Hampshire County Council s13

Contact: Thomas Whiffen, 01962 846287,

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1  Summary

1.1  This report sets out the current position on central expenditure items, (undelegated items) which are subject to limit within the Schools Budget, for each of the two financial years 2009/10 and 2010/11.

1.2  It seeks the necessary approvals to increase central expenditure above the Government limit as a result of the budget and formula developments agreed by Forum for 2009-2011.

2  The nature of central expenditure items and the limit

2.1  The Schools Budget contains a number of undelegated items, in addition to the total of schools’ delegated budgets and the payments to Private, Voluntary and Independent (PVI) providers of early years education. The pie chart attached as Appendix 1 highlights the main categories of expenditure involved and is based on the 2008/09 approved limit which forms the starting point for future calculations.

2.2  The Department for Children, Schools, and Families (DCSF) have set a limit on the sum of these items and all increases above this level have to be subject to Forum’s approval. At its meeting on 15 February 2008 the Forum set a limit of £76.514m for 2008/09.

2.3  The rules governing the central expenditure limit (CEL) have some technical features which complicate matters.

¨  The addition to budgets for 2009/10 of any funds brought forward from underspendings in 2007/08 or 2008/09 have to be taken account of in the limit calculations. Thus temporary increases to the central spending limit may be required.

¨  Unless sums delegated to schools for 2010/11 are actually contained in individual school’s provisional budget shares they do not count as part of the Individual Schools Budget (ISB), the sum of delegated amounts. This means that all the additions to school budgets that are not shown within the simplified provisional budget shares for 2010/11 count against the CEL for that year.

¨  The treatment of funds in 2009/10 as subject to termly allocation mean they have to come within the CEL.. This means that the move to termly allocation for children in care funding increases the amount counting within the CEL. Similarly the move to termly per pupil funding for nursery schools and nursery classes as the first stage towards the single early years formula has the effect of increasing the CEL requirement.

¨  In the move from 2009/10 provisional budget share to the definitive 2009/10 budget share, the 2009/10 part of the developments will come out of the CEL and hence the approved amount will also reduce and similarly a year later for 2010/11 items.

2.4  Any amounts, or variations in the amounts, used to support prudential borrowing have to be specifically approved by Forum. However the rephasing of the ASD provision has just delayed the start of the prudential borrowing by a year rather than changed the amount. The £0.60m increase in costs is on staffing to secure the correct minimum operational level for the provision.

2.5  The CEL is calculated by comparing the annual change in the total amount of ISB and payments to PVI providers of early years education with the overall change in the Schools Budget. Providing the total of ISB and PVI payments increases by the same percentage as the Schools Budget the limit is not breached. Effectively the CEL for any year is the amount of central expenditure which represents a standard percentage increase on the central expenditure for the previous year.

2.6  The Early Years Special Educational Need (SEN) payments and those for children in care in early years settings are treated in the same way as other undelegated expenditure and are part of the limit. Other technical adjustments are also required.

3  Budget priorities affecting the limit.

3.1  The budget priorities for 2009 to 2011, including the use of brought forward sums, which were agreed at the December 2008 meeting included a number of central expenditure items and these are given below:

3.2  The proposal that the costs of independent safeguarding authority (ISA) payments be met by the employer rather than the employee was supported in principle by the Corporate Management Team on 21 January 2009. However it is recognised that Education Personnel Services have some more work to do on the schools’ aspects. Until that is complete it is not possible to agree a sensible allocation method for 2009/10 and so the decision as to how to allocate it will have to be deferred until the May meeting of Forum. Accordingly the £0.15m agreed as a delegated priority will be shown as a CEL item initially. This takes the total of these items to £2.763m for 2009/10.

4  The impact of late changes

4.1  Item 4 on this agenda reports on additional dedicated schools grant (DSG) for 2009/10 and 2010/11 and proposals for the use of the money. The impact of implementing these proposals is to increase the Schools Budget by £729,000 in both years and increase CEL items by £100,000 in 2009/10 and provisionally by £711,000 until specific proposals are adopted in autumn/winter 2009.

