Archived decisions

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

1. Executive Overview and Summary

1.1 This report sets out the proposed Education revenue budget for 2002/03 and reports on the revised budget for 2001/02. The Education Executive member is being recommended to approve for submission to the Cabinet:

· that forecast savings totalling £651,000 be carried forward to 2002/03;

· the base budget (as set out in Appendix 1 and Annexes 1 to 4);

· the efficiency improvements set out in Appendix 2;

· the review of charges (as set out in Appendix 3);

· the proposals for new growth and redeployment of resources (Appendix 4);

· the Education budget (as set out in Appendix 5);

· the summarised trading accounts for business units (as set out in Appendix 6);

· the extent to which additional specific grants support service levels at schools and for the service as a whole;

· the proposals to achieve the targets set out by the Secretary of State for Education and Skills.

Prior to the Executive member considering the budget, this report is being presented to the Education Policy Review Committee to provide the opportunity to comment to the Executive member on the proposals.

1.2 The budget proposals for the financial year commencing April 2002 build upon current strategies and priorities. There are many pressures such as meeting the rapidly rising costs of home to school transport and special educational needs. There are proposals also in respect of other priority needs. In particular, they aim to strengthen further teacher retention and recruitment; support rising standards in pupil attainment and early years education; develop inclusion and pupil behaviour work: further develop the youth service; and modernise systems and support for information and communications technology (ICT) to improve networks to underpin developments in teaching and management. Many of the strategies and priorities are set out in the statutory plans including the Education Development Plan, Behaviour Support Plan and Early Years and Childcare Plan which appear of the agenda of this meeting.

1.2 During consultations with representative headteachers, governors and Teachers, Liaison Panel, there were strong representations for significant additional resources to help schools retain and recruit teachers, support pupil behaviour and make optimum use of computer technology.

1.3 The structure of the report follows previous years and includes:

· background covering Cabinet guidelines. Para 2, page 3.

· the revised budget for the current year: identifying a possible balance of £651,000 to carry forward to 2002/03. Para 3, pages 3 and 4.

· the base budget 2002/03: listing service variations compared with the current year's base (in particular the £8 million reduction resulting from the transfer of post-16 education to the Learning and Skills Council) and known increases in expenditure which will affect the forward budget, efficiency improvements and review of charges. Para 4 to 7, pages 4-8.

· the budget strategy 2002/03: including the outcome of Best Value Reviews and proposals to deploy £7.414 million of additional resources. Paras 8 to 11, pages 9-19.

· other budget information including the effect on schools' budgets and performance against central government targets. Para 12 onwards, pages 19-23.

1.4 Passporting the local Education SSA (Standard Spending Assessments) increase of 6.0%, less the net impact of the transfer of post-16 provision to the Learning and Skills Council, and other adjustments leaves about £25.8million or 5.5% available. Nearly £18.9 million is required to meet future inflation. The proposals for allocating the balance of £7.4 million will result in:

· passporting to Education the local education SSA cash increase;

· full take-up of the available Standards Fund allocations including class size initiatives, estimated to total about £47 million (£34 million of which is devolved to schools);

· 87.3% of the local schools' budget (LSB) being delegated to schools (national target is set at 87%);

· full funding of the teachers' pay award if it is settled at no more than 4%;

· spend on central administration will be £44 per pupil (national target is set at no more than £60 per pupil).

2. Background

2.1 At its meeting on 17 December the Cabinet set provisional budget guidelines which would result in an overall budget increase of 5.5% and an estimated council tax rise of 6.1%. The provisional guidelines are at the level of the base budget together with passporting of additional sums for Education and Social Services.

2.2 Other identified central pressures were not allowed for in the provisional guidelines because of a number of uncertainties affecting the budget. The Cabinet will take account of these pressures at their meeting on 11 February 2002 when considering the final budget to be recommended to the County Council. Taking these considerations into account a budget increase of between 6.2% and 6.6% might be the likely outcome. This would result in a council tax rise of between 8% and 9%.

2.3 The Cabinet resolved that when making budget recommendations to the County Council they will include:

· agreement of the base budget

· confirming the passporting of SSA percentage increases to Education and Social Services

· considering Executive members' responses to the budget guidelines

· considering the results of budget consultation with partners (headteachers, governors, parent teachers' organisations, the voluntary sector, trades unions); business interests; residents' associations and council tax payers

· considering the outcome from any further public opinion polling and any comments received from other organisations such as Police, Fire and health authorities

· determining spending and council tax decisions within the flexibility available within the provisional projections and subject to the final revenue support grant settlement and the update of budget and council tax figures.

2.4 For this service, the provisional budget guideline is £571.241 million, including forecast underspendings of £651,000 which the Cabinet will be asked to carry forward from 2001/02.

3. Revised Budget 2001/02

3.1 The last monitoring report to the Education Policy Review Committee indicated that expenditure would be contained within the cash limit and in fact a net underspending should be achieved. This, together with the unused general and home to school transport contingencies, would then be available to be carried forward to ease budget pressures in 2002/03.

3.2 Compilation of the revised budget has, largely, confirmed the earlier forecast. The exception is home to school transport where contract cost increases were significantly lower than forecast and outstanding applications were processed at minimal additional cost by the more intensive use of existing transport arrangements and were offset by savings resulting from transport reviews. The overall result is that only £166,000 of the specific contingency will be required in 2001/02 resulting in an underspend of £284,000 available to carry forward to 2002/03.

3.3 The forecast position for 2001/02 is summarised below with detail of the cash limit construction and comparison with the revised budget appearing as Appendix 7:

	Variation from Cash Limit
	£'000	£'000
Inclusion - out-county placements	371
- statements in mainstream	-100
- inter-authority recoupment	-146
		125
Bilingual Support Services (BLSS)		80
Other school centrally-held budgets:
- teacher maternity cover	+80
- school sixth forms	-240
- pupil support/uniform grants	-123
- interest on school balances	-122
- local management contingency	-35
		-440
St. Bede (temporary) School		260
Services to schools and support		102
Other variations		-164
		-37
Home to school transport contingency	-450
Less forecast excess over cash limit	166
		-284
General contingency		-330
Underspending against cash limit		-651

3.4 The Executive member is therefore being asked to recommend to Cabinet that the total forecast underspending against the Education 2001/02 cash limit of £651,000 be carried forward to assist budgetary pressures in 2002/03.

4. Base Budget 2002/03

4.1 A base budget has been prepared which reflects the current financial policies of the Council, in order to provide a starting point from which decisions can be made. The base budget for Education is £556.767 million (see Appendix 1).

4.2 The principal changes in the base budget, compared with the 2001/02 original budget, are set out below. They are made up of two elements:

· variations with corresponding adjustments to budget limit (see para 4.3)

· service variations in 2002/03 (see para 5).

4.3 The following variations are reflected in the 2002/03 base budget and the Education budget limit has been correspondingly adjusted:

			£'000
(a)	The Government has reduced the County Council's Education SSA increase to reflect the full year effect of the transfer in September 2001of Early Years Regulation and Development Officers to OFSTED and responsibility for the funding of Post-16 Education (mainly school sixth forms) to the Learning and Skills Council from 1 April 2002. These transfers result in the following adjustments to the Committee's base budget:
	- full year effect of Early Years Regulation and Development Officers transferring to OFSTED		-518
	- Post-16 education expenditure (school sixth forms and SEN provision) to be funded by the Learning and Skills Council from 1 April 2002		-8,044
(b)	The estimated pupil numbers for 2002/03, when compared with the estimates for 2001/02, show a decrease of 1286 pupils in primary schools and an increase of 188 pupils in secondary schools. Teacher numbers have been varied in line with changes in pupil numbers, to maintain current funding policy levels for pupil/teacher ratios.		-730
(c )	Full year effect of budget changes introduced in 2001/02 to meet budget targets, including one-off increase in schools' delegated budgets funded from carry forward of underspendings, the cost of additional early years and childcare development officers and one-off cost of relocating Pupil Referral Units.		-392
(d)	The revenue effect of capital schemes being completed in 2002/03 and the full year effect of those completed in 2001/02 (i.e. heat, light and cleaning costs of additional school accommodation)		+121
(e)	Variation in the number of school days affecting the level of expenditure on school catering and home to school transport		+678
(f)	Reduction in the take up of free school meals		-61
(g)	Variations in the level of expenditure financed by Government grants determined after the County Council budget for 2001/02 had been approved:
		£'000
	Teachers' pay threshold payments	+8,400
	Cash protection for former GM schools	-769
	Direct funding for schools	+2,535
	Standards Fund	+5,280
	Early years and childcare	+3,716
			+19,162
(h)	Net inter-committee budget adjustments		+30
			+10,246

5. Service Variations in 2002/03 totalling £801,000 (para 5.1 to para 5.5)

5.1 Based on the full year effect of trends identified in the current year, the home to school transport budget for 2002/03 reflects a net over-commitment of £758,000 against the budget limit of £17.796 million (3.5% of the total local schools' budget). Total service pressures for 2002/03 are estimated to cost an extra £1,143,000 as a result of an increase in the number of SEN pupils requiring transport, higher contract costs, the impact of recent appeals and on-going provision of £185,000 for health and safety risk assessments of school escorts. Against this, spend to save initiatives are expected to produce savings of £385,000, resulting in the net over commitment of £758,000.

5.2 As part of its budget strategy in 2001/02, the Education Committee earmarked a continuing special contingency of £450,000 to cover potential financial pressures on the service. Unfortunately, even applying this contingency in full is insufficient to bridge the gap in 2002/03, leaving an overall excess of £308,000.

5.3 Pressure from parents, schools and independent organisations for more specialised and increasingly expensive SEN provision continues to impact on the Education Inclusion budgets. For the coming financial year (2002/03) notifications are already being received from independent special schools for significant fee increases. The latest budget monitoring report highlighted the increase in the number of Hampshire pupils requiring specialist facilities not available within our own schools. The cost of these placements in out-county establishments is estimated to require an additional £371,000 in 2002/03 on a budget limit of £6.5 million. Offsetting this increase, the net effect of inter-authority recoupment for special education for 2002/03 is estimated to be £124,000 less than the original budget reducing the net impact to £247,000.

