Archived decisions

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

1 Summary

1.1 The following decision is sought:

That the accompanying report which sets out the latest revenue budget monitoring position for the Education Service be noted.

2 Reason

2.1 Financial regulations require the revenue budgets of services to be regularly monitored and for corrective action to be taken to control expenditure within approved cash limits.

3 Other options considered and rejected - not applicable

4 Conflicts of interest declared by the decision maker or a member or officer consulted - none

5 Dispensation granted by the Standards Committee - not applicable

6 Reason(s) for the matter being dealt with if urgent - not applicable

Approved by: Date: 21 November 2002

Councillor D.G. Allen

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

1 Summary

1.1 This report reviews the revenue budget of the Education Service for 2002/03. It indicates that, based on latest forecasts, expenditure will be £680,000 below the revised cash limit of £590.3 million whilst still leaving the whole of the contingency provisions intact. Efforts to control spending will continue in order to carry forward underspendings to ease potential budget pressures in 2003/04.

2 Cash Limit 2002/03

2.1 The original budget for 2002/03 set by the County Council for this Service amounted to £578.8 million which included provision for inflation of £18.7 million based on an overall 4% for pay (reflecting additional provision to aid recruitment and retention) and 2.5% for prices.

2.2 The final accounts of the Education Service for 2001/02 showed a net underspending of £60,000 which resulted in 50% (£30,000) being returned by the Cabinet for use in 2002/03. In addition, as the Government has allowed unused Standards Fund to be carried forward, the equivalent County Council contribution (for centrally managed schemes) amounting to £777,000 also needs to be brought forward. These funds were earmarked during the final accounts process. The cash limit has been adjusted accordingly.

2.3 The cash limit for 2002/03 has also been adjusted for the revised level of business rates, transfers between services (including supplementary repairs and maintenance funding delegated to schools), virement to capital (subject to Executive Member - Education approval) and expenditure financed by specific Government grants. The latter includes pump-priming grants for Public Service Agreements together with increases in Standards Fund as a result of schemes brought forward (£2.3m) and additional 100% allocations for specialist schools (£1.2m), early professional development (£1.9m) and laptops for teachers (£1.3m). At the same time childcare grants show reductions due to less grants being required for private and voluntary providers of nursery education for 3 year-olds (£1.0m) and delays with out of school hours schemes (£0.9m).

2.4 The revised cash limit for 2002/03 amounts to £590.262 million and is summarised below:

	£'000	£'000
Original Budget 2002/03		578,822
Transfers between committees (mainly additional repairs and maintenance funding delegated to schools)		744
Net variation in business rates		76
50% of 2001/02 underspending brought forward		30
County Council contribution re: Standards Fund brought forward		777
Virement to capital (subject to Executive Member approval)		-50
Variation in expenditure financed by Government grant: Teachers pay threshold payments Standards Fund Childcare grants Public Service Agreements Other	+4,600 +6,540 -2,187 +985 -75
		9,863
Cash Limit 2002/03		590,262

3 Forecast Outturn 2002/03

3.1 The forecast outturn for 2002/03 based, largely, on submissions for the compilation of the revised budget, has resulted in a projected underspending of £680,000 against the cash limit. An analysis of the variations over divisions of service is set out in appendix 1, and the major differences from the cash limit, identified at this stage, are discussed in the following paragraphs. Every effort has been made to manage continuing Government initiatives and legislative changes within existing resources. For example, delays in information systems replacements have enabled increased staffing needs to be met in areas such as statutory casework for children with special educational needs and the increased costs managing the developments in areas concerned with youth and social inclusion. From April 2003, these ongoing commitments will be addressed as part of the overall budget strategy for 2003/04.

Home to School Transport -£135,000

3.2 As a result of transport reviews, tight control on contracts, improved income generation and the continuing success of `spend to save' initiatives, home to school transport expenditure is currently forecast to be £135,000 below its cash limit of £19.0 million for 2002/03.

3.3 In developing its budget strategy for 2002/03, the Committee earmarked a special contingency of £450,000 to cover potential financial pressures in this area during the current year. The latest forecast suggests that this contingency is unlikely to be required in 2002/03. If this remains the case it may be possible to seek approval to carry it forward to assist budgetary pressures in 2003/04.

Inclusion (SEN) +£193,000

3.4 Pressure on the Inclusion budgets continues with an overall net overspending of £193,000 against total cash limits of £15.9 million currently forecast for 2002/03.

3.5 The successful policy of developing specific "in-county" provision, supplemented by funding from Standards Fund, has continued in order to meet the increasing demand from pupils with statements in mainstream schools. This approach, together with the full-year effect of the restructuring of the learning support assistants pay scales, has resulted in increased expenditure of £367,000. At this stage it is expected that these additional costs can be met from savings in "out-county" placements in independent and voluntary sector establishments.

3.6 A continuation of the overspending on inter-authority recoupment with Other Local Education Authorities (OLEAs), identified in the final accounts report, means that a total net overspending of £193,000 is forecast for 2002/03.

3.7 An increase in the number of exclusions, coupled with the introduction of full time education for excluded pupils, means that the provision of education otherwise than at school (EOTAS) continues to be volatile and difficult to predict. The budget is being actively managed and at this stage expenditure is expected to be contained within the cash limit of £4.8 million.

Other School Centrally-held Budgets -£353,000

3.8 The remainder of the centrally-held budgets show a net underspending of £353,000. The major contributions to the overall position are summarised below, with the balance being made up of smaller variations across a number of items.

	£'000
Premature Retirements The latest forecast of expenditure on premature retirements in schools shows an underspending of £120,000 against a cash limit of £2.5 million, a similar figure to the variation identified in last year's outturn	-120
Interest on School Balances The higher than anticipated level of school balances at 31 March 2002 is estimated to generate additional income of £91,000 in 2002/03	-91
Union and Public Duties/Staff Suspended from Duty A continuation of the situation identified last year means that the budgets for union and public duties and suspended staff costs are expected to be underspent by £50,000 and £20,000 respectively	-70
Local Management Contingency The local management contingency is forecast to show a net underspending of £94,000 for 2002/03. The Pupil Led Annual School Census identified that some pupils applying to more than one school had been double counted resulting in a clawback of £100,000. Other net underspendings totalled £44,000, mainly in respect of less calls on the protected salary provision for redeployed teachers. These savings were offset by additional spending of £50,000 on temporary classroom hire.	-94

Business Units

3.9 Against their accumulated reserves at 31 March 2002 of £1,275,000 business units are, collectively, planning for an overall deficit for 2002/03 of £728,000. This reflects proposals to use part of their accumulated balances to develop their services to schools and as a result the overall cumulative surplus of all business units at 31 March 2003 is forecast to reduce to £547,000. The summarised budgets of the individual business units are shown at appendix 2. The majority of the revised budgets submitted by Units are in line with their original plans apart from two exceptions. Firstly the HIAS business unit is now forecasting a deficit of £163,000 for 2002/03 against a planned surplus of £60,000 which will reduce its cumulative surplus to £12,000 by 31 March 2003. This results, largely, from major one-off investments associated with concentrating staff on the Bartley site and basing inspectors at home in order to provide more flexible and efficient working arrangements for staff. Secondly, the Education ICT business unit is undertaking major developments (including new school networks) and a re-focusing of the Unit and this has led to an increase in the planned deficit from £290,000 to £541,000 in the current year resulting in a cumulative deficit of £217,000 by the end of 2002/03. Recovery of this deficit will be taken into account in agreeing the new Service Level Agreements with schools to operate from April 2003. A full report on the performance of business units up to the end of March 2002 appears elsewhere on the agenda.

Youth Service -£150,000

3.10 The Youth Service is currently experiencing acute recruitment and retention difficulties. In particular, a significant number of full-time staff are leaving to join the Connexions Service or covering vacant posts through secondments. The impact of the numerous staffing changes is that the Service is forecasting a total underspending of £200,000 for 2002/03 against a cash limit of £4.1 million.

3.11 In view of this situation the Youth Panel at its meeting on 12 November 2002 is being asked to recommend to the Executive Member - Education that approval be given to vire £50,000 from revenue to capital as a contribution to enhance youth facilities as part of the major redevelopment at Hamble Secondary School.

Training and Curriculum Development (Standards Fund) -£175,000

3.12 Whilst overall Standards Fund Grant has increased this year (see paragraph 2.4) a number of the allocations requiring County Council contributions were less than expected, resulting in a forecast saving of £175,000 for 2002/03.

Other -£60,000

3.13 Other variations are forecast to produce net underspendings of £60,000, of which the most significant are higher profits from the Careers Service partnership (£18,000), a reduction in pension costs in respect of former further education college staff (£13,000) and net underspendings on support services (£17,000) as detailed in paragraph 3.1.

4 Summary

4.1 In summary, the current forecast for 2002/03 is:

	£'000
Home to school transport (paras 3.2/3.3)	-135
Inclusion (SEN) (paras 3.4 to 3.7)	+193
Other schools centrally-held budgets (para 3.8)	-353
Youth Service (para 3.10/3.11)	-150
Standards Fund (para 3.12)	-175
Other (para 3.13)	-60
Forecast Net Underspending 2002/03	-680

4.2 The latest forecasts indicate a potential underspending of £680,000 for 2002/03. In addition, both the Service's general contingency amounting to £380,000 (including £30,000 from the 2001/02 underspending) and the specific home to school transport contingency of £450,000 remain intact to cover unforeseen circumstances during the remainder of the year or to be carried forward to assist budgetary pressures in 2003/04.

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-offs. In addition, it will then be possible to assess whether the current forecast underspending, together with the contingency provisions for 2002/03, can be released to be carried forward.

5 Budget Outlook 2003/04

5.1 The report on the new education funding system presented to the last meeting of the Committee highlighted that the budget outlook for 2003/04 is currently extremely uncertain and depends very much on the outcome of the Government's proposals for changes in revenue grant support.

5.2 In view of the potential grant loss, the Cabinet, for 2003/04, is requiring any service pressure or proposed development beyond the base budget level to be offset by an equivalent redeployment of resources. Executive members and chief officers are also being asked to prepare contingency plans of 1% and 1.5% savings from efficiency/cost reductions measures and other savings, protecting, as far as possible, front-line services.

5.3 In addition, a number of pressures and proposed service developments have already been identified for consideration in 2003/04. These include:

· Continuation of cash protection for school sixth forms and former grant maintained schools

· effective management of surplus places

· Education Welfare Officers to support Public Service Agreements

· planned development of behaviour intervention service

· early years development (additional Area Special Educational Needs Co-ordinators)

· shortfall in resources to support the capital programme due, largely, to scheme costs exceeding government borrowing approvals (£5.0 million)

5.4 The forecast underspending for 2002/03, assuming that it can be carried forward, should provide some room for manoeuvre. However, the majority of such underspendings cannot be guaranteed to recur and, as such, do not produce a permanent increase in resources. They are, therefore, available only on a temporary basis to meet one-off commitments and pressures, or to provide some transitional funding.

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 or 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 Service

Revenue Expenditure 2002/03

Analysis of Cash Limited Expenditure over Services