This report sets out the current position (month 8) of the DSG budget for 2020/21 and outlines the variances and impact on the deficit recovery plan.
1.1 NOTE: The current overall DSG allocation and budget position for 2020/21.
1.2 NOTE: The current position within each funding block and impact on the deficit recovery plan.
2.1 The Dedicated Schools Grant (DSG) is a ring fenced specific grant and can only be used in support of the schools’ budget and spent on school/pupil activity as defined by the School and Early Years Finance (England) Regulations (2020).
2.2 The DSG is split between four different funding blocks – schools, central school services, early years, and high needs. Each Council’s allocation is largely based upon actual pupil numbers from the October pupil count proceeding the actual financial year. Although separate allocations are received for each block, transfers are allowed between blocks but subject to certain restrictions.
2.3 Most of the grant is allocated to schools – the Individual School’s Budget (ISB) or delegated budget – this is mainly formula driven; the remainder is the Centrally Retained School’s Budget – the non-delegated budget.
2.4 Overspends on the DSG are carried forward and are a first call on the following year’s allocation of DSG. Underspends on the DSG are carried forward to support the future year’s school’s budget.
2.5 The Authority must ensure that DSG is correctly spent and has to report the outturn position to inform the impact upon the following year’s budget position. The budget monitoring of the Authority distinguishes between how services are funded, namely by DSG or by the Local Authority.
2.6 The LA receives its DSG allocation gross (including allocations relating to academies and post 16 provision), and then the Education & Skills Funding Agency (ESFA) recoups the actual budget for these settings to pay them direct, leaving a net or LA allocation.
3.1 The DSG allocation received by the LA will change during the year. Table 1 shows the original estimate made by the LA and the current position, as last notified by the ESFA in July 2020. Further details are contained in Appendix 1. Changes to the allocation could impact on the overall budget position.
3.2 The allocations shown in the table are prior to any transfers between blocks. For the 2020/21 budget the Schools’ Forum has agreed a transfer of £350k from the schools’ block to the high needs block.
3.3 Overall there has been an increase of £586k to the current year allocation, which is explained in the paragraphs below (no change to the previous month 6 report).
Table 1: RBC’s original and revised (current) DSG allocations for 2020-21
|Block||Original estimated DSG allocation 2020/21|
|Original estimated DSG allocation 2020/21|
Less recoupment relating to Academies
|Original estimated DSG allocation 2020/21 |
|Revised DSG allocation 2020/21|
|Revised DSG allocation 2020/21 |
Less recoupment relating to Academies
|Revised DSG allocation 2020/21 |
Total DSG available
|Central Schools Block||1.218||1.218||1.218||1.218||0|
|Early Years Block||12.638||12.638||12.832||12.832||0.194|
|High Needs Block||22.472||-4.162||18.310||22.395||-3.829||18.566||0.256|
|19/20 Early Years adj.||0.136||0.136|
3.4 The main changes that may occur and need to be monitored during the year are as follows:
4.1 Appendix 2 contains the 2020/21 budget and current (month 8) forecasts. This is split between the four funding blocks, and broken down by the main reporting lines for the DSG. Appendix 3 contains brief notes on what is included in each line of the budget report.
4.2 Table 2 summarises the current budget and forecast per block. Note that the DSG allocation includes an additional net £0.322m which is ring fenced deficits/surpluses brought forward from 2019/20 and being utilised in 2020/21 (for growth fund, central schools block, and early years).
Table 2: Summary Budget and Forecast 2020/21
|Block||Original budget (£m)||Virements (£m)||Current budget (£m)||Forecast as at month 8 (£m)||Variance as at month 8 (£m)|
|Central Schools Block||1.218||0.039||1.257||1.257||0|
|Early Years Block||13.109||0.239||13.348||13.150||-0.198|
|High Needs Block||18.356||0.333||18.689||19.122||0.433|
|Repayment of Deficit||2.477||-0.387||2.090||2.090||0|
|Sub Total – Net Expenditure||81.171||0.137||81.308||80.921||-0.387|
|Balance Over/(Under) Allocated||2.174||-0.387||1.787||1.477||-0.310|
4.3 The deficit forecast for the end of the financial year is now £1.477m (£881k was reported at the last meeting) compared to the original budget of £2.174m and revised budget of £1.787m. The variances from the original budget are summarised as follows:
|Reduction in deficit amount to be repaid from 2019/20||-£387,140|
|School formula – business rates||£1,058|
|Early year’s contingency not utilised||-£197,978|
|Reduction in HNB grant due to import/export adjustment||£77,487|
|Place funding met by 6th form grant||-£32,595|
|High Needs top-up funding||£464,298|
|Other DSG funding adjustments (roundings across all blocks)||– £59|
4.4 Note that because many of these underspends are ringfenced and required for future commitments, this does not mean that the overall deficit has reduced by this amount. The following paragraphs provide more details on the variances.
The end of year position in 2019/20 was more favourable than when the current year budget was planned and set, so the deficit to be repaid has reduced by £387k to £2.090m.
Most of the central school services budgets are agreed contributions towards the full cost of a service and the majority will not therefore have a variance. There will be no variance on copyright licences, as this is a national contract agreed in advance. The underspend on the admission services brought forward from last year of £39k is likely to be required in year.
Table 3: Numbers of EHCPs
|Date||Actual total number||Annual year on yea increase|
|15/16: January 2016||1,002||43|
|16/17: January 2017||1,066||64|
|17/18: January 2018||1,175||109|
|18/19: January 2019||1,276||101|
|19/20: January 2020||1,391||115|
Table 4: Top Up Budgets and Current Forecasts 2020/21
|Placement type||Budget £ 2020/21||Current forecast for 202/21||Variance||Budget numbers 2020/21||Current actual for 2020/21||Variance||Budget average cost per place||Current average cost per place||Variance|
|NMSS & Independent||2,204,158||2,530,900||326,742||47||59||12||46,897||42,897||-4,000|
|Pupil Referral Units||859,867||928,287||68,420||12||12||0|
|Other Alternative Provision||434,972||672,485||237,513||38||51||13||11,447||13,186||1,739|
* PRU/Hospital costs will relate to all pupils placed in these provisions (e.g. costs include excluded pupils without an EHCP who are not included in the numbers above).
6.1 Since 2018/19, the high needs block deficit has been reducing, despite the continuing pressure of increasing numbers of EHCPs. Transfers between blocks including using underspend from other blocks in previous years has helped bring the deficit in the high needs block down, from its peak of £3.4m overspend at the end of 2016/17. Last year’s plan assumed a closing deficit of £2.098m in 2019/20, and the recovery of the deficit to have been achieved by the end of 2022/23. The actual closing deficit last year was £2.090m
6.2 The main elements of the recovery plan are as follows:
6.3 The DSG conditions of grant for 2020/21 have changed and now states that any LA with an overall deficit on its DSG account at the end of 2019/20, or whose DSG surplus has substantially reduced during the year, must be able to present a plan to the DfE for managing their future DSG spend. The plan should be shown to the local Schools’ Forum and should be kept regularly updated throughout the year to reflect the most recent forecast position and be viewed as an on-going live document. We have been presenting and updating the plan for Schools’ Forum as part of budget monitoring for the last two years, so this is nothing new for Reading. We also met with the DfE in June, who were satisfied with our plan and progress made.
6.4 In order to support LAs, the DfE has produced a template as a planning tool and which can be used for presenting the plan at Schools’ Forum. This includes some extra detail not previously brought to the Forum which will be collated for a future meeting. In the meantime, Appendix 4 provides information on the current plan, and paragraph 5.5 of this report provided details of the top up forecasts which are the main component of the plan.
6.5 The current forecast is that the high needs deficit will increase by £206k at the end of 2020/21, and the end of year carry forward will be £2.296m. It is still expected that recovery of the deficit will happen in 2022/23, though this is very much dependent on the future high needs DSG allocations continuing to rise as promised by the Government, and that numbers of EHCPs do not significantly increase above the current trend included in the plan.