5.4 The last monitoring report also highlighted the increasing level of expenditure required to meet the needs of the growing number of newly arrived pupils for whom English is an additional language and the needs of all ethnic minority pupils at risk of underachievement. It is estimated that to continue the current level of activity the Bilingual Support Service will require an increase of £80,000 in 2002/03.

5.5 The other budgets managed centrally on behalf of schools reflect a net increase of £144,000. This results, mainly, from items that featured in the last monitoring report. Namely, the continuing costs of St. Bede (temporary) School (£200,000) together with the impact of reduced interest rates on school balances and increases in copyright licences offset by savings on school uniform grants (£123,000) which flowed from changes in Department of Social Security entitlement regulations.

6. Efficiency Improvements : Education Services

6.1 The Cabinet, at its meeting on 17 December, 2001 requested all Executive members to identify efficiency improvements achieved in absorbing pressures and costs within the budget guidelines.

6.2 Delivering efficiency savings whilst retaining and recruiting quality staff remains difficult, as indicated in the Workforce Plans. The majority of resources managed centrally are demand led, in particular home to school transport and SEN. Whilst every effort is made to minimise cost increases the pressure from parents through appeals and other statutory processes continues to increase. The continuing implementation of the spend to save policy is proving successful: para 5.1 identifies £385,000 for home to school transport.

6.3 On special educational needs provision there has been a marked increase in the number of SEN statements/re-assessments. During 2001 there was a 20.52% increase to 599 compared with the previous twelve months. This may be the start of an upward trend which will be fuelled by the revised SEN national Code of Practice.

6.4 In addition to demand led budgets, many others relate to Standards Fund and the specific targeting of expenditure by central government through grants and similar mechanisms. Each of these requires administration. In most cases, the additional costs have been absorbed within existing resources; some are met by using an allowed proportion of the grant. On emerging new policy areas, such as Community Planning and initial preparation of a Local Public Service Agreement application, resources have been diverted to enable progress to be made to support the County Council's strategy. Similarly, growth in management information requirements, including the analysis and monitoring of the academic performance of schools and their pupils, the introduction of a countywide database of comprehensive pupil-level data and the use of geographic information systems for a wide range of analysis and presentation of data has been absorbed within the Information Services Team through more effective utilisation of time and IT equipment.

6.5 Appendix 2 sets out the only cost quantifiable efficiency improvement, namely, absorbing the net cost of staff increments. Otherwise the Education Department continues to absorb additional pressures.

7. Review of Charges

7.1 All sources of income generated by the Education Service have been reviewed to ensure that charges are set at the appropriate level. An analysis of charges is set out in Appendix 3.

7.2 Charges are amended annually in line with the review of prices set out in the plans of each business unit providing services to schools and the wider community. As the majority of such charges are made to schools there is limited scope for generating additional income to the County Council. Schools continue to be encouraged to maximise income through the letting of facilities to the community and outside organisations. Decisions on the level of charges will take account of availability, demand and market rates. School meal charges are reviewed regularly under the current contract and any increase in the meal charge is reflected in the payment to the contractor. The current school meal price is £1.35 effective from September 2001. It is likely that, due to new nutritional guidelines, single status and other external factors, the price of a meal will need to be reviewed in September 2002.

8. Budget Strategy 2002/03

8.1 The priorities agreed by the Cabinet include the passporting, in full, of the local Education SSA cash increase of 6.0% to the Education Committee, although the impact of functional changes, particularly Post-16 Education, reduces the effective increase to 5.5%. This 5.5 % cash increase in Education current expenditure equates to £25.8 million. From within this sum allowance needs to be made for future inflation. The primary assessment has been based on 4% for teachers' pay, 3% for other staff, 2.5% for prices. In addition provision needs to be made for increases in employers' contributions to the Teachers' Pension Fund and Local Government Pension Scheme but this is partially offset by reductions in employers' National Insurance contributions. The overall cost in 2002/03 is estimated to be £18.854 million. Taking this into account and after allowing for items already reflected in the base budget a sum of £6.763 million (at November 2001 price base) remains to cover inescapable commitments and service developments. This is made up as follows:

	£'000		£'000
Passporting local Education SSA cash increase			28,400
Net impact of functional changes (mainly Post-16 Education)			-2,600
			25,800
Items reflected in base budget (pupil numbers, revenue effect of capital programme, variation in pupil days)			-183
Provision for future inflation
- base budget (see annex 2 to appendix 1)	- 17,749
- business rates and non-teaching recruitment and retention provision held in central contingency but passported	-965
- priority budget pressures	-140
			-18,854
			6,763

8.2 Subject to Cabinet approval the forecast underspending for 2001/02 of £651,000 (see para 3.4) may be available to be carried forward to assist 2002/03, on a one-off basis. In total, therefore, £7.414 million is available to assist in meeting those pressures which must be addressed as priorities.

