DATE: 15 JULY 2021




Executive Director - People





1.1          The purpose of this report is to inform members of the Schools Forum of the provisional outturn on the 2020-21 Schools Budget, including the allocation of balances and use of Earmarked Reserves. These funds are ring-fenced for the support of schools and pupils.



2              EXECUTIVE SUMMARY


2.1          The 2020-21 draft accounts confirm a significant overspending on the High Needs Block (HNB) at £4.824m (£3.220m over spend in 2019-20), with a net over spending on the whole Dedicated Schools Grant (DSG) of £4.402m.


2.2          The over spending on the HNB is consistent with the experience of many LAs across the county. Whilst this pressure has been recognised by the government with additional funding being provided to all LAs – BFC has received an 8% increase in funding in both 20219-20 and 2020-21 – this is still insufficient to fund the increasing pressures. With a further £5.7m deficit projected when the 2021-22 HNB budget was considered, this represents a significant financial challenge.


2.3          Whilst the legal framework requires accumulated HNB deficits to remain within the Schools Budget and the financial responsibility of the Department for Education (DfE), day to day operational decisions continue to rest with LAs and as with all decisions around spending of public money in BF, these are taken in accordance with the normal rules and professional financial management standards required by the Council in the Financial Regulations and other Financial Procedure documents.


2.4          The coronavirus pandemic has had a significant impact on the plans of the council and Schools Forum to review support services to pupils, to widen choice, improve quality and reduce costs. This resulted in a number of planned savings not being achieved and ultimately contributed to the increasing deficit.


2.5          The overall balances currently held on the council managed elements of the Schools Budget amount to a £0.484m deficit. This is after taking account of the earmarked surplus balances held by schools of £2.123m and other reserves of £1.896m. Excluding these amounts leaves a net deficit on the DSG of £4.503m.





            That the Schools Forum NOTES:


3.1          that the outturn expenditure for 2020-21, subject to audit, shows an over spending of £4.402m (paragraph 6.6);



3.2          the main reasons for budget variances (paragraph 6.8);


3.3          the cumulative £0.484m deficit balance held in the Schools Budget Dedicated Schools Grant Reserve, responsibility for which rests with the Department for Education (paragraph 6.10);


            That the Schools Forum AGREES:


3.4          the proposed transfers to and from Earmarked Reserves (paragraph 6.11).





4.1          The recommendations are intended to inform the Schools Forum of financial performance against budget in the 2020-21 financial year including the year end transfers to and from balances and Earmarked Reserves.





5.1       Not appropriate.





2020-21 Schools Budget Revenue Expenditure and Funding


6.1          Based on recommendations of the Schools Forum, the Executive Member for Children, Young People and Learning approved the initial Schools Budget for 2020-21 with £112.938m of grant funding. This comprised the estimated amount of Dedicated Schools Grant (DSG) income that would be received from the DfE at £100.503m, anticipated income of £1.638m to reflect sixth form grant income from the Education and Skills Funding Agency (ESFA), £2.122m from the Pupil Premium grant, £1.245m from the Universal Infant Free School Meal grant, £0.438m from the Primary PE and Sports grant, £0.578m from the Teachers’ Pay grant and £6.291m from the Teachers’ Pension Grant. In addition to grant funding, there is also a budget of £0.123m for other receipts making total income of £112.938m.


6.2          Subsequent to this decision, anticipated DSG income has been updated to reflect revised grant notifications from the DfE, including reductions arising from academy schools where the amount due from the BF Funding Formula for Schools is recouped from the council for the ESFA to directly fund relevant schools. After making the following adjustments, the final DSG allocation amounted to £75.897m:


·         £25.077m deduction for academy schools, with £0.021m addition for in-year growth in academy pupil numbers.

·         £0.311m increase to HNB spending power following changes to the original allocation by the ESFA where final data indicated higher overall numbers of students in specialist institutions and fewer places purchased from providers directly funded by the ESFA compared to the estimate included in the original budget

·         £0.139m increase to the Early Years Block, essentially to finance the cost of the free entitlement to early education and childcare. This reflects the in-year recalculation of funding by the ESFA. Ordinarily, this is based on April to August 2020 from the January 2020 census and September 2020 to March 2021 from the January 2021 census. To reflect the impact of the national lockdowns on take up, the final funding allocation from April to December 2020 was based on the January 2020 census, with January to March 2021 on the January 2021 census.


