Archived decisions

Contact: Sheila Little, Education Finance Unit (01962 847545) ([email protected])

1. Summary

1.1 This report up-dates on the projected Education service overspend of £2.4 million reported to the Education Policy Review Committee and Executive Member - Education in October. Following implementation of the strategy proposed the projected overspend has reduced to £1.4 million. This strategy required all budget holders to curtail expenditure where possible to generate savings and for the Education Department Management Team (EDMT) to scrutinise all vacancies that arise before allowing any appointments to proceed. The main reductions in the overspend reflect savings achieved through deliberate management action and the re-direction of Standards Fund grant.

1.2 The report is structured as follows:

· Section 2 sets out the technical adjustments to be made to the original budget

· Section 3 considers the changes to the main areas of budget overspend projected in October

· Section 4 summarises the projected overspend and updates on the strategy for addressing the overspend

· Section 5 up-dates on schools' balances.

2. Cash Limit 2003/04

2.1 The original budget for 2003/04 set by the County Council for the Education Service amounted to £628.8 million. The October budget monitoring report to the Executive Member for Education detailed the adjustments required to this cash limit, giving a revised cash limit for 2003/04 of £641.031 million. This figure has altered further following late Early Years grant approval from the DfES for 2003/04 (£1.223 million) and agreement by the DfES to carry forward Early Years grant from 2002/03 of £0.531 million, producing a final cash limit of £642.785 million.

3. Forecast Outturn 2003/04 up-date

3.1 The forecast outturn for 2003/04 is based on actual expenditure for the first seven months of the year and implementation of the strategy set out in the report to the October meeting. All budget holders were required to curtail expenditure where possible to generate savings. EDMT are scrutinising all vacancies that arise before allowing any appointments to proceed. In addition to these actions, an element of the SEN and ICT overspend can attract Standards Fund grant in 2003/04 principally as a result of the discretion to vire Standards Fund monies that we have by virtue of being a three star excellent authority. A combination of these factors has reduced the projected overspend to £1.4 million against the cash limit. An analysis of the variations over divisions of service and as between LEA block and Schools block is set out in Appendix1. Variations against the cash limit which have given rise to the overspend are set out below.

Home to School Transport £80,000

3.2 Additional information about movement in contract prices this academic year has become available leading the anticipated overspend to increase to some £100,000. However, investigations show that the training budget is likely to under spend by some £20,000 leaving the overall anticipated overspend at £80,000 only marginally different from the £70,000 reported in October.

3.3 As part of the budget strategy for 2003/04 a special contingency of £200,000 was earmarked to cover financial pressures on the service in the current year. The latest forecast suggest that only part of this contingency is likely to be required in 2003/04, in which case the balance of £120,000 could be set against the overall predicted overspending of the Education Service.

Inclusion (SEN) £1,317,000

3.4 The latest net overspending is made up as follows

	£'000
Statements in mainstream schools (net of £225,000 Standard Fund grant) Out County Placements (net of £393,000 Standard Fund grant) Education otherwise than at school	550 527 240
	1,317

3.5 Due to management action a number of out-county placements have been avoided and the overall forecast overspend for pupils with statements in mainstream schools has been reduced.

3.6 In addition, management intervention in several previously planned projects, funded through the Standards Fund, has meant these have been cancelled, curtailed or postponed and the grant is able to be applied to other aspects of the SEN overspend as a one off in 2003/04 due to the flexibility we have as a three star excellent authority. It may be possible for further Standards Fund resources to be applied to the out county overspend as a one off in 2003/04.

3.7 The Standards Fund money being applied in 2003/04 to reduce the overspend is specific to the current financial year and will not be available in 2004/05, where an overspend of £1.4 million is being projected.

3.8 The Education Other Than At Schools (EOTAS) projected overspend on a total budget of £5.1 million has been reduced by £125,000 through a combination of management actions:

· not replacing teaching and learning support assistant staff who have moved on

· moving two staff to be a charge on the Behavioural Support Team budget (reflected in their reduced under spend)

· ceasing supporting schools financially, in the provision of behaviour management, in those areas where it has not been possible to deploy EOTAS staff.