9. Outcome of Best Value Reviews

9.1 Best Value reviews were completed during the past 12 months on a number of services. Some included outcomes which recommended that additional resources be considered to enable a successful service to provide better quality and/or an enhanced level of service provision. They were:

· specialist teacher advisory service;

· bilingual support service;

· educational psychology service;

· school library service.

In addition the school crossing patrol outcome review is being resourced through spending up to the budget cash-limit (in previous years this budget has reported an underspend of about £60,000) and the four service to schools business unit review outcomes are being included in the 2002/03 business plans. Work on the outdoor education service review continues as reported in agenda item 10 of this meeting.

9.2 On the four services listed in para 9.1 progress is being made as follows.

9.3 Specialist Teacher Advisory (STA) service: the appointment of a Senior STA for Physical Disability and backfilling of time spent on teaching were implemented last year; the equipment budget increased using School Access initiatives and Standards Fund resources and other developments reported fully in the Annual Report on Best Value Reviews elsewhere on the agenda for this meeting.

9.4 Bilingual Support Service: additional funding of £80,000 to meet the increased demands on the service is reported in para 5.4 above. Without this additional provision the service would have failed to meet the needs of newly arrived pupils. Work on improved data collection and analysis (a need reinforced in the LEA OFSTED report) is underway and will continue subject to the budget proposals being agreed to develop ICT infrastructure and systems.

9.5 Educational Psychology service: service developments were proposed subject to resources being available and reprioritisation of existing activity. A priority area was to improve the academic achievements and emotional well-being of children through the application of psychology in pre-school settings. This accords with a number of strategies relating to early years development, school improvement and behaviour. The budget proposals for Early Years and Childcare includes additional resources of up to £20,000 to achieve this.

9.6 School library service: additional resource to bring the level of spend on the book fund to the average for shire counties was recommended. This service trades with schools through a service level agreement. The budget proposals includes additional resources of £27,000, which will be delegated to schools, to achieve this.

10. Deployment of Resources totalling £7.414 million (para 10.1 to 10.30)

10.1 Consultation on budget strategies for 2002/03 involved representatives of headteachers, governors and the Teachers' Liaison Panel. The various views are reported in paras 10.23 to 10.29. The overall position is summarised in Appendix 4. The proposals with explanatory text are set out under five main headings: -

· Excess over base budget limit totalling £801,000 (para 10.2);

· Continuation of existing policy totalling £900,000 (paras 10.3 to 10.6);

· New requirements totalling £350,000 (paras 10.7 and 10.8);

· Standards Fund £2,712,000 (paras 10.9 and 10.10)

· Education Development Plan priorities totalling £1,167,000 (paras 10.11 to 10.20);

· Schools Delegated Budgets totalling £1,484,000 (paras 10.21 to 10.30).

10.2 The net excess over the base budget limit amounts to £801,000 with the major variations set out in paragraph 5.

10.3 Despite the impact of the spend to save initiatives, home to school transport expenditure continues to exceed the budgetary provision. As noted in para 5.2, the full year effect of current contracts and health and safety requirements has already led to a forecast overspending for next year of £308,000 even after applying in full the 2002/03 specific contingency provision set aside as part of last year's budget strategy. In view of this situation it is considered essential to reinstate the specific contingency of £450,000 in recognition of the current rate of increase of home to school transport costs, particularly in the special needs area.

10.4 This additional cost is part of the statutory requirement on the County Council to fund the cost of assistants' hours written into pupils' statements of special educational needs. All the funding will be transferred to schools and attached to individual pupils.

10.5 This service has been operating successfully over the last two years funded from Standards Fund. As a result of changes in Government priorities this funding ceases after 31 March 2002 and therefore £190,000 is required to enable this crucial preventative service to continue.

10.6 The provision of a Parent Partnership Service became a statutory requirement in January 2002 with the enactment of Part 1 of the SEN and Disability Act, the final version of the revised SEN Code of Practice and the attendant regulations. However, as from April 2002 the funding of Parent Partnerships will be transferred from the Standards Fund to become part of the SSA settlement. To continue this statutory service following the loss of Standards Fund grant will require £60,000 in 2002/03.

10.7 From September 2002 all permanently excluded pupils will be entitled to full-time education (i.e. 25 hours per week). Although some pupils already receive full-time provision the current average is 14.5 hours per week. In order to meet the County Council's statutory responsibility it is anticipated that an additional eight class groupings of pupils will be required costing £220,000 in 2002/03 and £365,000 in a full year.

10.8 In addition as a result of changes in the pay and conditions of staff in pupil referral units they will now be entitled to SEN allowances which will require extra funding of £130,000.

10.9 The Government has once again announced its intention to increase the value of the Standards Fund. The level of proposed allocations for 2002/03 is subject to continuous change but latest indications suggest that they could rise from £41.5 million to £46.8 million. Of the additional £5.3 million, the County Council's contribution will be £2.7m. In 2002/03 it is proposed, following consultation with partners, to take up 100% of the Standards Fund available. Of the allocation £34.4 million is devolved to schools, the balance funding strategies and support programmes. Primary schools will each receive between £18,000 and £45,000, secondary schools between £70,000 and £140,000 plus a share of the National Grid for Learning grant of £6.3 million (the distribution method is yet to be determined) and schools with infant classes will receive a share of a likely allocation of £3.7 m to reduce infant class sizes. Appropriate schools will also receive an allocation from the £1.7 m for the induction of NQTs and from the £1.5 m for designated Beacon or Specialist Schools.

10.10 Nearly all of the additional £5.3 million is allocated through the Key Stage 3 the strategy (expanded to include Science and ICT alongside English) and National Grid for Learning Strategies which link directly to the five National EDP priorities. Both place very specific targets on schools and the County Council which they could not achieve without taking up the full allocations.

10.11 The final phases of the move to the new corporate IT2000 Strategy systems will include: connecting sites in remote locations, where it is cost effective; connecting early years centres; and the introduction of new charging arrangements which reflect the improved service available to all users across the County Council. The early years investment will enable effective development of the Children's Information Service and assist towards attracting further central government funding. The provision of effective communication and information systems is critical to two of the three local priorities in the new EDP, will contribute to the national priorities and will also enable some of the best value outcomes for the outdoor education, bilingual support, school admissions and specialist teacher advisory services to be implemented.

10.12 In addition, a range of information systems need to be replaced to ensure management and schools' information needs continue to be met and to facilitate e-Government requirements. This will involve one-off funding in 2002/03 of £303,000. These mainframe based, legacy systems have to be replaced under the County Council's IT Strategy and converted onto IT2000. Systems include those relating to school improvement and pupil attainment, special educational needs, pupil exclusions and education otherwise than at school and school governors information.

10.13 To improve the quality of early education provision in line with local and national priorities and to meet the requirements of the DfES in the 2002/03 Early Years and Childcare Development Plan it is proposed to increase the levels of expert support available to practitioners. Five advisory teachers and five special educational needs co-ordinators (phased appointments to January 2003) would be appointed. In addition, up to £20,000 will be available to secure additional educational psychology services to early years provision. These relate to the EDP national priority on raising attainment in Early Years toward the early learning goals and EDP local priority 2 on inclusion.

10.14 In addition, the Government has announced recently that the 100% grant to provide nursery education places for three year olds will be increased by £4.483 million, from £5.740 million to £10.223 million in 2002/03.

10.15 To enable school senior managers to maintain existing communication networks with each other and the County Council when the current PROFS facility expires, a replacement facility is needed. This will facilitate EDP local priority 3: networks to support school improvement and reduce school and County Council administration.

10.16 A further increase in the level of provision for the Youth Service will enable the momentum from increased funding over the last four years to be sustained. Support for young people at risk of disaffection remains a priority.

10.17 The Government grants for teacher recruitment and retention and county wide initiatives from the DfES and the Teacher Training Agency do not fund fully the very successful activities of the Education Personnel Service in supporting the increased work in this area. Governor and headteacher groups expressed strong support for this service. In the current year, some funding had been secured by "top-slicing" the teacher grant; the regulations for 2002/03 require 100% delegation.

10.18 Hampshire schools' ability to recruit newly qualified teachers will be strengthened by providing training support at the outset in the management of pupil behaviour in the classroom. This covers part of one of the elements of the Behaviour Support Plan action plan, although there are others which would need further resources.

10.19 The Hampshire Target in the EDP for 2004 for pupils achieving 5+ A* -G grades is very challenging, DfES having proposed 97% including mathematics and English. The target includes children with special educational needs. This additional resource will enhance the ability of the inspection and advisory service to work with schools and education centres on improvement work. At the same time, the County Council will need to be closely involved in the national development of strategies for the education of 14 - 19 year olds, which will require policy and development work by officers, inspectors and advisers working with schools and other services.

10.20 The Government provides grants for schools which move into special measures/serious weakness. The number of Hampshire schools classified as such has reduced significantly with the consequent reduction in the grant. To enable work to be undertaken in those schools which might otherwise move into serious weakness/special measures, it is necessary to provide support targeted on staff, curricular and other needs.

10.21 The current year's allocation to schools through the Local Management Formula included money available from an underspend on the former Education Committee's budget in 2000/01. To ensure that schools budgets are not reduced in real terms it is necessary to make new provision.

10.22 A major change in the funding of school sixth forms arises with the transfer of responsibility for funding to the Learning and Skills Council. Balancing adjustments proposed within the main Local Management Formula are unable to fully achieve the funding stability that is sought. This sum is needed to compensate for the five schools out of ten that would lose sixth form funding after all the changes have been implemented.

10.23 The representatives of headteachers, governors and the Teacher Liaison Panel identified five areas. These are set out in paragraphs 10.24 to 10.29 inclusive.

10.24 The importance of retaining good teachers and recruiting new ones was a strong theme from all partners. The Standards Fund specific grant for recruitment and retention (£1.65m in 2001/02, £1.88m in 2002/03 mainly for secondary schools) has been welcomed. Many secondary schools reported spending on retention and recruitment at twice the level allocated through the grant in the current financial year. Salary incentives to attract recruits and to retain existing staff would put pressure on future budgets. Primary schools faced similar pressures, but with less support from the Standards Fund. The centrally funded Recruitment Strategy Manager and her team had played a major role in helping to secure the new teachers. Maintaining funding for this work was essential, as was the continuing support of Education Personnel Services more broadly.

