GUIDANCE NOTE FOR SCHOOLS ON CHANGES TO 2016/17 BUDGET AND PAYMENT PROCESSES

Transcription

1 GUIDANCE NOTE FOR SCHOOLS ON CHANGES TO 2016/17 BUDGET AND PAYMENT PROCESSES Advances and cash payments to schools Background During the current financial year significant savings were made in the Council s finance function in response to the Council s savings targets, which were set in the context of the Government s austerity measures. A meeting was held with representatives of Heads and School Finance Managers to consider a revised simplified model for financing schools and for the LA to have a better understanding of school budget plans. There was general support for the revised model. A separate paper sets out arrangements for those schools that buy into the Council s payroll service. Changes to be implemented i) Apart from the school block funding for Reception to Year 11 Pupils, and the place factor element for SEN ARPS, units and schools (which is fixed before the start of a financial year), the LA will move to a cash basis from April 2016 for all other funding sources, the main ones are: - Early years single funding formula (EYSFF) - Early years pupil premium grant(eyppg) - Pupil Premium Grant (PPG) - EFA funding for post 16 - High needs top ups - Universal free school meals funding (UFSM) - PE and Sports grant - Year 7 catch up - Pupil Growth - Any other in year allocations of funding, e.g. contingencies ii) iii) Schools to invoice other LA s for out of borough children s high needs top up funding from September From 2017/18, following consultation and approval by the Schools Forum, it is intended to amend the scheme for financing schools to require schools to produce 3 year forecasts & budgets so that early action can be taken to ensure that schools remain within budget. Reasons for the changes There have been a number of challenges over the past year as a result of schools coming under increasing funding pressure, as well as the LA implementing a new finance structure and offer. The impact of this has been on cash flow, communications and control. The changes attempt to resolve many of these issues. - Moving to a cash basis, rather than adjusting a school s budget share, schools should expect more timely payment and adjustment of funding streams such as high needs top ups and early years participation adjustments.

2 - It is also hoped that this process will also empower schools, allowing more autonomy and a firmer understanding of funding allocations. With the changing demographic schools are better placed to produce estimates relating to pupil premium, high needs etc. which will enable improved budget monitoring and financial planning over a 3 year period. - The LA also intends to request mandatory submission of 3 year budgets becomes a requirement from 2017/18. The LA views this process as best practice and advise schools to consider early adoption where it is not in place already. In certain circumstances schools may be requested to submit this information to the LA in advance of implementation. The LA will provide training, estimates and tools to support schools where appropriate. - The schools block funding and the place factor element remains unchanged. These are set in the February each year and generally remain unchanged in that year. Any amendments are made on a cash basis. Therefore all advance values are known and planned. - The LA will cease its involvement in recouping funds from other LA s for out of borough children from September Since 2013 maintained schools have had a direct commissioner provider relationship with a child s funding LA. As a result many LA s have already transferred this responsibility to schools. Ealing will offer support during the transition to enable schools to set up systems and processes. Ealing will also initiate communications with the relevant LA s. This change will enable schools to form closer relationships with these LA s, and negotiate top up values directly on an individual child basis. This will help to manage some challenges schools experience in accessing additional funding required to manage extra costs for some out of borough children such as therapies. All baseline funding will be allocated by Ealing where the place is a planned place. Process changes The implications in terms of processes are set out below Schools - Apart for schools block funding for R to Year 11 Pupils and ARP/Unit special school place factors ( 10,000), account for the funding as income - Review cash flow management as there will be no need for interim advances - Set up codes on FMS - Match codes to CFR - Produce forecasts for both income and expenditure - Set budget for both income and expenditure LA - Improve data management - Improve communications to schools - Ensure robust processes and timely payments of advances and cash funding - Update scheme for funding schools - Update finance hand book - Update finance SLA

3 Budget setting in Schools Table 1: The income codes will be used are identified below: FMS Description CFR CODE ACCOUNT CODE 8001 Dedicated Schools Grant - Schools I01 Block 8007 Pupil Premium I Bursary Fund I Year 7 Catch-Up Premium Grant I Early Years Block (EYSFF) I Top Up - High Needs Block Pre 16 I03 (INCLUDING SEN support fund, ICAN) 8013 Top Up - High Needs Block 16+ I EFA Income For Element 1 And 2 I PE and Sports Grant I Universal FSM I Early Years PPG I Summer School I All Above Income On Finance Return to be used on the council financial system. N/A The codes suggested are for schools local systems so they can be differentiated and enable transparent monitoring, When the school submits a finance return the upload will convert all income covered in the table above as transfers from other council accounts, on account code The accountancy team will manage this process. Schools submit the return using the various codes outlined above. This will not affect the schools ability to monitor budgets as the FMS system will remain the primary tool for managing schools budgets and the councils financial system Agresso will no longer be updated as frequently or match the coding in FMS. However the council s financial system will need to reflect the gross income and expenditure, and the net position recorded on FMS at year end. This will simplify the schools finance return process and eliminate the need for detailed reconciliations between systems. The priority will be to ensure the year-end total income and total expenditure matches that of each school, but at a higher level than historic practice.