|December 2019 DfE notification||LA estimate for budget||July update|
|Pupil Numbers Primary||13,096.5||13,096.5||13,096.5|
|Pupil Numbers Secondary||6,952.5||6,952.5||6,952.5|
|Premises & Mobility Funding||£1,283,373||£1,283,373||£1,283,373|
|actual funding rounding adjustment||£1||£35||£1|
|Schools Block Net Total||£95,536,486||£46,371,030||£46,370,996|
|Central School Services Block|
|actual funding rounding adjustment||£53|
|Central School Services Block Net Total||£1,217,847||£1,217,900||£1,217,847|
|High Needs Block|
|Pupil Numbers – Special Schools||287.0||287.0||287.0|
|Pupil Numbers – Alternative Provision||35.0||35.0||35.0|
|Additional funding for Special Free Schools||£17,553||£17,553||£0|
|actual funding rounding adjustment||-£45||-£45|
|Recoupment – academy high needs places||-£2,514,000||-£4,162,200||-£3,828,834|
|High Needs Block Net Total||£19,958,000||£18,309,800||£18,565,613|
|Early Years Block||(Jan ’19 census)||(Jan ’20 census)||(Jan ’20 census)|
|3 & 4 year olds Universal – Schools||1,321.6||1,369.2||1,369.2|
|3 & 4 year olds Universal – PVI||1,463.0||1,510.0||1,550.2|
|3 & 4 year olds Additional – Schools||268.8||270.4||262.6|
|3 & 4 year olds Additional – PVI||619.2||590.0||603.9|
|2 year olds – schools||60.0||72.0||72.0|
|2 year olds – PVI||325.2||270.0||279.7|
|PPG – schools||191.0||204.6||205.6|
|PPG – PVI||144.0||127.0||135.8|
|DAF – eligible pupils||60.0||26.0||60.0|
|Maintained Nursery Grant||£251,535||£260,276||£260,276|
|actual funding rounding adjustment||£87||£1||£2|
|Early Years Block Net Total||£12,595,042||£12,637,800||£12,831,639|
|SUMMARY GROSS IN YEAR ALLOCATION|
|Central School Services Block||1,217,847||1,217,900||1,217,847|
|High Needs Block||22,472,000||22,472,000||22,394,447|
|Early Years Block||12,595,042||12,637,800||12,831,639|
|TOTAL GROSS DSG ALLOCATION IN YEAR||£131,821,375||£131,864,220||£131,980,420|
|SUMMARY NET IN YEAR ALLOCATION|
|Central School Services Block||£1,217,847||£1,217,900||£1,217,847|
|High Needs Block||£19,958,000||£18,309,800||£18,565,613|
|Early Years Block||£12,595,042||£12,637,800||£12,831,639|
|TOTAL NET DSG ALLOCATION IN YEAR||£129,307,375||£78,536,530||£78,986,096|
|Line ref||Description||Original Budget £m||Virements £m||Current Budget £m||Forecast £m||Variance £m|
|1||Individual Schools Budget – Maintained Schools||44.325||0.003||44.328||44.329||0.001|
|3||Behaviour Support Services (de-delegation)||0.176||0.000||0.176||0.176||0.000|
|4||Staff costs supply cover (trade unions) (de-delegation)||0.043||0.000||0.043||0.043||0.000|
|5||School Improvement (de-delegation)||0.130||0.000||0.130||0.130||0.000|
|6||Statutory/regulatory Duties (ESG) (de-delegation)||0.080||0.000||0.080||0.080||0.000|
|7||Sub Total Schools Block Net Expenditure||46.011||-0.087||45.924||45.302||-0.622|
|8||Schools Block DSG Allocation||46.011||-0.087||45.924||45.924||0.000|
|9||Balance Over / (Under) Allocated||0.000||-0.000||0.000||-0.622||-0.622|
|Central Schools Services Block|
|10||Contribution to combined budgets||0.494||0.000||0.494||0.494||0.000|
|12||Servicing of schools forum||0.020||0.000||0.020||0.020||0.000|
|13||Prudential borrowing costs||0.040||0.000||0.040||0.040||0.000|
|14||Other Items (copyright licences)||0.111||0.000||0.111||0.110||-0.000|
|15||Statutory/regulatory Duties (ESG)||0.338||0.000||0.338||0.378||0.039|
|16||Sub Total Central School Services Block Net Expenditure||1.218||0.039||1.257||1.257||-0.000|
|17||Central School Services Block DSG Allocation||1.218||0.039||1.257||1.257||0.000|
|18||Balance Over / (Under) Allocated||0.000||-0.000||0.000||-0.000||-0.000|
|Early Years Block|
|19||Early Years Funding (free entitlement)||12.425||0.239||12.664||12.466||-0.198|
|20||Support for inclusion||0.100||0.000||0.100||0.100||0.000|
|21||SEN support services (Portage/Dingley)||0.198||0.000||0.198||0.198||0.000|
|22||Central expenditure on early years entitlement||0.385||0.000||0.385||0.385||0.000|
|23||Sub Total Early Years Block Net Expenditure||13.109||0.239||13.348||13.150||-0.198|
|24||Early Years Block DSG Allocation||13.109||0.239||13.348||13.348||0.000|
|25||Balance Over / (Under) Allocated||0.000||0.000||0.000||-0.198||-0.198|
|High Needs Block|
|26||SEN placements – Maintained Schools (first £10k/£6k place funding)||0.974||0.333||1.307||1.274||-0.033|
|27||Top up funding – Special Schools & PRU||9.254||0.000||9.254||9.037||-0.217|
|28||Top up funding – Resource Units||0.514||0.000||0.514||0.672||0.157|
|29||Top up funding – Mainstream||1.950||0.000||1.950||2.016||0.065|
|30||Top up funding – Nursery||0.092||0.000||0.092||0.063||-0.029|
|31||Top up funding – FE Colleges||0.917||0.000||0.917||0.840||-0.076|
|32||Top up and other funding – non maintained & independent providers||2.639||0.000||2.639||3.203||0.564|
|33||Additional high needs targeted funding (Inclusion Fund)||0.350||0.000||0.350||0.350||0.000|
|34||SEN support services||0.572||0.000||0.572||0.572||0.000|
|35||Hospital education services||0.175||0.000||0.175||0.175||0.000|
|36||Support for inclusion||0.425||0.000||0.425||0.425||0.000|
|37||Therapies and other health related services||0.395||0.000||0.395||0.395||0.000|
|39||Repayment of DSG deficit from previous year||2.478||-0.387||2.090||2.090||-0.000|
|40||Sub Total High Needs Block Net Expenditure||20.834||-0.054||20.780||21.212||0.432|
|41||High Needs Block DSG Allocation||18.660||0.333||18.993||18.916||-0.077|
|42||Balance Over / (Under) Allocated||2.174||-0.387||1.787||2.296||0.509|
|43||Total All Blocks Net Expenditure||81.171||0.137||81.309||80.921||-0.388|
|44||Total DSG Allocation Available||78.997||0.524||79.522||79.444||-0.077|
|45||Balance – Deficit / (surplus) In Year||2.174||-0.387||1.787||1.477||-0.311|
|Memorandum – Budgets Recouped from Gross DSG Allocation|
|46||Individual Schools Budget – Academies||49.450||0.000||49.450||49.450||0.000|
|47||SEN placements – Academies & Post 16||4.162||-0.333||3.829||3.829||0.000|
|48||Total DSG Recouped||53.612||-0.333||53.279||53.279||0.000|
|49||Gross DSG Expenditure including Recoupment||134.783||-0.196||134.588||134.200||-0.388|
Line 1 – Individual School Budget – Schools formula budget for maintained Primary’s and Secondary’s.
Line 2 – Growth fund – The growth fund budget is for new/growing schools or bulge classes in response to basic need and is allocated to schools from the autumn term based on the criteria set by Schools’ Forum.
DE-DELEGATIONS – Maintained Primary or/and Secondary Schools Only:
Line 3 – Behaviour Support Services – Passported to Cranbury College to supply this service.
Line 4 – Staff Costs to Supply Union Cover – Pays for Union support and supply cover for staff engaging in union duties.
Line 5 – School Improvement – To fund staff and Projects within the service.
Line 6 – Statutory/regulatory duties – formally known as the Education Services Grant, for statutory duties carried out by the LA on behalf of all maintained schools such as internal audit, year-end accounts, central reporting, monitoring compliance with scheme for financing schools.
CENTRAL SCHOOLS SERVICES BLOCK
Line 10 – Combined Budgets – covers contribution towards Commissioning, school improvement advisors, MASH (Multi Agency Safeguarding Hub), virtual school for looked after children, Early Help – children action teams that covers family workers, Welfare, CAMHs and Education Psychology.