5  The impact of carry forward amounts

5.1  The agreed CEL for 2008/09 of £76.514m included £1.811m of carry forward from 2007/08 and this has to be adjusted out of the limit in moving forward to 2009/10. As the budget priorities above include items funded from carry forward amounts these do not have to be added separately. However any new carry forwards identified in the Budget update report (Item 5 on this agenda) need to be shown.

6  Impact of ISB allocations for 2009-11

6.1  As indicated above, any items which are not in the initial budget share (whether definitive or provisional) for a year are deemed to be central items for the purposes of the CEL definition.

6.2  For 2010/11 the entire value of schools growth proposals above 2.5% inflation will have to appear in the CEL calculation. The amount is £6,478,000 in 2010/11. The detailed breakdown of these amounts is given in Appendix 1 of the Budget update report (Item 5 on this agenda) As new schools and buildings will not have opened the revenue consequences of the capital programme £270,000 in 2010/11, also have to feature in the calculation. Thus the total for 2010/11 is £6,748,000.

6.3  As indicated above, the CEL also includes amounts allocated termly and Table 2 shows those items which have newly come into this category for 2009/10.

Table 2

Heading

Amount £000

School Funding for Children in care

1,235

Nursery school per pupil funding

552

Nursery Class per pupil funding

1,270

Total

3,057

7  The Central Expenditure Limit for 2009 to 2011 with adjustments included

7.1  The benchmark increase for the CEL is the year on year change in the Schools Budget including Learning and Skills Council (LSC) funding and brought forward amounts as well as the Dedicated Schools Grant for the year and the table gives the make up by funding source.

Table 3

Schools Budget Funding Source

2008/09 £000

2009/10 £000

2010/11 £000

Dedicated Schools Grant (DSG)

671,500

692,104

718,543

Brought forward DSG

1,811

2,968

0

LSC funding

11,769

12,063

12,316

County Council Contribution

128

128

128

Schools Budget Total on this definition

685,208

707,263

730,987

Year on Year % change

3.2%

3.4%

7.2  The sequence of limits for each year is given in the following tables .

Table 4

Narrative 2009/10

£000

The 2008/09 limit agreed by Forum

76,514

Central items – inflation to 2009/10

1,770

Budget priorities in section 3

2,763

Impact of use of extra DSG in section 4

100

Reversing the impact of the 2007/08 brought forward amounts in section 5

-1,811

Allocations formerly ISB now termly in section 6

3,057

Total now needing approval

82,393

Limit per DCSF 3.2% above 2008/09

78,962

Amount above DCSF limit

3,431

Nominal % change in CEL

7.7%

7.3  Table 5

Narrative 2010/11

£’000

The 2009/10 limit agreed by Forum above

82,393

Central items – inflation to 2010/11

1,785

Budget priorities in section 3

17

Increased budget flexibility section 4

611

Allocations for ISB in section 6

6,748

Total now needing approval

91,554

Limit per DCSF 3.4% above 2009/10

85,194

Amount above DCSF limit

6,360

Nominal % change in CEL

7.7%

7.4  The changes in ISB and PVI provision for 2009/10 and 2010/11 nominally become 2.7% and 2.3% respectively. However, when the 2010/11 figures include the £6.748m amount for schools’ delegated budgets and if they also included the flexibility then the %s become CEL 2.2% and delegated and PVIs 3.5%.

8  Recommendations

8.1  Schools Forum is recommended to agree to a Central Expenditure Limit of £82,393,000 for 2009/10 which represents a 7.7 % increase on the budgeted 2008/09 limit of £76,514,000. The 2009/10 limit incorporates the use of £2,968,000 brought forward from 2007/08 and 2008/09.

8.2  Schools Forum is recommended to agree to a Central Expenditure Limit of £91,544,000 for 2010/11 which represents a 7.7% increase on the 2009/10 limit proposed of £82,393,000. It is estimated that when the definitive budget shares are prepared this could reduce to £84,195,000 a 2.2% increase .

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