Dedicated Schools Grant (DSG) Budget Monitoring 2020/21

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.    Recommendations

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.    Background

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.    DSG Allocation 2020/21

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

BlockOriginal estimated DSG allocation 2020/21

Gross
Original estimated DSG allocation 2020/21

Less recoupment relating to Academies
Original estimated DSG allocation 2020/21

Total LA
Revised DSG allocation 2020/21

Gross
Revised DSG allocation 2020/21

Less recoupment relating to Academies
Revised DSG allocation 2020/21

Total LA
Change

Total DSG available
Schools Block 95.536 -49.165 46.371 95.536 -49.165 46.371 0
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
Total 131.864 -53.327 78.537 131.981 -52.994 78.987 0.450
19/20 Early Years adj.           0.136 0.136
Total Available           79.123 0.586

3.4 The main changes that may occur and need to be monitored during the year are as follows:

  • Reductions in the schools’ block funding due to any academy conversions. This is because funding is paid direct to these schools by the ESFA, though this has no impact on the LA budget, as expenditure is reduced accordingly. Currently, there are no mainstream academy conversions in process, so the budget remains the same.
  • High needs block funding was adjusted in July due to the import/export adjustment: this is where there has been a change to the number of Reading pupils placed in settings outside Reading or a change in the number of pupils from other LAs attending settings in Reading. This is because the LA where the setting is located is responsible for the place funding, so this adjustment ensures any changes in pupil numbers transferring between LAs are properly funded. Overall, this has resulted in a reduction in funding of £78k, as the number of pupils placed outside of Reading has increased by 10. High needs funding has also been adjusted for the conversion of Cranbury College to an Academy. When the budget was set it was assumed the conversion would take place on 1st April; it was on 1st August, so £334k has been added back to the budget to reflect this. There should not be any further changes to this block this year.
  • The latest information is that early years funding will (for this year only) be based 9/12 on the January 2020 census, and 3/12 on the January 2021 census due to Covid-19 (the usual split is 5/12 and 7/12). Our original budget used January 2020 census estimates and has now been amended to reflect the January 2020 census figures confirmed in July, which uplifted our allocation by £194k. This is required for payments to providers. The final adjustment for 2019/20 was also made in July; this has added £136k to the current year allocation (no provision for this was made in the 2019/20 accounts as the estimate at that time was relatively low).

4.    DSG Budget 2020/21 Month 8 Overall Position

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

BlockOriginal budget (£m)Virements (£m)Current budget (£m)Forecast as at month 8 (£m)Variance as at month 8 (£m)
Schools Block 46.011 -0.087 45.924 45.302 -0.622
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
DSG Allocation 78.997 0.524 79.521 79.444 -0.077
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
Growth fund -£622,723
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
TOTAL -£697,652

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.

5.    Variances, Current Risks & Emerging Issues

5.1 Repayment of Deficit

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.

5.2 Schools Block

  • There would only be a variance on maintained primary and secondary school delegated budget allocations due to business rate revaluations or where actual business rates bills vary from the initial school formula allocation. This is due to schools being funded for their business rates like for like. The difference for business rates is currently only £1k.
  • The Growth Fund is likely to underspend (as planned), with the surplus funding currently estimated at £623k required to be carried forward towards paying for additional secondary bulge classes in 2021/22 and beyond.

5.3 Central Schools Services Block

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.