4 Example of budget setting changes Schools block Table 2: Current method MAINSTREAM all allocated through budget share with budget adjustments and advance adjustments in year Final Allocation: Dedelegation Total Schools Block High Needs Block PPG Post 16 EFA funding Estimated by LA: Early Years Growth Total (50) Table 3: Current method SPECIAL all allocated through budget share with in year adjustments 000 High Needs Block PPG Post 16 EFA funding Estimated by LA Early Years Growth Total Table 4: Below is an example of current budget load for all schools Area of spend 000 Salaries 2500 Agency 300 Supplies and services 920 Total Expenditure 3720 Balances (50) Income (10) Total Income (60) Net budget 3660

5 Table 5: Amended method MAINSTREAM Schools block all allocated through budget share with no in-year adjustments, all other funding is on a cash basis. Final allocation Funded through budget share current method Schools De- Total High block delegation Schools Needs Table 6: Amended method SPECIAL base allocated through budget share with no in year adjustments. Final allocation Funded through budget share current method High Needs Block Base Estimated by schools using LA estimates and local schools knowledge schools discretion Funded through cash and recognised as income in schools financial reporting High Needs Block Top up Estimated by schools using LA estimates and local schools knowledge schools discretion Funded through cash and recognised as PPG Post 16 EFA funding income in schools financial reporting PPG Post 16 Early Growth EFA Years funding Early Years Growth Total Table 7: Below is an example of the amended budget load - MAINSTREAM Area of spend 000 Salaries 2500 Agency 300 Supplies and services 920 Total Expenditure 3720 Balances (50) High Needs top ups (100) EALING children EFA post 16 funding (200) High Needs top ups out (50) of borough children PPG (100) Early Years (200) Growth (60) Income (10) Total Income (770) Net budget 2950 Total Block Block (50)

6 Table 8: Below is an example of the amended budget load SPECIAL Schools, ARPs and Units. Area of spend 000 Salaries 2500 Agency 300 Supplies and services 920 Total Expenditure 3720 Balances (50) High Needs top ups (1800) EALING children EFA post 16 funding (200) High Needs top ups out (300) of borough children PPG (360) Early Years - Growth - Income (10) Total Income (2720) Net budget 1000 Advances From April 2016, it is proposed that all schools will move to termly advances with the aim of improving cash flow and consistency for schools. This will apply to the schools block funding and high needs base line funding. Table 9: Below illustrates the funding per term 2015/16 and the amended advances from 2016/17: Term 2015/16 % of non-payroll budget paid through advance termly 2015/16 % of full budget paid through advance monthly 2016/17 % allocated on a term by term basis April 40% 44.3% 45% September 33% 33.2% 35% January 27% 22.5% 20% The DfE pays the schools block grant to local authorities in 25 instalments throughout the year.

7 Payments Cash payments are intended to offer the schools maximum flexibility and enable good cash flow management i. Payments for EYSFF and high needs top ups are based on pupil schedules and census data. Table 10: The below illustrates the approximate values of these payments based on the initial estimate. Autumn and spring term advances will be adjusted to take account of actual pupils on roll compared to your estimate. Therefore the % are an indication and not final Term % allocated on a term Payment date by term basis (first 2 weeks) Summer 55% April 2016 Autumn 30% October 2016 Spring 15% February 2017 The DfE pays the early years and high needs block grant to local authorities in 25 instalments. It should be noted that due to the move towards schools billing other LA s for out of borough children schools will be funded for all children for the summer term and for Ealing only children for the autumn and spring terms. Therefore schools will need to ensure all processes are in place before the end of the summer term so that purchase order numbers can be obtained and invoices raised. If this is not acted upon early schools may experience cash flow and credit control issues. For high needs funding the DFE advises that top ups should be paid monthly unless agreed otherwise. This is not the current profile or the proposed profile of payments. If schools would prefer a monthly installment for high needs top up this can be investigated further for 2017/18. ii. Payments for PPG and EFA incl bursary will be paid as it is notified and paid to the LA, and as growth is confirmed The total PPG allocation to Ealing schools in 2016/17 is forecasted to be around 16m with 14m of this being allocated by the LA to maintained mainstream and special schools. The total year old grant allocation to Ealing schools in 2016/17 is forecasted to be 20m with 13m of this being allocated by the LA to maintained mainstream and special schools. Special schools will receive the post 16 funding along with the top ups outlined above in table 10.

