Agenda item

Neil Hardwick to report.

Recommendation:- To receive the report and note the contents.

Consideration was given to the latest Dedicated Schools Grant position and the DSG projections as outlined in the DSG Management Plan presented by Neil Hardwick, Head of Schools Finance.

The Forum were advised how in 2017/18 the ESFA undertook an historic spend data DSG block realignment exercise, the High Needs block was then realigned after taking account of a £2.9 million transfer from the Schools Block in 2016/17 and an additional £3 million transfer in 2017/18. Prior to this exercise Rotherham consistently had a lower High Needs allocation than its statistical neighbours and the transfers helped dampen the impact of rising costs associated with the increasing demand for SEND provision in the borough.

From 2016/17 to 2019/20 the DSG deficit was rising at around £5 million per annum leading to an overall deficit of just under £20 millon.  Even with the SEND sufficiency strategies having an impact, further work was still required as the overall DSG deficit had risen to £21.258m at the end of the 2020/21 financial year.

As part of the DSG grant conditions in 2021/22 a plan was submitted to the Department for Education (DfE) for managing future DSG spend.  Rotherham became one of the local authorities with a “Safety Valve” agreement.

The details of Safety Valve Revenue Plan and the funding arrangements which were on target were set out in detail as part of the report.

The 2021/22 outturn on high needs expenditure remained at £0.73 million, however after taking account of other balances in other DSG funding blocks resulted in an in-year deficit of £0.11 million increasing the net deficit in the DSG Central Reserve of £21.37 million, which was ahead of target in terms of the £22.013 million estimated in the DSG  Management Plan.

The Original Management Plan & Latest Position, starting from the DSG deficit position to the latest 2023/24 position was outlined, but demand on the High Needs budget remained high due to rising numbers of children supported in specialist provision and the rising costs of Education Healthcare (EHC) plans.

In the 2023/24 financial year the High Needs budget position as at October 2023 showed an overspend of £1.217m (excluding safety valve funding) against a planned contribution to reserves of £2.068 million. The £2.068 million planned contribution to reserves would be reduced to £851k should the £1.217 million overspend be realised.  The £851k contribution to reserves was after the £3.459 million transfer of funding into the High Needs Block.  The financial pressure would be £2.608 million without the Schools Block transfer in the 2023/24 financial year.

In terms of the 2024/25 budget estimate the High Needs Block pressures remained with the High Needs Block indicative allocation for 2024/25 being £57.377 million. The current 2024/25 pressure on the High Needs Block was estimated to  be £1.716 million when including a transfer amount of £1.210 million (0.5%) from the Schools Block. Without this transfer the pressure was estimated at £2.927 million.

The Safety Valve agreement would still require a transfer from the School Block for the 2024/25 financial year of 0.5% to support the in-year financial pressures, to continue to meet the Safety Valve assumptions and avoid a significant increase in the overall DSG deficit over this period.

The other factors and risks to the management plan outside of the requirement for a school block transfer were the inflationary pressures, delivery of the capital programme to continue to support growth in resource centres and accessibility schemes to avoid high cost Independent Sector Placements and the continued growth in Education and Health Care Plans. 

Forum Mermbers were, therefore, reminded that the financial sustainability of the High Needs Block still remained a significant cause for concern for the Local Authority and would require the support of the Forum and High Needs Sub-Group to implement the strategies to assist in supporting the DSG High Needs Block to operate within its annual allocation.

The Cabinet Member and the Interim Assistant Director for Education also provided their support to the process and the success of the Safety Valve arrangement and welcomed the strategies in place to help Rotherham deliver its target.

Agreed:-  That the report be received and the contents noted.