Minutes:
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.
Supporting documents: