Agenda item

Further to Minute No. 82(6), Joyce Thacker, Strategic Director of Children and Young People’s Services, and Joanne Robertson, Finance Manager, presented a report on the financial deficits attached to the conversion of Rawmarsh School and Swinton Brookfield Primary Schools to Academies.

It was important to note that only ‘Sponsored’ Academy conversions (where a school was in deficit) resulted in the deficit falling onto the Local Authority. Where the school was a ‘Converter’ (not sponsored) any deficit was funded by the Department for Education.

The current main Policy for school’s deficits was contained in Rotherham’s Scheme for Financing Schools:-

Planning for Deficit Budgets

Expectation that schools which identified a financial deficit could clear its deficit balances and that the budget plan would demonstrate how it could be achieved.  If this could not be achieved, a school must seek approval for a licensed deficit.

Licensed Deficits – applicable to Secondary Schools only

The scheduling of repayments of deficits at Council-maintained schools were the subject of a 3 year spending plan which incorporated a maximum repayment term of 3 years.  The deficit would represent no more than 5% of the school’s delegated budget.  This could be extended to 5 years in exceptional circumstances.

Any such arrangement could only be entered into with the authorisation of the Strategic Director and Director of Finance representative.

The school must submit a recovery plan which provided robust evidence of the size of the financial problem and how it would be addressed.  Once authorised, the recovery plan would be monitored and reviewed on a 6 monthly basis.

Interest would not be charged during the terms of the repayment.  However, charges would be incurred on the initial or maximum balance (whichever was the greater) if the submission was not addressed within the timespan.

The report also referred to the proposed changes to Rotherham’s Fair Funding Scheme for proposed Academy conversions where schools were in deficit.  The proposed changes to the Fair Funding Scheme had not been as a result of Rawmarsh but recognition of the potential risk to the Council’s budget.  It ensured that schools had a better understanding of what the expectation of them was but the power to remove the budget had always been there.  Consultation on the proposed changes would close on 10^th September, 2014, with feedback to the Schools Forum on 3^rd October. 

Rawmarsh Academy had seen a number of significant changes and had been transformed into a vibrant learning community.  There had been a number of discussions with the Executive Head Teacher, Director of Schools and Lifelong Learning and the Head of the School Effectiveness Service regarding the School’s attainment.  Marked improvement had already been seen and it was felt that the funding had been required to achieve such.

Discussion ensued with the following issues raised/clarified:-

-          75% of Rotherham’s schools were “good” or better and 78% of children attended schools that were “good” or better

-          The deficit to the Local Authority was expenditure within the financial year against revenue within the CYPS budget - there were no further costs once the school had converted.  The school did not have to repay the deficit

-          The Local Authority had no control over a school once they became an Academy

-          27% of Rotherham’s schools had converted to Academies with the number increasing

-          Work was ongoing with all Head Teachers to try and avoid 1 School’s decision to academise not affecting another’s feasibility

-          The DfE had no contingency plan in the case of an unsuccessful Academy and its pupils; it would fall upon the Local Authority to take the pupils on board.  However, there was robust financial monitoring in place

-          The issue was included on the Risk Register

Resolved:-  That the work undertaken to mitigate the revenue impact upon the Local Authority of deficit budgets in schools that were likely to become a sponsored Academy be noted.