Contact: Sheila Little, (01962) 847545; [email protected]

1 Summary

1.1 This report is the first regular budget monitoring report for the financial year 2006/07, the first complete year for the newly combined Children's Services department. It covers a number of aspects:

· Corporate budget monitoring and activity data

· Period two (end of May) revenue budget monitoring highlights

· Explanation of the Schools Budget, LEA Budget, Children's Social Care budget splits

· Explanation of the implications of the final DSG 2006/07 allocation (made on 1 June 2006).

1.2 Decisions on Children's Services revenue expenditure and capital programmes impact on the financial resources available to this service to contribute to the following corporate strategy aims:

· maximising life opportunities

· achieving economic prosperity

· improving services:

1.3 In addition Children's Services contributes to the five keys aims of the Children Act.

1 Corporate Budget Monitoring and Activity Data

1.1 The corporate focus on budget monitoring up-dates has increased recently and as well as monthly budget monitoring reports to the Director and his senior management team, quarterly reports are being produced for Cabinet focussing on high risk budgets.

1.2 In future, it will be proposed for regular budget monitoring up-dates to incorporate performance/ activity data trends to ensure managers are reviewing performance issues that drive the budget. This will enable a more explicit link to trends and allow more thorough explanations for variations to be provided. Children's Services Management Team are working with budget holding service managers to identify appropriate reporting frameworks for activity indicators and trend analysis for the high risk budgets. These indicators will be more directly incorporated into the budget monitoring process from September 2006.

2 Revenue Budget Monitoring 2006/07 as at 31 May 2006 (Period 2)

2.1 Based on forecast outturn projections received from service managers and budget holders across the department there is a forecast projected year end overspend of £1.5m above inflated cash limit across the Children's Services department. Appendix 1 to this report details the overall variations, while the rest of this section considers the key variations. It should be noted however, that this is only month two and a number of the key variations are difficult to predict at this early stage in the financial year.

Schools Budget

Out County Special Schools +£270,000

2.2 This is a provisional estimate based on the 2005/06 pupil numbers and the position may change once it is updated for 2006/07 pupils and prices. The main factor underlying this pressure is fee increases in 2006/07 which have ranged from 5% to 17%. Schools Forum had recognised this potential pressure and already allowed for price increases of 4%. Placements and expenditure are closely scrutinised by the County Placement Group and a clearer position would be expected early in the Autumn term.

Other SEN +0

2.3 Accurate prediction before early in the Autumn Term is difficult for the low incidence budgets so until more meaningful information becomes available, a balanced outturn is being reported.

2.4 No variation is being reported on the recoupment budgets (either for pupils in mainstream schools or in special schools) at this early stage, but work is progressing to identify any variances at an earlier stage than in previous years. This ought be in the early Autumn.

Catering -£8,000

2.5 The expected saving is the result of an anticipated increase in income from milk sales.

LMS Contingency +£20,000

2.6 This reflects the need to make adjustments for temporary classroom rentals commenced in 2005/06.

LEA Budget

Home to School/College Transport (HTST) +£380,000

2.7 This variation is net of applying the HTST contingency of £517,000. Although the main causes identified so far are detailed below, it is important to note that a more certain outturn forecast will be available in September, when travel needs are known for the new academic year:

· Increased Contracted Hours for Escorts +£104,000. Net effect of changes to routes, and an increase in the number of escorts for set routes, e.g., need for solo transport for pupils with behavioural difficulties

· Increased Contract costs +£793,000. This is a combination of inflation, catchments' schools being full, net effect of pupil movements, and complex needs, offset by spend to save savings, although the information is not available at this stage to give the breakdown.

2.8 As part of the continual monitoring of expenditure, work is underway to review all non-contract costs. In addition, a review is being undertaken with support from Property Business and Regulatory Services (PBRS) procurement specialists to seek saving through more cost effective tendering for taxis.

