Schools Forum / Item 6
10 July 2013
Long-Term Sickness and Maternity Service Level Agreement (SLA)
Report of the Director of Children’s Services and the Director of Corporate Resources – Corporate Services
Contact: Andrew Minall, 01962 846408;
1Summary
1.1Schools Forum acts as the partnership group for the Long Term Sickness and Maternity Service Level Agreement (SLA).
1.2The SLA effectively acts as a type of mutual insurance fund covering long term sickness, and maternity, paternity, adoption and maternity support leave of teachers. Accordingly, the SLA now clearly states that it is available to maintained schools - that is Community, Foundation, Aided, Controlled and Trust schools. This was further extended during the period of the current agreement to include academies within Hampshire.
1.3This paper identifies any significant changes to the SLA, provides feedback on the current SLA and gives the experience of operating the SLA over the last six years. It is for Schools Forum to agree the SLA.
2Customer feedback
2.1A customer survey was undertaken in May 2013. The purpose of the survey was to gather positive and negative feedback about the current SLA and to gauge customers’ opinions regarding any potential changes to the SLA from 2014 onwards.
2.2178 responses were gratefully received from schools.
2.3Frequent positive comments centred around:
- The SLA providing valuable cover and re-assurance against any unforeseen circumstances;
- The processes are easy and clear;
- Staff are supportive and provide helpful guidance;
- Claims are processed quickly and efficiently.
2.4Some of the negative comments consisted of the following:
- 20 days before sickness claims can be processed is too long;
- The reimbursement rate doesn’t match actual supply costs;
- X, Y and Z factorsare too complicated;
- Only teachers are covered under the scheme;
- The premium is too high.
2.5The survey then asked schools if they would like the cover to be extended to support staff and teachers on an optional basis. Although 36% of respondents would like to keep the scheme for teachers only, 64% would like to have the option of additional cover for support staff or non-teaching staff. Most of the comments which followed this question were about the decision being dependant on the price of the premium. It is recognised that an additional premium would be required in order for us to widen the cover to support staff as well as teachers.
2.6A final point was made to schools regarding the sustainability of the fund and the need, at some stage, to increase premiums or reduce reimbursement rates. 44% would prefer to increase the premium charge and 56% would rather see the reimbursement rate decreased.
2.7Comments receivedwere split between a desire to avoid increases in costs and a willingness to increase premiums to ensure the reimbursement rate was set at a realistic level. Some comments included the possibility to make smallchanges to both.
3Market research
3.1A desk based research exercise was undertaken to review comparable services provided by other public and private sector providers. The service provided compared favourably with other public sector mutual funds. Breadth of services provided varied considerably with the current SLA in the middle range. Further enhancements to the service options are explored as part of the proposed changes to the agreement.
3.2Private sector provision was less comparable due to the greater risk-based commercial approach adopted, which differs considerably to the mutual fund approach provided by this agreement. This differing approach was also reflected in some of the customer feedback received, with requests for some of the benefits of a risk based approach e.g. no claims discounts. This approach is fundamentally different than the model offered by a mutual fund and would of course, require much greater administration and specialist staff involvement and may not be possible to be delivered internally. It would also mean that premiums would need to be reviewed each year and reflect individual schools’ profiles and claim history. Given the strong positive feedback around the current mutual delivery model and the issues associated with a fundamental change, this option has not been considered.
4Operation of the SLA over recent years
4.1Over the six years of the agreement the intention has beento match the total value of the school ‘premiums’ with the costs of reimbursement paid out in respect of long-term sickness, adoption and maternity leave and paternity and maternity support leave.
4.2The table below shows the overall position of the fund as atthe end of financial year 2012/13.
Income / Expenditure / Under/ (Over) spend for year / Overall Surplus/ (Deficit)£000 / £000 / £000 / £000
2008/09 / 4,631 / (4,128) / 503 / 503
2009/10 / 4,657 / (3,988) / 669 / 1,172
2010/11 / 4,338 / (4,366) / (28) / 1,144
2011/12 / 4,236 / (4,591) / (355) / 789
2012/13 / 4,194 / (4,714) / (520) / 269
4.3The table shows that although the overall position is a surplus, over the last three years the overall expenditure has increased and the overall income has reduced. Whilst initial indications suggest the deficit may not be as significant as 2012/13, an in year deficit is still forecast in 2013/14 with the overall fund anticipated to break even. It is therefore likely a relatively small surplus or deficit will occur.
