To receive a report outlining the details of the Dedicated Schools Grant outturn 2015/16 and EFA return.

Graham Ebers, Director of Corporate Services addressed the Forum and went through the report which was set out in page 17 of the supplementary agenda.

Graham stated that there was a period of time where it was perceived that there was a discrepancy between the 2015/16 school budget allocation and the funding received from the Education Funding Agency (EFA) of circa £1 million.  This had created anxiety and concern, which appeared to be validated after a notification from EFA that there were discrepancies in the annual return that had been submitted.

Graham explained that given the imminent issuing of schools budgets for 2017/18, the issue was speedily raised with the Chairman of Schools Forum, so that options could be explored in addressing the perceived over-allocation.  A forensic analysis and reconciliation of the schools finances was undertaken, going back to 2014/15, to attain a comprehensive understanding of the financial position.

Graham informed Schools Forum that the perceived over-allocation did not exist: £89.32m grant was allocated and paid by the EFA in 2015/16, and £89.32m was allocated to the Budget.  The source of the suspected over-allocation was a note in the Statement of Accounts (year ended 31 March 2016) that incorrectly indicated a total of £90.37m had been allocated to schools budget.  Although the declared Dedicated Schools Grant (DSG) Schools Forum balance of £2.177m was correct, the note explaining the balance was erroneous.  It is the balance figure (level of Reserves), not the note, that becomes a substantive part of the Council’s financial statements.

Graham stated that the EFA has subsequently been notified of the £89.32m and there was now agreement on this figure.  It was proposed that future financial statements to Schools Forum include a reconciliation to the latest EFA funding notification for that year.

Graham stated that part of the explanation for the erroneous note was that there had been a lot of staff changes within the finance team.  He believed that the lack of continuity had also contributed to this situation arising.  There had been three different senior school finance officers in a short period of time, each individual had been very committed, but this had caused problems.  The Local Authority was aware that high staff turnover was an issue and that it needed to be addressed.

The Chairman thanked Graham for his attendance at the meeting and invited Members to discuss the item.  Some of the points raised during the discussion of the item are listed below:

·           Janet Perry stated that over the last two years Schools Forum had been presented with regular large differences in figures.  She asked Graham how satisfied he was that he had the right team and resources were in place to address this issue.  Graham responded that he was not satisfied at the moment, this was a transitional period.  He confirmed that he was aware that papers for Schools Forum were often late and stated that this was not the level of financial support delivered elsewhere in the Council.  He believed that more money would have to be applied to secure the level of resource that was required for this particular function;

·           Julia Mead asked what controls were going to be put in place to make sure this situation did not happen again.  Graham stated that lessons had been learnt, for example in the future it may be considered better not to act in such an expedite manner and take more time to undertake the necessary analysis.  On this occasion there had not been an actual problem, but only a perceived problem.  However, on this occasion communication was made before a full analysis was undertaken.  Graham advised that giving Schools Forum a full reconciliation of the latest EFA funding would provide a good control mechanism;

·           Graham stated that a new financial system was being implemented and this new automated system would improve reporting and free up resources.  It was hoped that Schools Forum work would be become more proactive rather than reactive;

·           Graham believed that creating more senior posts within the finance team would help retain people and improve continuity;

·           Ginny Rhodes emphasised that Schools Forum had suffered terribly with the lack of staff continuity.  She believed that poor decisions had been made as a result of Schools Forum not having enough information available.  She stated that the constant ‘interim behaviour’ was not good and referred to recent press cover about interim staff employed by the Council;

·           Graham pointed out that Donna Munday had been in post for a long time, and it was only since her departure that interim staff had been employed.  He stated that the Local Authority had no choice in controlling when people decided to leave.  Ginny acknowledged Graham’s point but stated that staff changes had happened in other strategic areas related to school support as well, and this had affected efficiency;

·           Carol Simpson stated that she found Schools Forum figure reports very difficult to interpret and reconcile.  Janet Perry informed that she kept a spreadsheet containing the figures provided at Schools Forum and stated that they jumped considerably meeting by meeting;

·           John Bayes confirmed that it had been very difficult for Schools Forum to operate receiving reports very late;

·           Graham assured the Forum that there was a firm commitment to address the issues raised, but it would take time to make the necessary changes;

·           Darren Gray asked what percentage of the overall Council Budget was in control of Schools Forum and what percentage of Graham’s job involved schools finance.  Graham responded that normally he would spend around 1% of his time working with schools finance, but it had taken 50% of his time this week.  Graham explained that his responsibilities included all the support services for the Council.  Graham stated that the Council had a council tax payers budget of about £250 million, a capital budget of about £140 million, a housing revenue budget of about £12 million and schools was in the region of £90 million (within this total some was retained and some was re-located directly to schools) per annum.  The amount of time he spent on each of these depended on its complexity.  Schools finance was not entirely within Council’s control as it was subject to the funding formula;

·           Darren Gray expressed discontentment that schools finance did not receive the same level of support as other areas in the Council, given that it amounted to a considerable amount of the overall budget.  Graham accepted the point made and agreed that it was important to make sure it was right.

Graham emphasised that it was the premature communication of a perceived problem, and not a real problem, that was the reason for his report and presence at this meeting. 

RESOLVED That the reconciliation of 2015/16 settlement discrepancy and impact on 2018 report be noted.