6.3          There are further budget adjustments to report:


·         To reflect additional sixth form student numbers, the ESFA increased funding allocations to schools by £0.045m. This has a net nil effect as an equivalent increase is made to the relevant expenditure budget used by the schools.

·         As part of the council’s commitment to provide an additional £1m to schools to help mitigate the additional costs arising from new schools, the council added a further £0.253m to school budgets. Total additional funding from the council for this purpose now amounts to £0.591m.

·         In accordance with Local Government Accounting code of practice, where schools use their revenue funding for capital related expenditure, both the funding and spend need to be transferred to the capital accounts. The Council was notified by schools that of a total of £0.329m of funding needed to be converted to capital through a transfer from revenue. There is a net nil effect on school budgets from this as both the funding and costs are transferred out of delegated budgets.

·         £0.086m of DfE grant to support the Virtual Head role has been applied to supplement DSG funded expenditure on the educational attainment of children looked after.


6.4          The net effect of the budget changes set out above is that the final net Schools Budget totalled £0.010m, with an income budget of £88.379m, and an overall gross budget of £88.389m.


6.5          In accordance with DfE Funding Regulations, a number of self-balancing budget adjustments have also been made during the year to reflect the transfer of funds from centrally managed budgets to schools where they have met qualifying criteria or original estimates are revised following verified data. The most significant adjustments reflect funding for the free entitlement to early years education and childcare, changes in SEN funding for named pupils i.e. Element 3 top up funding, allocations from the Growth Fund, mainly in respect of managing the financial impact of Key Stage 1 Class Size Regulations, and support to schools in financial difficulty.


Provisional Outturn Position


6.6          The provisional final accounts for the Schools Budget, as summarised at Annex A, shows an over spending of £4.402m. These figures remain subject to change, pending external audit, although no significant movement is anticipated.


6.7          Some expenditure in the Schools Budget is ultimately financed from accumulated balances and earmarked reserves. Annex A sets out the transfers required as part of the accounts closedown process which is explained in more detail in paragraphs 6.9 to 6.13.


6.8          An explanation of the main changes (+/- £0.050m) from the approved budget plan, after transfers to or from reserves and balances are as follows, many of which are consistent with the update on budget performance that was reported to the Forum in November:

LA Managed Budgets:

Schools Block - £0.221m under spend:

                       i.       Pupil behaviour - £0.091m under spend. The main savings arose from staffing as a result of vacancies and limited expenditure on resources as visits to schools were curtailed

                     ii.       Schools in financial difficulties - £0.062m under spend. With the suspension of the Ofsted inspection framework to allow schools to focus on the impact of the coronavirus pandemic, expenditure for the year was lower than expected

                    iii.       Official staff absences - £0.061m under spend. The incidence and cost of maternity leave absence for classroom staff was lower than expected

                    iv.       Under spend returned to schools - £0.205m over spend. Items i to iii above are de-delegated from maintained schools. Where there is an aggregate underspending on these budgets. It is returned to maintained schools.

                     v.       Other Schools Block provisions and support services - £0.179m under spend. There are 2 significant budget variances being reported in this area of the accounts. Firstly, there was a net under spending of £0.167m on the Growth Fund of which there are 2 relevant elements; based on the actual pupil numbers on the October 2020 census, in-year growth allowance payments were made for 10 fewer classes at schools experiencing significant increases in pupil numbers compared to the 11 assumed from the 3 year average actual numbers which was used to calculate the original budget requirement. This resulted in an under spending of £0.269m; secondly, top up funding allocations to schools experiencing additional teaching costs as a result of Key Stage 1 maximum class size regulations over spent by £0.102m. The second significant variance relates to potential business rates revaluations in schools. A provisional cost of £0.071m was transferred to reserves and set aside for this future expected liability.

High Needs Block - £4.824m over spend:

Members of the Forum will be aware that budget items vi to viii below represent the most unpredictable and volatile education budgets that the council manages. Placement requirements can change at short notice and new pressures can emerge that can together result in large movements in costs and between budget lines.

It is also well known that significant cost pressures are being experienced, which is a national issue, and not just limited to BF, with the number of pupils with a statement or Education Health Care Plan (EHCP) [1] having increased in the 2 years between 2018 and 2020 by 16.2% [2]. The change in BF showed a steeper increase of 17.7% [3].

