Agenda item

To receive and consider a report giving an indication of the financial horizon for the DSG in 2015 to 2020, including the future financial pressures.

The Forum received and considered a report set out on Agenda pages 17 to 24, which gave an indication of the financial horizon for the Dedicated Schools Grant (DSG) in the next 5 years – 2015 to 2020.

Matt Marsden presented the report and said the it including an assessment of the future financial pressures, based on assumptions of the situation now.  It was prepared to help set the scene for the 2016/17 budget setting, and the intention was for it to be updated following feedback, and for it to become part of the annual budget setting process.

In 2015/16 the AWPUs had been reduced in recognition of the growth pressures, from the increase in primary pupil numbers.  The predictions in the report are based on a suggested further reduction in 2016/17 AWPU of 1.5% to minimise the risk of creating an unmanageable deficit during that year, while Reception numbers continue to increase.  Growth in primary numbers will start to slow in 2019.  Anticipated pupil numbers will be closely monitored, taking account of the impact from the new housing developments.

Currently outlay is higher for secondary pupils, and as the bulge in numbers moves from primary to secondary, the weighting starts to have a detrimental impact on the DSG, the level of which is assumed to remain flat.

Details of the assumptions are set out in the report, including an indication of the financial impact on different types of schools.

During the discussion the following points were made:

·           The Minimum Funding Guarantee (MFG) will carry on, and there is no plan to reduce the AWPU in 2017/18

·           The MFG allocation of £2.5m could be removed and used to level off the AWPU, using the reserve pot if needed.

·           All schools are expecting to have to fund a 4% rise in employment costs in 2016/17, and you are proposing to reduce the AWPU by 1.5% - that will have a massive impact.

·           The reduction in AWPU is to try to avoid a deficit in 2016/17.

·           It appears that a risk assessment of the financial impact on existing schools was not done before the decision to create and fund new school growth from the DSG was made, there was no clarity in the decision making process.

·           The Council set an ambitious programme for the provision of new schools but did not provide additional money to fund it, schools are having to top slice all budgets to fund this growth.  Is there another way of doing it?

·           There is, and will continue to be, a huge detrimental impact on existing schools which will put some schools in deficit and will lead to a reduction in standards.

·           This impact needs to be fully assessed; schools are frightened that they will not be able to cope.

·           Schools are not allowed to set a deficit budget, and are usually refused permission to do so.  There is a possibility that it will be reported to the DfE which can affect future Ofsted outcomes.  But it seems the Local Authority can be in deficit.

·           The Local Authority is here to protect all schools, and the Schools Finance Team will give support. 

·           Historically schools have predicted that they would be in deficit, but it did not happen by the year end.

·           That shows good financial management by schools during the year.

·           Although the specific line in the budget for support for schools in financial difficulties was removed in moving towards the national funding formula, there is some provision in the budget.  That specific funding was never used.

·           As school’s staffing/employment costs account for around 80% of their expenditure, the impact of the 4% increase in these costs will see several secondary schools becoming eligible for the MFG.

·           Why is there no provision for Early Years attached to the new schools, when there is a national proposal to increase the free provision for 3 and 4 year olds?

·           The last time, primary capacity was increased in the north of the Borough, but there are now surplus places in that area, and less pupils has an impact on schools’ budgets.  Schools are supporting surplus spaces.

·           The Local Authority has a legal duty to provide a sufficiency of school places for children in their area.

·           Currently there is an excess of secondary places in the Borough , the shortage predicted in 2013/14 did not come.

·           The next meeting of the Council is considering a motion to call for lobbying of MPs, the Secretary of State and the Department for Education about the low level of per pupil funding that Wokingham receives. (the motion was subsequently agreed at full Council on 23 July 2015)

·           Perhaps schools could help in informing parents of the funding situation that schools are in, as currently they do not realise what is happening.

·           Could the overall budget be put into deficit by funding the growth, with the knowledge that it would become a surplus in a few years when the increased per-pupil funding comes through as the new schools fill up?  It could be a specific item in the budget.

·           Officers will continue to at whether a contribution in funding can be obtained from Health, and CAMHS where appropriate.

All agreed that it is morally wrong that existing schools should be penalised by having their budgets reduced to fund new schools.  There is a real danger that standards in schools will be detrimentally affected. The Forum needs to have a clearer picture of the cost of the new schools and the funding coming in.

Brian Grady, Head of Strategic Commissioning, explained that the capital finding for the new secondary school will come from the Local Authority’s capital funding allocation and from S106 and CIL contributions relating to the new housing developments in the area.

Details of predicted High Needs Block (HNB) and Special Education Needs (SEN) provision were given in the report.  The intention is to reduce the number of pupils having out of Borough placements to meet their needs.  A review of provision is currently being undertaken.  Comment was made that with the pressures of the new secondary curriculum, some SEN pupils may not be able to cope in main stream schools, so the pressure on Foundry College may increase.

An analysis of internal recharges is being undertaken and will be reported to the September meeting.

An early notice of indicative budgets will be given at autumn term meetings and work will be done with schools likely to be in deficit.

RESOLVED:  That the Draft Dedicated Schools Grant 5 Year Financial Plan be noted and the above comments be used to make revisions, which will be reported to a future meeting of the Forum.