Section 5 Guidance for Schools in Financial Difficulty incorporating the Licensed Deficit Application

Transcription

1 Section 5 Guidance for Schools in Financial Difficulty incorporating the Licensed Deficit Application Index 5.1 Introduction 5.2 Licensed Deficit Application at Three Year Budget Plan setting 5.3 Schools identify a deficit year end position during the financial year 5.4 Schools end the financial year in deficit but set a balanced Three Year Budget Plan 5.5 Local Authority intervention (LA) 5.6 Support and contact details 5.7 Licensed Deficit Application (LDA) 5.1 Introduction Kent County Council (KCC) Scheme for Financing Schools states: schools can only plan for a deficit budget in exceptional circumstances and only with a Licensed Deficit approved by the Local Authority. This will only be approved in circumstances where the school cannot balance its budget in any year of their Three Year Budget Plan without a significant impact on the provision of education. The limits detailed below apply to each individual year of the Three Year Budget Plan where applicable: A Licensed Deficit Application up to and including 20,000 or 2% of a school s predicted total annual income budget (CFR codes I01 to I18) must be approved by Schools Financial Services A Licensed Deficit Application in excess of 20,000 or 2% of a school s predicted total annual income budget (CFR codes I01 to I18) must be approved by the Director of Education, Planning and Access The LA is not likely to approve a deficit in excess of 20% of the individual school s annual income budget. If a school refuses to set a balanced budget or comply with the KCC Scheme for Financing Schools, the LA may intervene by identifying the action a school could take and ultimately by suspending delegation (see section 5.5). On a regular basis, School Support provides the Schools Funding Forum with up to date information of schools in deficit. April 2018 Page 1

2 5.2 Licensed Deficit Application at Three Year Budget Plan setting Financial assessment and challenge by Governors When first aware of a potential deficit the school should: Check all the figures and the assumptions that have been made Identify the cause of the forecast deficit e.g. a falling roll Undertake a benchmarking exercise Discuss and draw up a range of Management Action This action should be incorporated with a view to being able to amend the figures so that the Three Year Budget Plan does not result in a deficit in any of the three years. If this is not possible the school will have to submit a Licensed Deficit Application together with their Governor approved Three Year Budget Plan. The school may also need to submit a combination of the following (if requested): Completed Management Action Plan Kelsi Budget Template, as per budget submission Supporting CFR comments FGB budget ratification minutes Latest October and following January census information School Data Sheet Detailed information of the salary budget calculations The latest approved staffing structure Copy of the latest payroll report Schools that submit a Governor Approved Three Year Budget Plan showing a deficit position in any of the three years without a supporting Licensed Deficit Application will be given a deadline to submit one to the LA as a matter of urgency. Schools will be required to apply to the LA for a Licensed Deficit on an annual basis if they continue to submit a Three Year Budget Plan with a deficit in any of the three years. The maximum length allowed should not exceed three years see section 4.9 of the Scheme for Financing Schools. April 2018 Page 2

3 Management Action Plan The purpose of the Management Action Plan is to identify the actions that can be taken to bring a school budget back to a balanced position and must be agreed by the LA. Schools submitting a Licensed Deficit Application may be asked to send in a Management Action Plan that demonstrates how they intend to achieve a balanced budget over an agreed period. This may be through a combination of income generation and/or a reduction in expenditure. The reduction in expenditure may include reducing staffing and making redundancies (see Section 5a, Application for Approval of Redundancy Costs). A Management Action Plan for schools predicting a deficit in any year is good practice and may need to be produced on request by the LA. Approval Following the submission of a Licensed Deficit Application a number of validation checks will be completed by School Support. They will check that the Management Action Plan (if applicable) includes sufficient detail and that the required level of savings can be achieved within specified timescales. Areas that are unclear or do not appear to be achievable will be queried by School Support and further clarification sought from the school. Validated plans will then be passed to the Head of Service for Schools Financial Services or the Director of Education Planning and Access, for approval. Written confirmation will be sent to the school along with a copy of the approved Licensed Deficit Application by the end of term six. School monitor Management Action Plan and submit monthly monitoring to School Support Schools are required to check their financial position against their agreed Management Action Plan and submit monthly monitoring, with full details of any significant variances, to the Local Authority School Support Team. School Support analyse monthly monitoring against Management Action Plan (if applicable) and send feedback to school School Support will analyse the monthly financial position of the school to ensure it is in line with the agreed Management Action Plan (if applicable) and in some cases further information may be requested. April 2018 Page 3

4 Licensed Deficit Application at Three Year Budget Plan Setting April / May School set Three Year Budget Plan showing deficit Financial assessment and challenge by Governors School submit: Three Year Budget Plan with Licensed Deficit Application, Management Action Plan (if applicable) and supporting documents (if requested) Documentation assessed by School Support for approval Written confirmation of approval, along with a request for timetabled monthly monitoring, will be sent to schools by the end of the term six School monitor Management Action Plan and submit monthly monitoring to School Support School Support analyse monthly monitoring against Management Action Plan (if applicable) and send feedback to school Failure to Comply with the KCC Scheme for Financing Schools will result in Local Authority Intervention (see section 5.5) Level 1 Financial review meeting with school Level 2 School receive Notice of Concern Level 3 Suspension of Delegation April 2018 Page 4

