Agenda item

The Forum considered a report (Agenda Item 8) which presented saving options for balancing the high needs budget for 2016/17. The previous two rounds of meetings of the Heads Funding Group (HFG) and Schools’ Forum (SF) had received reports setting out the funding position of the high needs budget for 2016/17. These reports had detailed the services making up the high needs budget, and possible savings options in order to close a £1.9m estimated funding gap. The reasons for this gap were as summarised again below:

• A significant over spend in the current year high needs block which will need to be met from next year’s DSG.
• The carry forward of previous years’ under spend has supported the budget up to now, but this was one off funding which has now all been used up.
• Pupil numbers and needs in the high needs block continue to rise without a corresponding increase in funding.
• The DfE has provided only a small increase to our funding allocation which falls significantly short of our increasing numbers and level of support of pupils being funded from this budget.

At the meeting of the Schools Forum on 25^th January 2016, the members acknowledged all the options and did not rule any out. As part of setting the schools block budget for 2016/17, it was agreed that £848k of funding would be transferred from the schools’ block funding to the high needs budget as a contribution towards the savings required. 

In the meantime Officers had revised the estimates for the current year forecasts and the budgets for next year, using the latest pupil placement and other relevant data. 

The overall position for 2016/17 was now a shortfall of £1,378k compared to £1,915k as reported in January 2016. The reasons for the £537k change were:

• Transfer of funding from the Schools Block: shortfall reduced by £848k
• Increase in 2015/16 overspend: shortfall increased by £106k
• Increase in 2016/17 estimate for top ups: shortfall increased by £205k

Ian Pearson drew the Forum’s attention to the amendment report which had been circulated at the meeting and the briefing note provided under Item 12 - Any Other Business. The previous week, the government had launched consultations on schools funding. The consultations had been launched after the publication of the agenda and report for this meeting of the Schools Forum. The amendment had been recommended by officers to ensure that the Forum’s financial planning was compatible with the proposals outlined in the consultation.

The consultation that had been launched regarding mainstream schools funding proposed a national funding formula. The decision at the previous meeting of the Schools Forum to move the forecasted headroom in the Schools Block to the High Needs Block would have no impact on mainstream schools funding from 2017/18 because it would be based on a national formula and not historical funding levels.

Regarding the consultation on the High Needs Block (HNB), the government view was that an entire overhaul was necessary on how the HNB was funded. Commitments had been made to look at the way local authorities received funding and it was thought that the HNB funding should reflect the increase in places and the higher levels of needs being supported. It was proposed that proxy measures be used to determine the extent of the funding.

It was proposed that in the future, schools would be funded directly by the Schools Funding Agency, whereas High Needs funding would continue to be received and then distributed by local authorities.

It had been suggested that High Needs funding in 2017/18 would be at a similar level to expenditure in 2016/17. Ian Pearson advised that the Schools Forum needed to be careful not to reduce the budget so far in 2016/17 that the funding in 2017/18 was disadvantaged. Ian Pearson pressed the need however to balance the High Needs budget.

Table 1 of the amendment report summarised the savings (totalling £647k) that were now being proposed. It was still proposed that a two year approach was adopted in balancing the budget.

The savings above were colour coded according to their likelihood of being achieved:

• Green: certain it could be achieved as within the Local Authority’s control.
• Yellow: the reduction to rates/places would be made but as the budget was demand driven the saving level was uncertain (the figure is based on current demand).
• Grey: the reduction to budget was subject to negotiation with external organisations.

The savings that had now been removed totalled £402,350 and were as follows:

·        The reduction in sensory impairment (£23,880)

·        The reduction in places at Engaging Potential (£154,360)

·        The reduction in the equipment budget (£10,000)

·        The reduction in therapy services (£32,440)

·        The removal of PRU outreach service (£117,000)

·        CALT team – the increase in charges to schools (£20,000)

·        Learning Independence for Travel (£40,000)

·        FE College Top Ups (£4,670)

Ian Pearson explained that the services that were no longer proposed to be reduced were preventative and early intervention services which had the potential to reduce the pressure on the HNB further down the line. The savings as proposed above was proposed as the best way to safeguard essential services. The revised table would still mean that £489k of savings were required in 2016/17 and £157k was required in 2017/18.