5.4 Early Years Block

  • The majority of Early Years Funding (95%) is relating to the free early year’s entitlement for 2, 3 and 4 year olds.  The budget is based on the hours funded in the previous financial year at the set hourly rates. The DSG funding due to be received is based on an average of the January 2020 and 2021 census numbers, so in theory, as expenditure is based on the actual uptake of entitlement for each term, any increase or decrease in numbers during the year should be funded if the January census represents the average for the year. Funding is increased or clawed back (by the ESFA) in the following year if there has been an under or over allocation.
  • However, for 2020/21, it is expected that only 3/12 of the funding will be based on the January 2021 census, though the arrangements for the Spring 2021 term have not yet been announced. This is because LAs are being encouraged to fund providers in the Autumn term using the previous Autumn numbers if take up of places is significantly lower. We have funded providers on the October 2020 headcount/census but used the 2019 hours of provision if this is higher. The additional “sufficiency” payments to providers has been approximately £645k. A large proportion of this payment is offset by the guaranteed funding based on the January 2020 census, with the remainder met from contingency.
  • The contingency budget is £412k (originally set at £367k but added to by carry forward from 2019/20), and the current forecast is that there is £206k remaining. The funding arrangements for the Spring 2021 term are not yet known, but it is possible that further sufficiency payments could be made from contingency if funding over and above that based on January 2021 census is not forthcoming. However, it is unlikely that this could be afforded at the same level as the Autumn payments. Note that the contingency can only be used to fund providers through the early years formula as already set and cannot be used to increase the hourly rates or to change the formula after these have been set for the year.
  • Other budgets that pay for central spend are mainly contributions as agreed at budget setting.

5.5 High Needs Block

  • Annual expenditure in the HNB is now largely being contained within its annual DSG allocation, and the overall deficit is slowly reducing, so the focus is to continue to drive average costs of placements down in order to repay the deficit.
  • Approximately 85% of the high needs block budget is payments for statutory top up fees for pupils/students with Education Health and Care Plans (EHCPs). This is the area of highest risk due to the unpredictability of the number and level (cost) of plans. It is the continued growth in both the number and cost of these plans that has led to the DSG deficit. Table 3 shows the rising trend in the number of EHCPs. Data as at January in each year is used being mid-way through an academic year and is what the ESFA use for data comparisons. The current number of EHCPs (October 2020) is 1,425, an increase of 34 since January 2020.

Table 3: Numbers of EHCPs

DateActual total numberAnnual 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
  • The top up budget for 2020/21 was set based on the number and cost of top ups as at February 2020 and predicted increase (note that not all EHCPs result in a top up payment which is why the top up numbers are lower). The budget and the current top up forecasts (cost and number of placements) are shown in Table 4. The current forecast is £16.006m, which is £464k over budget (the last report showed £15.624m, £0.082m over budget), although the individual variances by type of placement are quite large. The overall numbers of placements are currently 18 over budget.

Table 4: Top Up Budgets and Current Forecasts 2020/21

Placement typeBudget £ 2020/21Current forecast for 202/21VarianceBudget numbers 2020/21Current actual for 2020/21VarianceBudget average cost per placeCurrent average cost per placeVariance
Special Schools8,394,2588,108,474-285,784462430-3218,16918,857688
Resource Provision514,558671,613157,0558499156,1266,784658
Mainstream1,950,1402,015,64165,501417408-94,6774,940264
Nursery92,10263,356-28,746138-57,0857,920835
NMSS & Independent2,204,1582,530,900326,74247591246,89742,897-4,000
Further Education916,690840,292-76,398107131248,5676,414-2,153
Pupil Referral Units859,867928,28768,42012120   
Hospital175,450175,4500      
Other Alternative Provision434,972672,485237,51338511311,44713,1861,739
          
TOTAL15,542,19616,006,498464,3021,1801,1981813,17113,361190

* 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).

  • These figures now take into account the increases in top up fees to be paid to Reading schools from September 2020 from which an overspend was expected. However, the larger increase is down to several new expensive placements in Independent schools which could not be avoided. Note that the forecast for other alternative provision assumes current placements will remain to the end of the year, but for many this is short term whilst a permanent placement is found. This position still compares extremely favourably to neighbouring local authorities where significant in year deficits to their high needs blocks are emerging.
  • The Inclusion Fund provides additional funding to mainstream schools with a high percentage of pupils with EHCPs compared to our statistical neighbour average. £350,000 has been transferred from the Schools Block to the High Needs block to pay for this. Based on the current numbers of EHCPs in mainstream, the increase in some schools since the Spring term will mean that this budget will likely overspend, possibly by about £100k. This will be reviewed once the Autumn census data is available, but it is clear that the qualifying percentage cannot be reduced as previously thought.
  • There is a small saving of £32k in place funding, which is 6th form grant received to offset the payments made to Cranbury for their post 16 places at £10k per place. The current estimate of this grant for the current year is greater than budgeted.

