The report sets out the expected financial position for Herefordshire’s high needs budgets for three years from 2018/19. If current trends were to continue high needs expenditure, particularly high needs top-ups paid to schools, is forecast to overspend by £1m in 2018/19, £1.5m in 2019/20 and £2m in 2020/21. This report recommends  actions for 2018/19 and 2019/20 to ensure expenditure remains within budget for the next two financial years whilst a fundamental review of high needs services and costs is undertaken. During this period the high needs expenditure will be reviewed regularly to ensure the savings are delivered and further action will be taken if necessary

1.           Options are limited for implementation from April 2018 but will include a modest reduction in expenditure in the SEN protection scheme and further price increases for the services identified in the consultation paper. These have been discussed with the Budget Working Group (BWG) and Schools Forum in March. Additional options will be developed by the BWG for further consideration in autumn 2018 and implementation in 2019/20 as necessary.

2.           The options included in this report are those options that deliver immediate cost savings in 2018/19 and have been discussed fully with the BWG and Schools Forum. The following options have been discounted as either infeasible or delivering an unacceptable reduction in service with insufficient notice for implementation in 2018/19 (i) more radical changes to the tariff structure such as funding each tariff point value separately (ii) implementing the economies of scale model for all existing tariffs, (iii) abolishing the SEN protection scheme.

3.           The BWG considered two options for the existing tariff bands A to F to be split. Option A would split each band into two and was projected to save £200k a year. Option B would split the current bands into smaller bands each spanning 5 assessment points. This was projected to save £300k a year.

4.           Following discussion the BWG preferred option B as it would deliver greater savings and allow more cover in the event that demand was greater than projected. It was cautioned that there would be more complex administration and as the tariff bands would be narrow there might be incentive for schools to push for an additional couple of points on an assessment in order to move a child up a band. On a vote the BWG supported implementation from April 2018 rather than September 2018 by six votes to two.

5.           BWG discounted the alternative recommendation for revised tariffs (Option A) i.e.

6.           The High needs tariffs to mainstream and special schools be revised to include a lower and upper band from 1st April 2018 Post-16 providers from 1st September 2018)  to save approx. £200k as follows

7.           At this stage the financial strategy is to ensure the high needs budget remains in surplus until April 2020 and actions are identified to reduce the expenditure from 2020/21 onwards when the forecast expenditure begins to exceed income.