Agenda item

Jenny Lawrence introduced the report and stated that the content only covers maintained schools and academies are not affected by this at all.  Jenny referred to the Leicestershire Scheme of Financing which sets out the financial relationship to the local authority and its schools and is what conveys the responsibility for the budget to the governing body. In terms of revisions to that document there are two sets of revisions – those that are Secretary of State directed and local authorities have no option other than to adopt these and there are others where there are changes the local authority seek to reflect the way schools are expected to work with the local authority.  There are two sets of changes within this document – one is driven by the document ‘The Financial Transparency of Maintained Schools’ which is a directed revision and the second is a tidy-up of local wording and reflection of current working practices.  The version of the Appendix shows ‘tracked changes’ to make it easier to see the changes because of the size of the document.

Jenny reported that in July 2019 the DFE launched a consultation on financial transparency for maintained schools because it was felt that the arrangements in place for academies were much more robust than those in place for maintained schools.  The results of that consultation took time to come through partially because the DfE wanted to introduce some more stringent audit requirements which would have required local authorities to increase their internal audits of schools significantly which has not been implemented.  There are some changes that mainly relate to reporting but will challenge the way the local authority work with schools moving forward.  Firstly, there are a set of annual returns to the DfE the local authority carries out and the DfE will start publishing the names of authorities that do not meet those deadlines.  There are also two of those returns that as a local authority are reliant on maintained schools giving the information to be able to respond to DfE deadlines and that is in relation to the School Financial Value Standard and the consistent financial reporting returns.  Jenny was currently working on information to go out to schools.  The DfE is also requesting the number of maintained schools that either have suspended budgets or operating under a notice of financial concern.  In addition, they will collect information on amounts recovered following action undertaken from fraud investigations and make it mandatory for maintained schools to submit 3-year budget plans which in Leicestershire 5 years of data is currently collected.  Schools will have some additional reporting requirements in terms of third-party related transactions.  The DfE also want to collect information on the number of deficit recovery plans the local authority are working with.

Jenny stated that the local authority’s statement of accounts publish a number of individuals earning a particular banding rate; this is something individual maintained schools are going to have to publish on their website with a link to the school financial benchmarking information by the DfE.  These changes are being looked at in terms of guidance for schools and will apply to the 2021 financial year.  As a result, two direct revisions have been made to the Scheme For Financing Schools which is set out in paragraph 10 – the first is for maintained schools to submit 3-year budget plans and requirement for maintained schools to submit recovery plans.

Jane Dawda asked about whether schools will be working on 3-year budget or a 5-year budget.  Jenny commented that this is something being looked at as there is concern how reliable a 5-year plan is as they are far too speculative to mean a great amount but are working through the detail at the moment.

Graham Bett referred to paragraph 6 of the report which states that schools need to submit a recovery plan to the local authority when their deficit rises above 5% - presumably the local authority know which schools this refers to.  Jenny commented that the local authority currently works with schools to ‘licence’ a deficit because a school cannot operate a deficit without a ‘licence’ so the recovery plan is part of that licencing process.  Graham referred to the paragraph that states the local authority will also seek deficit recovery plans lower than this threshold.  Jenny stated that the local authority may because the financial threshold is not always the important thing and there are things in there that schools should be on top of and the challenge comes in on where to focus resources on.  Graham asked how many schools there are with their deficit above 5%.

Carolyn Lewis referred to the comment about the related party transactions and asked what the local authority’s plans are to support maintained schools in that regard and if there was anything the Diocese could do in relation to Related Party Transactions between Diocese and Church Maintained Schools.  Jenny said that guidance was being looked at for these areas.  Guidance will be issued to set out to all maintained schools the interpretation of all these things and for the RPT area the local authority will be taking the advice of Internal Audit.

Schools Forum noted the new reporting requirements for both local authorities and maintained schools.

Schools Forum (maintained schools only) approved the revised Scheme for Financing Schools and its retrospective application from 24 August 2020.