CSDMT sponsor Felicity Roe, Assistant Director Performance and Resources, 01962 84 [email protected]

Contact: Thomas Whiffen , 01962 846287, [email protected]

1 Summary

1.1 This report gives the results of the consultation on changes to the Scheme for the Financial Management of Schools and some textual changes in response to comments received. The text incorporating these modifications needs approval.

1.2 The County Council is required to produce a Scheme for the Financial Management of Schools (SfFM) which takes account of statutory guidance from the Department of Education and Skills (DfES).Proposals for changes to the SfFM were approved as a basis for consultation with all headteachers and governing bodies schools by the Executive (Lead) Member for Children's Services on 12 October 2006. ( Item2 with appendices ).

1.3 The text for consultation had been discussed and supported by the Schools Forum at its 11 October meeting.

1.4 The results of the consultations and the further modifications to the text of the SfFM were considered by Schools Forum on 1 March and ..... (to be completed after Forum.)

2 Recommendations

The Executive (Lead) Member for Children's Services is recommended to approve the supported changes to the Scheme for Financial Management of schools and the modifications agreed by Schools Forum on 1 March 2007

3 Background

3.1 All local authorities are to required to produce a Scheme for the Financial Management of Schools (SfFM) which regulates schools' exercise of their delegated powers in respect of finance. It also governs the County Council on aspects of its dealings with schools on financial matters. The DfES produce statutory guidance on such schemes and the latest revision was in October 2006.

3.2 As reported on 12 October 2006 the proposals for change dealt with the following main topics:

o budgeting and planning

o financial reporting

o balances

o deficits

o notices of concern

o financial management standards and FMSiS

o general updating.

3.3 A major development was the proposal to clawback and redistribute surplus school balances which were not properly assigned to particular purposes within defined timescales.

3.4 Currently all schemes have to approved by the DfES. It is important to achieve implementation on 1 April 2007 or as close as possible thereto. Accordingly the text as considered by Schools Forum on 1 March 2007 has been forwarded to the DfES but with the proviso that it is still subject to member approval.

4 Consultation

4.1 Every headteacher and school governing body were consulted on the changes . This consultation began on 19 October 2006 and closed on 31 January 2007.

4.2 The head and governing body of each school can reply separately or jointly. The 66 (12.2%) replies received can be analysed as :

o Separate replies from the head and governing body of one school

o 16 other replies from headteachers only

o 10 other replies from governing bodies only

o 38 replies jointly from head and governors.

The responses from all groups were similar .

4.3 The replies by type of school are

o Special 1 (4%)

o Secondary 16 (23%)

o Primary 49 (11%)

4.4 Every proposal was supported by at least 59 (89%) of those replying. However the proposals which had five to seven schools opposing them and which caused most comment both on the return and in separate letters were those in respect of reporting timescales and the assignment of balances.These issues are discussed below.

5 Reporting timescales

5.1 The requirement for the declaration of assigned balances to be made to the County Council by 1 May each year was particularly queried. There was real concern that school's precise balances might not be known by that date and issues such as: utility bills, late income whether from final budget share changes or elsewhere and the need for non-SAP schools to have agreed their figures; were all cited.

5.2 However the change from the previous practice was always expected to cause comment. Previously schools were notified of their exact balance in early June and had until the end of the summer term to give reasons for the larger balances. They now have to incorporate their intentions and calculation of anticipated and target balances more fully into their financial planning and notify their intended uses by 1 May. This is an explicit shift towards earlier decision making and reporting by schools. These are both good practice and essential if the DfES imposed deadline of 31 May for the notification to schools of any redistribution of balances is to be met.

5.3 One of the areas that many schools need to address is the level of income forecast at revised budget stage so as to ensure the estimate is a justifiable reflection of anticipated outturn rather than a summation of all that is known and certain at the date of budget revision. This will then feed into better forecasting of net balances and better assignment decisions. The wider moves towards earlier closedown of accounts mean that each school's figures on SAP at the end of April will be a reasonable crosscheck on the assumed balances included in the submitted balance assignment return.

5.4 There were other concerns as to some of the detailed wording on reporting requirements and these are reflected in appendix 1 attached. The most significant one relates to a clarification that the provision of services commissioned by the authority falls under the community facilities power and is subject to those provisions Some overlap between appendices D and E to the scheme were identified and a consolidated version of the two is given at Appendix 2.

6 The assignment of balances

6.1 The general trend of comments was towards establishing greater justifications for the current size of balances and proposing further purposes and longer time scales. Some small schools believed that they needed to hold higher balances in % terms and some larger schools emphasised the scale of their projects.

6.2 Where a school has a well defined adult and community education programme which more than fully recovers its costs then it is reasonable to recognise the use of this for development purposes within the community and adult education purpose and subject to the same timescales as other developments.Text to this effect is shown in Appendix 1.

6.3 Decisions as to the use within the Schools Block of any redistributed balances will have to be made at the 23 May 2007 meeting of the Schools Forum.Schools have to be notified of any redistribution by 31 May each year This makes it important to have a full set of prompt returns on the assignment of balances so as to enable the discussion to be based on a realistic view of the likely amount involved.

7 Textual Clarifications

7.1 The other clarifications sought are included in Appendix 1 and include enhanced treatment of some of the extended schools / community facilities issues. These clarify the fact that any provision by a school of services commissioned by the local authority are an exercise of the community facilities power and subject to those provisions of the scheme

8 Link to priorities

8.1 The proposals in this report do not specifically support the County Council's corporate priorities but require a decision because: statutory guidance is being implemented and schools' financial management will improve when the proposals take effect.

8.2 The proposals in the report do not specifically the outcomes of the Children Act but are the implementation of statutory guidance.

9 Legal implications

9.1 None.

10 Financial implications

10.1 No cost implications but the management of funds by schools should improve.

11 Personnel implications

11.1 None .

12 Impact assessment

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

13 Crime prevention issues

13.1 Not applicable .

14 Views of the Local County Councillor

14.1 Not applicable as applies to all electoral divisions.

14 Conclusion

14.1 The changes have received general support but there are some anxieties among schools about the potential effects of the clawback of surplus balances and the tighter deadlines. It is appropriate to approve the changes with the modifications in the Appendices.

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.

List documents here or type `none'.

None.