Issue - meetings

To consider a report of the Corporate Director for Corporate and Support Services.

The report provides Schools Forum members with the outcome of the “Excessive surplus balance control mechanism” process applied to the final School Balances reported at 31 March 2015.

The Forum is recommended to note the report and agree a method of redeploying clawed-back funds.

Officer Contact: Peter Hughes on 0161 474 3947 or email peter.hughes@stockport.gov.uk

A representative of the Corporate Director for Corporate and Support Services submitted a report (copies of which had been circulated) providing members with the outcome of the “excessive surplus balance control mechanism” process applied to the final School Balances reported at 31 March 2015.

It was reported that the total level of surplus school balances was £12.658m and that the claw-back system was applied to any school reporting a year-end surplus exceeding the locally agreed 12% threshold level. A total of 22 schools reported a year-end surplus balance exceeding the locally agreed threshold level which provided for a claw-back level totalling a maximum of £0.995m.

All schools were formally written to in May 2015 advising that their individual school balance exceeded the permitted threshold level as prescribed in the Scheme for Financing Schools document and would be subject to the appropriate claw-back by the Local Authority. All schools were given the opportunity to present to the Corporate Director for Services to People, any matters to be considered as “exceptional circumstances” and thus request that the claw-back not be applied. One of the following actions was taken for each school:-

·         School excessive surplus balance was committed to a significant capital project led by the school, school would retain full balance and were expected to deploy as per return submission;

·         School excessive balance was committed to a significant capital project commissioned by the Local Authority – the excessive balance would be subject to claw-back and would be set aside in a specific school reserve;

·         Claw-back applied as prescribed – all monies would be redistributed as per Local Authority decision in consultation with Schools Forum;

·         Further dialogue between the school and Local Authority was required.

The following comments were made/issues raised:-

·         Concerns were raised surrounding the transparency of the process and the lack of dialogue between the schools subject to claw-back and the Local Authority;

·         The calculation could be set against the final income of a school as opposed to the initial allocation to account for in-year funding streams;

·         The claw-back mechanism was agreed by Schools Forum not the Local Authority and the process applied was in accordance with the updated Scheme for Financing Schools document as approved by Schools Forum in March 2014;

·         All schools were required to fill out the same template (as per recommendation form Internal Audit following review of previous year process) to set out how they intended to spend the full surplus balance reported at the close of the annual accounts;

·         Over half of the forms were returned incorrectly (i.e did not account for the full balance) and the Local Authority were giving those schools chance to resubmit their response before a decision was made on whether the claw-back mechanism should be applied;

·         No secondary schools had reported an excessive surplus budget due to low population figures and a number had reported a deficit budget;

·         SMT had considered and discussed feedback from schools following the issuing of original letters to schools informing them of decisions following application of the claw-back process and it had been decided that all excessive surplus balances reported would now be clawed-back in full. However any school not accounting for the full surplus balance on the original template would be invited to re-submit a template accounting for the full balance. All schools would then be able to draw down 100% of their balance subject to claw-back provided evidence is provided of expenditure incurred in relation to items listed on the revised template and in accordance with the timeline stated and agreed with the Local Authority.

RESOLVED – (1) That the report be noted.

(2) That the Local Authority provide updated letters to schools before end of summer terms.

(3) That a report be submitted to the Forum detailing schools reporting a budget deficit.