Schools Forum 14 December 2015 2016/17 Budget

1. Schools Forum14 December 20152016/17 Budget Andrew Minall Finance Business Partner, Children’s Services

2. Schools Budget 2015/16

3. 2015/16 Budget – key issues • Growth fund - £1.3m overspend • Primary age pupil number growth • High Needs Top-Up Funding - £3.3m overspend consisting of: • Mainstream - £1.1m overspend • Special School - £0.8m overspend • Post-16 - £0.6m overspend • Discretionary payments - £0.8m overspend • INMSS - £1.1m overspend • High needs budget pressure reduced by £1m one-off support from reserves

4. Spending Review – Nov 2015 • Schools budget protected in real-terms between 2015-16 and 2019-20 • free childcare from 15 hours to 30 hours a week for 3 and 4 year olds • per pupil protection for the dedicated schools grant and the pupil premium • Implies real-terms cut of approx. 7.5% in spending per pupil (estimate provided by the Institute of Fiscal Studies) • Education Services Grant (ESG) reduced by around £600m (currently £815m) • 16 – 19 base rate protected in cash terms

5. Spending Review – Nov 2015 • Commitment to introduce a national funding formula for schools in England in 2017 • Consultation early 2016 (all blocks) • DfE view that they have topped up those least fairly funded in 2015 • Fairer school funding gaining political momentum supported by role of the f40 • Transitional phase • Apprenticeship levy • Larger employers required to pay • Mandatory employment targets for public bodies

6. 2016/17 Schools Budget – key features • £4m budget pressure ongoing and likely to increase • Savings required – First step to meet budget pressures • Reduction in primary and secondary lump sum • Similar savings planned from special schools • Review of funding policies • Efficiency savings from CERA • Budgets finalised in January following DSG settlement late December

7. 2016/17 Schools Budget – key features • Minimal change in the funding formula • ‘Cash flat’ settlement anticipated • Absorption of inflation impact • Impact of NI and pension changes • Minimum Funding Guarantee – remains at minus 1.5% per pupil • Impact of updated IDACI scores • Pupil Premium rates protected • UIFSM continuing

8. 2016/17 Schools Budget – key features • Early Years (update to Forum Jan 16) • Extension of free entitlement to 30 hours • Potential early adopter • Review of nursery flat rate • High Needs – significant challenges • Increasing demand and impact of EHCPs • Growing cost pressures • DfE Funding not increasing with growth • £2m one-off funding ends in 2016/17 • Working groups established

9. De-delegation * Budget subject to updated census data

10. De-delegation • Support to continue with all services. • Approach to funding BST will be reviewed for 17/18 • Licences and subscriptions budget reduced • Contingency budget increased in response to increased risk

11. Central budgets

12. Central budgets (Misc)

13. Central budgets • Only two areas can be increased – Growth Fund and Fees to Independent Schools for pupils without SEN • Others restricted to commitments/previous year figures • Reduction to miscellaneous services based on reduced requirements • Further reductions in miscellaneous services to be considered by Schools Forum • CERA commitment reduces to £2.856m • Combined budgets - Early Help (£1.61m), NEET Tracking (£333k)

14. CERA (Paper 6) • Only historic commitments allowed • £3.4m reduction planned • £2m efficiencies achieved through • Improved planning enabled through strength of SLA • efficiencies in new term maintenance contracts • design of a new minor works framework • Delegation of £1.4m into schools budget of which £1m to be pooled into SLA

15. CERA (Paper 6) • Schools Forum to consider options for use of £2m released into overall schools budget

16. CERA Options for ongoing £2m efficiency saving • Retain saving to meet ongoing budget pressures • Combined with lump sum reduction, would meet the majority of the current pressure • Saves limited reserves for future pressures • Defer lump sum reduction • Would still leave ongoing budget pressure (£2m) • Avoids schools taking first step to meeting pressures

17. Formula modelling • Extensive modelling undertaken in response to: • Request from School Forum to look at “de-capping” • Budget pressures requiring savings to be made • Updates to national data sets • Challenges included • Conflict with original principles • No redistribution of funding between phases • Minimise redistribution of funding between factors • Set lump sum to minimise impact on smaller schools • Impact of MFG • Formula changes result in increased MFG • Strong correlation between MFG and certain factors