10.25 This was linked with retention and recruitment and a critical factor for both new and experienced teachers. Additional good classroom assistants and administrative staff with good information and communication technology (ICT) support would free teachers from some of the workload pressures and make the job more satisfying. A full teaching force at each school remains, however, the main route to avoid teachers having to take on additional work.

10.22 As with workload, this was linked with retention and recruitment. There was recognition that mainstream and special schools needed support in providing for pupils whose complex needs were increasingly being identified. To sustain this development required a range of measures, particularly where behaviour issues were involved. The measures would include:

· Early identification of needs

· Prompt inputs from health and social services as well as educational psychologists;

· Training and support for school staff in behaviour management (BM) issues;

· Time and resources for those at school level most involved in BM to work both with pupils and in enabling other staff. Special schools have some staff with the expertise but this can only be shared with funding;

· Shared resources in expert staff for groups of schools;

· Staff outside schools such as the Behaviour Intervention Service;

· Fully resourced Education Otherwise than at school (EOTAS) service working with pupils not in schools and as a support to schools.

10.23 The provision has to be a mix of resources within school and outside school requiring flexible and creative use of funding. The SEN Audit provides a mechanism for allocating additional delegated resources weighted towards schools with the greatest needs, bearing in mind that behaviour is a significant factor in identified special needs. The Behaviour Support Plan describes how centrally managed resources can support teachers and pupils.

10.24 There are major pressures both on the management and the curriculum needs which NGfL has not fully meet:

· The replacement of PROFS by Outlook to ensure good communication with and between schools;

· The targets for computer/child ratios in schools;

· The costs in operation of ICT: communication links, repairs, ICT support, supplies and peripherals, software;

· Short replacement/upgrade cycles on all ICT equipment, software, communications;

· New management/admin tasks and software;

· Learning time for staff as ICT is yet more integral to curriculum delivery;

· Increasing management information via ICT e.g. on targets, performance;

· The Education service aspects of E-Government;

· The ICT infrastructure of the County Council;

· Early years information developments.

10.25 In addition to these four priorities, the Special Schools Heads Conference identified parity with primary MLD schools in support staff funding for secondary MLD schools funding and implementation of the Audit approach to Special Schools. The latter has been developed as a way of achieving a better match between schools' delegated budgets and pupils' needs. The traditional description of special schools e.g. MLD and SLD have become less useful and the Audit provides a formula better able to support schools meeting a wider range of complex needs. Additional funding is needed for successful introduction of the scheme.

10.26 Although not initially highlighted specifically by partners, they did endorse best value review outcome of providing the best possible resources to support reading through the use of the school library. The relatively modest level of additional delegated money suggested for Library Services would be useful.

10.27 Following the consultation with partner representatives, it is proposed to allocate the £992,000 with schools' delegated budgets as follows:

· £300,000 to implement the audit approach to special schools funding, the policy having been agreed previously subject to resources becoming available;

· £625,000 to the SEN Audit by raising Step 2 by £13 and Step 3 by £52. This will give values of £340 (primary) and £317 (secondary) for Step 2 and £1,287 (primary) and £1,170 (secondary) for Step 3, providing the number of pupils identified at each step remains the same as 2001;

· £40,000 to help meet demands from schools for personnel service support; this money will be delegated to schools (the vast majority buy support from the Education Personnel Service through the management partnership arrangement)

· £27,000 to the School Library Service (SLS) to increase the book fund; this money will be delegated to schools through the SLS management partnership service agreement.

11. Summary

11.1 The distribution of resources available for 2002/03 (at a November 2001 price base) is summarised below with further detail appearing in Appendix 4; in particular the priority budget pressures.

	2002/03	2003/04
	£'000	£'000
Passporting 5.5% cash increase	25,800	25,800
Items reflected in base budget	-183	-183
Provision for future inflation	-18,854	18,854
	6,763	6,763
Resources available for redeployment	651	395
	7,414	7,158
Priority Budget Pressures
Net excess over base budget limit	801	601
Continuation of existing policy	900	900
New requirements	350	495
Education Development Plan priorities	3,879	3,818
Schools delegated budgets	1,484	1,344
	7,414	7,158

12. Effect on Schools' Budgets 2002/03

12.1 The County Council's budget strategy for 2002/03 is to passport the maximum cash increase into schools' delegated budgets. If approved, the budget delegated to schools for them to manage will represent a cash increase of 5.0% which incorporates:

· variations in pupil numbers

· the revenue effect of the capital programme

· changes in the number of school days

· inflation to outturn (equivalent to 4% for teachers and 3% on other pay votes, 2.5% for prices plus increases in teachers and local government pension contributions offset by reductions in national insurance)

· restoration of one-off support to Individual Schools' Budgets

· sixth form cash protection

· special school funding via SEN Audit

· additional funding for Individual Schools Budget

· increased County Council contribution to enhanced Standards Fund devolved to schools.

