Agenda item

Consideration was given to a report presented by Neil Hardwick, Head of Finance CYPS, outlining the current and projected overspend on the Dedicated Schools Grant (DSG) and the recovery plans in place to enable Rotherham to operate within its annual allocation and reduce the deficit over future years.  It also outlined the national picture on the High Needs Block as part of the overall Dedicated Schools Grant and the additional funding going into education.

Rotherham had been a relatively low funded authority and had seen significant pressures on the High Needs Block for many years and even though the High Needs Budget (HNB) allocation had increased year on year, partly due to Rotherham’s low funding baseline compared to neighbouring boroughs and nationally, the budget uplifts had not been sufficient to match the acceleration in demand and increased cost of provision.

Rotherham had seen year on year deficits due to the growing pressure on HNB culminating in a total deficit of £20.4M and an overall DSG deficit of £19.9M after taking account of DSG balances across the various blocks e.g. Early Years. The projected overspend was as a result of a number of factors including an overall increase in Education Health and Care Plans (EHCP) as well as an increase in the number of young people aged 16 to 25 with an EHCP who were now the responsibility of the local authority to fund, an increase in the number of children accessing higher cost provision and an increase in the number of pupils in Alternative Provisions (Pupil Referral Units).

The DfE had recently acknowledged the need to review the national funding formula for allocations of High Needs Funding to local authorities by launching a consultation on 10th February 2021. It proposed changes to the historical spend element for 2022/23 as well as looking at other funding factors in future years.

The report detailed how local authorities had the ability to transfer monies (0.5%) from the Schools Block to the High Needs Block and how the Authority had taken up this opportunity and successfully submitted disapplication requests to the Secretary of State.  However, despite the transfer of funding, there was still a projected overspend of £1.9M in the High Needs Block for 2020/21 and estimated overall DSG deficit of £22.1M. 

To monitor the DSG central reserve,  the Education and Skills Funding Agency (ESFA) launched the DSG Management Plan Template on 16^th September, 2020, to replace last year’s DfE DSG Deficit Recovery Plan.

The template has been completed by Rotherham to support its recovery plan and submitted to the Schools Forum for approval and to support the 2021/22 School Block consultations.

Clarification was provided on the following points:-

-        The DfE was investing £14Bn from 2021-22 and 2022-23 in the Schools Block and the High Needs Block.    Rotherham would be receiving an additional £5.5M for Schools and £5.3M for the High Needs Block for 2021/22.  The specific allocations for 2022/23 was not known as yet

-        In the past Rotherham had had an in year deficit of circa £5M; this year the expected deficit was £2.2M - £1.9M on the High Needs Block and would normally expect Early Years to balance.  However, due to Covid-19 and the protection of Early Years settings, in certain circumstances, the Authority has had to double fund where protecting Early Years setting on last year census’ rates and some young children had had to go elsewhere and those places having to be funded as well

-        In recognition of the national issue in terms of DSG deficits, the Government had introduced regulations during 2020 specifying the deficit must be ringfenced to School resources and must not seek to fund it from General Fund resources

-        Most local authorities were taking the same actions as Rotherham i.e. looking at resource centres linked to mainstream schools.  Social Emotional and Mental Health (SEMH) was the key issue across most authorities.   Rotherham had not had a SEMH special school which meant that the young had been supported in the Pupil Referral Units or, in certain instances, it had led to high cost expensive independent sector placements

-        Rotherham had had a high number of out of authority placements which were very costly and received a contribution from the DSG, therefore, had a significant impact on the High Needs Block

-        The SEND Sufficiency Phase 2 had started to embed.  Most provisions had not opened until September 2020 and would fill as the year progressed.  Year on year there would be more effective and value for money placements

-        There were financial projections going forward, however, it was difficult to estimate the number of EHCPs and demand on the High Needs Block.  Assumptions had been made in terms of year on year growth and the recovery plan and expecting to move to balanced position next year

Gareth Mills, Grant Thornton, stated that regular meetings were held with Neil and Finance representatives to monitor the position of the DSG deficit and the actions the Council had taken.  Additional guidance had been issued by NAO last year for auditors in terms of how they should assess and conclude on significant DSG deficits.  One of the key areas of the guidance was evidence that the Audit Committee and Members were being appropriately informed of the Council’s actions and arrangements in place to deal with DSG.  The report submitted and attendance by the officer fulfilled that criteria from an external auditor’s point of view.  

Resolved:-  (1)  That the actions being taken to manage the Dedicated School Grant deficit in Rotherham be noted.

(2)  That the additional funding allocated in the Government Spending Review and the outstanding Department for Education (DfE) consultation on Special Education Needs and Disabilities (SEND) and Alternative Provision (AP) funding be noted.

(3)  That an annual update on the Dedicated Schools Grant be submitted to the Audit Committee.