Archived decisions

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

1. Summary

1.1 This report is the first monitoring report for the financial year 2004/05 and since it reflects the position after only the first two months of the year, the implications are indicative at this stage. The focus of the report has been to highlight areas where budget pressures have altered since the budget was agreed in February 2004 or where 2003/04 pressures look likely to continue into 2004/05.

1.2 As the year progresses regular budget monitoring reports will be submitted to EDMT and Members to keep them fully informed and ensure appropriate management action can be taken early if necessary.

1.3 Race and equality impact assessment has been considered in the development of this report and no adverse impact has been identified.

2. Cash Limit 2004/05

2.1 The cash limit agreed for 2004/05 by County Council in February 2004 is £665.7m and reflects the agreed strategy that the overspend in 2003/04 is met from reserves. This was agreed on the basis that Government's restrictions on central spending in the Schools Budget for 2004/05 meant that the service was not able to set the 2003/04 overspend as a first call on the 2004/05 budget.

3. Forecast Outturn 2004/05 up-date

3.1 The following paragraphs set out the areas of the budget where early indications are that there may be variations later in the year or where there may be expected to be pressures as a result of activity levels incurred during 2003/04. However, it is too early in the year to conclude that a forecast outturn variation could occur.

Home to School Transport

3.2 This budget is historically difficult to forecast due, in particular, to the unpredictable nature of the contract price re-negotiation outcome. As a result a contingency was set up, which currently stands at £205,000 for 2004/05. Against the cash limit of £19.485m, an overspend is currently forecast, the expectation is at this stage that the contingency will cover this overspend.

Inclusion (SEN)

3.3 There were significant budget pressures on these services (i.e. Statements, Out-County Placements and EOTAS) during 2003/04, most of which continue into 2004/05. Against a base budget of £18.55m, current forecasts indicate that:

· Statements / Out-County Placements (Cash limit £13.1m) - in addition to County Council funds, there is substantial Standards Fund money allocated by the DfES to this area annually. This Standards Fund money may be spent over a 17 month period and so grant for 2003/04 may be spent up to 31 August 2004. By applying around £400,000 of Standards Fund money in 2004/05 from the 2003/04 allocation, it is forecast at this early stage that the budget pressures for 2004/05 on these budgets can be contained within the cash limit. This assumes that the estimated pupil numbers prove to be accurate. Caution is needed because even small variations can have a significant impact.

· Education Otherwise Than At School (EOTAS) (cash limit £5.45m) - management action to contain staffing costs and behaviour intervention measures are aiming to ensure this budget remains within cash limit while not detracting from the effective delivery of the service.

Services to Schools and Support - ICT costs

3.4 Against a cash limit of £1.25m the current outturn forecast indicates a significant projected overspend (£500,000) for a variety of reasons as outlined below:

· the increasingly technology driven processes across the department enabled through the IT2000 roll out has resulted in increased numbers of users. The full impact of annual charges, which are as a consequence more than budgeted, are now being borne (£230,000)

· there is an anticipated cost of approximately £100,000 to develop a central admissions system, required as a result of statutory changes which emerged too late in 2003/04 to be included in the budget for 2004/05

· increased complexities in the system requirements for the SEN database are expected to add a further £60,000 to the costs during 2004/05

· a number of smaller system enhancements / replacements (e.g. the Hummingbird reporting tool) account for the balance of the projected overspend.

In all these areas commitments are currently being reviewed and the budget plans are being revisited in detail.

Ethnic Minority Achievement Service (EMAS) and Drug Advisory Response Team (DART)

3.5 The total cash limit for 2004/05 for the EMAS service is £705,000, which includes an additional £100,000 allocated to the service as a priority for 2004/05 only, to replace the loss of grant, while a longer term plan is implemented to refocus the service to match this reduced funding. The detailed plan for EMAS has been agreed and is being implemented with the expectation that the service will be within the cash limit in 2004/05 although this is subject to the final costs of redundancy.

3.6 The previous grant of £100,000 for DART ceased with effect from 2004/05 but the full amount was allocated to the service as a priority for 2004/05 while a plan to refocus the service is developed.

Early Years -£234,000

3.7 The 2003/04 budget under spent by £335,000 due to lower than estimated take up of early years entitlement by three year olds. The effect of this lower take up has already impacted on the first term's payments (made in April 2004), with these showing an under spend of £234,000. At this stage the expectation is that take up will rise and it's too early to assume any greater savings than those identified above. Indeed, if take-up increases at a greater rate than expected for the latter two terms, then this under spend identified could be used to absorb any additional costs.

Connexions service

3.8 Management action will be taken to ensure that any residual costs as a result of the ending of the Connexions contract with effect from 31 July 2004 are met by the new direct delivery organisation, South Central Connexions Partnership. However, there will be financial implications during 2004/05 if VT Careers Management go into voluntary liquidation. As soon as information is available a full costing of these will be undertaken and officers will ensure these are minimised as far as possible.

4 Business Units

4.1 Based on the recently produced business plans, early indications are that in total the education business units will reduce the cumulative surplus to £448,000, which had been projected according to the budget set in February 2004 at £897,000. This relates mainly to a projected increase in deficit within the EdICT business unit. A further report will be produced on the EdICT recovery plan.

4 Supplementary Allocation to Schools

4.1 Despite the overspending of £555,000 on Education cash-limited expenditure, savings of £1,280,000 have been achieved on school business rates during the year, so that spending within the Schools Budget is £725,000 lower than assumed when the 2003/04 budget was set. A single transfer of £725,000 to the insurance reserve was agreed by Cabinet in June 2004 and is consistent with the County Council's policy on passporting. Under the Fair Funding arrangements this will require a supplementary allocation to schools in 2004/05 to give effect to this proposal. Premium levels for both buildings and liabilities will need to be reviewed in conjunction with new service level agreements with schools in 2005/06 with the expectation that an increase in the overall level of premiums will be required both to cover the current short fall in the funding of fire reinstatement and future claims expectations.

Recommendation

1. That a three year budget plan for Education ICT (including the business unit) be prepared and bought back to Executive Member at a future meeting

2. That a single supplementary allocation to schools in 2004/05 of £725,000, as agreed by Cabinet in June 2004, be implemented.

3. That the budget monitoring report and an early identification of costs pressures 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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