18. Lump sum proposals • Option 1 • Reduce by £4,000 across both phases (to £171,000 per school) • Budget reduction of 86% (£1.7m) in primary and 14% (£0.3m) in secondary • Option 2 • Reduce proportionately to budget split • Primary schools lump sum reduce by £2,600 (£172,400) • Secondary schools lump sum reduce by £13,000 (£162,000) • Budget reduction of 55% (£1.1m) in primary and 45% (£0.9m) in secondary

19. IDACI Funding 2016/17 • National data set updated in 2015 (5 year cycle) • Overall level of deprivation in Hampshire reduced as percentage of national total • Impact at school level not known until data is released • Likely to impact on level of deprivation funding schools receive • Reductions may result in MFG protection • Option to either maintain overall deprivation funding or accept reduction (after taking into account MFG)

20. Disapplication requests • All exceptional requests or requests to dis-apply funding regs must be approved by Schools Forum. • Types of requests required are: • Variation to pupil numbers • Sparsity funding • MFG exclusion • Applications submitted by 31 December • Requirement not known until pro-forma analysed following issue by DfE mid December

21. Central budgets – Growing schools (5a) • Budget pressure as a result of continued growth • Supported from one-off funds by £3m p.a. until end of 2017/18 • Growing schools • Hampshire policy relatively generous • Changes required for current and newly eligible schools to meet budget pressures • Options for implementation timescales • Impact on schools financial planning • Further changes may be required in 2017/18 following funding reform and in preparation for secondary growth

22. Central budgets – Growing schools (5a) • Options • A: Do nothing • B: Remove top up and transfer risk to school if pupil numbers fall below 20 in future years • A and B will leave a significant overspend requiring further savings to be identified • C: Change from school level AWPU to £2,300 fixed rate for 30 pupils per additional class • D: Funded through budget share on the basis of 20 pupils per additional class • C and D broadly meet budget pressure

23. Central budgets – Growing schools (5a) • Transition arrangements for options • Implement changes for all in April or September (options 1 or 2) • Implement changes for newly eligible schools in April or September with existing schools to follow (option 3) • Implement changes for all in April 2017 and meet overspend from reserves (option 4) • Funding for additional classes relates to the period Sept to April • Changes in April would only impact top-up payments

24. Central budgets – Growing schools (5a) • Key recommendations • Policy: Option D – funding through the budget share • In line with DfE guidance • Promotes transparency • Assists financial planning / funding received upfront • Timescales: Option 1 – implement from April 2016 • Meets budget pressures • Consistency for all schools that are growing (current and newly eligible) • A step towards potential further changes that may arise following DfE consultations in Spring 2016 • Potential confusion if implemented mid year • Impact to majority of schools from September (new class)

25. Other Policy changes (5b) • Annual update to policy pack • Refinements to improve understanding • Minor process changes • Inclusion of Education Centre policy to clarify approach to charging • Initial equipping included in other funding streams therefore removed • Minimal change as policies will need to be reviewed in 2017/18 due to wider reform • Forum asked to approve revisions / inclusion

26. Summary of 2016/17 proposals • Proposals for £4m savings to meet initial budget pressures • Reduction to lump sum • Similar reduction in funding for special schools • Policy changes • CERA saving proposals • Possible early years savings (update Jan 16) • Any residual overspend met from reserves • Other savings opportunities will be explored and discussed • Recognition that reserves are now limited and further savings will be required for 2017/18 • Full consultation on formula changes could include further savings proposals

27. Schools Forum decisions Growing Schools (paper 5a) • Agrees a preferred option to changes to the growing schools policy • Agrees a preferred approach to implementation • Agrees to a further review in 2016/17 Policy Pack (paper 5b) • Approves the revisions to the policy pack • Approves inclusion of a policy for Education Centre Funding CERA (paper 6) • Agrees the proposed reductions in CERA (w.e.f. from April 2016) • Agrees that a further £3m is delegated with £1m calculated into the SLA and £2m available to the overall schools budget

28. Schools Forum decisions Schools Budget 2015/16 and 2016/17 (paper 7) • notes the forecast 2015/16 budget position, based on figures as at October 2015. • Agrees approach to meet £4m ongoing budget pressure through reduction in lump sum and use of CERA savings • Agrees to preferred option for reducing the lump sum in primary and secondary schools (3.4 to 3.10) • Considers reductions to the centrally held miscellaneous budgets, as set out in paragraph 3.29. • agrees the 2016/17 budget proposals (section 3), subject to confirmation of final figures at the meeting in January 2015. • Agrees to the application for exceptional requests (3.63)