Excessive Surplus Balances NEW RULES ON SURPLUSES

Excessive Surplus Balances

NEW RULES ON SURPLUSES • • Following consultation with and approval from the Schools Forum it was agreed that the level of schools balances would be reduced- a summary can be seen below. These limits will be reviewed during 2011/12 due to government regulations. Schools are only allowed an excess for one year, unless a capital build is involved. Existing ‘Allowed’ Excess Balance i. e. at 1 st April 2010 First Step phased Reduction i. e. ‘Allowed’ excess Balance at 1 st April 2011 Final step phased Reduction i. e. ‘Allowed’ excess Balance at 1 st April 2012 Primary/Special/Nurs ery 8% 6. 5% 5% Secondary 5% 3. 5% 2% De Minimis- All Schools £ 25, 000 £ 22, 500 £ 20, 000

Summary of Revenue Surplus Balances over Limits 2008/09 Number (Actual) 2008/09 Amount (Actual) 2009/10 Number (Actual) 2009/10 Amount (Actual) 2009/10 Claw back 2010/11 Number (Requests) 2010/11 Amount (Requests) Primary 19 £ 255, 744 10 £ 207, 110 £ 823 17 £ 498, 448 Secondary 5 £ 1, 074, 443 2 £ 374, 435 8 £ 1, 303, 884 Nursery 2 £ 37, 468 0 0 2 £ 18, 884 Special 1 £ 45, 689 0 0 2 £ 123, 392 27 £ 1, 398, 627 12 £ 581, 545 29 £ 1, 944, 608 TOTAL £ 21, 657

Projected Balances from September 2010 3 yr plans 2009 -10 Actual Balances 2010 -11 2011 -12 Primary £ 4, 716, 285 £ 4, 491, 609 £ 3, 116, 994 Secondary £ 2, 503, 897 £ 2, 443, 974 £ 1, 094, 996 Special £ 231, 381 £ 308, 074 £ 158, 896 Nursery £ 109, 990 £ 137, 594 £ 119, 707 Total £ 7, 561, 553 £ 7, 381, 251 £ 4, 490, 593

Excess Balances • If approved then excessive c/f will be monitored in the next financial year. • Helpful if schools inform us of when expenditure has been incurred

Schools in Financial Difficulty Examining the Reasons

Deficits at 31 -3 -10 School budget Share Number Range £ Total £ Primary 7 1, 57732, 128 80, 490 Secondary 4 379, 126 Special and nursery 0 27, 620170, 069 0 1, 577170, 069 459, 616 Totals 11 0

Projected deficits from September 2010 3 year plans 2010/11 2010 -11 No Value 2011 -12 No 2011 -12 Value 2012 -13 No 2012 -13 Value Primary 4 £ 71, 541 19 £ 354, 134 51 £ 1, 670, 638 Secondary 2 £ 194, 950 3 £ 326, 835 8 £ 2, 396, 753 Special 0 0 2 £ 40, 364 Nursery 0 0 1 £ 77, 858 Total 6 £ 266, 491 22 £ 680, 969 62 £ 4, 185, 613

Deficit Budgets • If the school finds itself in a predicted deficit position, the Head and Governors must discuss what cause of action will be taken • A deficit recovery plan must be submitted to the LA by 31 st May and 31 st December • Notice of Concern If a school fails to comply with Scheme for Financing Schools or safeguard the financial position of LA or school.

Completing a deficit recovery plan • Form on the schools intranet to complete • Recovery over a maximum of 3 years • Common problem is not enough financial information given to back up the recovery plan. • Signed by Head and Chair of Governors • New ‘budget adjustment scenario calculator’ spreadsheet devised to assist in the process.

Questions on Deficit Recovery Form • Balances- these are the cumulative balances predicted at the year end- 3 year plan submitted • Reason/s for going into deficit • How do you intend to recover the deficit (details with costings) • By what date will the deficit be recovered? Need copy of minutes showing Governors have discussed and approved this deficit Copy of CFR summary Form signed by Head and Chair of Governors

Deficit Approvals • The Assistant Director of CFAS (John Wilson) will consider all applications • The approval once given will be valid for the length of the recovery period as long as future submitted 3 year budget plans are in line with the recovery plan. If the deficit has increased from the anticipated position, then a further submission will need to be made and reasons given why the school is not on course.

Possible Factors • • • Workforce reform and school structures Changes in Funding School meals Curriculum / class planning Challenging circumstances : attainment/ deprivation / SEN/ EAL • Falling rolls and surplus places • Poor financial management in school

Year End Balances and Considerations

Anticipating Year End Balances At the March / April 3 Year Plan Visit Schools Finance ask you for a predicted year end balance to build in to the 3 year plan • Why? To give an indication of the cumulative balance at the end of the following year • ie Can we afford to do all that we have planned? ?

Variance between estimated and actual carry forwards projected carry forward 2009 -10 and April 2010 3 yr plan £ 0£ 999 £ 1, 000£ 4, 999 £ 5, 000£ 9, 999 £ 10, 000£ 19, 999 £ 20, 000£ 29, 000 £ 30, 000£ 49, 999 £ 50, 000+ Primary 58 54 9 6 1 0 0 Secondary 5 2 3 3 2 1 2 Special 0 1 1 1 0 0 0 Nursery 3 0 0 0 1 0 0 Totals 66 57 13 10 4 0 2

How • Start with Reserves figure • Look at budget remaining column • Take into account – Any commitments / planned spend – Income/ funding not yet received

Year End Considerations • Recharges complete? Examples include: School meals, Joint Projects • Accruals Creditor – Goods received but not yet invoiced Debtor – Income due but not received NB. All of the above need to be taken into account when predicting your year end position

Governors • Always be aware of your financial position • A surplus balance over the allowed amount could be clawed back- consider how balances can be spent to raise attainment and support the pupils in school now. • A deficit position will require intervention, and should be managed to reach a recovered position. (know the reason for a deficit ie falling pupils, over staffed, reduced funding, unexpected costs, loss of income, staffing issues.

Local Authority Support • • • 3 year budget plans Budget monitoring reports Benchmarking information (Key indicators) New ‘pupil number funding’ spreadsheet New ‘budget adjustment scenario calculator’ spreadsheet • Contingency funding – if applicable • Joint visit by finance and SIP- if necessary • Training provided to school staff and governors

Accountancy SLA • 100% of the East Riding schools buy into the accountancy SLA • Other financial services available at an extra charge ie individual GB training £ 158 2010 -11