Line 11 – School Admissions – contribution towards the statutory admissions service for all Reading Schools.
Line 12 – Servicing of Schools Forum – contribution towards officer time for preparation of reports and attendance at meetings; cost of room hire; arranging meetings, minute taking, web site.
Line 13 – Prudential Borrowing costs – Borrowing costs for schools capital programme has historically been and will be funded by borrowing over many years. This is a small contribution to the overall borrowing costs.
Line 14 – Other Items – Copyright licences – national contract, purchased on behalf of all schools.
Line 15 – Statutory/regulatory duties – formally known as the Education Services Grant, for duties carried out by the LA for all schools, including academies. Includes DSG budgets, school funding formula, payments to schools, statutory returns, education welfare, asset management.
EARLY YEARS BLOCK
Line 19 – Early Years formula funding – 2, 3 & 4 year old free entitlement funding including deprivation and early Years pupil premium and other early years grants relating to maintained nurseries and disability.
Line 20 – Support for Inclusion – Early Years Cluster funding and central staffing in Education department. Supports inclusion of children in early year’s settings, supporting inclusive practices and resources that enable young children with SEND to have their needs met in these settings. There is also a contribution from the high needs block (in line 37).
Line 21 – SEN Support Services – portage and contribution to Dingley.
Line 22 – Central Expenditure on Children under 5 – Early Years Team Staff including compliance, data, sufficiency and performance.
HIGH NEEDS BLOCK
Line 26 – SEN Placements – Place funding for pre 16 maintained Resource units (first £6k), maintained special Schools (first £10k), and Cranbury College up to the date they became an academy.
Line 27 to 30 – Top-up funding for schools – EHCP top-ups for nursery, primary, secondary, special and alternative provisions within any LA that has a Reading financial responsibility for the EHCP. This also includes Pupils without EHCPs in Pupil referral units
Line 31 – Top-up funding for FE Colleges – EHCP top-ups for students in further education colleges.
Line 32 – Top-up funding and other funding – non maintained and Independents – EHCP Top-ups for Independent and non-maintained special schools, and placements in other alternative private provision for pupils with or without a EHCP.
Line 33 – Additional High Needs Targeted Funding (Inclusion Fund) – financial support to schools with a higher than average number of pupils with EHCPs.
Line 34 – SEN Support Services – This includes Sensory Consortium (joint arrangement with other Berkshire LAs), virtual school, and ASD Outreach commissioned to Christ The King School.
Line 35 – Hospital Education Services – This includes Hospital Education unit at Royal Berkshire Hospital and Education for Pupils in Tier 4 CAMHs specialist independent mental health hospital provision which is commissioned by NHS England
Line 36 – Support for Inclusion – Funding for hard to place pupils (through Inclusion panel & Therapeutic Thinking approach), and central staffing (2 posts) in Education department, one for statutory functions including monitoring exclusions and one for ASD advisory support. The final year’s payment to Manor School for the inclusion project, a contribution to the early years inclusion panel, plus early years place funding at Snowflakes.
Line 37 – Therapies and other Health Related services – Contribution towards Speech and Language, Occupational and Physio therapy. Jointly funded with the Clinical Commissioning Group.
Line 38 – SEN Transport – Contributions to SEN School Travel
Line 39 – Repayment of deficit – All of the 2019/20 deficit related to the high needs block, and this is a first call on the 2020/21 resources.
Line 46 – Individual School Budget – School formula budgets recouped for academies.
Line 47 – SEN Placements – Placement
funding recouped for academy resource unit places (£6k) and special school
places (£10k), and Cranbury College from the date they became an academy.
The DSG deficit peaked at £3.4m at the end of 2016/17 . Of this the HNB deficit was £3.2m.
Since then it has been gradually reducing, even though numbers of EHCPs have continued to rise, and HNB income has been largely static.
This has been achieved through using underspends from other blocks, and controlling costs as per the strategy.
Overall the DSG deficit has gone UP from a total of £1.606m at the end of 2018/19 to £1.768m at the end of 2019/20, an increase of £163k – mainly due to surpluses b/f from schools and early years blocks offsetting the deficit being used in year.
