Schools Consistent Financial Reporting

GUIDANCE NOTES TO BUDGETING 2015/2016

Produced by the Schools Finance & Training Team–February2015.


Guidance Notes to Budgeting 2015/2016

Contents:

Page
A) /

Preparing your Budget 2015/16

/ 3- 4
B) /

Completion of Budget Plan

/ 3 - 6
C) / Income Budget Planning / 7 – 13
D) / Staff Expenditure Budget Planning / 14 – 21
E) / Non Staff Expenditure Budget Planning / 22 - 32
F) / Items Fully Funded by the LA / 32
G) / Capital / 33 - 35
H) / Balances / 36 - 38

Appendices:

1.Budget Plan. Including completion instructions and links to the forecast statement with instructions.
2.Inflation Factors 2015/2016
3.Headteachers & Deputy Headteachers Pay Information 2015/2016
4.Teachers & Supply Teachers Pay Information 2015/2016 –

4a.Teachers Pay

4b.Advanced Skilled Teachers Pay

4c.Leadership Pay Information

5.Unqualified Teachers Pay Information 2015/2016
6.Clerical and Ancillary, Nursery Nurses, Mid-day Supervisors & Site Agents, Caretakers, Cleaners and Swimming Pool Cleaners Pay Information
7.Part-time Proportion Tables –

7a.Teaching staff

7b.Non-teaching staff

  1. Annual Leave Entitlements – Non Teaching Staff
  2. Earnings Limits & NIC rates –

9a.Not in the pension scheme

9b.In the pension scheme

  1. Detailed Code List

A) Preparing your budget 2015/16

Specific Issues to Consider for 2015/16: Consideration should be given to the following issues prior to commencement of budget planning:-

  1. The level of balances anticipated at 31 March 2015 and the level of balances the school needs at 31 March 2016.
  1. Actual expenditure compared with budget in 2014/15 and the movement of balances upwards or downwards between April 2014 and March 2015.
  2. Changes in pupil numbers and level of staff resources required.
  1. Your medium term forecasts. Reduction in basic levels of funding and the likely further reductions in 2016/17 and beyond. A basic assumption that you could make is that unit funding rates in the Primary and Secondary Sectors will reduce by 1.5% and school will be protected by a further 1.5% minimum funding guarantee.
  1. Income likely to be received in respect of top up funding for high needs pupils both from Milton Keynes and other Local Authorities.
  1. School Teacher Pay Review Board and Government recommendations in connection with the payment of increments in the teacher main scale and the Government’s Public Sector pay policy that pay increases should average no more than 1% across the sector in 2015.Progression of teaching staff up the pay scales should now be linked to performance reviews.
  1. Increase in the employers’ contribution to the Teachers’ Pension Scheme of 2.3% from 14.1% to 16.4% from September 2015.
  1. Milton Keynes Council non-teaching staff pay settlement to March 2016.
  1. Changes to the payment of increments for staff on Milton Keynes Council conditions- increments payable in October 2015, subject to performance appraisal.
  1. Implications of Job Evaluation in respect of any protected salaries.
  1. Cost changes in respect of utilities. (See Appendix 2)
  1. Inflation on other goods and services.
  1. Bank charges – Schools will need to budget for bank charges for 2015/16 under code E22. A schedule of charges will be made available to schools.
  1. Interest on balances – the floor interest rate on credit balances for schools that bank in the Council’s pooling arrangements has been reduced to 3%.
  1. Universal Infant Free School Meals - please estimate income using the calculator on the LMS website.UIFSM Calculator. Assume the same rate per meal per day for the 2015/16 academic year as used for 2014/15 academic year, and update data references by one year. Assume the small school supplement ceases.

A) Preparing your budget

  1. Other grants –Primary PE and Sports Grant continues for the 2015/16 academic year.
  1. The full year impact of the teachers’ pension increase for 2016/17 and the increase in NI contributions from April 2016 for staff that are contracted out of the additional state pension which will remove the 3.4% rebate on employers contributions, which may impact on the level of balances a school considers it needs to hold.
  1. Schools whose budget shares are protected by the Minimum Funding Guarantee should plan their budget in anticipation of reductions of funding in subsequent years particularly where their pupil numbers are static or decreasing.
  1. When making decisions to utilise balances, ideally schools should be using those balances towards one off expenditure. If balances are used to fund additional staff schools should be satisfied that that those costs can be sustained in the future when balances have been diminished through increased income or those appointments should be on a fixed term basis so that commitments are not made that cannot be sustained from future income levels.

B) Completion of the Budget Plan.

1.Timescale: In line with the Scheme for Financing Schools (2.3 Submission of Budget Plans) (Scheme for Financing Schools)approved school budgets(proforma attached Appendix 1)must be submitted by 1st May to the Schools Finance Team () along with the budget profile for the year. The budget will need to take into account estimated year end balances which will be formally confirmed during May or June (see below).

The submission should be made electronically by the Head Teacher by email, copying in the Chair of Governors, confirming that the budget has been approved by the Governing Body. A signed hard copy must be retained by the school on file but no hard copy is required by Milton Keynes Council.