Taking account of the increasing use of private, voluntary, and independent (PVI) sector providers, costs over the same 2-year period to 31 March 2020 increased by 27.3% during which time grant from the DfE has increased by 4.8%.

These factors have contributed to the significant overspending now being reported.

                    vi.       Maintained schools and academies - £1.179m over spend. This relates to the cost of additional Element 3 top up support i.e. individual support needs above £0.010m where these have been determined by assessment. This includes payments to BF and other LA schools.

For support to BF schools this totalled £2.034m, an increase of £0.715m (54%) from 2019-20 and a £0.745m overspend. There has been a £1.112m cost increase over the 2 years from April 2019 (121%).

For non-BF schools, this totalled £2.652m, an increase of £0.509m (41%) from 2019-20 and a £0.651m overspend. There has been a £1.099m cost increase over the 2 years from April 2019 (71%).

There were a number of other relatively minor budget variances.

                   vii.       Non-Maintained Special Schools and Colleges - £3.226m over spend. The ESFA generally pay the £0.010m place cost at these institutions, with LAs paying individual support needs above this level and which reflects the support arrangements agreed for schools plus £0.010m for any additional places that are needed and have not been pre-purchased.

In terms of the outturn variances, an analysis of the external placements budget shows:

·         Budget increase of £0.311m for the actual DSG allocation compared to the amount originally expected, as per paragraph 6.2 above.

·         The original HNB DSG was estimated to be £1.677m below expected expenditure. In order to balance to confirmed funding, this was the budget that was set below expected spend.

·         Actual costs exceeded the original budget by £1.860m with the key factors being:

o   Overall costs increased from 2019-20 by £1.615m (+25%).

o   There was a total of 220.2 FTE placements (was 217.4 in    2019-20 and 186.6 in 2018-19).

o   At £36,176 the average actual cost of placement was £6,856 more than the £29,320 cost in 2019-20, an increase of 23%.

o   The budget assumed both additional placements (+39) from the forecast increase in EHCP numbers and reductions from the impact of the savings programme (-16), which as previously reported, was only partially implemented in the year due to the coronavirus pandemic.

                 viii.       Education out of school - £0.441m overspend. There were 2 significant budget variances. There was an increase in the number of pupils requiring home tuition that resulted in a £0.123m overspending, with total expenditure increasing by £0.116m in the last 2 years (26%). There was also a £0.322m overspending on externally commissioned alternative provision. Demand also increased for these provisions, with total expenditure increasing by £0.257m in the last 2 years (93%).

                    ix.       Other SEN provisions and support services - £0.052m underspend. The main areas of overspending amounts to £0.095m on additional support for pupils with medical needs and £0.084m of unachieved savings. This is offset by a number of savings primarily arising from staff vacancies and the pandemic and includes the range of therapies (-£0.095m), the Traveller Education Service (-£0.037m), support to under 5’s including the Child Development Centre         (-£0.095m).

Early Years Block - £0.194m under spend:

                     x.       Free entitlement to early years education - £0.125m under spend. The budget to fund payments to providers delivering the free entitlement to early education and childcare under spent by £0.125m. This primarily occurred as a result of the DfE funding LAs for April to December 2020 at the actual January 2020 head count take-up numbers rather than the normal practice of only using January 2020 data through to August. This ensured sufficient funding was available to meet actual hours delivered, or 2019-20 actual levels if the pandemic had resulted in lower take-up. The budget included £0.104m to manage in-year differences between take-up and DfE funding which in the circumstance was not required.  

2021-22 DSG funding from the DfE will be based on actual termly take-up data, which should ensure sufficient income is received to fully fund providers.

                    xi.       Other Early Years provisions and support services - £0.069m under spend. This arose from a number of staff vacancies during the year together with limited spend on the commissioned translation service.

Financing of in-year over spending:

                   xii.       Financing of year end over spend - £4.402m overspend. The net aggregate overspending on budgets centrally managed in the Schools Budget.

Unallocated Schools Budget Balance:

                 xiii.       Taking account of the £0.141m deficit brought forward balance and an in-year transfer of £0.040m from the unrequired Schools Meals Re-Tender Reserve, there is a net deficit balance of £4.503m on the unallocated Schools Budget Reserve. More information is provided on this and other reserves directly below.


