Agenda item

David Gearing

A summary table detailing the 2019-20 outturn position for all the ‘central’ Dedicated Schools Grant budgets was made available to the meeting. On the bottom line the account shows an overspend of £14.40m. This breaks down across the DSG funding blocks as follows: -

High Needs Block                £12.88m        overspend

Early Years Block             - (£0.98)m        underspend

Schools Block / CSSB        £ 0.32m          overspend

Schools Block                       £2.18m           (technical overspend)

Total                                      £14.40m

High Needs Block

The overspend within the High Needs funding block is wholly attributable to 2019-20 activity. In each of the two preceding financial years the Council’s general fund has been deployed to mop up the increasing overspends in the High Needs account. Such action is no longer permitted with the ESFA now instructing that any DSG overspends must instead be shown against the DSG balance sheet – Councils are no longer allowed to use their own funds to mitigate DSG budget problems. Once the balance sheet deficit becomes apparent within government returns the ESFA will engage with the Council about a deficit recovery plan (although the Council will want to focus upon the delayed allocation of Kirklees’ full entitlement to its High Needs National Funding Formula outcome).

Early Years Block

A significant factor in the build-up of the balance in the account is the DfE’s use of the January census as an average for distribution of funding – seasonal variations in numbers of children attending early years provision means there is often a divergence between funding received and actual payments to providers. In-year adjustments by the ESFA to the Early Years funding block can also compound the divergence and are not easy to anticipate. Part of the £982.2k balance relates to a decision made a year ago to use some of the 2018-19 balance to increase the hourly rate to providers by 6p through to the end of the Summer term 2020.  

A report considered by the Early Years Reference Group proposed the following usage of the Early Years balance during FY 2020-21…

Double-funding situations arose during the lockdown for a number of reasons such as the closure (temporary or otherwise) of a provider or the need for a child to attend just one provision to comply with guidance where previously they might have attended one provider for part of the week and another provider for the remainder of the week. It is now anticipated that the cost of double-funding will be much lower than the figure in the above table unless the virus resurfaces to spark a second period of lockdown. Given the uncertainty for many private, voluntary and independent (PVI) providers there is a potential for the bad debt provision to be under some pressure until the market is re-established.

The hourly rates for 3 & 4 year olds and for disadvantaged two year olds were both increased by 8p in the 2020-21 DSG Early Years Block settlement. This means the base hourly funding rates for 20-21 are £5.09 for disadvantaged two year olds and £4.21 for 3 & 4 year olds. The 6p boost agreed for the Summer term raises these hourly rates to £5.15 and £4.27 respectively. The estimated uncommitted sum in the table above would permit a temporary rise in the base hourly rate by 16p to be paid over the coming Autumn and Spring terms, taking the rates temporarily to £5.25 for two year olds and £4.37 for 3 & 4 year olds. A further step could be taken on top of this by anticipating the potential surplus that may accrue during 2020-21 (– an initial estimate would be £468k for the difference between the funded hourly base rates and the estimated pay out to providers). This could enable some level of permanent increase to the base hourly rates to be considered.

The recommendation received from the Early Years Reference Group was that the temporary 16p increase to the two base hourly rates for Autumn 2020 and Spring 2021 should be implemented. The boost is much needed to help many providers who are struggling through the current difficult times. The Group recommended a more cautious approach with respect to making a permanent increase to the hourly rates, preferring to wait instead until further modelling checks and adjustments to overall funding levels have confirmed the availability of uncommitted funds in the account.

It was asked whether there were different hourly rates applied to school nurseries and PVI settings. The hourly rates are applied equally across all settings. It was asked whether there was some benefit to the system of increasing the deprivation element of funding. Consultation with providers has consistently revealed a preference for maximising the hourly rates whenever additional funds become available.

Schools Forum agreed to accept the recommendations from the Early Years Reference Group for use of the rolled forward balance during 2020-21.

Schools Block / Central Schools Services Block

The balance to be addressed is £316,600 and this breaks down as follows: -

It was agreed that the deficit figures in the Staff Absence Insurance Schemes account and in the School Reorganisation account should both be rolled forward into 2020-21 to be made good during that year. A deficit of £113k was actually rolled forward into the 2019-20 Schools Reorganisation account so this was nearly cleared off during 2020-21. The ability of the staff absence insurance schemes to turn round the sum rolled forward remains to be seen given the turbulent nature of the year so far.

The only remaining issue still to resolve in respect of the 2019-20 DSG outturn is a net overspend of £106,300 in the Schools Block account. This is effectively the remaining problem in the Trade Union facilities time account after deployment of surplus balances totalling £31k across a couple of other DSG Schools Block headings.The Forum agreed that there is little point in rolling forward the £106k deficit into the 2020-21 facilities time account. Officers were asked to refer the issue back to the local authority to consider options for dealing with the overspend amount.

Schools Block (technical issue)

There is a technical overspend of £2.18m also showing within the DSG Schools Block which has temporarily been parked on the DSG balance sheet. This relates to the funds the Council adds to the DSG Schools Block to pay for the PFI affordability gap funding factor. This input has been caught up in the regulation change which now prohibits local authorities from using general fund monies in support of DSG deficits. Further work is being undertaken to try to resolve this issue.