The high needs deficit has gone DOWN from £2.245m at end of 2018/19 to £2.090m at end of 2019/20, a total of £155k repaid.
Actual in year HNB expenditure in 2019/20 was £292k MORE than in year HNB DSG allocation (the £447k transfer of DSG from the Schools’ Block has brought the in-year position into surplus).
Compared to the original budget set, the top up budget was £226k overspent, or 1.6%; underspends in place funding and inclusion funding has offset this within the block.
Given the continued increase in numbers of EHCPs (from 1,277 January 2019 to 1,391 in January 2020, an increase of 8.9%), costs are managing to be contained and are not spiralling out of control.
Focus is on High Needs Block – all other blocks deficits/surpluses are being managed and balanced within a two year period.
Emphasis is on control of EHCP top up costs – being the largest proportion of the spend, and with a statutory requirement to provide this funding, so demand led. As follows:
Increase in HNB DSG annually – assumed £2m 2021/22 & 2022/23, the same level of increase as in 2020/21. The overall funding for schools and high needs is due to rise by similar amounts, though the split is not known.
£350k transfer from SB to HNB for inclusion funding continues until the deficit is repaid.
All other funding blocks balance in year/carry forward their balances – underspends in other blocks will not offset HNB deficit
All non top up costs in HNB remain static beyond 2020/21
The number of top ups overall continue to increase year on year at current EHCP trend (90 – 100) and adjusted in type of provision for known changes e.g. special schools go up and ind/NMSS go down
Average cost of top ups increase annually by inflation at an average 2%
Based on the above assumptions, the deficit is repaid in 2022/23.
This is only possible with the assumed additional DSG funding, and that current trends on numbers/costs of EHCPs continue and are not significantly exceeded.
The deficit is recovered because previous years overspends are now built into the base and are covered by the increased grant.
|High Needs Budget (Net of Recoupment for Academy Place Funding)||2019/20 actual||2020/21 budget||2020/21 forecast||2021/22||2022/23||2023/24|
|Top Up Funding||14,283,908||15,542,196||16,006,498||17,128,264||18,480,661||19,999,914|
|Total High Needs Block Expenditure||18,167,357||18,356,496||19,121,503||19,942,564||21,294,961||22,814,214|
|DSG High Needs Block Funding||-18,322,000||-18,659,800||-18,915,613||-20,659,800||-22,659,800||-23,159,800|
|In Year High Needs Block||-154,643||-303,304||205,890||-717,236||-1,364,839||-345,586|
|Add brought forward deficit / (surplus)||2,245,003||2,090,360||2,090,360||2,296,250||1,579,015||214,176|
|Planned Year End Position||2,090,360||1,787,056||2,296,250||1,579,015||214,176||-131,410|
|Overall DSG Position (Net of recoupment)||2019/20||2020/21||2020/21||2021/22||2022/23||2023/24|
|Central Schools Services Block||1,290,736||1,217,850||1,257,064||1,217,850||1,217,850||1,217,850|
|Early Years Block||12,462,005||12,595,040||13,149,627||12,595,040||12,595,040||12,595,040|
|High Needs Block||18,167,357||18,356,496||19,121,503||19,942,564||21,294,961||22,814,214|
|Central Schools Services Block||-1,330,000||-1,217,850||-1,257,107||-1,217,850||-1,217,850||-1,217,850|
|Early Years Block||-12,842,060||-12,595,040||-13,347,604||-12,595,040||-12,595,040||-12,595,040|
|High Needs Block||-18,322,000||-18,659,800||-18,915,613||-20,659,800||-22,659,800||-23,159,800|
|In Year Net Position – Deficit/(surplus)|
|Central Schools Services Block||-39,264||0||-43||0||0||0|
|Early Years Block||-380,055||0||-197,978||0||0||0|
|High Needs Block||-154,643||-303,304||205,890||-717,236||-1,364,839||-345,586|
|Add brought forward deficit (net)||1,791,852||1,768,221||1,768,221||1,476,549||1,579,015||214,176|
|Brought forward ring fenced amounts in other blocks||453,151||322,139||322,139||819,702||0||0|
|Planned Year End Position||1,768,221||1,787,056||1,476,549||1,579,015||214,176||-131,410|