6.    DSG Deficit Recovery Plan

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:

  • The largest individual top up costs are in specialist placements out of county, particularly non maintained and independent providers. Part of the strategy is to invest in more local provision to avoid having to seek more expensive out of county placements for the growing numbers of pupil’s requiring support. New resource unit places are being developed locally, and a new special school to be located in Wokingham is being built.
  • Inclusion of high needs pupils in mainstream schools to avoid being placed in more expensive specialist provision. As part of this, additional funding for schools with a higher than average percentage of pupils with EHCPs was introduced in September 2018. In 2020/21 this cost is being met by a top slice from the schools’ block DSG.
  • The LA has also invested some funds to improve the SEND commissioning element that review SEND placements/contracts. 
  • The increase in allocation of the HNB DSG by approximately £2.0m in 2020/21, and in the following two years.

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.

2.    Appendices

Appendix 1 – DSG Allocation 2020/21

December 2019 DfE notification LA estimate for budget July update
Schools Block   
Pupil Numbers Primary13,096.5   13,096.5 13,096.5
Rate£4,172.37  £4,172.37 £4,172.37
Allocation  £54,643,444 £54,643,444 £54,643,444
Pupil Numbers Secondary6,952.5   6,952.5 6,952.5
Rate£5,503.69  £5,503.69 £5,503.69
Allocation  £38,264,405 £38,264,405£38,264,405
Growth Funding £1,345,264  £1,345,264 £1,345,264
Premises & Mobility Funding  £1,283,373 £1,283,373 £1,283,373
actual funding rounding adjustment  £1 £35£1
Gross Allocation  £95,536,486 £95,536,520£95,536,486
Academy Recoupment -£49,165,490 -£49,165,490
Schools Block Net Total  £95,536,486 £46,371,030   £46,370,996
Central School Services Block  
Pupil Numbers20,049.0   20,049.0 20,049.0
Rate£33.61  £33.61 £33.61
Allocation  £673,847 £673,847 £673,847
Historic Commitments  £544,000 £544,000 £544,000
actual funding rounding adjustment £53
Central School Services Block Net Total £1,217,847  £1,217,900  £1,217,847
High Needs Block  
Formula  £22,778,471 £22,778,471 £22,778,471
Hospital Funding  £197,435 £197,435 £197,435
Additional Allocation  
Pupil Numbers – Special Schools287.0 287.0  287.0
Pupil Numbers – Alternative Provision35.0   35.0 35.0
 322.0   322.0 322.0
Rate£4,213.00  £4,213.00 £4,212.86
Allocation  £1,356,586 £1,356,586 £1,356,541
Import/Export Adjustment-313   -313 -323
Rate£6,000.00  £6,000.00 £6,000.00
Allocation  -£1,878,000 -£1,878,000 -£1,938,000
Additional funding for Special Free Schools  £17,553 £17,553 £0
actual funding rounding adjustment  -£45 -£45
Gross Allocation £22,472,000  £22,472,000 £22,394,447
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 – Schools1,321.6   1,369.2 1,369.2
3 & 4 year olds Universal – PVI1,463.0   1,510.0 1,550.2
3 & 4 year olds Additional – Schools268.8   270.4 262.6
3 & 4 year olds Additional – PVI619.2   590.0 603.9
Total3,673   3,740 3,786
Rate£5.22  £5.22 £5.22
Allocation £10,927,454 £11,126,806 £11,264,507
2 year olds – schools60.0   72.0 72.0
2 year olds – PVI325.2 270.0  279.7
Total385.2   342.0 351.7
Rate £5.82  £5.82 £5.82
Allocation  £1,277,862 £1,134,551 £1,166,829
PPG – schools191.0   204.6 205.6
PPG – PVI144.0   127.0 135.8
Total335.0   331.6 341.4
Rate£0.53  £0.53 £0.53
Allocation  £101,204 £100,176 £103,125
DAF – eligible pupils60.0   26.0 60.0
Rate£615.00  £615.00 £615.00
Allocation  £36,900 £15,990 £36,900
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  
Schools Block  95,536,486 95,536,520 95,536,486
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  
Schools Block  £95,536,486 £46,371,030 £46,370,996
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

