Agenda item

School Reserve Balances Year Ending 31 March 2020


(a)       That the school reserve balances as at 31 March 2020 be noted; and


(b)       That the changes to the Protocol for Schools in Financial Difficulty be noted.


The Chief Officer (Education & Youth) presented the annual report on reserves held by Flintshire schools and the risks and internal processes associated with schools in deficit.  The report had also been considered by the Education, Youth and Culture Overview & Scrutiny Committee.


The position at the end of March 2020 showed a significant decrease in the level of reserves compared with the previous year, with a 44% increase in the net deficit position for secondary schools and a 26% reduction in primary school balances.  There were a number of factors contributing to significant risks on the financial resilience of school budgets, with secondary schools a particular concern and emerging risks in the primary sector.  In recognising the difficulty for schools to manage these continuing pressures - in addition to the uncertainty around Covid-19 - the report summarised the balanced approach taken by the portfolio to robustly challenge and target support as appropriate, using the revised ‘Protocol for Schools in Financial Difficulty’.  Recommendations from an Internal Audit advisory review of the Protocol were in the process of being implemented.


Councillor Ian Roberts highlighted the significant impact from continued austerity measures and said that the key concern was for schools to maintain standards of education and curriculum which required appropriate funding.  He and the Chief Executive would continue to make representations to Welsh Government (WG) for an uplift in the Settlement and the end of year position on school reserve balances would be closely monitored.


The Chief Executive said that there were examples of some secondary schools with stable or deteriorating deficit budgets with no remaining local solutions for recovery, other than a budget intervention.  The Council’s Medium Term Financial Strategy had identified that a specific uplift in the funding formula was necessary for secondary schools to address the deficit position.  The Council had continued its case to WG as amongst the lowest funded in Wales on the need for an increased Settlement to re-balance the deficit budgets of secondary schools.


In response to a question from Allan Rainford, officers provided clarification on the stages within the Protocol and stressed that the position of two schools highlighted in the report was due to the lack of funding and that all available options for recovery had been exhausted in those cases.


In praising the level of challenge given by the Education, Youth & Culture Overview & Scrutiny Committee on the report, Sally Ellis suggested that more regular updates be given to that Committee to help monitor progress.  She asked about the impact of a specific uplift applied to support school budgets previously and ensuring that any future uplift would help to resolve the situation.


The Chief Executive clarified that the additional levy on Council Tax in 2018/19 was to maintain a cash flat position and assist with inflationary pressures in school budgets as a temporary measure at that time.  No such investment was planned for next year beyond pay and inflation and a longer term funding strategy was required from WG.


Officers explained that schools were continuing to bear some inflationary costs with no capacity to invest in increased demand and costs for services (such as those for children with additional learning needs) and the range of curriculum options.  This ongoing cumulative impact had not been resolved and the teachers’ pay award for this year had only been part-funded by WG.


Councillor Johnson acknowledged that this was a long-standing issue that was mainly beyond the control of schools.  On levels of reserves, officers explained the role of the School Accountancy Team in working with schools to plan for future budget requirements.  A rigorous process was in place for the approval of spending plans for schools.  Councillor Johnson’s request that future reports show data over a three year period was noted by officers.


Councillor Dunbobbin recognised that the reasons for the deficit position included the impact of national agreements that were not fully funded.  He paid tribute to the Chief Officer and her team for their support to schools going through the process.


In recognising the scale of the pressure, Councillor Axworthy spoke about the impact of parental preferences and the need to consider the sustainability of schools.


Following her earlier suggestion, Sally Ellis acknowledged that whilst more frequent updates to Overview & Scrutiny would not change the position, they would help to assure the Audit Committee that any potential future uplift in school budgets was being monitored to achieve the right outcome.  She asked that officers consider how best the situation could be monitored.


The recommendations were moved and seconded by Councillors Dunbobbin and Johnson.




(a)       That the school reserve balances as at 31 March 2020 be noted; and


(b)       That the changes to the Protocol for Schools in Financial Difficulty be noted.

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