4.4Based on the analysis undertaken, the recent in year deficits appear to be driven by a number of factors, including:
- Fewer number of schools buying back in upon conversion to academy status;
- A better understanding of the SLA and methods of claiming reimbursement costs;
- No premium increase over the entire five year SLA period. This however was planned as part of the active management of the fund to ensure the fund balance was low at the end of the agreed period.
- The table and chart below show an analysis of the expenditure by typefor the SLA.
Paternity Reimbursements
£000 / Maternity Reimbursements
£000 / Sickness Reimbursements
£000 / Total
£000
2008/09 / 86 / 2,094 / 1,948 / 4,128
2009/10 / 132 / 2,193 / 1,663 / 3,988
2010/11 / 117 / 2,332 / 1,917 / 4,366
2011/12 / 84 / 2,383 / 2,124 / 4,591
2012/13 / 81 / 2,475 / 2,158 / 4,714
4.6This demonstrates the rise in maternity and sickness costs over the last five years, illustrated in the increased annual expenditure. Thefinancial implications of this trend will be addressed by phase when modelling the SLA cost and reimbursement rates from 2014 onwards.
5Proposed changes to the Service Level Agreement
5.1All SLAs will refreshed for the next period to reflect a new and consistent style, which will be further enhanced with many adopting a standardised set of terms and conditions. It is hoped that this will be welcomed by schools and will allow them to focus on the service specific elements and reduce the amount of time required for review.
5.2The long term sickness SLA is included in this process and, therefore, the style will be different. There will also be some slight variation to standard terms and conditions to reflect the need for long term subscription, to ensure stability of the fund.
5.3A number of changes are proposed to the SLA to reflect feedback received and other external changes. These changes are primarily around the nature of the absences covered within the SLA and the staff groups eligible to join the scheme.
5.4It is proposed to supplement the existing cover with an option to include non-teaching staff. This will be subject to a supplementary charge and a different reimbursement rate. This amendment addresses the main change requested through customer feedback over the duration of the current SLA and has been operated successfully in some other local authorities.
5.5It is also proposed to extend the cover of the scheme to includeother forms of absence. With the approach of de-delegation it has been necessary to develop an SLA approach to other forms of absence e.g. public duties. This was required to ensure cover can be provided to special schools and education centres. An agreement has been developed to cover the period up to 31 March 2014. However, it is recognised that this has led to some duplication. While no change to criteria is planned, it is proposed to include these additional absence types within the main sickness scheme to reduce administration and further add to the flexibility and strength a large mutual fund provides.
5.6The proposal to include other staff groups and absence types not classified as sickness requires an amendment to the agreement name. It is, therefore, proposed to amend the name to the “Hampshire School Staff Absence Scheme” (HSSAS).
5.7Other changes are technical and are intended to provide greater clarity and simplify, where possible, the detail of the scheme. These changes are being proposed in response to feedback around the complexity of application. Whilst some complexity is unfortunately necessary, the changes should hopefully simplify understanding of valid claiming relating to length of absence and absence type.
5.8As outlined in section 4, claims in recent years have resulted in expenditure exceeding income received. Whilst the fund is forecast to break even over the duration of the agreement, changes are required to the charging model going forward, to address the trend of in year deficits and ensure future viability of the fund.
5.9As part of the recent customer survey, schools were asked whether they would prefer an increase in premiums or a reduction in reimbursement to address this predicted future shortfall. No overwhelming response was received therefore it is proposed to make a small adjustment to both factors. The values will be reviewed following analysis of claims received at the end of the summer term.
5.10As outlined in the agreement, any surplus remaining in the fund at the end of the period will be distributed to contributors and any deficit will require an additional contribution. With the fund forecast to breakeven, it is likely a relatively small overspend or underspend will occur. Therefore, whilst further funding may be distributed, it should be noted that there is a risk an additional contribution may be required.
6Recommendations
6.1Schools Forum is recommended to approve the proposed amendments to theLong-Term Sickness and Maternity Service Level Agreement, which will be re-named the Hampshire School Staff Absence Scheme Service Level Agreement (SLA).
- 1 -