Agenda item

Annual Report to update members of the Forum on the level of balances held by schools as at 31 March 2014.

The Forum received an annual report updating members on the level of balances held by schools as at 31 March 2014 and how these compared to the previous financial year. This showed that there was a £0.135m (2.9%) reduction in aggregate surplus school revenue balances to £4.438m with average surplus balances standing at 6.3% of annual income which was considered more than an adequate level for working balances and that more funds could have been spent by schools on their key priorities. Capital balances reduced by 56% to £0.247m which reflected the lower amounts of funds now being allocated and schools drawing down funds that had been accumulated over a number of years to delivery new projects.

The Forum also reviewed significant surplus school revenue balances, as defined in the approved scheme, and in light of information provided by relevant schools, agreed that all significant surpluses were being held for valid reasons and would not, therefore be subject to claw-back.

In light of the small number of schools that continued to increase their surplus balances, the Forum was asked to consider whether schools should be encouraged to spend more of their budget by making changes to the existing criteria within the claw-back scheme, including removing the clause that excluded schools from the scheme if they lost funding as a result of the April 2013 national funding reforms and whether an absolute cap should be applied to the percentage of budget that could be retained.

The Forum concluded that more information was needed on the claw-back scheme in relation to schools and that a consultation was needed before any amendment could be made to the scheme. Forum members advised caution before making any changes to the claw-back scheme due to tighter budgets for schools year-on-year, but recognised the need for schools to give reasons for not spending funding.

Forum members were in broad agreement that the clause that excluded schools from the scheme if they lost funding as a result of the April 2013 national funding reforms should be removed and concluded that more information on potential options should be presented at a future meeting when it could be decided if a consultation on potential changes to the scheme should be undertaken with all schools. As well as potential changes to the conditions of the scheme, there would need to be more robust and detailed information provided by schools, including how balances had arisen and explanations as to why they were different from amounts projected in initial budget plans.

Forum members also suggested that schools would welcome support in relation to spending funding, as it was sometimes difficult to monitor budgets in schools on a day-to-day basis and that funding settlements continued to be tight and were expected to remain that way for the foreseeable future.

The Forum NOTED:

1. The level of aggregate surplus revenue balances as at 31 March 2014 totalled £4.438m, a decrease of £0.135m (2.9%) from the previous year (paragraph 5.3 (1));

2. That at 6.3% of annual income, average surplus balances were in excess of the amount required for working balances and that more funds could have been spent by schools on their key priorities (paragraph 5.3 (3));

3. That significant surplus revenue balances totalled £1.251m, an increase of £0.107m (9.3%) from the previous year (paragraph 5.6);

4. The average surplus balance for a primary school is £0.096m (6.4% of budget) and £0.264m (4.3%) for secondaries (paragraph 5.3 (5));

5. The largest surplus balance as a percentage of budget was 26.9% (was 16.8%) and that there were very limited circumstances where this could be warranted (paragraph 5.3 (6)):

6. That £0.247m of Devolved Formula Capital grant remained unspent at 31 March 2014, a decrease of £0.196m (56%%) from the previous year (paragraph 5.21 (1));

7. That relevant schools had indicated that the £0.014m of Devolved Formula Capital grant funding that was due to expire at 31 August 2014 would be fully spent (paragraph 5.21 (5)).

The Forum AGREED:

8. That all of the qualifying significant surplus balances held by schools would be assigned for relevant purposes as set out in the approved scheme and should not be subject to claw back (paragraph 5.8).

9. That the Local Authority would present options to amend the approved claw-back scheme to the next meeting of the Schools Forum to consider whether attempts should be made to reduce the highest levels of surplus balances through encouraging additional spend in relevant schools (paragraph 5.16).