CLACKMANNANSHIRE COUNCIL
Report to Performance and Audit Committee of 16th November 2006
Subject: General Fund Revenue Budget Monitoring 2006/07
Prepared by: Martin Dunsmore, Accounting and Budgeting Manager
1.0 SUMMARY
1.1. This paper details General Fund revenue spend for the current financial year 2006/07 based on the actual spend at the end of September and subsequent detailed discussions with Service Managers during October on likely forecasts for the year.
1.2. Based on the Summary appended to the report a net deficit of £894k is recorded compared with the budgeted deficit position of £69k.
1.3. Net spend by Services is showing an overspend of £1.04m, of which £903k relates to Services to People. An explanation is provided below, but it should be stressed that management are actively working to bring this figure down, and past experience indicates that this will be achieved.
1.4. As in previous years, Service overspends are being compensated to a degree by savings generated elsewhere such as Interest received on Revenue Balances.
1.5. At this stage it remains reasonable to assume that improvements will be made on the position outlined above, and that by the year end the Council may be looking at a net deficit in the year of c£250k, which will be closer to the budgeted position.
2.0 RECOMMENDATIONS
2.1. The Committee is asked to note the current forecast position.
3.0 BACKGROUND
3.1. This is the second report to members on the financial position this financial year. Forecasts will continue to be reviewed and reported to Committee on a regular basis for the remainder of the year.
3.2. The attached summary of expenditure shows the revised estimate for the year, together with the forecast outturn spend and variance from revised estimate for the year.
4.0 EXPENDITURE
4.1The attached summary of expenditure indicates that the Council spend for the year will amount to £91.480m, which is £527k more than the revised estimate for the year. This represents an overspend of 0.6% on spending plans. The significant areas of variance are explained in more detail below.
4.2Corporate Development Services (adverse variance £96k)
As in previous years, Council Offices are again recording an overspend compared to budget – currently £77k. Utilities costs, Insurance and property maintenance are the main areas.
4.3Services to People (adverse variance £903k)
4.3.1Education and Community Services (adverse variance £507)
There are a few areas which account for the majority of the overspend:
Supervisory assistants are £222k over budget. It was expected that the costs of Supervisory Assistants would have been reduced after September in order to meet the saving of £145k taken at the 06/07 budget. However, this saving has not yet been achieved. It is possible that the overspend may be slightly reduced if there are funds available from underspends on National Priorities Action Fund (NPAF).
SQA fees are forecast to be overspent by £68k. This area has historically been overspent, although last year a transfer of £50k was made from the DMR into this area.
Another area of overspend is on Tulligarth which is predicted to be £66k over budget. Income is below budget and there are additional staffing costs due to long-term sickness absence.
4.3.2 Residential Schools (adverse variance £203k)
The anticipated overspend is associated with extra costs of children in Residential Schools. This year has been particularly hard with two children being placed in secure accommodation while on remand and another one in a secure unit at £579 per day.
The Director of Services to People has made representations to the Scottish Executive on the high cost of these placements on a Council such as ourselves.
4.3.3 Social Services (adverse variance £194k)
The main area of overspend is the purchasing budget which is likely to be over budget by £250k. The time taken for budget cuts to filter through the care system has attributed £160k to this position. The introduction of three year budgeting should help smooth these peaks and troughs in the purchasing budget. A further £100k is due to the opening of the new home at March Glen. There will be savings in the future once beds are sold to neighbouring authorities.
4.4Interest on Revenue Balances (favourable variance £525k)
The Councils positive cash position continues to generate increasing interest on balances held. The sum credited to General Fund now exceeds £1.6m.
5.0 INCOME
Expenditure is funded from two sources – Aggregate External Finance from the Scottish Executive together with Council Tax income. There is currently a shortfall in anticipated income of £298k, which is attributable to Council Tax.
5.1 Council Tax (adverse variance £298k)
The budgeted Council Tax income excludes the 1% increase of c£194k earmarked for the Schools PPP for monitoring purposes.
In preparing the budget, the council tax base was significantly increased in line with considerable house building in the county. It would appear that the initial estimate was over stated in that it did not take into account that all new properties take some time to generate 100% of the charge due to an initial exemption period. Also, around 35% of properties end up with a discount and hence the full charge does not apply in those instances.
6.0RESERVE POSITION
Based on the current probable outturn spend for the year, adjusted for expected improvements, the anticipated reserve position at the year end will be as follows:
- General Fund Reserve at 1st April (excl. DSM element)£2.623m
- Projected deficit for current year per summary(£0.894m)Anticipated improvement by year-end 0.644m (£0.250m)
Total£2.373m
- Less est. cost this year of schools professional advisers(£0.500m)
Estimated Revenue Reserve 31st March 2007£1.873m
The opening reserve position now reflects the provision for Equal Pay included in the 2005/06 accounts of £1.435m.
7.0 CONCLUSIONS
7.1 This report has explained the current expenditure position within the General Fund. A number of potential overspend factors have been identified at this stage, some of which are expected to be reduced, or compensatory savings found before the year end.
7.2However, now that the Council has made provision for equal pay claims from reserves, it should be noted that the estimated revenue reserve at the end of this year stands at £1.9m which is significantly below the Councils own recommended minimum working balance of c£3m.
8.0 IMPLICATIONS FOR THE COUNCIL
5.1 Financial implications: Decrease in General Fund revenue reserve
5.2 Staff implications:
5.3 Strategic aims:
Create strong, active, safe and caring communities / Achieve local economic prosperity and stability /
Make the most of Clackmannanshire's unique built and natural environment /
Develop a culture of personal achievement where everyone is valued /
Improve the health of the people of Clackmannanshire /
Represent and promote the interests of all of the people of Clackmannanshire /
Ensure that the people of Clackmannanshire receive the highest quality services for the public pound / X
Head of Finance
Director of Corporate Development
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