To update the forum on local and national school funding issues, including the recommendations of the budget working group (BWG) on the following matters:

1. Herefordshire schools budget 2019/20

2. f40 briefing on school funding

3. High needs budget 2019/20

4. DSG outturn 2017/18

5. Apprentice levy - update on the optimal use of the levy to support community and voluntary controlled schools in Herefordshire

The Schools Finance Manager (SFM) began with a presentation on national school funding issues.

Key points noted included:

·         the f40 group of low funded local authorities continued to campaign for a fairer funding system;

·         a presentation had been given to MPs in Westminster to promote the group’s briefing paper which identified a number of areas of concern and proposals of how these could be resolved;

·         the f40 group promoted an activity led funding model, which should be index linked and move away from reference to historical spending patterns, for example the lump sum allocated to schools was based on an average of historic values across all local authorities rather than an assessment of the costs that funding was intended to meet;

·         the national funding formula should not be artificially supported by a minimum guarantee which locks in many historic differences;

·         the f40 briefing note reflected many of the issues that had recently been discussed by the schools forum;

·         Herefordshire currently ranked around 93^rd out of 150 local authorities in terms of funding, this improvement on the past position reflected both additional money from central government and prudent decisions taken by the forum;

·         the f40 estimated the current funding shortfall to be £2bn per annum, rising to £3.8bn in 2019/20;

·         funding per pupil had remained steady over recent years but an increase in pupil numbers had increased expenditure and there were hidden costs such as those relating to national insurance and pension costs for teaching and non-teaching staff;

·         it was estimated that the total increase in costs was about 15% over 5 years, while the amount of funding per pupil had barely increased over the same period;

·         the comprehensive spending review in 2019 would determine the next 3 – 5 years of funding, until that process was completed the DfE would not be able to commit on future schools budgets;

·         the government was aware of the emerging cost pressures in the high needs budget, where demand was outstripping the budget available;

·         the national funding formula for high needs was fixed with a 50% factor on historic funding levels, some local authorities had requested significant transfers from their schools budget block to their high needs block to meet pressures;

·         there was feedback on early years that with the introduction of 30 hours central provision for some families, providers were more reliant on central funding and this was causing some providers to struggle;

·         restraint on council funds was impacting on the availability of school transport;

·         the SFM reported that the f40 group remained a good way for Herefordshire to put its views across and that the chair and vice-chair of the group had regular access to ministers.

The members of the forum thanked the SFM for his work with the f40 group.

In discussion of the presentation and f40 briefing note it was noted that:

·         some low funded schools in Herefordshire had benefitted from the minimum funding level but the mechanism was applied bluntly across all pupils with no consideration of additional needs, if the formula was doing its job then these artificial floor levels would not be needed;

·         the only sensible advice that could be given to schools in projecting their budget for future years was to assume little or no increase in budgets but increasing costs, the council had advised to budget for 2% increase in pay costs for the next 5 years;

·         that the f40 briefing paper had been sent to all MPs and 28 had attended the Westminster briefing, it was not known if either of the Herefordshire MPs had attended;

·         that the cabinet member for children and families had requested a meeting with the local MP to include discussion of the high needs budgets.

Forum members felt that it would be beneficial to invite the two MPs representing the county to attend a future meeting of the forum, to hear first-hand the financial challenges faced by Herefordshire schools, how these were being tackled and how they could support these efforts.

The SFM then gave a presentation on the projected schools budget for 2019/20. The key points of the presentation were:

·         the Dedicated Schools Grant (DSG) was expected to be confirmed in December, past estimates had proved to be quite accurate;

·         consultation would take place with schools during the second half of the autumn term with final proposals on schools budgets being put to the forum in January 2019 and the high needs budget in March 2019;

·         there was a new growth allocation which was expected to be a recurring factor, the consultation with schools would include some possible criteria which could be used to allocate this fund, this would include the option to fund additional special school places but this would require a transfer to the high needs block;

·         allocating any surplus funds as additional funding per pupil was possible but there were risks in doing so due to the impact of the minimum funding guarantee on future years funding;

·         other options for use of any surplus in the schools block included transfer to the high needs block to address pressures there, a similar transfer had taken place for 2018/19 although this had only been supported by the forum as a one-off;

·         the final option would be to retain the surplus into balances;

·         the cost pressures on the high needs budget remained and additional savings would need to be found;

·         changes to top up tariffs had been agreed for the 2018/19 budget and no further changes were proposed at this time;

·         not all of the savings required were realisable in 2019/20 so balances would be used to smooth the transition, some changes would not kick in until September 2019;

·         the future of the primary SEN protection scheme remained a matter for debate - the scheme, which was calculated in the background and distributed to primary schools with higher than average numbers of SEN pupils, was funded from the high needs block even though the costs it mitigated would otherwise have to be met from the schools block;

·         the pay increase for teachers who were centrally employed would not be offset by an increase in funding for the central services block so this would need to be absorbed;

·         a set of principles had been produced, which were supported by the Budget Working Group (BWG), to guide reduction to the high needs block;

·         detailed proposals for making savings in the high needs block would be worked up by the BWG and presented to the forum, with a final decision on the high needs budget for 2019/20 to be made in March 2019;

·         the budget situation was disappointing but it was noted that Herefordshire was in a good position compared to many other local authorities.

In summary the forecast was for a modest surplus in the schools block of perhaps £200-300k, which would not be confirmed until December, and the projected allocation for the high needs block was about £550k short of projected need.

In discussion of the points raised in the presentation the forum noted that:

·         actions already taken were delivering savings, including in central costs;

·         forecasts for the high needs budget identified cost pressures as accurately as possible but demand could fluctuate depending on the needs of pupils that required support from year to year;

·         the 2017/18 outturn showed that the high needs budget overspent by £125k, this had been offset by an underspend on early years so overall the DSG for 2017/18 was slightly underspent;

·         centrally employed teachers would receive the pay award in line with all teachers but the costs would have to be absorbed by the central services DSG block, while pay costs could be managed there was concern about future teachers’ pension costs as these would be more significant;

·         the council was under pressure to make savings in its overall budget, with the children and families budget currently predicting a £2m overspend due to increased numbers of looked after children;

·         consultation with schools would be based on the information shared in the presentation and responses would reviewed by the BWG as part of their deliberations on how the funding gap could best be closed.

The SFM summarised a report on options to administer access for schools to the apprenticeship levy fund held by the council. This only applied to those schools whose payrolls were administered through the council. Other schools with independent payrolls of more than £3m had their own levy pot and accessed this independently.

The BWG had considered the options and had recommended option 4 in the report, which would see eligible schools given a specific deadline each year to submit bids for apprenticeship levy funding. Bids received by the deadline would be considered by a panel, which would include headteacher representatives.

It was noted that so far, requests to access funding had been dealt with ad hoc and that the DfE was not involved in the levy and saw it largely as a tax on schools. Forum members felt that the proposed mechanism was a fair way to allocate the funds.

It was resolved that:

a)    School Forum invite the Herefordshire MPs to attend a future meeting of forum to be briefed on school funding pressures in Herefordshire and the f40 campaign for fairer funding;

b)    the initial budget proposals for 2019/20 for schools and high needs were considered and feedback provided to inform the local authority’s annual school budget consultation process; and

c)    the council be asked to adopt that

                    (i)        requests from local authority maintained schools for apprenticeships be made by a given point in the year, for efficient administration of the council’s apprenticeship levy fund;

                  (ii)        bids be assessed by a panel consisting of the OD Business Partner, HR Services Manager and School Finance Manager with at least three headteacher representatives from LA maintained schools who had paid into the council’s digital account;

                 (iii)        the deadline for 2018 should be set for a date in December to give time for communication with schools; and

                 (iv)        the apprenticeship levy be included on the agenda for the schools leadership conference to be held on 23 November.