Governor Finance Induction Training

1
Governor Finance Induction Training

• School Funding Team
• Name of Presenter

2
Session Objectives

• By the end of this session you will be familiar
  with
• 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.

3
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 Bradfords School Forum and the
  calculation of school delegated budgets

4
Role of the Governing Body

• Provide strategic direction
• Meet statutory responsibilities
• Set the school financial (and educational)
  priorities
• Approve and monitor the schools 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)

5
Role of the Finance Committee

• Set financial priorities through the
• School Development Plan
• 3 Year Financial Plan (also known as Governor
  Approved Budget)
• Annual Budget
• Propose or decide how the schools 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

6
What is the Schools Financial Value Standard
(SFVS)?

• 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.
• Maintained schools are required to complete the
  SFVS once a year
• For all maintained schools, the first run through
  was required by March 2013. An annual review is
  required thereafter.
• 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.
• Once completed the SFVS document should be
  submitted to Bradford Council Audit Division no
  later than 31st March each year.
• 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.

7
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 Councils
  audit plan
• Further guidance / training will be available
  through School Funding Team

8
Audit Common Control Weaknesses

• 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

9
Schools Forum

• What is Schools Forum?
• Bradfords 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

10
The Financial Year What happens when?

• 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 31 March
Consistent Financial Report (Annual Return to DFE) June (exact date confirmed Spring Term)
11
What is the S251 Budget Statement?

• The S251 Budget Statement is the documentation
  issued to schools which details their funding for
  the financial year.
• Significant changes to the way schools are funded
  have been implemented for 2013-14 gt a move to a
  more simple, national funding formula
• The majority of funding a school receives is
  based on pupils numbers the more pupils on
  roll, the higher the funding (volatility also?)
• Other factors contribute to a schools funding
  allocation towards the budget (these are shown
  separately on each S251 Budget Statement),
  including
• 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)
• 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

12
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
• Bradfords 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

13
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

14
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 Ofsteds Pupil Premium analysis
  and challenge for schools?
• How do you report PP spend? The best on line
  information is
• 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

15
What is a Budget Monitor?

• 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

16
What is an excess surplus balance?

• 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.
• 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 25.2mAt March
  2013 the figure for Bradford has fallen to 22m
• Under the new Protocol at 31 March 2014
• 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
• These are thresholds not targets
• DFE Guidance most Primary schools should be able
  to manage with balances of 4-5 and Secondary
  schools with 2-3

17
How do we know if our projected surplus is over
or under the threshold?

• The Governor Approved Budget template includes an
  alert to show if your projected surplus balance
  is over the limit
• 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

18
What happens if a school exceeds the threshold?

• 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
• 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

19
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

20
What happens if a school projects a deficit
balance?

• Bradford LA operates a process for managing
  deficit budgets. This is called the Deficits
  Protocol
• Bradford LA has a zero tolerance style stance
  towards deficits
• 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)

21
Efficiency Value for Money

• With the current economic climate, the DFE
  expects schools to make savings through increased
  effectiveness and value for money
• 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
• 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.
• 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
• 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
• There are websites and guidance documents
  available. Details of how to access these is
  provided later in this presentation. DfE Report
  June 2013

22
Consistent Financial Reporting (CFR)

• 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

Income Income Expenditure Expenditure
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
23
Annual CFR Return

• 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
• The return details the total funding, income,
  expenditure and balances recorded for the school
  for the financial year
• The return is submitted to the DFE via the
  COLLECT website
• 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
• The LA also uses the data to compile the
  Financial Classification of Schools category for
  each Bradford School

24
What is benchmarking?

• 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
• The DFE benchmarking tool allows schools to
  compare themselves to other schools throughout
  England
• The LA benchmarking tool allows schools to
  compare themselves to other schools within
  Bradford
• 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
• Benchmarking is updated on both a national and
  local level each year. The local benchmarking
  data is available on the BSO website.
• The Finance Committee should expect to see and
  review this data at least on an annual basis

25
What is the Financial Classification of Schools?

• 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.
• 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
• There are 4 categories A, B, C, D with A being
  the highest level of support and D being the
  lowest level of support

26
Deadline Dates

• 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
27
Questions to ask your school

• Following this session you may wish to ask your
  school the following questions
• Are the pupil numbers stable?
• Which of the 4 Financial Classification
  Categories is the school currently placed in?
• How many points are on the school Scorecard?
• 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?)
• Is the forecast balance for March 2014 near to or
  over the thresholds?
• How has Pupil Premium spending information been
  published?

28
Any Questions?

• If you have any questions about the topics we
  have covered during this session please feel free
  to ask them now

29
How to access guidance notes and documents

• 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/schoo
  ls/home.aspx
• From the home page go to Site Content Finance
  SFT Guidance School Governor Induction
  Documentation

30
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 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
31
Any further question Thank You

• We hope you found this session both useful and
  informative
• Please take 5 minutes to complete the feedback
  form
• Your views and opinions are important and help us
  to improve the training and information we
  provide
• You can hand your feedback form in before you
  leave today if you would like more time to
  complete it