your school has not changed.

Large Surplus Balances • Scheme for recycling excessive surplus balances is NOT in place at the moment. • Challenge by School Forum (SF)and Children and Young People Overview and Scrutiny Committee (CYPOSC) • Guide (% of the initial school block funding) – primary 5% or £ 20, 000 – higher of the two – Secondary 2% • Schools finance team have been asked to challenge and seek reasons from schools. Letter from Kevin Hall sent out to all Headteachers and Chair of Governors on 3 December 2014 HT bulletin week 14 Item 155

Budget Monitoring • A plan in financial terms over a period of time • Monitoring is checking the plan is on course – Identifying significant variances to the plan – Examining the reason – Taking action – Considering the consequences Discussed at governing body meetings

Universal infant free school meals (UIFSM) from September 2014 • Grant funding letter email 3 July 2014 • Further information sent out email 7 November 2014 • Take an average of your newly eligible free school meal pupils (October 14 and January 15 school census and compare to the original number you were funded on • Funding will be adjusted in Summer 2015 Any impact on parents registering for pupil premium? Face to face discussions/Incentives to parents

School meals position-example Area 2011 -12 2012 -13 2013 -14 2014 -15 E 06 Staff £ 3861 £ 3783 £ 3748 £ 4500 E 25 catering supplies- non SLA £ 3873 £ 7719 £ 6811 £ 7500 E 25 SLA (so split out separately) £ 56 £ 53 £ 1262 £ 1500 I 09 Income -£ 5973 -£ 5522 -£ 6009 -£ 5000 Net Cost £ 4817 £ 6033 £ 5812 £ 8500 Funding £ 6 k + £ 1. 90 per fsm -£ 6355 -£ 6298 0 (national -£ 7412 (UIFSM) -Profit/+loss -£ 1538 -£ 265 £ 5812 £ 1088 -£ 6298£ 1209 -£ 1695 -£ 6419 (14 -15 includes one-off of £ 3420) But if you add in the funding that is now in the lump sum of £ 130 k and deprivation and the funding for the SLA in the AWPU New -profit /+loss -£ 1538 -£ 265 funding formula)

Reminders and Updates

CLOSURE OF ACCOUNTS 2014/15 • The 2014/15 accounts must accurately reflect all expenditure and income for the year. • In particular it is important to ensure that all accruals are submitted by the due date. Only external accruals will be processed and as with 2013/14 a de-minimis level will apply to all accruals. • Deadlines for some aspects of the closedown process will be brought forward compared with 2013/14 to recognise the tight statutory deadline for the approval of the accounts. • The Easter break will be taken into account in planning the deadlines. • Detailed guidance notes will be posted in advance of the year-end on the intranet. • Your cooperation in achieving the deadlines will be greatly appreciated • Feel free to contact Duncan Marshall to discuss any issues on 01482394212 or duncan. marshall@eastriding. gov. uk

New ledger codes • Staffing changes from April 2014 • Non staffing from April 2015

Service Level Agreements (SLA) • From September 2014 on an academic year • 2 charges per financial year – April to August (5 months) – September to March (7 months) • Be aware of cost when producing budget plans • Be aware of the periods that have been charged when budget monitoring

Schools Financial Value Standard (SFVS) • Reminder from the Audit & Technical team Email sent out to all school admin officers from Alan West on 27 November 2014 Main point – Df. E require a report on SFVS return to be submitted to the GB. Previously only needed to be signed by the Chair. Submit fully authorised 2014 -15 forms along with copies of relevant authorising minutes to technical. team@eastriding. gov. uk by 27 February 15

School Fund • Once they have been audited must be sent to Audit and Technical section • Balances over £ 5, 000 considered to be too high • Bank reconciliations not done, or checked by the Head • Bank mandates not updated • Inappropriate use of funds

Contingency Fund • Growth fund £ 107 k increasing to £ 207 k in 2015 -16 (11 schools) • Infant class size funding £ 65 k- (3 schools) • General £ 112 k (2 schools) • SEN contingency for small schools £ 25 k (3 schools)

Leases and loans Schools cannot enter into a finance lease as this is classed as borrowing and schools cannot borrow Alternatives: - buy outright, apply to the loans scheme, capital bid (prudential borrowing) 1 secondary (2 schemes) and 7 primary currently have loans

External Grants • Awards for All England- big lottery fund • Between £ 300 -£ 10, 000 • Projects that improve communities – Developing skills – Improving health – Revitalising the local community • 8 weeks to assess • Some projects need planning permission

Mount Pleasant Juniors • Trim trail on school grounds • Received £ 10 k plus £ 1 k Friends of school • Wished to improve outdoor play provision, also recommendation from OFSTED • Bid relatively straightforward, but had to apply for planning permission • Aim to encourage children to interact, develop new skills, be healthier and more active. • Across the community, available to local after school clubs and holiday clubs.