Appendix 2 – Summary DSG Budget and Forecast 2020/21 as at 30 November

Line refDescriptionOriginal Budget £m Virements £m Current Budget £m Forecast £m Variance £m
 Schools Block     
1Individual Schools Budget – Maintained Schools44.325 0.003 44.328 44.329 0.001
2Growth Fund1.257 -0.090 1.167 0.544 -0.623
3Behaviour Support Services (de-delegation)0.176 0.000 0.176 0.176 0.000
4Staff costs supply cover (trade unions) (de-delegation)0.043 0.000 0.043 0.043 0.000
5School Improvement (de-delegation)0.130 0.000 0.130 0.130 0.000
6Statutory/regulatory Duties (ESG) (de-delegation)0.080 0.000 0.080 0.080 0.000
7Sub Total Schools Block Net Expenditure46.011 -0.087 45.924 45.302 -0.622
8Schools Block DSG Allocation46.011 -0.087 45.924 45.924 0.000
9Balance Over / (Under) Allocated0.000 -0.000 0.000 -0.622 -0.622
 Central Schools Services Block     
10Contribution to combined budgets0.494 0.000 0.494 0.494 0.000
11School admissions0.215 0.039 0.254 0.215 -0.039
12Servicing of schools forum0.020 0.000 0.020 0.020 0.000
13Prudential borrowing costs0.040 0.000 0.040 0.040 0.000
14Other Items (copyright licences)0.111 0.000 0.111 0.110 -0.000
15Statutory/regulatory Duties (ESG)0.338 0.000 0.338 0.378 0.039
16Sub Total Central School Services Block Net Expenditure1.218 0.039 1.257 1.257 -0.000
17Central School Services Block DSG Allocation1.218 0.039 1.257 1.257 0.000
18Balance Over / (Under) Allocated0.000 -0.000 0.000 -0.000 -0.000
 Early Years Block     
19Early Years Funding (free entitlement)12.425 0.239 12.664 12.466 -0.198
20Support for inclusion0.100 0.000 0.100 0.100 0.000
21SEN support services (Portage/Dingley)0.198 0.000 0.198 0.198 0.000
22Central expenditure on early years entitlement0.385 0.000 0.385 0.385 0.000
23Sub Total Early Years Block Net Expenditure13.109 0.239 13.348 13.150 -0.198
24Early Years Block DSG Allocation13.109 0.239 13.348 13.348 0.000
25Balance Over / (Under) Allocated0.000 0.000 0.000 -0.198 -0.198
 High Needs Block     
26SEN placements – Maintained Schools (first £10k/£6k place funding)0.974 0.333 1.307 1.274 -0.033
27Top up funding – Special Schools & PRU9.254 0.000 9.254 9.037 -0.217
28Top up funding – Resource Units0.514 0.000 0.514 0.672 0.157
29Top up funding – Mainstream1.950 0.000 1.950 2.016 0.065
30Top up funding – Nursery0.092 0.000 0.092 0.063 -0.029
31Top up funding – FE Colleges0.917 0.000 0.917 0.840 -0.076
32Top up and other funding – non maintained & independent providers2.639 0.000 2.639 3.203 0.564
33Additional high needs targeted funding (Inclusion Fund)0.350 0.000 0.350 0.350 0.000
34SEN support services0.572 0.000 0.572 0.572 0.000
35Hospital education services0.175 0.000 0.175 0.175 0.000
36Support for inclusion0.425 0.000 0.425 0.425 0.000
37Therapies and other health related services0.395 0.000 0.395 0.395 0.000
38SEN Transport0.100 0.000 0.100 0.100 0.000
39Repayment of DSG deficit from previous year2.478 -0.387 2.090 2.090 -0.000
40Sub Total High Needs Block Net Expenditure20.834 -0.054 20.780 21.212 0.432
41High Needs Block DSG Allocation18.660 0.333 18.993 18.916 -0.077
42Balance Over / (Under) Allocated2.174 -0.387 1.787 2.296 0.509
43Total All Blocks Net Expenditure81.171 0.137 81.309 80.921 -0.388
44Total DSG Allocation Available78.997 0.524 79.522 79.444 -0.077
45Balance – Deficit / (surplus) In Year2.174 -0.387 1.787 1.477 -0.311
 Memorandum – Budgets Recouped from Gross DSG Allocation     
46Individual Schools Budget – Academies49.450 0.000 49.450 49.450 0.000
47SEN placements – Academies & Post 164.162 -0.333 3.829 3.829 0.000
48Total DSG Recouped53.612 -0.333 53.279 53.279 0.000
49Gross DSG Expenditure including Recoupment134.783 -0.196 134.588 134.200 -0.388

