Governor Finance Induction Training
School Funding Team
Name of Presenter
Session Objectives
By the end of this session you will be familiar with:
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Governing Body responsibilities
The reporting requirements for schools throughout the year
Local Authority Protocols
Deadline dates for submission of returns
How to access further written documentation on the topics covered
during the session via the Bradford Schools Online website
You will also have an awareness of key issues within school finance
Governors wishing to learn and understand more about school
finances can book onto the Effective Financial Governance
Course. Contact Governor Services for information.
Role of the School Funding Team
• We aim to continuously improve the financial management and
controls in Bradford Schools via effective monitoring, support and
challenge
• Reduce the number of schools reporting deficits and excess
surplus balances
• Support & challenge delivered according to the risk posed by the
financial position of the school (e.g. at risk of deficit)
• SFT provides a ‘helpdesk’ for schools on all aspects of school
financial management and reporting
• SFT carries out school visits in line with ‘Protocol’ requirements
• Manage Bradford’s School Forum and the calculation of school
delegated budgets
Role of the Governing Body
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Provide “strategic direction”
Meet statutory responsibilities
Set the school financial (and educational) priorities
Approve and monitor the school’s budget (revenue and capital)
Establish limits of delegated authority. In practice many responsibilities
delegated to Head Teacher – governors need to understand their role
Ensure accurate financial accounts are kept
Determine the staff complement and the pay policy for the school
Determine other school policies e.g. lettings
Act as a ‘critical friend’ to the Head Teacher by providing advice,
challenge and support
Comply & participate in completing the Schools Financial Value
Standard (SFVS)
Respond to the LA consultations on formula funding changes. (Many
changes within education finance since the introduction of the Coalition
Government)
Role of the Finance Committee
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Set financial priorities through the:
 School Development Plan
 3 Year Financial Plan (also known as Governor Approved Budget)
 Annual Budget
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Propose or decide how the school’s delegated funding should be spent
Approve and monitor the annual budget
Revising the annual budget where significant changes have occurred since
approval
Ensuring the budget is managed effectively (control of balances)
Ensure the school complies with the LA financial regulations
Determine virement and expenditure thresholds
Evaluate the effectiveness of spending decisions & value for money
Ensure accounts are properly closedown at year end
Administer voluntary / private / company funds
What is the Schools Financial Value Standard
(SFVS)?
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The SFVS has been designed in conjunction with schools to assist them in managing their
finances and to give assurance that they have secure financial management in
place. Governing bodies have formal responsibility for the financial management of their
schools, and so the standard is primarily aimed at governors.
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Maintained schools are required to complete the SFVS once a year
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For all maintained schools, the first run through was required by March 2013. An annual
review is required thereafter.
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The DfE website includes two versions of the SFVS assessment form, both of which can be
downloaded. One version includes embedded support notes, the other is simply the
assessment form. Schools are free to use either version. The support notes can also be
downloaded from the SFVS section of the DFE website.
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Once completed the SFVS document should be submitted to Bradford Council Audit Division
no later than 31st March each year.
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The LA will use schools’ SFVS returns to inform their programme of financial assessment
and audit. SFVS is mandatory and all maintained schools are expected to comply. Failure to
do so could lead to the issue of a Notice of Concern and to withdrawal of budget delegation.
SFVS Reporting March 2013
• Very mixed quality of returns; small number of ‘poor’ returns
• Of 171 returns: 105 schools gave a ‘NO’ or an ‘IN PART’
response to at least 1 question
• 5 questions where fewer than 90% of schools gave a ‘YES’
response (Qs 1, 8 12, 22, 23)
• Q23 (business continuity or disaster recovery plan and an up to
date asset register and adequate insurance) - only 53% of
schools responded ‘YES’
• SFVS Outcomes are being built into the Council’s audit plan
• Further guidance / training will be available through School
Funding Team
Audit: Common Control Weaknesses
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Financial decision making responsibilities are unclear
Financial decisions are influenced by personal and business interests
(clear register of business interests)
Inadequate monitoring of the budget results in overspends or failure to
effectively utilise funds
Purchases are made without authority
Invoice checking procedures are insufficient to protect against
fraudulent and erroneous purchases e.g. paying for goods not received
Governors and staff are unaware of their comparative financial
performance and potential efficiency savings are not identified
Posts are held by ineligible and unsuitable staff
Voluntary funds – the purpose of the fund is unclear and funds are used
inappropriately
Voluntary funds – there is no independent oversight and / or
stewardship of funds
Schools Forum
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What is Schools Forum?