Annex A sets out the full Schools Budget at a summary level, with the above notes referencing to the appropriate lines with budget variances.


Balances and reserves


6.9          As part of the financial planning process, there is the opportunity to establish and maintain reserves and balances. Earmarked Reserves are sums of money which have been set aside for specific purposes and the Schools Forum has agreed a number of Schools Budget reserves should be created. Each year these reserves can have funds added or deducted depending on financial performance and the purposes for which they were created. Balances reflect year end unspent funds and can be held separately as an unring-fenced amount or are transferred to Earmarked Reserves.


6.10       Table 1 below provides a summary of movements last year together with current balances on the earmarked reserves of which column 3 shows a total deficit of funds at 31 March 2021 of £0.484m, a reduction of £3.348m compared to 2019-20 (column 2).

Table 1: Earmarked reserves and balances related to the Schools Budget




Year end















£ 000

£ 000

£ 000

School Balances - Earmarked:
















Outstanding Academy School loans




College Hall PRU








Earmarked Reserves




SEN Resource Provision Reserve




New school start-up / diseconomies




School Meals Re-tender Reserve (b)




School Expansion Rates Reserve (c)




SEN Strategy Reserve (d)








Schools Budget General Reserve




Brought forward balance




Transfer from School Meals Reserve (b)




2020-21 in-year over spend (e)












Total reserves






Memorandum item:




School balances from above



Less loans to academy schools *



Maintained schools balances








* Outstanding at point of conversion. Due to be fully repaid 2021-22.



6.11       A number of year-end transfers, as set out in column 2 of Table 1 have been processed in accordance with the accounts closedown arrangements:


Note a:  School balances: Statutory Regulations require balances on school budgets to be earmarked to individual schools for use in a future financial year. There was an aggregate -£1.041m transfer to balances during the year as schools spent less than their budget allocations. In addition, academy schools with outstanding loans at the point of their conversion repaid the £0.043m of advances that were due, resulting in a net overall increase in balances of £1.083m. Academy schools now owe £0.018m on outstanding loans compared to the initial £0.135m debt and are on course to be fully repaid by August 2021. A separate item on tonight’s agenda provides further detail on school balances.

Note b:  School Meals Re-Tender Reserve. The purpose of this reserve was to help finance costs arising from future Schools Meals Catering tendering exercises. With schools now undertaking these exercises themselves, the reserve is no longer required and the £0.040m can be transferred to the Schools Budget General Reserve.

Note c:  School Expansion Rates Reserve: the annual review of liabilities reflects the latest in-year school rates revaluations and a recognition that any further revaluations will be backdated no further than to April 2017, the most recent national revaluation date. This indicates that the Reserve needs to increase by £0.071m.

Note d:  SEN Strategy Reserve: the Forum has previously agreed that this reserve would be used to finance the costs of support agreed at the SEN Hub which amounted to £0.100m.

Note e:  Schools Budget General Reserve: the aggregate in-year over spending on centrally managed budgets of £4.402m has been charged here.


6.12       Changes to the School and Early Years Finance (England) Regulations 2020 and Regulation 30L of The Local Authorities (Capital Finance and Accounting) Regulations (the 2003 Regulations) determine the accounting treatment to be adopted by LAs with deficit balances on their Schools budget. This requires the establishment of a new statutorily ring-fenced unusable reserve  – the Dedicated Schools Grant Adjustment Account. The new accounting practice has the effect of separating schools budget deficits from the LAs general fund to confirm no liability on LAs. This arrangement has been put in place by the government for an initial 3-year period.


6.13       The table above sets out the year end Schools Budget Reserves and Balance deficit at £0.484m. Annex B provides a summary of the purpose and policy of each element of the Dedicated Schools Grant Adjustment Account. together with recent levels of funds.





            Borough Solicitor


7.1          The relevant legal provisions are contained within the body of the report.


Director of Resources: Finance


7.2          The financial implications arising from this report are set out in the supporting information. The budget variances were reviewed during the year and where appropriate, have been built into the 2021-22 budget, most notably relating to the increasing pressure on High Needs Budgets.


7.3          Whilst liability for the £0.484m deficit balance on the Dedicated Schools Grant Adjustment Account rests with the DfE, it is important that the council continues to work on strategies to reduce costs whilst maintaining appropriate support levels to children and young people.