3.9 The 2004/05 projection for EOTAS is that the level of service demands will remain similar to that experienced during 2003/04 and therefore for an overspend of £246,000 in 2004/05.

Other School Centrally-held Budgets +£58,000

3.10 The remainder of the budgets held centrally on behalf of schools continue to show a net overspending of £58,000. The major contributors to the overall position are variations on premature retirements, local management contingency, interest on school balances and staff suspended from duty.

Services to Schools and Support +£83,000

3.11 In total, support services expenditure is currently forecast to be £83, 000 above the cash limit of £24.9 million, although there are some major variations within this heading as summarised below:

	£'000
Behaviour Support Teams and Early Years Unit Delays in the time taken to establish full staffing for the new Behaviour Support Teams (including teachers, social workers and health services staff). In addition, there have been recruitment delays in the Early Years Unit.	-145
IT2000: connecting remote issues and new equipment Management action has been taken to stop all new orders for equipment and work other than where it completes the roll out of IT2000. This will have a direct impact on services' plans by deferring consideration to the next financial year. Our eligibility to charge against Standards Fund grant for management time has increased the level of income against the overall ICT budget. The combination of these actions has reduced the level of overspend significantly	+ 230
Support Services A review of the criteria determining eligible spend against Standard Funds has shown that management ICT costs totalling £79,000 can be charged against the National Grid for Learning Standards Fund grant in 2003/04. In addition, a number of smaller under spends totalling £23,000 have been identified across a range of other support services.	-102
Ethnic Minority Achievement Service Management action is being taken to contain the forecast overspend, a key contribution of which is the increase from 343 to 556 in the number of pupils (new arrivals) receiving support.	+100

Youth -£40,000

3.12 The projected under spend of £40,000 that has been identified in the Youth Service relates mainly to turnover of full time youth workers and resulting salary savings.

Other -£9,000

3.13 The only other significant variation identified to date relates to the Careers Service, where the County Council share of profits from the partnership with Vosper Thorneycroft Southern Careers is still expected to be £49,000 more than the original budget

3.14 A further total under spend of £40,000 is spread across the remainder of the education services.

4 Summary and proposed strategy

4.1 In summary, the current forecast for 2003/04 is:

	December	October
	£'000	£'000
Inclusion (SEN) (paras 3.4 to 3.9) Other school centrally-held budgets (para 3.10) Services to schools and support (para 3.11) Youth (para 3.12) Other (paras 3.13 to 3.14))	1317 58 83 -40 -9	2,060 58 350 0 -49
Forecast Net Overspending 2003/04	1,409	2,419

4.2 Utilisation of the entire general contingency provision of £247,000 and the balance of the home to school transport contingency of £120,000 will assist in meeting with the cash limit.

4.3 The figures will be refined during the compilation of the revised budget and, in the meantime, close monitoring and tight control will continue in an attempt to balance the budget. However, it must be recognised that the pressures from SEN and EOTAS will have an ongoing effect on the 2004/05 budget.

4 Local Management of Schools

4.1 At 1 April 2003 schools' balances, in total, stood at £28.331 million

4.2 Latest projections from 2003/04 budget plans show 59 schools likely to be in deficit at 31 March 2004 with a total deficit of £2.2m. Many other schools are finding it very challenging to remain within their current year's budget plans, with many using previous year's reserves and having little or no contingency funds available. Most of the primary deficits are small sums and planned for recovery within three years (many much earlier). There is a group of 10 -12 secondary schools whose deficits are significant and will require concerted management efforts to recover.

4.3 To ease the pressure the Government provided a one off opportunity during this financial year for schools in financial difficulty to transfer devolved capital funds to revenue. To date a total of £952,000 has been transferred by 40 schools to help relieve those pressures.

Recommendation

That the revised cash limit of £642.785 million be noted.

That the forecast overspend is 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 FILE

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Appendix 1

Education Service

Revenue Expenditure 2003/04

Analysis of Cash Limited Expenditure over Services