2.Authorisation: The original budget plan must be approved by the Governing Body. Each budget plan should be signed as authorised by two officers in line with the financial authorities in place at the school. Usually this will be fulfilled by a governor (normally the chair of governors, or the chair of the finance committee) and an officer (the headteacher). This signed copy must be retained by the school.

3. Revision of Budget Plan:The school should regularly review its budget plan and if changes are made, submit a revised plan in the format of the original to the LA. In any event the school is required to formally review its budget plan at the half year and report such to the LA (Scheme for Financing Schools – 2.3 Submission of Budget Plans)Scheme for Financing Schools.If changes have been agreed, then the revised plan in the same format as the original should be submitted to the LA.

If, after review, no change is necessary then an e-mail to the LA stating that the review has been carried out and that no changes have been made will be sufficient. Even if

B) Completion of the Budget Plan.

no change has been made to the overall budget a revision of the profiles is required. In either event a submission to the LA should be made by no later thanMonday2ndNovember 2015.

After the November revision, budget plans should only be revised and submitted to the LA if there are significant material changes.

Schools must ensure that the Governing Body meetings are scheduled at the appropriate time to meet the deadlines set.

4.Purpose of Budgeting: The annual school budget plan sets out how the total budget delegated to the school is to be spent. It has a number of functions as follows:

  • to set out the annual income and expenditure budget and financial implications of the school’s policies. As such it should be prepared in conjunction with the schools development plan. OFSTED guidance on school development plans states the following. ‘The school should have a medium term educational and budget plan (covering at least three years) indicating the intended use of resources in achieving its educational goals. Even though the funding available to each school will change

annually, the school development plan should outline which areas are the priority for spending and why’.

  • it provides a framework within which those who are responsible at the school for making payments and securing income should operate;
  • it provides governing bodies with authority to incur expenditure, subject to rules relating to virement (see Financial Regulation 4);
  • it provides the basis on which to monitor financial performance; and
  • it provides a framework for governing bodies to ensure that expenditure reflects the principles of Best Value.

5.Consistent Financial Reporting Format: The Consistent Financial Reporting framework’s main aim is to allow for the benchmarking of expenditure at a national level. By comparing spending and consumption patterns of services, all schools will have the tools to promote self-management and value for money.

The Consistent Financial Reporting framework summarises financial information at school level into headings:

  • Income
  • Expenditure
  • Capital Income
  • Capital Expenditure
  • Balances

6.Detailed Account Code List:The detailed code list at Appendix 10 will assist you in identifying which income and expenditure codes are attached to each budget heading. Please contact the Schools Finance Team if you require further assistance.

Please note that one new account code has been created in I03 4190122 which is to be used for high needs top up payments received from Local Authorities other than Milton Keynes.

7Profiling:

All schools must submit a profiled budget. This means you have to allocate your budget across the 12 monthly periods when income will be received and payments will be made.

  • Schools should look closely at the previous years spending to identify appropriate profiles, e.g. Rates over 10 months.
  • All revenue & capital income paid by the LA should be profiled in line with the cash advance schedule.
  • Profiles must add up correctly and balance.
  • No entries can be made using pence (except within the brought forward balances)
  • No formulae can be used within the budget plan spreadsheet.
  • Brought forward balances must be entered into the profile in April and the carry forward entered in March.
  • Any un-profiled or un-realistically profiledbudget plans will not be accepted and will be returned to the school for further consideration.

8. Format of Budget Plan: The budget plan is linked to the forecast template. The

spreadsheet that all schools must use is available on the schools website under the heading “Local management of schools scheme for financing schools and procurement guidance”or attached as Appendix 1.(This template must be used and downloaded from the website at the beginning of each financial year, using a previous years template will not reflect any changes made to the CFR structure or improvements to the template). Instructions on how to use the budget plan and forecast template are included within the spreadsheet.

The budget plan template spreadsheet also includes a budget plan workings and notes page. It would be helpful for schools to add notes about unusual items that only they know about to save on the number of queries that come back from the Schools Finance Team i.e. if the profile of your teachers goes down in September, it maybe because some members of staff are leaving and not being replaced. Or, if one of your income headings is higher than you have been notified by the LA, this could be because you know you are going to receive additional funding.

9 Completion of the Budget Template: In completing your budget plan, please ensure in particular that:

  • Only the first worksheet,“Budget Plan Template” needs to be completed.
  • The total of all budget headings equates to the level of funds for 2015/2016, including changes in balances:- Cells E105 and E106 must equal zero
  • De-delegated income and expenditure is excluded from the budget plan.
  • The figure for Rates is taken from the formula allocation sheet.
  • Each budget heading clearly indicates the amount or, if not applicable for this year, is clearly indicated by “0”.
  • The budget plan is profiled across the twelve months of the year i.e. the amount of income you expect to receive each month is shown against each relevant month. The expenditure is split across the months as you use it. When deciding the profile, please refer to the previous years’ data. Each row in Column S should equal zero.
  • No entries are made using pence (except within the brought forward balances) or formulae included in the budget plan template.

