Agenda item

To receive a verbal report by the Head of Finance.

A report was submitted to the Members during the meeting by the Head of Finance outlining information regarding the 2018/19 budget.

 

The Cabinet Member for Finance reported that they had spent hours trying to get a balanced budget for the Council and they had never seen such a situation before.   From the table submitted regarding the settlement of the Revenue Support Grant to fund local government, it was seen that Gwynedd Council would receive a grant increase of £1m by next year an increase of 0.6%, with the Wales average increase at 0.2%. 

 

During the next three years 2018-2019 it was anticipated that the Council will need to find savings of up to £20m.  Currently, all Department Heads had been asked to forward plan cuts of 3%, 10% and 20% and it was envisaged that the impact of further cuts based on the above percentages would be dire, with the Council's two largest budgets in Education and Social Services having to contribute.

 

The Head of Finance explained that when developing a draft budget for 2018/19 it had become evident that there was concern regarding the schools budget.   Since the announcement of the grant settlement for local authorities, the Welsh Government's reference to "additional funding" and school protection had raised the financial expectations of Headteachers and Governors for 2018/19.

 

The Welsh Government's Minister of Education had made some misleading statements regarding the financial position of schools.  Following a discussion with Cabinet Members, a way forward was agreed to avoid the transfer of further savings targets to Gwynedd schools this year:

 

(a)  Demography

 

It was noted that the net position of schools was -£225,000.

 

(b)  ALN Integration

 

It was recommended to agree on a bid of £319,000 to address over-expenditure on the budget for the integration of pupils with additional learning needs, and the "Education" budget would gain compared to last year because of this and inflation of £1.4m financed by the Council.  

 

 

(c)  Centralising Integration

 

£347,000 will transfer from the schools budget centrally to the Education Department and whilst the schools budget will reduce, the need for schools to spend will also be reduced.

 

(ch)      Education Difficulties

 

It was noted that a number of difficulties had arisen in Education that would mean that the Council would have to add further to the Education budget through a bids process, or for the Education Department to reduce the schools budget, if they wanted a balanced budget in 2018/19.   The total of these issues would have meant harvesting £1.7m savings from the schools budget and the view of Cabinet members was that this was impractical.   Therefore it was agreed to recommend the following solutions:

 

Higher expenditure on transport £516,000

 

If the above budget was left as it was it would create a need for additional permanent finance of £286,000 in 2018/19 and £230,000 to meet the 2017/18 deficit.   It is recommended that corporate under-expenditure would be used to delete over-expenditure this year, but to demand that the Education and Environment Departments re-visit their policies /transport arrangements with a view to control expenditure within the budget available by 2019/20.   In the meantime, in order to buy time to undertake this change, it was recommended to bridge £200,000 of the £286,000 required in 2018/19 by providing a one-off budget with the Education Department meeting the remaining £86,000.  

 

Schools Improvement Grant (EIG) £617,000

 

It was noted that the Education Minister had cut the above specific grant and had 'placed it in the settlement' in order to be able to say that it was not expected for the schools budget to be reduced.    It was expected that everything funded via the grant would be maintained, however, the same money could not achieve both and it was noted that there was frustration amongst local authorities in Wales regarding this.

 

The Council cannot fill the gap in the grant and the funded schemes, therefore a relevant element of the grant reduction would feed through to schools. 

 

Savings £4.3m - the remaining £263,000

 

In 2014, it was decided to set a savings target of £4.3m for schools to be delivered over the period 2015/16 - 2017/18 and to work jointly with the Schools' Budget Forum to develop schemes to achieve the target.  Since then, a slippage was permitted to 2018/19, when it is expected that the reorganisation of schools will produce the remaining £263,000 of the £4.3m target. 

 

This saving will not be available until 2020/21 to 2021/22 but rather than transfer the deficit to the schools (temporary quantum reduction) in the meantime it was recommended to re-profile the savings to those years.  

 

 

 

Conclusion regarding the 2018/19 Schools Budget

 

Rather than suffering a £1.7m "further cut" schools will shoulder the relevant element of the £617,000 (estimate) of a grant reduction that is relevant to them, together with £347,000 of 'technical' transfer taking a budget and the need to spend from them.

 

It is understood that there is a reduction in other specific grants, and local factors to individual schools, but with this strategy, on the whole, Gwynedd schools would only be expected to find expenditure reductions equivalent to the reduction in Government grants by 2018/19.

 

During the ensuing discussion, the following main points were highlighted:

 

·         Concern was expressed regarding the lack of information about special needs education and specifically what money will be transferred back to schools (3 / 4 years ago money was transferred for 3* statement pupils)

·         That schools were anxious to get clarification in order to respond immediately in terms of staffing duties and school management

·         Currently schools had a number of individuals on contracts and if the money was moved then this could lead to over-expenditure / redundancy.

·         There was a similar situation with an additional language where pupils are latecomers to schools without any English - and therefore Headteachers were not eager to see the same situation with special needs pupils.

 

In response to the above, the Finance Manager noted that he would arrange for the relevant officers to immediately send a letter of clarification to schools.   The Head of Finance added that the Senior Manager in the Education Department should convey the information to schools at an opportune time in order for them to plan appropriate staffing levels. 

 

In terms of increasing Council tax 4.8%, the Cabinet Member for Finance noted that this increase must be faced in order to protect services.  It was further noted that there was a scheme to assist needy individuals and that Finance Department staff did everything they could to deal with any problems that arise. 

 

The Cabinet Member for Education reported that additional expenditure on transport was a challenge for the Education Department, and of the need to discuss more favourable terms with transport contractors.

 

Resolved:       (a) To accept and note the above.

 

                        (b) To ask the Finance Manager to arrange that the appropriate education officers send clarification without delay to schools regarding the staff and special needs Education budget.