Bradford’s Schools Forum is a representative group of Head Teachers,
Governors & non school members established by statutory instruments issued
by the Department for Education.
Further Information is available online (Bradford Council minutes website)
What do they do?
Acts a body for Local Authorities to consult on School Budget related issues,
such as formula funding and provision for the education of pupils with Special
Educational Needs (SEN)
Agree “funding formulae” and oversee the review of this (via the Formula
Funding Working Group; FFWG and the Early Years Working Group; EYWG)
and consultation with schools
Make the recommendations on the allocation of the Dedicated Schools Grant
(DSG) on an annual basis. This includes agreeing ‘topslices’ to school budgets
for centrally managed funds and services that maintained schools can access
Manage and monitor school deficit and surplus budget processes, through the
Schools Financial Performance Group; the SFPG
Consider changes in financial procedures and protocols e.g. the Scheme for
Financing Schools, the Financial Classification of Schools, Light Touch Financial
Monitoring and Intended Use of Balances
The Financial Year – What happens when?
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Indicative S251 Budget Statement issued to schools by LA in February
Final S251 Budget Statement issued to schools by LA in March
Return
Date to be submitted to LA each year
3 Year Governor Approved Budget
15 May
Q1 Budget Monitor & Bank Reconciliation
31 July
Q2 Budget Monitor & Bank Reconciliation
31 October
Q3 Budget Monitor & Bank Reconciliation
31 January
Q4/Year End Bank Reconciliation
April (exact date confirmed Spring Term)
Intended Use of Balances Documents
(excess surplus balance information)
Schools Financial Value Standard
31 March
Consistent Financial Report (Annual
Return to DFE)
June (exact date confirmed Spring Term)
31 March
What is the S251 Budget Statement?
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The S251 Budget Statement is the documentation issued to schools which details
their funding for the financial year.
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Significant changes to the way schools are funded have been implemented for 201314 > a move to a more simple, national funding formula
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The majority of funding a school receives is based on pupils numbers – the more
pupils on roll, the higher the funding (volatility also?)
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Other factors contribute to a school’s funding allocation towards the budget
(these are shown separately on each S251 Budget Statement), including:
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Deprivation levels (FSM and IDACI); FSM influences levels of Pupil Premium funding
Special Educational Needs
Levels of mobility
Pupil Prior attainment
Rates (actual cost)
Funding is grouped together in types (CFR codes):
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I01 – Funds delegated by the Local Authority
I02 – Funding for 6th Form Students
I03 – High Needs Top Up Funding
I04 – Funding for Minority Ethnic Pupils
I05 - Pupil Premium
School Funding Reform - significant changes
from 2013/14
• The DfE has announced the intention to move to a ‘national funding
formula’ for schools from April 2015
• All local authorities have been required to implement significant
changes to local formula funding arrangements from 1 April 2013, to
‘prepare the way’
• Bradford’s Schools Forum made final recommendations on our
Primary, Secondary Early Years, and High Needs funding formulae for
2013/14 in January 2013.
• A number or aspects, especially concerning High Needs provision, are
to be further reviewed during 2013/14, in time for implementation at
April 2014
School Funding Reform – key
changes for 2013/14
• School budgets are based on the October 2012 pupil count, rather
than the January 2013 count
• Our funding formulae for Primary & Secondary schools has been
simplified; reducing the number of factors from 37 to 10.
• Funding allocations for high needs providers for pupils and students
(aged 5-25) has been moved to the ‘Place-Plus’ model and will be
calculated monthly
• The Minimum Funding Guarantee (MFG) has been set at -1.5% per
pupil in 2013/14 and 2014/15, limiting any reduction in funding from
the previous year for individual schools to 1.5% per pupil
• The funding of centrally managed services has been restricted,
leading to a greater level of delegation to schools to make their own
arrangements. Certain central funds continue e.g. maternity
Pupil Premium
• Governors are required annually to publish a report on spending
• Are you able to demonstrate the impact of each aspect of
spending? How rigorous is your monitoring? How do you
evaluate effectiveness? Are you using Ofsted’s ‘Pupil Premium:
analysis and challenge for schools’?
• How do you report PP spend? The best on line information is:
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Easy to find
Gives an overview of the PP and why it has been introduced
Provides access to Pupil Premium Policy
Gives total allocations and a breakdown of expenditure each year
Gives impact for the current year and intended impact for the next
year
What is a Budget Monitor?
