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 £1.042 million against the revised cash limit of £642.785 million reported to the Education Policy Review Committee and Executive Member - Education in January 2004. Following continued implementation of the strategy proposed the projected overspend has reduced to £734,000. 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.

2. Implication of Budget Strategy 2004/05

2.1 In agreeing the Education revenue budget for 2004/05, Cabinet were asked to consider what other budget measures were available to limit the size of the County Council's central spending application, which included the projected 2003/04 overspend of £1.042 million. On 12 February 2004 Cabinet agreed to make provision to fund the final 2003/04 overspend from contingency resources subject to the Education service continuing to minimise the level of this overspend as outlined above. County Council endorsed this strategy at the budget meeting on 25 February 2004.

2.2 This means that the 2003/04 overspend will not now be the first call on the 2004/05 budget subject to keeping the overspend to a minimum.

3. Forecast Outturn 2003/04 up-date

3.1 The forecast outturn for 2003/04 is based on actual expenditure for ten months of the year. Few variations have arisen since the revised budget was prepared but the most relevant, together with other volatile areas, are discussed in the following paragraphs and a summary provided in para 5.1

Home to School Transport -£120,000

3.2 The net effect of some favourable contract price re-negotiations and additional income means a projected under spend of £120,000 against the revised budget of £19.3 million. This latest forecast means that more of the contingency is likely to be available to minimise the overall Education projected 2003/04 overspend.

Inclusion (SEN) +£17,000

3.3 Although there is very little variation against the revised estimate for the total inclusions budgets of £12.6 million altogether, there is a variation within the statements and out-county split as illustrated below:

	Jan PRC	current
	£'000	£'000
Statements in mainstream schools Out County Placements Education otherwise than at school	550 527 240	865 229 240
	1,317	1,334

3.4 Significant management action has been taken in terms of controlling out-county placements, since the report to PRC at the end of the second quarter. The January out-county figures were inevitably a projection, based on the premise of all agreed pupil placements actually taking place. In reality, some expected placements included within the estimated out turn have taken longer than expected to fulfil. The impact of this decrease in out-county costs to the authority, is increased costs in the statemented budget. Additionally, pressure has continued and indeed grown on the statemented budget, due to meeting the increasingly complex needs of Hampshire children in local LEA provision.

Other School Centrally-held Budgets +£36,000

3.5 The remainder of the budgets held centrally on behalf of schools continue to show a net overspending of £36,000 against a cash limit of £4.6 million. 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 -£141,000

3.6 In total, Support Services expenditure is currently forecast to be £100,000 below the revised cash limit of £31.1 million, although there are some variations within this heading as summarised below:

	£'000
Early Years Units Further slow recruitment, reduced travel costs and IT connection delays in the Early Years Unit have caused this under spend	-55
IT2000: connecting remote issues and new equipment The tight control introduced as a result of the previously identified over spend has been effective although there is a direct impact on services where new orders (for equipment and work, other than where it completes the roll out of IT2000) have been stopped.	+ 0
Support Services A number of small savings across a range of other support services account for this under spend, for example printing and stationery, staff turnover.	-86

Ethnic Minority Achievement Service +£60,000

3.8 The total cash limit for 2003/04 for this service is £0.7 million. The service was not able to start reducing its expenditure until a longer term plan had been agreed to downsize the service to match the loss of grant from April 2004. The plan has been agreed and is being implemented with the expectation that the service will be within the cash limit in 2004/05.

Early Years -£200,000

3.9 Due to lower than estimated take up of early years entitlement by 3 and 4 year olds there is an estimated under spend of £200,000 against the budget of £16.2 million.

4 Business Units

4.1 The latest indications are that the education business units will increase their overall deficit slightly from £512,000 to £526,000 (on gross expenditure of £24.6 million). Based on these forecasts, the cumulative surplus at 31 March 2004 will be £882,000.

5 Summary

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

Variations from cash limit	January	March
	£'000	£'000
Home to School Transport (para 3.2) Inclusion (SEN) (paras 3.3 to 3.4) Other school centrally-held budgets (para 3.5) Services to schools and support (para 3.6) Ethnic Minority Achievement Service (para3.7) Youth Early Years (para 3.8) Other	0 1,317 58 -17 100 0 -9	-120 1,334 94 -158 160 -200 -9
Forecast overspend 2003/04	1,409	1,101
Use of contingencies	367	367
Net forecast overspend 2003/04	1,042	734

5.2 Other variations may surface during the closure of the accounts process but in the meantime monitoring is continuing to ensure that the Education service continues to reduce the overspend.

Recommendation

That the budget monitoring report 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.

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

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