Equalities Impact Assessment


7.4          There are no specific impacts arising from this report.


Strategic Risk Management Issues


7.5          There is a risk to the Schools Budget from not having sufficient reserves to manage unforeseen in-year cost pressures. This is mitigated by holding funds in earmarked reserves and other reserves, although these are now diminishing.


Climate Change Implications


7.6          The recommendations from this report will have no impact on emissions of carbon dioxide as they report on activities already undertaken.





8.1       Not applicable.


Background Papers



Contact for further information

Paul Clark, Finance Business Partner – People Directorate                         (01344 354054)


Doc. Ref Forum/(104) 150721/2020-21 Schools Budget outturn etc.docx

Annex A



See paragraph 6.8 for an explanation to the notes to variances. Note roundings may result in totals not cross checking

Annex B


Breakdown of the Dedicated Schools Grant Adjustment Account – net deficit at 31 March 2020 of £0.484m


Internal Reserve



Year-end value

School Balances

These funds are used to support future expenditure within the Schools Budget relating to individual school balances.

Balances are permitted to be retained by Schools under the Schools Standards & Framework Act 1998. Policies are set and the reserves are managed by schools and the LA has no practical control over the level of balances.


March 17 £1.746m

March 18 £1.363m

March 19 £1.610m

March 20 £1.038m

March 21 £2.123m

SEN Resource Units

To set aside in a reserve for building adaptations to allow for the creation of SEN resource units on school sites.

To finance capital expenditure to assist with the development of local, cost effective provisions to support pupils with SEN.


March 17 £0.304m

March 18 £0.337m

March 19 £0.459m

March 20 £0.459m

March 21 £0.459m


New school start-up / diseconomies

To set aside an earmarked reserve to support the additional costs that will arise from the new school places building programme.


To help finance the diseconomy costs that will arise from new schools that will open with relatively low numbers of pupils as housing developments progress.

March 17 £0.300m

March 18 £0.800m

March 19 £1.000m

March 20 £0.746m

March 21 £0.746m


School Meals Re-Tender Reserve

To set aside an earmarked reserve for the School Meals Catering Re-tendering exercise


To help finance costs arising from future Schools Meals Catering tendering exercises.

March 17 £0.040m

March 18 £0.040m

March 19 £0.040m

March 20 £0.040m

March 21 Nil


Schools Expansion Rates Reserve

To set aside an earmarked reserve for the rates costs associated with school expansions.


To help finance costs arising from the school expansion programme.

March 17 £0.595m

March 18 £0.842m

March 19 £1.092m

March 20 £0.364m

March 21 £0.435m






Year-end value

SEN Strategic Reserve

To set aside funding to contribution to costs arising from implementation of the SEN Strategy, assisting with the early implementation of change to improve the outcomes of children.


To help finance start-up and one-off initiatives arising from the SEN Strategy.

March 18 £0.439m

March 19 £0.439m

March 20 £0.356m

March 21 £0.256m

Grants unapplied Reserve

To set aside in a reserve for unspent Schools Budget related grants where there are no restrictions applied to the spending from the grant awarding body.


To facilitate the transfer of unspent grant balances between financial years.

March 17 £0.003m

March 18 £0.003m

March 19 £0.003m

March 20 £0.003m

March 21 £0.003m


Schools Budget General Reserve

The Schools Budget is a ring-fenced account, fully funded by external grants, the most significant of which is the Dedicated Schools Grant. Any under or overspending remaining at the end of the financial year must be carried forward to the next year's Schools Budget.


This reserve is held for specific accounting reasons. The funds in this reserve are ring fenced and cannot be used for any other purpose than a future years’ Schools Budget.

March 17 £1.779m

March 18 £1.994m

March 19 £1.577m

March 20 -£0.141m

March 21 -£4.503m



Net account deficit at 31 March 2021 = £0.484m

[1] An EHCP is a legal document that describes a child or young person's special educational, health and social care needs. It explains the extra help that will be given to meet those needs and how that help will support the child or young person.

[2] DfE SEN statistic at relevant January from: Create your own tables online, Table Tool – Explore education statistics – GOV.UK (

[3] Average FTE placements for the financial year that BFC is financially responsible for, reconciled to payments to providers