5 5.3 School identify a deficit year end position during the financial year A school setting a balanced Three Year Budget Plan but subsequently predicting a year end deficit during the financial year will be required to: Contact the LA, then subsequently submit: Completed Management Action Plan Monthly monitoring returns in the format as specified by Schools Financial Services NOTE: Additional information may be required by School Support. This will depend on when the potential deficit has been identified. School identify year end deficit during the financial year Financial Assessment and Challenge by Governors School advise LA of potential year end deficit position and submit Management Action Plan School advise LA of potential year end deficit position LA identifies potential year end deficit position School Support request school submit a Management Action Plan School submit Management Action Plan to School Support School Support review Management Action Plan and request monthly monitoring School monitor Management Action Plan and submit monthly monitoring to School Support School Support analyse monthly monitoring against Management Action Plan and send feedback to school Failure to Comply with the KCC Scheme for Financing Schools will result in Local Authority Intervention (see section 5.5) Level 1 Financial review meeting with school Level 2 School receive Notice of Concern Level 3 Suspension of Delegation April 2018 Page 5

6 5.4 School end financial year in deficit but set balanced Three Year Budget Plan Schools that end a financial year in a deficit position but subsequently set a balanced Three Year Budget Plan, will be required to submit: Monthly monitoring returns in the format as specified by Schools Financial Services School Support will assess the monitoring returns and give feedback to schools. School end the financial year in deficit School submit a Balanced Three Year Budget Plan School Support request that school submit monthly monitoring School submit monthly monitoring School Support analyse monthly monitoring and send feedback to school Failure to Comply with the KCC Scheme for Financing Schools will result in Local Authority Intervention (see section 5.5) Level 1 Financial review meeting with school Level 2 School receive Notice of Concern Level 3 Suspension of Delegation April 2018 Page 6

7 5.5 Local Authority intervention Local Authority intervention will apply as a last resort where: The school is persistently in breach of the Scheme for Financing Schools The school will not set a balanced budget/or engage in the Licensed Deficit Application process The deficit is worsening and no action is being taken by the school There is evidence of financial mismanagement by the school Proposed action / plan is not adequate The three levels of intervention are: Level 1 Financial Review Meeting Schools that do not return a balanced Three Year Budget Plan or a Licensed Deficit Application will be required to attend a Financial Review Meeting with the LA. A similar requirement will apply to schools with a worsening deficit and for those schools who persistently breach the terms of the Scheme for Financing Schools. The review meeting will include the Director of Education Planning and Access and other Senior LA Officers. The meeting will: Review the financial position of the school Seek an explanation from the school about the action being taken to safeguard the school s financial position Assess what support and challenge the school may require Agree an action plan Level 2 Notice of Concern A school that continues to refuse to take the necessary action will be sent a Notice of Concern formally listing the action necessary to bring the budget back in to balance. See Section 4, Governors Guidance notes on the Management of School Finances. Level 3 Suspension of Delegation Where a school still refuses to take the action identified the ultimate sanction will be to suspend delegation following a meeting with the Director of Education Planning and Access. Under suspension the LA would take control of the budget and take the necessary action before returning control to the Governing Body. During the suspension school staff would be responsible to the LA for the day to day financial administration in the school including personnel decisions where there are monetary implications. April 2018 Page 7

8 5.6 Support and contact details Where schools require advice on producing either a balanced Three Year Budget Plan or a Management Action Plan, the LA will provide an experienced School Support Officer to visit the Headteacher, Finance staff and Governors. This meeting may need to be in conjunction with the Area Education Officer and/or the School Improvement Advisor. This will be based on: Significance of the deficit both in year and cumulative Length of time the school has been in deficit Level of financial competency Benchmarking data Contextual data Bank balance/statements NOTES: The above requirements may vary according to the time of year or the precise nature of the school s difficulty and Schools Financial Services may request other information where necessary. Schools Financial Services Contact details: School Support School Support Lead Officer School Support Lead Officer School Support Lead Officer School Support Lead Officer Lisa Halford Maxine Gibson Emma Standen Liz Knight or schoolsupport@kent.gov.uk Service Delivery If the school requires assistance in completing any documentation during this process a service can be purchased from Schools Financial Services. Please schoolsfinancialservices@kent.gov.uk or phone April 2018 Page 8

9 5.7 Licensed Deficit Application DfE no: The Governing Body of... School wish to apply for a Licensed Deficit for financial year/s We enclose: A completed signed Licensed Deficit Application A Governor approved Three Year Budget Plan We will supply: Any supporting documentation as detailed in section 5.2 on request We understand that we will: Consult with School Support prior to advertising any new posts Not commit the school to any further expenditure without School Financial Services approval Implement the savings within the timescale agreed Notify School Support of any deviation from the Approved Three Year Budget Plan e.g.: long term sickness or disputes Provide monthly monitoring including Year End outturn forecasts by the 20th of each month Provide any other information as and when required by the Local Authority Be liable for interest charges on the deficit Value of Licensed Deficit sought Year 1 Value of Licensed Deficit sought Year 2 Value of Licensed Deficit sought Year 3 Head Teacher s Signature Print name Chair of Governor s Signature Print name Date approved by Full Governing Body Signed on behalf of KCC Print name Position / Title Date this form by 31st May to: schoolsupport@kent.gov.uk Approved copy to be retained by Schools Financial Services and School April 2018 Page 9