2.9 The critical driver of costs in HTST is the number of new contracts that have to be started to take children to school. Since October 2005 there have been a net addition of 114 contracts. It is normal for the number of contracts to increase during the year and further work is under way to examine annual variances and quantify the impact of the different factors mentioned earlier.

Youth Service +£0

2.10 Although no variation is reported on the budget to date, there is additional grant of £560,000 Youth Opportunity Fund and £594,300 Youth Capital Fund available in 2006/07 under the Youth Matters initiative. The agreed approach to allocating and assessing the Youth Capital and Opportunity funds will involve people from the County Youth Council reviewing the capital fund bids and groups of young people in districts reviewing applications for opportunity grants advised by a group local officers co-ordinated by the Senior Youth Worker. There will be a broad range of young people engaged and grants support young people in need especially those with disabilities. Consideration is being given as to how the young people involved in districts reviewing grants can link with the HATs to explore both bid applications and wider youth issues.

2.11 It is planned to advise Cabinet later in the year of the proposals to allocate the Youth Capital Fund and the Youth Opportunities Fund grants to support activities and buildings for the young people of Hampshire.

SEN Audit Moderation -£24,000

2.12 The SEN Audit for which this budget is intended has stopped, hence this estimated saving. There is a continued need to allocate SEN funding to schools, a complex process, and the remainder of this budget will be used for this purpose. This is potentially a cashable efficiency for the service.

Interest on School Balances -£66,000

2.13 An increase in schools' balances in 2005/06 (of £3.378m) means that more interest is being earned on those balances than originally budgeted for.

Resources and Planning Branch +£133,000

2.14 This is mainly due to a combination of Change for Children project costs (£60,000) and the move of Eastleigh Families Centre to Wessex Way following a need to vacate the Eastleigh Borough Council office (£45,000), and other minor variations (£28,000).

Unallocated Budget Adjustment -£174,000

2.15 This small contingency will be used to offset overspends elsewhere within the Children's Services Department.

Children's Social Care Budgets

Commissioning Social Care +£6,000

2.16 This pressure represents the net effect of pressures from staff above midpoint on the pay scales, off-set by vacancy management.

Looked After Children

Non County Placements +£743,000

2.17 NCPs are currently projecting an overspend of +£743,000 on a cash limit of £9,584,000 (7.8% variance). Although the table in paragraph 3.19 illustrates that there has been little turnover in placements so far this year (a net decrease of two), the forecast outturn figures do not assume that any of these places will cease during the year and are likely to be overstated as a result. Close monitoring will allow further reporting later in the year.

Independent Fostering Agency +£149,000

2.18 IFAs are currently projecting an overspend of +£149,000 on a cash limit of £5,303,000 (3.0% variance). The number of IFAs has increased by eight since the start of the financial year. However, trends of the last two years have seen an increase in the number of IFAs in the first two months of the year which have then subsequently reduced. This reflects the impact when in-house foster carers become unavailable due to annual leave over Easter and Whitsun and the need to use IFAs instead.

2.19 The table below summarises the numbers of NCP and IFAs and illustrates the movement between March and May 2006:

Provision	Client numbers at March 2006	Client numbers at May 2006
Non-County Placements (NCP)
· Non-disability	19	21
· Children With Disabilities (CWD)	50	46
Total NCP	69	67
Independent Fostering Agency (IFA)
· Non-disability	100	108
· Children With Disabilities (CWD)	11	11
Total IFA	111	119

Residential Homes +£112,000

2.20 The pressure on Children's Homes relates to an increased cost of agency staff.

Fostering Fees +£108,000

2.21 Last year the Skill Fees level 5 were funded from the £166,000 foster pilot money but this is not available in 2006/07. However, it is anticipated that this pressure will be offset by savings on the IFA budget created by this initiative as the year progresses.

Family Support Services (Direct Payments, Day Care, Under 8s, Home Care, equipment and adaptations) +£198,000

2.22 The pressure of +£198,000 is on a cash limit of £6,542,000 (variation of 3%) Last year there was a non recurring budget increase of £316,000 on this budget.

