Agenda item

This report sets out the final DSG outturn against the budget set for 2018/19.

Andrew Ward - Head of Finance, Children & Young People, Brent Council - introduced the report which set out the final DSG outturn against the agreed budget for 2018/19, and provided detail on the overall £1.4 million overspend.

Dena Aly, Senior Finance Analyst, Brent Council, informed the Forum that the maintained school balances have increased by £0.9 million from £15.8 million during 2017/18 to £16.7 million during 2018/19 (Appendix B). It was noted that maintained schools received £1.2m of the £2.5m reserve funding added to the funding formula for 2018/19.

In considering the report, the following key points and comments were noted:

·         The Dedicated Schools Grant (DSG) budgets overspent by a total of £1.4 million in 2018/19. This was primarily due to a £3.1m overspend on the High Needs block which was partially offset by underspends in the Schools’ block, Early Years block and Central Services block. The High Needs block experienced demand led overspends on top-up funding to mainstream settings, residential and independent settings, and post-16 providers;

·         The underspend in the Early Years block was due to an underspend on nursery provision for 2, 3 and 4 year olds, and a planned underspend on central budgets. The Schools block underspend was due to an underspend on the growth budgets. In addition to the £1.4m overspend, there was planned use of DSG reserves totalling £4.1m in 2018/19. Therefore, in 2018/19, the DSG reserves balance reduced from £7.8m to £2.4m as highlighted in section 10.3, table 3 on page 47;

·         The schools funding formula for 2018/19 was set in December 2017 ahead of the final DSG budget being confirmed in February 2018. The DfE recoup formula and high needs place funding from the DSG to allocate this directly to academies and free schools. The total gross 2018/19 DSG allocation for Brent was £312m, of which £118m was recouped/deducted by the DfE (Department for Education);

·         The Dedicated Schools Grant (DSG) expenditure budget totals £315m which was supported by the £312m of grant income and £3m of DSG reserves released in consultation with Schools Forum as one off funding;

·         The £315m represents the total cost of funding education to early years and school age pupils in the borough before recoupment of funds by the Department for Education to fund the borough’s Academies. In addition, £3.5m of sixth form funding was received and passed onto maintained schools which have sixth form provision - Appendix A provided the budget details;

·         Overall, the DSG overspent by £1.4m but within this there were large variations on the High Needs block and the pupil growth fund. The overspend could be met from DSG reserves in 2018/19, but the growing cost of High Needs provision was a serious concern for future years, and might deplete reserves by the end of 2019/20;

·         In relation to Schools Expenditure, sections 5, 6 and 7 of the report provided further details;

·         With regard to pupil growth, there were compensating underspends against the growth contingency budgets. These budgets were prudently set aside for localised primary growth, for the demographic bulge in secondary phase pupil numbers, and included £0.8m spent on supporting the CAFAI projects supporting newly arrived pupils from overseas. The budget underspent by £1.3m in 2018/19, and had been rebased for 2019/20. The underspend on growth budgets partially compensated for the overspend on high needs, with DSG reserves meeting the balance of the High Needs pressures; and

·         The main cost driver for the High Needs block was the number of Education Health and Care Plans (EHCPs). These plans specify the amount and type of support a pupil with SEND required and therefore largely dictated the cost. The number of EHCPs increased by 200 in 2018/19 from 2,000 to 2,200, which represented a 10% increase, despite the overall pupil population remaining broadly the same. The average cost of funding the services required by an EHCP was £20k, in a range from £11k to £63k with an average cost of different EHCP placements illustrated in table 2 on page 46.

·         Based on the information and budget numbers available, the Forum noted that there appeared to be significant financial trouble in 2020, a number of the Forum members enquired about the difficult situation and what measures were being taken. In response, Gail Tolley, Strategic Director Children and Young People, Brent Council, provided the London-wide context where 24 local authorities overspent on high needs block, 13 of those had a deficit budget and were under the DfE measures with a fear that this scenario could be replicated across the country. In that context, Brent was comparatively in better situation but it was not sustainable. She added that strong lobbying was taking place by both officers and politicians and Brent Council contributed to a London Councils paper on this issue as reserves would be inadequate to cover this bigger picture. A paper was also going to be presented to the Corporate Management Team by Andrew Ward and Gail Tolley;

·         In response to a comment that the current situation meant that Local Authority Schools could go bankrupt, together with, an enquiry whether anyone was listening, it was noted that the current Education Minister was listening and the DfE was beginning to recognise the evidence-based lobbying. However, provided the other issues like, e.g. Brexit etc., were dominating the political agenda, this issue was not yet getting the traction and priority it required;

·         The Schools Forum members were requested to use their own professional and community networks to push the message that this issues required urgent attention on apolitical basis;

·         In response to a query about a variation in a financial situation of a specific school, the Chair informed that individual schools were not discussed at its meetings; and

·         Based on the information and budget numbers available, there appeared to be significant difficulties ahead in 2020, was this picked up earlier in three-year budget forecast - it was noted that the full budget details - did recognise financial uncertainty. In addition, it was clarified that there were no plans for financial claw-back - average balance was £12,000.

RESOLVED that the Schools Forum noted the report, and a further update be provided at future Schools Forum meetings.

(Action: Andrew Ward)