To consider the report of the Budget Working Group on the following matters: consultation proposals for the 2017/18 schools budget; maintained schools five year budget planning; the government’s early years funding consultation; dedicated schools grant outturn for 2015/16 and a funding bid for social, emotional and mental health work with NEETS (young people not in education, employment or training); and five maintained schools which are in excess of the 25% balance cap.

The Forum considered the report of the budget working group (BWG) on the following matters: consultation proposals for the 2017/18 schools budget; maintained schools five year budget planning; the government’s early years funding consultation; dedicated schools grant (DSG) outturn for 2015/16 and a funding bid for social, emotional and mental health work with NEETS (young people not in education, employment or training); and the position of five maintained schools which were in excess of the 25% balance cap.

The Chairman thanked members of the BWG and officers who provided support to it, remarking on the complex task that the BWG had to undertake.

The School Finance Manager (SFM) presented the report.  He highlighted the following principal points:

National Schools Funding Formula (NSSF):  The stage 2 school funding consultation was now expected in autumn 2016.  The new national formula values were proposed to take effect from April 2018 rather than September 2017.  The DfE would undertake further consultation on the detail.  The council was working with the F40 Group on the matter.  In the meantime it was proposed that the same Herefordshire funding values for 2017/18 would be used as for 2016/17 as an interim measure.  This would maintain financial stability for schools prior to consideration of the DfE proposals and avoid the need to reverse any changes.  Draft budgets had been issued to schools.

He commented that it was becoming increasingly difficult for schools to absorb rising cost pressures.  The outcome of the government’s review of early years funding had produced a very disappointing outcome for Herefordshire moving it to the second lowest funded authority for early years.   Without the ability to charge top up fees the proposed funding would not reflect the current costs of provision as reported by providers in Herefordshire.  A similar methodology (base funding and a multiplier based on an area cost adjustment) was being proposed by the DfE for the NSFF.  His inclination was that the expectations that the formula change would benefit Herefordshire may turn out not to have been well-founded.

Education Services Grant (ESG):  The SFM referred to the savings proposals to meet the government’s reduction in the grant given to all local councils to fund statutory education duties, as set out at paragraphs 4 and 5 of the report.  He noted that a consultation paper including the savings proposals had been issued to all schools.  The ESG would be confirmed in December.  The Forum would be asked to make a final recommendation on the savings proposals in January 2017.

The council had always been a high delegating authority and in the lowest quartile of local authorities for central costs.  Every avenue to achieve efficiency and economy savings had been explored.  The council was proposing to meet over half the required reduction in ESG.  This had to be viewed in the context of a situation where the council was being required to make further budget reductions of £28m over the next 4 years, with £59m of reductions having already been delivered since 2010.  Over 10 years this meant savings of £87m on a £140m revenue budget.

The council considered the proposals were pragmatic.  Schools had been invited to put forward alternatives.

The Assistant Director (AD) – Commissioning and Education commented that a number of organisations were lobbying government about the ESG cut.  Some authorities, such as West Sussex County Council were intending to seek to ask schools to meet the whole cost of the reductions.  Herefordshire had sought to develop a balanced proposal.  He noted that the authority had already implemented changes over the years that meant it was not facing the scale of change that many other authorities were having to address. The council had to plan on the basis the reduction would need to be made.

Maintained School Balances.  The SFM explained the circumstances of the five maintained schools whose balances currently exceeded the 25% balance cap.  He considered no further action was needed, noting that the schools’ business plans all indicated that balances would be below the threshold by the end of the financial year.

In discussion the following principal points were made:

·        Schools in West Sussex were indicating that they could not make the reductions the government was proposing.  Herefordshire had already been disadvantaged as a consequence of being a high delegating local authority.  It was asked when the point would be reached when Herefordshire would take a stand.  The AD commented that the council was lobbying through MPs and the F40 group, but the situation was difficult and this was reflected nationally.  At the same time it was prudent for schools, forum and the council to plan for the cut taking place and the council was seeking to address the cut as a reduction to the county as a whole not just the school sector.

·        It was important that everyone responded to the budget consultation.  Forum members were encouraged to urge colleagues to engage with the consultation.

·        Schools needed to be proactive in considering options available. 

·        Schools needed to consider very carefully what class sizes would be viable in future.

·        In response to concerns expressed about the financial pressures schools faced and an absence of alternative options in the report, the SFM clarified that the BWG had explored and tested the proposed options and concluded that they represented the best way forward, subject to the outcome of the consultation.

The Chairman thanked the Chairman of the BWG and the SFM for their work.

RESOLVED:

That      a)       all schools be asked to set a balanced budget by March 2021 and a joint letter from the schools forum and director for children’s wellbeing, should be sent to schools in line with previous ‘looking to the future’ letters;

              b)      the DSG outturn for 2015/16 be noted and in particular that without the one-off £335k rates funding, DSG would have been £60k overspent and that subject to (c) below the balances be carried forward to support future years DSG;

              c)       the £30k bid for SEMH (social emotional mental health) funding for NEETS for 2016/17 be approved as a one off sum in view of the pressure on high needs budgets;

              d)      it be noted that a report on special schools funding would be submitted to the BWG; and

              e)       no further action be taken in relation to those schools previously in excess of the 25% balance cap given the progress made and the forecast budget pressures faced by schools in the medium term.