To approve a change to the local scheme for managing schools to ensure compliance with a national direction.

Deferred item from inquorate meeting of 6 July 2018

The SFM explained the directed change made by the secretary of state to the local scheme for managing schools. The purpose of the change was to ensure that loans agreed by the council with schools in future were for capital purposes only. Budget deficits would not be able to be converted into loans. Any loans in place when a school converted to academy status would not necessarily transfer to the academy.

As this was a directed change there was no alternative option and the LMS needed to be updated to reflect the new regulations and guidance.

It was resolved that the Herefordshire scheme for financing schools be amended as follows:

(a) Add a new para 4.10 (f) as follows:

“Loans will only be used to assist schools in spreading the cost over more than one year of large one-off individual items of a capital nature that have a benefit to the school lasting more than one financial or academic year. Loans will not be used as a means of funding a deficit that has arisen because a school’s recurrent costs exceed its current income. If loans are made to fund a deficit and a school subsequently converts to academy status, the Secretary of State will consider using the power under paragraph 13(4)(d) of Schedule 1 to the Academies Act 2010 to make a direction to the effect that such a loan does not transfer, either in full or part, to the new Academy school.”

(b) Replace the existing paragraph 4.8 as follows

“Where in the funding period, a school has been established or is subject to a prescribed alteration as a result of the closure of a school, a local authority may add an amount to the budget share of the new or enlarged school to reflect all or part of the unspent budget share (including any surplus carried over from previous funding periods) of the closing school for the funding period in which it closes”

(c) Add an additional paragraph to Annex F as follows

“A local authority can retain a central budget within the schools budget to fund the costs of new early retirements or redundancies by a deduction from maintained school budgets (excluding nursery schools) only, where the relevant maintained school members of the school forum agree to a de-delegated budget in accordance with Schedule 2 Part 7, of the Finance Regulations.”

To approve a change to the council’s local scheme for managing schools, as directed by the Department for Education. The directed change is to ensure that loans agreed by the council with schools in future are for capital purposes only.

The Forum was invited to approve a change to the council’s local scheme for managing schools, as directed by the Department for Education. The directed change was to ensure that loans agreed by the council with schools in future are for capital purposes only.

The Schools Finance Manager (SFM) presented the report.

Members supported the amendments to the scheme for financing schools.

The SFM reported that as the Secretary of State had directed that the changes be made with effect from 22 March 2018, the matter could await ratification by the Forum in October.