Chris Davis enquired how likely the savings shown in grey were to be achieved. Jane Seymour responded that there was always a risk when savings were based on negotiations which had not yet been finalised, however there had been an underspend on Further Education college top ups which had enabled the budget to be reduced.

Chris Davis further asked what assurances could be offered that the savings would be successful in balancing the HNB and mitigating the trend of increased pressure. Ian Pearson advised that the number of children with Statements and EHC Plans could not be predicted, however underspends in some areas had been used to offset overspends in others. Services, in their forecasting for 2016/17 has assumed an increase demand on provision and this had been accounted for.

Chris Davis raised the point that there had been an anticipated £2m shortfall in the HNB for 2016/17 which was now £500k. He further asked for information on how the spend in that block could be controlled. Ian Pearson advised that budget setting had been more realistic and had taken into account the increased pressure.

Jane Seymour confirmed that the 2015/16 overspend had been calculated into the service budgets for 2016/17 and officers were looking at a strategic approach to reducing the overspend. For example, a new Autism Spectrum Disorder resource had recently been opened and another was planned to open in the next academic year.

Cathy Burnham contributed that research had been completed to establish the reasons for increased placements in specialist settings and why mainstream schools were less able to support children with high needs.

Ian Pearson advised that Language and Literacy Centres were no longer proposed to be removed because their early intervention prevented higher demand on other services.

Cathy Burnham advised that the Vulnerable Children’s Grant of £60k was no longer considered for a budget reduction because it had a beneficial impact, despite being a small budget.

Bruce Steiner acknowledged that a briefing note on the consultations for Item 12 – Any Other Business, at paragraph 4.8 stated that no transfers between funding blocks would be permitted. He enquired what the result would be if there was a surplus in one of the blocks. Ian Pearson advised that if the Forum members were minded to approve the High needs budget as laid out in the original report, it would not be possible to transfer the expected surplus of circa £400k back to the Schools Block in 2017/18. Therefore the amended savings proposals put forward a plan to balance the budget. Peter Hudson confirmed that this would mean any future overspend in one block could not be mitigated by an underspend in another block.

Peter Hudson opined that there was a disincentive to reduce the overspend in the HNB due to the likely implications of the consultation’s proposals. Ian Pearson agreed that the High Needs budget 2016/17 would in part determine the 2017/18 budget. Peter Hudson suggested that if no savings were proposed then more funding would be received in 2017/18. Ian Pearson pressed the need to balance the budget.

Claire White pointed out that the main issue to consider was that the original proposals had been to create a surplus balance in 2017/18 which could be used to pay back the Schools Block, however this was likely to be impossible if the proposals in the consultation came to fruition. The aim should still be to balance the budget over two years.

Keith Watts congratulated Ian Pearson and the other officers for responding quickly to the consultation and keeping the Forum informed.

Councillor Roger Croft stated that he was not a voting member but would offer his opinion on the matter. He advised that he had considerable experience in trying to estimate government funding formulas and they had proved very hard to predict. It was always difficult to make savings but deferred savings were more difficult to achieve. Like an individual’s debt was at risk of being passed on to their children, any deficit budget would be passed on to the next generation of Schools Forum members and officers to resolve. Councillor Croft warned against setting a deficit budget.

Graham Spellman asked for further information on savings 13 and 14 in the table on the amendment report. He questioned these as savings as they had not been funded by the HNB historically. Ian Pearson advised that saving 13, the Pre-School Teacher Counselling Service (PSTCS) was not and would continue not to be funded by the DSG, however the Heads Funding Group had considered the PSTCS to be of value to early years providers and therefore some of the underspend in the early years block would be used to support this service. Saving 14, Learning Independence for Travel (LIFT), had not been funded by the DSG but qualified for funding and it was proposed that £40k be used to fund a replacement of that service and an invest-to-save strategy.

Peter Hudson proposed that the Forum agree the High Needs Budget 2016/17 as laid out in report and as amended by the amendment report. Graham Spellman seconded the proposal. The Chairman invited the Committee to vote on the proposal; at the vote the proposal was carried.

RESOLVED that the High Needs Block Budget 2016/17 be approved as laid out in the report and as amended by the amendment report.