Appendix 3 – Additional Information per Service for Appendix 2 table

SCHOOLS BLOCK

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.

RECOUPMENT

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.

Appendix 4 – Deficit Recovery Plan – as at November 2020

Background

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.

Highlights of 2019/20 Outturn

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.

Recovery Plan Strategy

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:

  • SEN panel is robust and consistent in its decision making; EHCPs are necessary and funding is set at the right level/banding and reviewed annually.
  • Ensure out of county independent/NMSS costs and annual reviews are negotiated at the right level through the commissioning team, and inflation is contained to a reasonable realistic level.
  • Inclusion in mainstream – help schools in providing the right support for their EHCP pupils, and provide additional funding through the inclusion fund (money transferred from schools block – £350k in 2020/21)
  • Maximise lower cost local provision – this includes additional new places in resource units and new local special school
  • Minimise higher cost placements in Independent/NMSS where possible by providing good local provision.
    Ensuring minimal increases in other contracts in HNB (no greater than inflation) – negotiated by commissioning team

Assumptions Used in Current 3 Year Recovery Plan

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%

Current HNB Recovery Plan

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.

Amount2016/172017/182018/192019/202020/212021/222022/23
Brought forward£2.057m£3.228m£2.860m £2.245m £2.090m £1.787m £0.605m
In year£1.171m£-0.368m£-0.615m£-0.155m£-0.303m£-1.182m£-1.829m
Carried forward£3.228m£2.860m£2.245m£2.090m£1.787m£0.605m£-1.224m

Updated Plan taking into account latest in-year forecast

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
Expenditure 
Place Funding2,429,700 1,073,500 1,374,205 1,073,500 1,073,500 1,073,500
Top Up Funding14,283,908 15,542,196 16,006,498 17,128,264 18,480,661 19,999,914
Other1,453,749 1,740,800 1,740,800 1,740,800 1,740,800 1,740,800
Total High Needs Block Expenditure18,167,357 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 Position2,090,360 1,787,056 2,296,250 1,579,015 214,176 -131,410
Overall DSG Position (Net of recoupment)2019/202020/212020/212021/222022/232023/24
Expenditure 
Schools Block44,593,880 46,010,770 45,302,135 46,010,770 46,010,770 46,010,770
Central Schools Services Block1,290,736 1,217,850 1,257,064 1,217,850 1,217,850 1,217,850
Early Years Block12,462,005 12,595,040 13,149,627 12,595,040 12,595,040 12,595,040
High Needs Block18,167,357 18,356,496 19,121,503 19,942,564 21,294,961 22,814,214
Total Expenditure76,513,978 78,180,156 78,830,329 79,766,224 81,118,621 82,637,874
  
DSG Income 
Schools Block-44,496,700 -46,010,770 -45,923,816 -46,010,770 -46,010,770 -46,010,770
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
Total Income##########-78,483,460 -79,444,141 -80,483,460 -82,483,460 -82,983,460
  
In Year Net Position – Deficit/(surplus) 
Schools Block97,180 0 -621,681 0 0 0
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
Total Net-476,782 -303,304 -613,811 -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 blocks453,151 322,139 322,139 819,702 0 0
  
Planned Year End Position1,768,221 1,787,056 1,476,549 1,579,015 214,176 -131,410