Archived decisions

Contact: Trevor Mansley, Education Finance Unit (01962 847545)

1 Summary

1.1 This report reviews the Education Committee's revenue budget for 2001/02 and indicates that, based on latest forecasts, expenditure will be £40,000 below the revised cash limit of £546.5 million even after taking into account the additional costs associated with the temporary St. Bede School. Efforts to control spending will continue in order to carry forward underspendings to ease potential budget pressures in 2002/03.

2 Cash Limit 2001/02

2.1 The original budget for 2001/02 set by the County Council for this Committee amounted to £534.9 million which included provision for inflation of £16.9 million based on an average of 3.96% for teachers pay, 3.0% for other pay increases and 2.5% for prices. Subsequently, at their meeting in July the Policy and Resources Committee approved a small supplementary allocation of £250,000 for 2001/02 from the central inflation contingency in order to assist Committees in meeting the cost of national awards over the 3% included in the original budget.

2.2 The final accounts of the Education Committee for 2000/01 showed a net underspending of £367,000 after absorbing the financial impact (£465,000) of the flood at St. Bede School. Committees were allowed to carry forward 50% of their unplanned savings, amounting to £184,000. In addition the Policy and Resources Committee had earmarked a £300,000 contingency in respect of St. Bede and this was also returned, bringing the total available in 2001/02 to £484,000. The Education Committee in July identified their major priorities as the shortfall in funding for the capital programme and pressures on the home to school transport budget, particularly health and safety risk assessments of the work of escorts, and added £356,000 and £128,000, respectively to these two areas.

2.3 The cash limit has also been adjusted for transfers between committees and expenditure financed by government grants.

2.4 The revised cash limit for 2001/02 amounts to £546.486 million and is summarised below:

	£'000	£'000
Original Budget 2001/02		534,884
Transfers between committees		81
Supplementary inflation allocation		250
Carry forward of 2000/01 underspending	484
Less virement to capital	-356
		128
Variation in expenditure financed by government grant:
Direct Grants to Schools	2135
Former Grant Maintained Schools - transition grant	-415
Standards Fund	5280
Childcare Grants	4143
		11,143
Cash Limit 2001/02		546,486

3 Forecast Outturn 2001/02

3.1 The forecast outturn for 2001/02 based, largely, on submissions for the compilation of the revised budget, has resulted in a projected outturn £40,000 below the cash limit. An analysis of the variations over divisions of service are set out in the appendix and the major differences from the cash limit identified at this stage are discussed in the following paragraphs.

Home to School Transport

3.2 As a result of the underspending in 2000/01 being carried forward, the home to school transport cash limit has been increased by £128,000 to provide initial funding for health and safety risk assessments of escorts (see para 2.2). This increases the cash limit for 2001/02 to £17.441 million. The latest indications are, that, despite savings of £327,000 from the spend to save initiatives, expenditure is likely to exceed the revised cash limit by £418,000, which includes £47,000 in respect of St. Bede School.

3.3 The predicted over commitment reflects increased contract costs mainly in respect of pupils with special educational needs (including the impact of developing in-county provision), although this has been partially offset by savings of £111,000 on season tickets, primarily in respect of Post-16 students.

3.4 As part of its budget strategy for 2001/02, the Committee earmarked a special contingency of £450,000 to cover potential financial pressures on the service in the current year. The latest forecast means that almost all of this contingency is likely to be required in 2001/02. Officers will continue to seek further savings since any balance in the contingency that remains at the year end, currently estimated at only £32,000, will need to be carried forward to 2002/03 given that the full year effect of the current year's over commitment is forecast to exceed the available budgetary provision.

Inclusion (SEN) +£125,000

3.5 Pressure on the Committee's Inclusion budgets continues with an overall net overspending of £125,000 currently forecast for 2001/02.

3.6 The development of specific "in-county" provision is proceeding and, supplemented by funding from Standards Fund, is enabling the service to meet the increasing demand from pupils with statements in mainstream schools. Creditor provision for outstanding claims for additional support in 2000/01 was overstated, resulting in a one-off saving in 2001/02 of £100,000 against a cash limit of £4.5 million.

3.7 Pupils with complex and extreme levels of need are becoming more difficult and expensive to place in out-county provision. In addition several SEN Tribunal decisions have had a significant effect upon this budget. This has resulted in a forecast overspending of £371,000 against a cash limit of £6.5 million. Offsetting this increase, the net impact of inter-authority recoupment (the cost of Hampshire SEN pupils attending schools in neighbouring LEAs or reimbursement of pupils from other LEAs using Hampshire establishments) for special education is estimated to be £146,000 less than the 2001/02 cash limit.

3.8 The level of expenditure on the provision of education otherwise than at school (EOTAS) continues to be volatile. The budget is being actively managed and at this stage expenditure is expected to be contained within the cash limit of £3.9 million.

Bilingual Support Services (BLSS) +£80,000

3.9 The impact of meeting the needs of an increasing number of newly arrived pupils for whom English is an additional language and the needs of all ethnic minority pupils at risk of underachievement has resulted in the operational aspects of the Bilingual Support Services forecasting an overspending of £80,000 against a cash limit of £390,000.

