Agenda item

To update members of the Schools Forum on the level of balances held by schools as at 31 March 2016, how these compare to the previous financial year and to consider whether any significant surplus balances should be subject to claw-back and re-invested within the overall Schools Budget.

The purpose of this report was to update Members on the level of balances held by schools as at 31 March 2016, how these compared to the previous financial year and to consider whether any significant surplus balances should be subject to claw-back and re-invested within the overall Schools Budget.

Members were again asked to consider performance information excluding Harmanswater Primary School as their current surplus significantly distorted the data. The key points highlighted included:

• Aggregate surplus balances had decreased by £0.537m, from £3.031m to £2.495m (-17.3%).
• On average, at 3.8% of total budget, overall reserves were considered to be below the prudent level of 5% required for working balances to cover unforeseen circumstances and therefore an increased risk existed of schools developing year end deficit balances.
• At £0.072m (6.4% of budget), the average surplus balance for a primary school was greater than the £0.050m (0.1%) average balance held by secondaries.

Members were also updated on schools with significant surplus balances, as defined by the approved scheme. As usual, officers had collected signed statements from relevant headteachers to confirm the intended use of the funds and also the anticipated spend date. This indicated that all funds were being held within the provisions of the scheme and should not be subject to claw-back.

In response to questions from Members, Officers advised that:

• surplus balances were planned and not set aside ‘in case of need’ for something not yet identified. 
• Most surpluses were allocated for capital projects, some of which were phased over a number of years; this applied in particular to the larger amounts. 
• In respect of the two largest surpluses as a proportion of the annual budget, both schools had advanced plans in place to deliver significant capital investments
• All investment plans were monitored regularly to ensure they were still needed and the use of surplus balances was still justified. 
• Recent changes had been introduced to the claw-back scheme to apply an absolute cap on the amount of surplus schools could retain. The transitional period to allow schools to move towards the new arrangements ends at March 2017 at which point there would be stronger sanctions available to control excessive surplus balances.

The Forum NOTED:

The key performance information on all school balances, as set out in paragraph 5.3 of the report.

That due to the significant size of surplus, it was more appropriate to draw conclusions from overall school performance excluding Harmanswater Primary School, as set out in the report, and in particular;

i.      Aggregate surplus balances continued to decline, with an in-year reduction of £0.537m (-17.3%);

ii.    Secondary schools were drawing down more from their reserves than primary  schools;

ii.     At 3.8%, average balances were considered to be below the level required for working balances to cover unforeseen circumstances and an increase risk existed of schools over spending their budgets.

The Forum AGREED the following recommendation made in the report:

That all of the significant surplus balances held by schools had been assigned for relevant purposes as set out in the approved scheme and should not be subject to claw back.