Youth Justice -£111,000

2.23 Swanwick Lodge is anticipating a reduction of -£111,000 in its expenditure on agency staff compared to last year on the basis of using more casual staff as well as a reduction in long term sickness.

Other Children's Services -£478,000

2.24 The table below illustrates the elements comprising this projected under spend:

Service	Forecast outturn 2006/07
	£'000
Care leavers	+63
Youth Justice	-207
Quality Projects	-184
Asylum seekers	-163
Adoption service	+13
Total	-478

2.25 Care leavers and adoption settling in grants are relatively recent statutory responsibilities and the demand and take-up of the services is still being established. However, there is an expectation that the number of asylum seekers will be below the budget (£163,000) and that Youth Justice (£207,000) income and the Quality Protects (£196,000) income will be exceeded.

Management and Support Services +£236,000

2.26 This comprises of costs relating to the Change for Children project management and on-going pressures on the legal services budget.

3 Budget Blocks Explained

3.1 The budget for the Children's Services Department is broken down into three components to reflect the various funding mechanisms:

· Schools Budget - funded through the new ring fenced Dedicated Schools Grant

· LEA Budget - there is currently still a statutory requirement to report on this separately through Section 52 statements, so a separate budget will be retained for reporting purposes at this stage

· Children's Social Care Budget - subject to passporting.

3.2 The DfES funding controls mean that the authority is prohibited from using any DSG funds for purposes outside the DSG ring fence. This means the authority can add more to the Schools Budget, but it is unable to spend DSG outside of the Schools Budget items.

3.3 Items included in the DSG ring fence are:

· Schools delegated budgets (Individual Schools Budgets)

· Central spending limit items - SEN, EOTAS, Out-County, Behaviour Support teams, Early Years.

4 Dedicated Schools Grant Definitive Settlement 2006/07

4.1 The DSG process is:

· December 2005 - Provisional DSG settlement estimated pupil numbers for January 2006 but fixed units of resource

· February to April 2006 - iterative process between DfES and local authority information teams on validating pupil count (PLASC) and other data used.

· March 2006 - local authorities have opportunity to review provisional DSG using the known units of resource in light of updated information on pupil numbers from the part validated data.

· June 2006 - definitive 2006/07 DSG using fully validated pupil numbers.

4.2 The provisional DSG (announced by DfES on 7 December 2006 and based on estimated pupil numbers for January 2006) was £615.803m. The definitive value announced on 1 June 2006 (based on January 2006 PLASC after rigorous DfES validation procedures) was of £614.145m. A reduction of £1.658m and a net 482 pupils (0.27%). The DSG reduction is equivalent to about £10 per pupil.

4.3 The shortfall in the 2006/07 DSG has a knock on effect to 2007/08 DSG. The baseline on which the changes for 2007/08 were added is effectively £1.66m too high. Therefore the provisional budgets and budget shares for 2007/08 are also overstated by the equivalent of about £10 per pupil. The main factors involved are:

· elimination of duplicate pupils with clawback from schools

· a different treatment by DfES of part timers across primary, secondary and special from that used in our formula funding

· a double counting of pupils in primary pupil referral units at the crosscheck stage which partially masked other changes

· a major discontinuity in the full time equivalent number of pupils aged four years as at August 2005 and still being funded in private, voluntary and independent providers in January 2006

· an incorrect assumption in respect of the proportion of the three year olds in the rising fours age group.

4.4 The most significant element relates to early years and it is expected that most of the over allocation can be clawed back from early years, leaving about £600,000 (approximately £3.95 per pupil) to be clawed back from schools in 2006/07. Schools Forum will discuss the choices for clawback at their meeting on 11 July 2006and an oral up-date on their preference will be presented at the PRC meeting.

5 Impact assessment

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

Recommendations

That the Executive lead Member for Children's Services be advised:

1 That the projected outturn position for the department be noted.

Section 100 D - Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have 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. - none