Other School Centrally-held Budgets -£440,000

3.10 The remainder of the centrally held budgets show a net underspending of £440,000, excluding the cost of St. Bede (temporary) School (see below). The major contributors are set out below with the balance being made up of smaller variations across a number of items.

	£'000
*Teacher Maternity Cover
The current number of teaching staff on maternity leave is higher than recent years. Based on these trends an overspend of £80,000 is predicted against a cash limit of £665,000.	+80
*Local Management Contingency
As a result of delays in the capital programme the hire of temporary classrooms is expected to exceed the budgetary provision of £447,000 by £63,000. However, other legitimate claims on the local management contingency are forecast to be £85,000 less than anticipated resulting in a net underspending of £22,000.	-22
*School Sixth Forms
Funding of school sixth forms will transfer to the Learning and Skills Council (LSC) on 1 April 2002. In recognition of this change it was agreed with the relevant heads and governors that their 2001/02 budget shares would be based initially on 90% of their forecast November 2001 sixth form pupil numbers and would be subject to adjustment when actual numbers were available. £300,000 was set aside to fund this approach but based on September 2001 pupil numbers it seems likely that only £60,000 will be required.	-240
*Pupil Support
Despite an increase in the level of school uniform grant payable to parents, the latest forecast is showing an underspending of £123,000 against a cash limit of £497,000. Grant is payable to parents receiving income support or income-based job-seeker's allowance. The underspending reflects a continuation of the situation highlighted in last year's outturn and results from changes in Department of Social Security entitlement regulations.	-123

	£'000
*Interest on School Balances
Despite a reduction in interest rates, the increased level of school balances at 31 March 2001 is expected to generate additional income of £122,000 in 2001/02.	-122

St. Bede School +£275,000

3.11 The County Council has confirmed that its preferred option is to repair/rebuild the existing school buildings in Gordon Road, Winchester. Work is progressing on detailed plans for the building improvements but in the meantime the school remains in temporary accommodation on a playing field in Bereweeke Road. The cost of this temporary school is estimated at £239,000 for 2001/02, mainly in respect of hire of classrooms but also covering landscaping and plumbing services. In addition the hire of dehumidifiers for the existing school is estimated to cost a further £36,000.

Services to Schools and Support +£101,000

3.12 Despite continued tight control of all aspects of the education support services budgets an overspending of £101,000 is forecast against the cash limit of £20.7 million. Careful vacancy management is currently expected to produce net savings of £100,000 but this has been more than offset by additional spending of £201,000 on the information communication technology (ICT) budget of £1.032 million. This includes the cost of recabling buildings and the rolling out of IT2000 to local education offices, together with the replacement of the dedicated SEN module.

3.13 Business Units are also having to manage budgets actively and at this stage have taken a cautious approach in forecasting the outcome of their trading activities during the current year. In formulating plans for 2001/02 business units proposed to use part of their accumulated balances to develop the services to schools. Collectively, they are continuing to predict an overall deficit position of £85,000 on gross budgets of £21 million which is in line with the original budget plan.

Other -£181,000

3.14 There are a number of other variations which together result in a net reduction of £181,000. The most significant are:

	£'000
a) School Catering
A net underspending of £50,000 is forecast against the school catering cash limit of £3.5 million, reflecting the continuing decline in the number of free meals served to pupils, as identified in last year's outturn.	-50
b) School Crossing Patrols
Despite the hiring of consultants to review all school crossing patrol sites, continuing recruitment difficulties have resulted in a net underspending of £44,000 against a cash limit of £871,000. This budget will transfer to the County Surveyor in 2002/03 in accordance with the recommendation of the Best Value review.	-44
c) Careers Service
The County Council has a share in the equity of Vosper Thorneycroft Southern Careers and is entitled to a share of any profits released. The share for 2001/02 is forecast to be £31,000 above the original budget.	-31
d) Settlement of Claim
Final settlement of an outstanding claim with a sixth form college has resulted in the recovery of £38,000 in 2001/02.	-38

4 Summary

4.1 In summary, the current forecast for 2001/02 is:

	£'000
Inclusion (paras 3.5 - 3.8)	+125
Bilingual Support Services (para 3.9)	+80
Other School Centrally-held Budgets (para 3.10)	-440
St. Bede School (para 3.11)	+275
Services to Schools and Support (paras 3.12 - 3.13)	+101
Other (para 3.14)	-181
	-40

4.2 Despite the significant pressures on the budget, including the impact of the St. Bede (temporary) School, careful management is enabling the Committee to remain within its cash limit. In fact, the latest forecasts indicate a potential underspending of £40,000 for 2001/02. In addition, the Committee's general contingency of £326,000 remains intact to cover unforeseen circumstances during the remainder of the year or to be carried forward to assist budgetary pressures in 2002/03.

4.3 In preparing for the January meeting, officers will seek further to refine the current forecasts to establish the forward year impact of variations, given that a number of the savings achieved this year will be one-off. In addition, it will then be possible to assess whether the current forecast underspending, together with the Committee's general contingency for 2001/02, can be released to be carried forward.

Recommendation

That the report be noted.

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

1 Published works.

2 Documents which disclose exempt or confidential information as defined in the Act.

TITLE ACT

None.

Appendix

Education Committee

Revenue Expenditure 2001/02

Analysis of Cash Limited Expenditure over Services