8 Table 11: The below illustrates the approximate values of these payments based on the initial estimate. Term % allocated Payment date Summer 55% April 2016 Autumn 30% Spring 15% January 2017 September 2016 (balance to take total to date to 85%) EFA will calculate the PPG allocation using: the number of pupils recorded on the January 2016 school census who are Ever 6 FSM (not eligible for the LAC and post-lac premium) post-lac pupils Ever 6 Service child FTE pupils aged 4 and over in year groups reception to year 11 The LAC numbers will be updated in December 2016 For new schools that open in the 2016 to 2017 financial year, EFA will use the October 2016 school census. PPG allocations will be confirmed by the EFA in June 2016 once pupil number data from the January 2016 census has been validated and agreed. PPG will be paid to LAs in quarterly instalments by: 30 June September December March 2017 Growth will be allocated as it is confirmed therefore for the majority of schools this will be 100% in April or 100% in September. EYPPG will follow the current allocation method All other UFSM, year 7 catch up, PE and sports will be pass ported to schools as soon as the allocations are announced, The EFA have not advised of the payment schedule or allocations. Therefore the LA will update schools once the information is available VAT, Returns to LA and statutory returns, Loading Finance Information on to the Council s Ledger - Finance Return and upload which includes VAT returns will be accepted in September 2016, January and March These are to be sent electronically. - CFR returns should be submitted through the DFE portal within national timescales. No documents need to be submitted to accountancy - simplification of returns will be considered later in the year.

9 Scheme for financing schools The above amendments are consistent with the guidance on financing schools. Whilst the move towards termly advances of a schools budget share would formally need approval of the Forum at its next meeting, we intend to implement it for April Other minor changes to the scheme and detailed changes to the Schools Finance Handbook will be made before the summer. Below is the link to the DFE guidance: cheme_for_financing_schools_dec_2015.pdf Annual timetable The table below outlines the timetable for budget approval, publication, advances and payments. This will be subject to review in the light of experience. KEY Schools Forum LA publications Returns from schools to LA Payments Process change EFA/DFE publications Action Plan Date School Forum meeting approving budgets indicative schools January 2016 block published. LA Notify school of budget share and income estimates and February 2016 schedules published on EGFL Estimate guidance notes published on EGFL including Pro February 2016 forma s and modelling tools Budget setting, advances and cash guidance note March 2016 Funding update from EFA 2015/16 and 2016/17 (DSG, other March 2016 grants) Schools Forum Scheme for financing schools, Payroll SLA, April 2016 Finance SLA, high needs resource allocation and funding pressures. DFE consultation on funding reforms. 1 st advance April st cash payment April 2016 High Needs, EYSFF, EFA, PPG, growth, other tbc Schools to set budgets and send budget upload May 2016 SENAS service to begin using database to inform allocations May 2016 for sept 2016 implementation Schools to send balance forms May 2016 Funding update from EFA 2015/16 and 2016/17 (PPG, DSG, June 2016 other grants) Schools Forum Finance Handbook, high needs resource July 2016 allocation and funding pressures highlighted for Forum. Annual

10 Audit Report, School Balances and outturn figures reported. DFE consultation on funding reforms 2 nd cash payment PPG, EFA, Growth balance September 2016 (within first 2 weeks) Special schools to start charging other LA s for top ups September 2016 Updates on funding estimates and schedules published on September /October EGFL nd advance September 2016 (within first 2 weeks) Schools forum - Formula consultation and funding pressure October 2016 report. National funding formula update. Funding update from EFA 2016/17 (DSG, other grants) November nd cash payment High needs and EYSFF, other tbc October 2016 (within first 2 weeks) Funding update from EFA 2017/18 (PPG, DSG, other grants) December 2016 Schools Forum budget setting for 2017/18 January rd advance January 2017 (within first 2 weeks) 4 rd Final cash payment PPG, EFA, Growth balance, other tbc February 2017 (within first 2 weeks) 5 th Final cash payment High needs and EYSFF, other tbc February 2017 (within first 2 weeks) LA Notify school of budget share and income estimates for February /18 Funding update from EFA 2016/17 and 2017/18 (PPG, DSG, March 2017 other grants)