·

12.2 These various aspects are summarised below:

	£m	%
Adjusted 2001/02 Budget (excluding government grants)	385.6
Variation in pupil numbers	-0.7
Revenue effect of capital programme/ changes in number of school days	0.2
Inflation to outturn	15.9
Individual Schools Budget (ISB)	1.5
	402.5	4.4
Standards Fund - increased County Council contribution to match specific government grant	2.2
	404.7	5.0

12.3 In addition to County Council funding through SSA, schools are increasingly receiving direct funding by central government. The National funding for education has seen an increase from 1% in 1997/98 to 12% in 2001/02 of the proportion of funding allocated through specific and special grants (i.e. Standards Fund, School Standards Grant, Teachers Pay Grant, Education Action Zone programme, School Budget Support Grant and Education Budget Support Grant, although not all apply to every Hampshire school).

12.4 In summary the impact of all the specific grants relating to direct current expenditure, including those for early years and childcare and nursery education, is:

Original Budget 2001/02		Budget 2002/03	Schools	Variation Other	Total
£'000		£'000	£'000	£'000	£'000
23,312	Standards Fund	30,416	5,723	1,381	7,104
12,459	Direct funding to schools	14,994	2,535		2,535
2,071	Early Years & Childcare	5,631		3,560	3,560
5,740	Nursery Education	10,223		4,483	4,483
43,582		61,264	8,258	9,424	17,682

12.5 This shows that the approved Government grants (which excludes any matched funding required in respect of Standards Fund) increased from an original budget 2001/02 of £43.6 million to an estimate of £61.3 million for 2002/03, a £17.7 million (40%) increase. In addition Teachers' (threshold) Pay Grant for 2002/03 is estimated to be £8.4 million and the devolved capital allocations to schools will rise to £7.568 million.

13. Targets set by Secretary of State for Education and Employment

13.1 The DfES has recently confirmed that the minimum delegation target 2002/03 will be set at 87% of the Local Schools Budget (LSB). However, for 2002/03, Ministers have decided not to set a specific target increase in delegated funding per pupil (although it is envisaged that the comparative table for 2002/03 will continue to show the percentage increase achieved by each LEA).

13.2 The provisional budget guidelines set by the Cabinet, the delegation in April 2002 of some £7.7 million to schools of insurance, meals, maternity and school library service and the budget proposals in this report achieve 87.3%.

13.3 The Government has also decided that the ceiling for spending on central administration will remain at £70 per pupil in London and £60 per pupil elsewhere. Hampshire's spending in this area for 2002/03 is estimated to be £44 per pupil.

13.4 Finally the Government continues to require LEAs to increase Age Weighted Pupil Unit (AWPU) funding for each phase by an average of not less that 2.5% per pupil compared with the previous year's levels. This budget will ensure that this will be achieved in Hampshire.

14. Other expenditure

14.1 The budget includes some items which are not counted against the cash limit. This includes budgets for central departments' support services, except where they have been given to departments to buy services, and repair and maintenance of buildings. It also includes costs of member support within the Education budget which are rechargeable to the Policy and Resources budget for corporate and democratic core services. These have been excluded at this stage as the Cabinet control them and they have not yet been agreed. In the original budget they totalled £12.9 million.

15. Mandatory Awards

15.1 The budget for mandatory awards for 2002/03 totals £422,000, a decrease of £1.180 million on the original estimate. This decrease reflects the effect of changes to the awards regulations whereby the County Council has not had any financial responsibility for new students from September 1999 onwards. As mandatory awards are 100% grant aided this change in responsibility has had no effect on the County Council's finances.

16. Capital charges

16.1 Capital charges for 2001/02 and 2002/03 for the use of assets amount to £114.760 million, an increase of £3.774 million. The increase relates to charges for new assets.

16.2 Capital charges are made to services in order to show the full cost of providing services. They impact on the charges set for facilities supplied to third parties (e.g. inter-authority recoupment) and full cost services provided by trading units but they do not affect the Authority's total gross expenditure as they are reversed in the asset management accounts in the Policy and Resources Committee's budget and accounts.

17. Staffing Statistics

17.1 Following consideration by the Education Policy Review Committee the Education workforce plan covering the next 18 months was approved by the Executive Member - Education in October 2001.

17.2 For budget planning purposes the average number of staff in the base budget is 14,154. This compares with the original estimate for 2001/02 of 14,180, reflecting variations in teaching numbers in line with changes in pupil numbers.

17.3 Proposal relating to new growth and redeployment of resources as set out in Appendix 2 will result in an extra 83 staff including 65 in schools.

18. Business Units

18.1 The services to schools business units operate under Management Partnership on a trading basis and have Financial Regulation 20 status, enabling them to carry forward planned surpluses or deficits. A number of the business units are planning to utilise some of their accumulated surpluses to fund developments in 2002/03. Consequently, the proposed budget, even after taking into account the additional core funding for Education Personnel Services and Hampshire Inspection and Advice Service, reflects a net deficit of £234,000 (on gross expenditure of £21.2 million). The net deficit will be charged against the reserves reducing the estimated cumulative surplus at 31 March 2003 to £588,000. A summarised trading account for the eight business units is shown at Appendix 6.