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The Budget Monitor records the following information:
Original Governor Approved Budget
Governor Approved Revised Budget (if applicable)
Spend to date (end of each quarterly period)
Forecasted Spend
Projected Outturn – balance remaining at the end of the
financial year
• Outturn (balance) in relation to the excess surplus balance
threshold
• The Governing Body should expect to see the Quarterly Budget
Monitor each term before it is submitted to the LA
What is an ‘excess’ surplus balance?
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Bradford LA operates a scheme to manage excess surplus balances. This is called
The Surplus Balance Protocol. Please note that the Protocol has changed for
balances held at March 2014.
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At March 2010 the total surplus balance within Bradford it was £21.3m.
At March 2011 the figure for Bradford was £24.6m.
At March 2012 the figure for Bradford had risen to £25.2m
At March 2013 the figure for Bradford has fallen to £22m
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Under the new Protocol at 31 March 2014
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Primary, Nursery and Special schools can hold up to the greater of £60,000 or 6% of Section 251
Funding
Secondary schools can hold up to 4% of Section 251 Funding
The types of scheme schools can hold balances in excess of these thresholds is restricted
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These are ‘thresholds’ not ‘targets’
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DFE Guidance ‘most Primary schools should be able to manage with balances of 4-5%
and Secondary schools with 2-3%’
How do we know if our projected surplus is over or
under the threshold?
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The Governor Approved Budget template includes an alert to show if
your projected surplus balance is over the limit
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The Budget Monitor template includes a calculation table and an ‘alert’
to identify if the surplus balance is over or under the limit. Governors
should check this on every budget monitor presented to them
What happens if a school exceeds the
threshold?
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Where a school identifies that their surplus balance will exceed the threshold
they should first endeavour to utilise the excess within the financial year but
then must check the conditions of the Protocol
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If a school is unable to spend the excess surplus within the financial year and
the Governing body wishes to carry the balance forward to the next financial
year they should adhere to the Surplus Balance Protocol in that they must:
– Meet, before the 31st March, to discuss and agree the SDP priorities upon which
the excess surplus balance will be spent in the next financial year
– Ensure these plans meet the restricted criteria of the new Protocol e.g. capital
schemes
– Ensure that these schemes are clearly minuted and that these minutes record costs
and timescales for completion
– Complete the Intended Use of Balances (IUB) Schedule Template issued by the LA;
this details the plans and costs within set categories
– Submit the Schedule, Minutes and any other required evidence to support the plans
to School Funding Team no later than 31st March
What happens if we do not take action?
• Where a school fails to comply with the Protocol at
any point within the process, they may be at risk of
‘clawback’
• School Funding Team recommends that Governors
download the Surplus Balance Protocol from the
Bradford Schools Online website to ensure they are
familiar with this
What happens if a school projects a deficit balance?
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Bradford LA operates a process for managing deficit budgets. This is
called the Deficits Protocol
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Bradford LA has a ‘zero tolerance’ style stance towards deficits
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If at any point during the year a school reports a deficit balance they
must contact School Funding Team
– An SFT Officer will undertake a visit to the school and meet with the Head Teacher
and a member of the Governing Body to discuss whether the school can take
immediate action to bring the budget back into balance before year end
– Where it is not possible to do this the school must make a ‘formal application for
deficit’
– This application will identify cost savings and when the budget will be back in a
balanced position
– If the school cannot produce a plan which achieves a balanced budget position the
LA will work with the school to produce a repayment plan which achieves a
balanced budget whilst ensuring the progress of pupils is not compromised
– The Deficits Protocol can be downloaded from the Bradford Schools Online website
(BSO)
Efficiency & Value for Money
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With the current economic climate, the DFE expects schools to make savings
through increased effectiveness and value for money
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Schools should consider how they can collaborate with each other to help towards
achieving these savings. By collaborating on both a formal and informal basis,
schools can raise standards and maintain local provision
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Schools working together can generate efficiencies by providing an opportunity to
pool funding, purchase goods and services jointly, share staff, functions, facilities
and technology across sites.
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Benchmarking can help schools identify where their spend is significantly different
to other similar schools and where savings and efficiencies could be introduced,
thus achieving greater value for money
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Value for money is not simply buying goods and services for the cheapest rate. It is
maximising resources, improving efficiency and utilising budgets effectively to
directly improve the teaching and learning of pupils
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There are websites and guidance documents available. Details of how to access
these is provided later in this presentation. DfE Report June 2013
Consistent Financial Reporting (CFR)
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CFR is the acronym for Consistent Financial Reporting
This refers to the national Government prescribed standard coding structure in
place for all Local Authority Schools
There are codes to define types of income and types of expenditure, for
example:
Expenditure
Income
I01
Funds delegated by the LA
E01
Teachers Salaries
I08
Income from Facilities & Services
E12
General Maintenance
All financial returns to the Local Authority are made in this format. School Funding
Team issues templates for all returns based on this standard
Annual CFR Return
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Once the financial year has closed and the school and the LA has
agreed on the closing balance, all LA Schools must submit an annual
return in the CFR coding format
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The return details the total funding, income, expenditure and balances
recorded for the school for the financial year
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The return is submitted to the DFE via the COLLECT website
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The exact deadline for submission varies each year but usually falls in
early June
What is the CFR Return used for?
• Both the LA and the DFE use the data to produce benchmarking
information
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The LA also uses the data to compile the Financial Classification of
Schools category for each Bradford School
What is benchmarking?
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Benchmarking is the comparison of financial data between schools to allow financial
performance to be accessed and for best practice and value for money to be
identified, shared and encouraged
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The DFE benchmarking tool allows schools to compare themselves to other schools
throughout England
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The LA benchmarking tool allows schools to compare themselves to other schools
within Bradford
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You can compare your school to others based on pre-determined clusters grouped
on percentage of ethnic minority pupils and free school meals, or simply on size or
interest in a particular school
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Benchmarking is updated on both a national and local level each year. The local
benchmarking data is available on the BSO website.
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The Finance Committee should expect to see and review this data at least on
an annual basis
What is the Financial Classification of Schools?
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The Financial Classification process is a method employed to identify
risk and support needs
It allows the LA to identify those schools facing the highest level of
financial challenge. The LA provides these schools with additional
support. Schools are then placed within a Category to identify which
level they fall into.
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How is the Financial Classification calculated?
The financial classification is based on a number of factors:
Closing balances for the last 2 financial years
Forecast balances for the next 3 year budget period
Accuracy of forecasting balances at Q3 compared to final actual
balance
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There are 4 categories A, B, C, D with A being the highest level of
support and D being the lowest level of support
Deadline Dates
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Each return due from schools has a specific deadline date
Schools are informed of the deadline dates in the Timetable of Key Dates
document and also within the information provided with each report template
What happens if a return is late?
The LA operates a Light Touch Financial Monitoring Scorecard (LTFM)
Where reports are late or inaccurate points are issued to the school
Points
Colour
Action
Less than 20
Green
No action
Over 20 less than 40
Amber
Termly contact with Head Teacher
40 or more
Red
Half termly contact with Head Teacher
An example of points issued are Late VAT Submittal = 5 points; late budget monitor = 5
points
The finance Committee should expect to see the Scorecard position of the
school each quarter
Questions to ask your school
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Following this session you may wish to ask your school the following questions:
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Are the pupil numbers stable?
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Which of the 4 Financial Classification Categories is the school currently placed
in?
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How many points are on the school Scorecard?
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Does the school currently have an approved Scheme for Intended Use of
Balances (i.e. was the surplus balance at March 2013 over the previous 5% 8%
thresholds?)
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Is the forecast balance for March 2014 near to or over the thresholds?
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How has Pupil Premium spending information been published?
Any Questions?
• If you have any questions about the topics we have covered
during this session please feel free to ask them now
How to access guidance notes and documents
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We have covered a number of topics during the session and more detailed
information is available to you on these and other topics via the Bradford
Schools Online (BSO) website
We recommend you look through these in order to cement your understanding
of the information provided today and also to expand on the information
You may also wish to revisit information once a term to ensure you are up to
date with any changes in policy. Since the introduction of the Coalition
Government there have been a number of changes and we anticipate further
changes will take place. The most up to date information available will be
placed on BSO at all times.
Website address: https://bso.bradford.gov.uk/schools/home.aspx
From the home page go to: Site Content – Finance – SFT Guidance –
School Governor Induction Documentation
Documents available to view and download:
• Role of the Governing Body
• Governance & Accountability
• HCSS Strategic Financial Planning
Guide
• Audit Commission-Keeping Your
Balance
• DfE Efficiencies Report June 2013
• Benchmarking (example)
• The Effective Financial Governance
Course
• Efficiency & Value for Money
• Governor Approved Budget (Example)
• CFR Report (Example)
• SFVS –Schools Financial Value
Standard
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Introduction to Formula Funding
Documents to request for your school
Glossary of Key Terms
Useful Websites
School Funding Team Contacts
BSO Document Navigation
Schools Balances Deficits & Surpluses
Schools Forum
Protocols & Statutory Framework
Training Session Powerpoint
presentation
• Accounting of VAT
• Timetable of Key Dates
Any further question & Thank You
• We hope you found this session both useful and informative
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