Agenda item

To consider the attached report of the Assistant Director, Finance and the Assistant Director, Education.

Consideration was given to a report of the Assistant Director of Finance and the Assistant Director of Education.  This provided an update of the surplus balances held by schools at the end of the 2019-20 financial year, alongside details of the current balance mechanism scheme and balances for 2020-21.

It was explained that school balances had reduced by £0.322m or 5% compared to 2018-19, with Primary sector balances being reduced by £1.01m and Secondary sector balances showing an improved deficit position, having reduced a small deficit to a surplus by £0.299m.  In addition, it was highlighted that Special sector balances had increased by £0.469m.

The movement in school balances was discussed and it was explained that 2 Primary Schools closed the year with a combined deficit of (£24,383), whilst 49 Primary Schools held a combined surplus of £5,927,243.  There were 2 Secondary Schools closing the year with a combined deficit of (£1,179,580), whilst 4 Secondary’s held a combined surplus of £1,456,617.  5 Special Schools also held a combined surplus balance of £876,894.

Reference was made to the changes in the Balance Mechanism Scheme for 2019-20, which included:

• The % thresholds for surplus balances increased from 8% to 12% in Primary and Special Schools
• The % thresholds for surplus balances increased from 5% to 9% in Secondary Schools
• An interest bearing Capital Reserve was established to allow schools to transfer balances set aside for specific capital projects
• The clawback of surplus balances was applied to balances held in excess of 2 consecutive years, and at a rate of 50%
• Any balances clawed back from schools was used to offset High Needs Block overspend, subject to compliance with regulations
• The clawback agreement would be reviewed annually
• Exceptional circumstances would be considered with regard to clawback

It was stated that, taking into account these changes, all surplus balances had been reviewed and those schools that exceeded their approved surplus balance had been contacted and advised that these surplus balances may be at risk of clawback at the end of 2020-21.  Forum members were informed that there were 15 schools above the approved surplus balance at the end of June 2019. 

However, it was explained that the number of schools with surplus balances above the permitted level had reduced this year following the threshold being raised.  There were currently 8 Primary Schools and 1 Special School with balances above the permitted level.  Each of these schools had submitted plans to the Local Authority to advise on the reasons for holding this surplus.  It was explained that this would continue to be monitored and that the final position would be brought back to Forum to in order to consider any exceptional circumstances and whether the clawback mechanism should be invoked.

Members of the Forum were made aware that, at the end of the academic year 2018-19, there were 5 schools that closed the year with a deficit.  At the end of 2019-20, 2 of these secondary schools were still operating under a licensed deficit.  Similarly, 2 primary schools closed the year in deficit and the Local Authority were working with those 2 primary schools alongside another primary school who were looking to set a licensed deficit this year.  One of these deficits had now been licensed with the other 2 schools having meetings scheduled over the coming weeks.

RESOLVED

That the position of Schools Balances 2019-20 be noted.