Agenda item

Context:

To provide Select Committee Members with information on the forecast revenue outturn position of the Authority at the end of period 3 which represents month 9 financial information for the 2016/17 financial year.

Recommendations proposed to Cabinet:

·         That Cabinet notes the extent of forecast revenue underspend using period 3 data of £79,000, an improvement of £919,000 on the previous reported position at period 2.

·         That Cabinet expects Chief Officers to continue to review the levels of over and underspends and reallocate budgets to reduce the extent of compensatory positions needing to be reported from at quarterly cycles.

·         That Cabinet appreciates the extent of predicted schools reserve usage, its effect of forecast outturn reserve levels and the related anticipation that a further sixschools will be in a deficit position by end of 2016-17.

·         That Cabinet considers the capital monitoring, specific over and underspends, and importantly that Cabinet recognises the risk associated with having to rely on a use of capital receipts in the year of sale and the potential for this to have significant revenue pressures should receipts be delayed and temporary borrowing be required.

·         That Cabinet approves an additional investment of £30,000 into the Disabled Facilities Grant capital budget in order to respond to demands being placed on the current programme, funded by a virement from existing Highways Maintenance and Access for All budgets.

·         That Cabinet approves a £30,000 increase to the Woodstock Way linkage scheme afforded by an equivalent underspend to another area improvement scheme (Abergavenny).

Member scrutiny:

·         Six schools exhibited a deficit position at the start of 2016/17.  This is anticipated to rise to 12 schools by the end of 2016/17. Officers are meeting with these schools with a view to producing recovery plans.  However, it was noted that a number of these schools have very low deficit budgets and would therefore be likely to recover quickly.

·         In response to a question raised regarding Post 16 funding, it was noted that the money is sent through to the schools via the local Authority. There are a range of different methods that could be applied to that distribution.  The Children and Young People Directorate has been working with the schools to find an appropriate methodology which is based on live pupil data.  Work during the previous year has been somewhat undermined by the fact that the actual quantum that was received from Welsh Government was significantly lower than was expected. An 8% reduction was received compared to last year.  The Authority has a proposal with its schools that the distribution will be taken on equal shares of the reduction.  However, this is being reviewed.  If this is taken forward this year, the Authority will ensure that in the intervening year all of the schools will have to sign up to an agreed methodology, which will be adhered to for the next three years. The Welsh Government has increased the funding per unit of learning to schools by 1.25%. However, this is not the case for Monmouthshire as the units of learning for Monmouthshire’s four comprehensive schools has decreased by 0.1%.

·         In response to a Select Committee Member’s question regarding Fostering and external placement costs (paragraph 3.1.9 of the report), it was noted that the Children’s Services budget has been very volatile in previous years, especially with regard to Fostering and external placements.  The budget is currently coming in on line.  However, due to the volatile nature of this service, Select Committee Members need to be aware that this budget could change quickly if one or two children go into external placement.  However, the Children’s Services Commissioning Strategy, which was presented to the Select Committee last year, is bedding in and is resulting in keeping children out of external placements and keeping more of them in internal fostering placements.

·         In response to a Select Committee Member’s question regarding the receipt of ad hoc grants from the Education Achievement Service (EAS) (paragraph 3.2.4 of the report) and the need for this money to be made available up front from Welsh Government, it was noted that with regard to the EAS, the five local authorities contribute in the region of £3.6M to the EAS every year combined.  In the current financial year, the EAS will distribute £56M worth of grant from Welsh Government.  Therefore, the amount of money coming via grants is hugely significant to Monmouthshire’s schools.  The Education Improvement Grant (EIG), the Pupil Deprivation Grant (PDG) and what was schools Challenge Cymru comes through and is identified early in the financial year.  However, it is the additional pieces of money that Welsh Government has reduced flexibility over since the financial crash and this is the funding that is being distributed at the year end.

·         School reserves (Paragraph 3.2.3) – There has been a sharp decrease in the reserves being held by schools.  It was noted that there is a challenge to schools’ governing bodies that there is a need for schools to have a balanced budget.  If schools go into a deficit budget then a robust financial three year plan is established to ensure that these schools are out of a deficit budget by the end of this period.  It was noted that there is a volatility in the levels of reserves held as schools are being asked to hold less of a reserves level.  No school will be allowed to plan for a deficit budget.

·         With regard to the issue of services bought in, it was noted that it is the governing bodies’ decision as to where they procure services from. However, the close relationship that has been formed over the years between local authority staff and schools has led to a close positive relationship.  The surety of the local authority ensures that processes are properly adhered to.  Hybrid models are an option which are also being looked at.  The Authority has to look to see if it is providing an excellent service.  It was considered that, for a future meeting, a report could be presented regarding the relationship of the Authority and its schools with governing bodies.

·         Children’s Services – It was noted that in terms of the forecast outturn a large aspect of the over spend pertains to the continued use of agent staffing.  A work force plan is being produced to identify the way in which the authority looks to recruit social workers. Much success has come via social media regarding recruiting of staff.  This will lead to the phasing out of agency staff over a period of time. This will take place over the next 12 to 18 months.  However, the forecast for 2017/18 has the potential to move away from using some agency staff from April 2017. It was noted that a firm base will be required before these changes can be made.