10. Forecast Statements

Following a recent review it has been decided that in future schools will routinely only need to submit their Quarter 3 Forecast statements to the Schools Finance Team for monitoring purposes. If school monitoring during the year identifies that it is at risk of going into deficit however it must notify the LA immediately. More frequent in year formal reporting may be requested for those schools considered by the LA to be financially of higher risk

11. Cluster/Consortia: If schools still have outstanding cluster/consortia funds from previous years, they should use the guidance issued separately under the LMS website to code and control their Cluster/Consortia funding.

12 Checking of Budget Submissions by the Schools Finance Training Team:The School Finance and Training team will review budget plan return in particular:

  • Budgeted Income in I01 to I04 is at the level of budget allocation

(Schools may budget for different levels of SEN and High Needs top up and Pupil Premium, particularly if received from other LAs but should provide an explanation and reconciliation on the Budget Plan Workings and Notes worksheet)

  • Budgets are profiled over the 12 month period
  • Balances brought forward equal those carried forward at 31st March 2015
  • The school has not set a deficit budget.
  • The budget and movement in balances reconciles to zero ( Cells E105 and E106)

C) Income Budget Planning

N.B. Income budgets should be shown as a negative (minus) figure.

I01 - Funds delegated by the LA

This is the major share of funding provided by the local authority (LA) to the school. All delegated funding other than sixth form funding should be included here.

Includes

  • The school's gross budget share, before any de-delegation for central services
  • Any additional funding from the LA that is not formally included in the school's delegated budget but is managed by the school
  • Funding for nursery pupils
  • Notional high needs funding included in budget share
  • Pre-16 place funding for special units, resourced provision, alternative provision and special schools

Excludes

  • Sixth form funding (See I02)
  • High needs funding outside the budget share i.e. top-up funding (See I03)
  • Minority ethnic funding which is not already included in the budget share (See I04)
  • Pupil Premium funding (See I05)
  • Capital funding (See Capital Income)
  • Any balances carried forward from previous years

This budget should be based on the figures notified to you by the LA.

I02 - Funding for sixth form students

Includes

  • Funding from public sources for sixth form students
  • Education Funding Agency (EFA) funding
  • Additional Learning Support funding for sixth forms from the EFA within their main EFA budget allocations
  • 16-19 Bursary Fund
  • Post 16 place funding (Elements 1 & 2)

Excludes

  • Voluntary sources of funding for sixth form students (See I13)
  • Any balances carried forward from previous years
  • High needs top-up funding (Element 3) provided by the LA direct to the school (See I03)

This budget should be based on the figures notified to you by the EFA and confirmed by the LA.

C) Income Budget Planning

I03 - Special educational needs (SEN) and high needs funding

Funding outside the school budget share

Includes

  • High needs top-up funding (from any commissioner – home LA, other LA or schools)
  • Level 3 top-up funding from other LAs
  • Any other high needs funding paid outside the budget share
  • Any top-up (Element 3) from the LA for sixth form students

Excludes

  • Voluntary sources of funding for high needs pupils (See I13)
  • Place funding delegated by the LA to a special school or resourced unit (See I01)
  • Notional SEN funding from your school’s budget share
  • Any balances carried forward from previous years

The figures notified to you with your budget share include only those pupils currently in your school with those pupils known to be leaving the school funded to 31 August.Schools should make their best estimate of top up funding for pupils joining the school or remaining in the sixth form, and for any funding provided by other Local Authorities.

I04 Funding for minority ethnic pupils (Not being used)

Any devolved funding which is allocated outside the school’s budget share

Includes

  • Any publicly-funded source intended to promote access and opportunity for minority ethnic pupils, in support of English as an additional language or as part of a wider focus on raising attainment

Excludes

  • Voluntary sources of funds for minority ethnic and traveller pupils (See I13)
  • Any balances carried forward from previous years

We do not expect that schools will receive any income in this area and thus have not included this in the budget plan.

I05 –Pupil Premium

The income budget should be based on the figures notified to you by the LA (4190150). You may also receive funding from other LA’s for children that they are responsible for.

Includes

  • Pupil Premium funding
  • Pupil Premium funding received directly from LAs other than the school’s maintaining authority
  • Summer school funding

C) Income Budget Planning

Excludes

  • Any other source of funding for deprived pupils
  • Any balances carried forward from previous years

I06 - Other government grants

All other Government grants received.

Includes

  • Income from the National College for Teaching and Leadership
  • The total of all development and other non-capital grants from government not included in the lines above
  • SALIX loans (i.e. specific funding from SALIX for energy efficiency projects)
  • Year 7 Catch Up Premium
  • School Direct salaried programme
  • VCSE National Prospectus Grant

Excludes

  • Grants or monies from government captured in I01 to I05 above
  • Payments by government agencies for goods or services provided by the school
  • Big Lottery Fund (See I07)
  • Grants not funded through government (See I07)
  • Any balances carried forward from previous years

I07 - Other grants and payments received