·

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 FILE

None

Appendix 1

Education Committee

Revenue Budget 2002/03

Calculation of Base Budget 2002/03 - Summary of Cash Limited Expenditure

The following table shows the progression from the original budget for 2001/02 which was prepared at outturn prices 2001/02 to the base budget for 2002/03 (at outturn prices in 2002/03).

Annex 1 to Appendix 1

Education Committee

Calculation of Base Budget 2002/03

Parameters used in the Compilation

1 Definitions

1.1 The first stage in the construction of the budget for 2002/03 is the preparation of a base budget. The rules used this year are similar to those used in 2001/02 which are summarised below.

1.2 The 2002/03 base budget is defined as the current year's budget adjusted for:

· allocations made for inflation in 2001/02 including the full year effect of the provision made for pay awards in 2001/02

· exclusion of expenditure included in the 2001/02 budget which was financed by the carry forward of planned underspendings from 2000/01, the one-off use of reserves or balances, or which was approved on a non-recurring basis

· the revenue effect of past capital programmes, subject to its inclusion in the approved capital programme

· the full year effect of council-approved policies included in the current year's original budget, which have been introduced part-way through the year

· correction of arithmetical errors in the current year's budget

· the following specific items:

_ variations arising directly from changes in the number of pupils in schools/level of free school meals/number of days in the school year

_ variations in expenditure financed from government grants

_ full year effect of the transfer of early years inspection to Ofsted

_ transfer of responsibility for Post-16 Education to the Learning and Skills Council.

Annex 2 to Appendix 1

Education Committee

Calculation of Base Budget 2002/03

Significant costs of inflation

1. Variation between the actual cost of inflation in 2001/02 and the provision for inflation included in the 2001/02 budget:

	£'000	£'000
Additional costs of inflation		1,765
Less - full year effect of pay awards during 2001/02	329
- variations in business rates	243	572
= shortfall in the provision		1,193

2. Significant costs of inflation between 2001/02 outturn prices and November 2001 prices.

2.1 Pay awards £'000

Provision was originally made in 2001/02 for pay awards of 4% to teachers and 3% for other pay
The additional cost in 2002/03 of the pay awards agreed in 2001/02 is:		459
The pay awards agreed were:

Negotiating body	Effective date	%
Teachers	April 2001	3.7
APT&C Staff	April 2001	3.5
Manual Workers	April 2001	3.5
Soulbury Staff	September 2001	3.5

2.2 Non-pay inflation £'000

Provision was originally made in 2001/02 for price increases of 2.5%
The additional cost of price increases other than pay and net of income is:		1,306
The most significant non-pay variations from the 2.5% assumption made in the budget are as follows:

	Outturn 2001/02 to November 2001	Cost in 2002/03
	%	£'000
Electricity	-8.4	-127
Gas	32.5	439
Rates*	3.3	243
Fuel oil	-20.4	-216
Maintenance of grounds	0.8	30
Car allowances	9.1	131
Home to school transport	3.4	486
Cleaning contracts	1.5	62
School catering contract	5.1	572
Educational supplies	-0.7	-166
Payments to other local authorities	2.0	53
Income (average)	-1.1	-421
* subject to adjustment to the cash limit

3. Allocation for future inflation in 2002/03

		£'000
Provision for pay awards of 3% in 2002/03		2,344
Provision for pay award to teachers of 4% in 2002/03		12,106
Increase in teachers' employers' pension contributions (7.4% to 8.35%)		2,555
Increase in local government employers' pension contributions		304
Reductions in national insurance contributions		-1,425
Provision for non-pay inflation at 2.5%		3,242
Allowance for increased income		-1,377
Total allocation for future inflation		17,749

Annex 3 to Appendix 1

Education Committee

Calculation of Base Budget 2002/03

Significant Variations

Major variations between the repriced budget 2001/02 and the base budget for 2002/03 (at November 2001 prices) contributing to the increase of £9,053,000 are set out below:

Appendix 2

Education Committee

Revenue Budget 2002/03

Proposals for Efficiency Improvements (excluding schools)

*excludes costs absorbed relating to Best Value and Enterprise ProjectAppendix 4

Education Committee

Revenue Budget 2002/03

Proposals for New Growth and Redeployment of Resources

Appendix 6

Education Committee

Revenue Budget 2002/03

Services to Schools Business Units - Summarised Trading Account

The above summary includes the eight education business units : Inspection and Advice, Personnel, Music, Finance, Governor Services, ICT, Minstead Study Centre and Stubbington Study Centre.

Appendix 7

Education Committee

Revised Budget 2001/02

Calculation of the Cash Limit for the Revised Budget 2000/01

The following table shows the progression from the original budget for 2001/02 to the cash limit for the revised budget 2001/02. Both are at estimated outturn prices 2001/02.

Annex 1 to Appendix 7

Education Committee

Revised Budget 2001/02

Summary comparing the Revised Budget with the Cash Limit