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SOLIHULL METROPOLITAN BOROUGH COUNCIL
Report to:
Information report to Cabinet Member for Resources and
Delivering Value
Meeting date:
21st May 2015
Subject/Report Title:
LICENSED DEFICITS FOR ST PETERS CATHOLIC SCHOOL
AND SPECIALIST SCIENCE COLLEGE AND DAYLESFORD
INFANT SCHOOL
Report from:
Director of Resources
Report Author/Lead
Contact Officer:
Linda Sheridan
[email protected] 0121 704 6617
All Wards
Wards affected:
Bickenhill
Blythe
Castle Bromwich
Chelmsley Wood
Dorridge/Hockley Heath
Elmdon
Kingshurst/Fordbridge
Knowle
Lyndon
Meriden
Olton
Shirley East
Shirley South
Shirley West
Silhill
Smith's Wood
St Alphege
Public/Private
report:
Public
Exempt by virtue of
Paragraph:
N/A
1.
Purpose of Report
1.1
To inform the Cabinet Member of Licensed Deficits which have been approved for
St Peters Catholic school and Specialist Science College and Daylesford Infant
school.
2.
Decision(s) Recommended
2.1
For information
3.
Background
3.1
The financial controls within which delegation of funding to schools works are set out
in the Solihull Scheme for the Financing of Schools made by Solihull MBC in
accordance with s.48 of the School Standards and Framework Act 1998
Section 4.9 of the Solihull Scheme details the regulations for Licensed Deficits, an
extract is shown in Appendix A. In the event that recovery cannot be achieved within
the Licensed Deficit framework, the Director for Children’s Services and Skills will
work through the protocol of the Statutory Guidance on Schools Causing Concern,
which incorporates formal escalation and intervention procedures.
Whilst the Council would normally expect to consider a request for a Licensed Deficit
in advance of a school experiencing financial difficulties, there are two schools which
forecast substantial losses for 2014/15 only towards the end of the financial year.
These schools are St Peters Catholic School and Specialist Science College, and
Daylesford Infant school.
It is five years since we last had a request for a Licensed Deficit, and this is therefore
the first request since the regulations changed in April 2014.
3.2
ST PETERS CATHOLIC SCHOOL AND SPECIALIST SCIENCE COLLEGE
St Peter’s is an Ofsted rated outstanding secondary school with a sixth form which
serves Solihull’s catholic community. A new Head teacher was appointed for the
start of the 2014/15 academic year. At that stage the Senior Leadership team (SLT)
and Governing body were aware that the school faced financial difficulties for the
financial year commencing April 2015 and in future years. However, in February
2015 it became clear that the school would end the financial year 2014-15 in a
significant deficit position.
3.3
An application for a
Licensed Deficit has been received from St Peter’s school.
This includes a detailed recovery plan, which has formed the basis of this report. The
confirmed deficit for St Peters at 2014/15 financial year end is £208,433.
3.4
The school’s Published Admission Number (PAN) had been reduced in 2011 in order
to facilitate an expansion to the sixth form while still meeting demand for catholic
places at the time. However, the 6th form subsequently experienced a period of
surplus capacity. Changes in the national formula for 6th form funding also resulted
in a significant reduction in 6th form funding. Consequently, with 6th form funding
falling, surplus capacity in 6th form, and school oversubscribed because demand for
places had risen, the PAN was increased to 205 in 2013. As school admissions
increase to the revised PAN, funding will increase over the next 5 year period, which
will contribute to financial recovery.
3.5
The school have also undertaken an exhaustive review of their staffing structure in
order to achieve a return to financial sustainability. In addition to addressing the
current deficit position, this review has also sought to address the significant known
financial cost pressures which schools are facing as pay, superannuation and
National Insurance rise in a climate of ‘cash flat’ budgets for schools. Much of the
change required for the new structure has already been achieved through
turnover, with the remainder to be implemented through a planned staff reduction
exercise before the end of this academic year.
3.6
In undertaking this staffing review, the priority has been to work towards financial
sustainability in a way which ensures that the current high educational standards are
maintained. All non staffing budget areas have also been subjected to a rigorous
challenge, and reduced where appropriate, to ensure all areas of the school budget
are contributing to financial recovery.
3.7
The forward financial plan (Appendix B) indicates that , if achieved, these savings
will accomplish a reduction in the required deficit to £ 76,000 by 2015/16 financial
year end, with a return to a surplus budget position by the end of 2016/17. Future
financial viability for 2018/19 and beyond may necessitate further reductions,
depending on both further staffing and formula funding changes in the interim.
3.8
The financial position at St Peters is vulnerable to:
a) Delayed achievement of staffing reductions
b) Additional costs of any redundancies being charged to the school.
c) Pupil numbers failing to increase as anticipated
d) Delay in restoring catering sustainability
e) Sixth form provision failing to maintain financial viability
3.9
However, the leadership team are committed to doing whatever becomes necessary
to ensure financial stability is maintained, although any future such measures have
not at this stage been incorporated into the forward plans.
3.10
In recognition of the existing deficit position, a Licenced Deficit for St Peters school
has been approved subject to the following conditions:
a) The School continues close and co-operative working with the School Finance
team to ensure on-going monitoring and support. Management information
will be submitted on a monthly basis using the Council’s standard templates
for financial management reporting for schools
b) The school will have a formal monthly financial review meeting with the
Schools Finance team Manager to track progress against the financial
recovery plan
c) If financial stability cannot be achieved through the proposals outlined in the
recovery plan, the Governing body will achieve the proposed level of financial
recovery through other means within a similar time period
d) The school will undertake an analysis of it’s sixth form provision to ensure
financial viability
e) Further reductions will be made as necessary to ensure longer term viability
f) The school will provide a summary update report in November, to track
progress against the recovery plan. This should include:

A forecast out-turn position for 2015/16

A revised forward plan
3.11
DAYLESFORD INFANT SCHOOL
3.12
Daylesford is an Ofsted rated outstanding Infant school with a current Pupil
Admission number (PAN) of 75 pupils. Pupils are split into three classes per year
group with one mixed years 1 and 2 group in the afternoons. The school have
historically had low reserve balances because they have maintained these small
class sizes.
3.13
The school’s funding for 2014/15 was slightly reduced in comparison to the previous
year because of a combination of lower pupil numbers and funding formula changes.
The school budget planned for a small surplus balance at 2014/15 financial year
end, after a positive contribution from the wraparound club based at the school.
3.14
However, a number of late changes during the financial year have resulted in a
confirmed deficit of £29,887 at financial year end. An application for a Licensed
Deficit has now been received from Daylesford school ( Appendix C). Much of this
deficit (approximately £20,000) relates to the use of teaching posts to temporarily
replace teaching support assistants on maternity leave, in order to maintain
standards. A fall in nursery pupil numbers through the year is the other key
contributor to the deficit.
3.15
The authority has requested that the school increase its PAN to 90 with effect from
September 2015. This will provide a significant increase in funding as the school fills
up to its new PAN, with only a small increase in staff costs required, because most of
the structure for three classes per year group is already in place. The pupil funding
increase will amount to approximately £40,000 each year for the next three years
( if full) resulting in an overall increase in funding of £120,000 by 2018/19 which will
restore financial viability.
3.16
Alongside these changes, the school’s wraparound club made a lower than planned
financial contribution in 2014/15 as a result of capital works which had to be
undertaken as a result of increasing numbers utilising this provision. It is anticipated
that in 2015/16 and future years, the club will contribute a significantly higher sum to
the school budget.
3.17
The Forward Financial (Appendix D) plan indicates that this will achieve a reduction
in the deficit to £4,000 by 2015/16 financial year end, with a return to a budget
surplus position by 2016/17 financial year end.
3.18
The financial position at Daylesford is vulnerable to:
a) Pupil numbers failing to increase as anticipated
However, the school place planning team have confidence the demand is sufficient
to fill the increased places.
3.19
In recognition of the existing deficit position, a Licenced Deficit for Daylesford school
has been approved subject to the following conditions:
a) The School continues close and co-operative working with the School Finance
team to ensure on-going monitoring and support. Management information
will be submitted on a monthly basis using the Council’s standard templates
for financial management reporting for schools
b) The school will have a formal termly financial review meeting with the
Schools Finance team Manager to track progress against the financial
recovery plan
c) If financial stability cannot be achieved through the proposals outlined in the
recovery plan, the Governing body will achieve the proposed level of financial
recovery through other means within a similar time period
d) The school will provide a summary report in November, to track progress
against the recovery plan. This should include:

A forecast out-turn position for 2015/16

A revised forward plan
4.
Evaluation of Alternative Option(s)
4.1
Solihull Council does not hold back funds for schools in deficit, and the Scheme for
the Financing of schools explicitly states that ‘the Council cannot write off the deficit
balance of any school under any circumstances’.
4.2
Consequently the mechanism of a Licensed Deficit is the only option available when
a school is in this position.
5.
Reasons for Recommending Preferred Option
5.1
N/A
6.
Scrutiny
6.1
N/A
7.
Implications
7.1
Delivery of the Council’s Priorities
N/A
7.2
Policy/Strategy Implications
N/A
7.3
Meeting the duty to involve
N/A
7.4
Financial Implication
There are no financial implications for other Council budgets
7.5
Legal implications
N/A
7.6
Risk Implications
There are no ‘red’ risks which need to be reported
7.7
Statutory Equality Duty
There are no direct equality analysis implications
7.8
Carbon Management/Environmental
N/A
7.9
Partner Organisations
N/A
7.10
Safeguarding/Corporate Parenting Implications
N/A
7.11
Customer Impact
N/A
7.12
Other implications
N/A
8.
List of Appendices Referred to
8.1
Appendix A - Extract from Scheme for the Financing of Schools
8.2
Appendix B - Forward Financial plan for St Peter’s school
8.3
Appendix C - Application for a Licensed Deficit for Daylesford school
8.4
Appendix D - Forward Financial plan for Daylesford school
9.
Background Papers Used to Compile this Report
9.1
N/A
10.
List of Other Relevant Documents
10.1
N/A