The Leeds Scheme for Financing Schools
Made under Section 48 of the School Standards and
Framework Act 1998
School Funding Team
Leeds City Council
October 2014
CONTENTS
The Outline
Scheme
1. INTRODUCTION
1.1 The funding
framework
1.2 The role of the
scheme
1.2.1 Application of the scheme to
the City Council and maintained schools
1.3 Publication of the
scheme
1.4 Revision of the
scheme
1.5 Delegation of
powers to the head teacher
1.6 Maintenance of
schools
2. FINANCIAL CONTROLS
2.1.1
Application of financial controls to schools
2.1.2
Provision of financial information and reports
2.1.3
Payment of salaries; payment of bills
2.1.4
Control of assets
2.1.5
Accounting policies (including year-end procedures)
2.1.6
Writing off of debts
2.2 Basis of
accounting
2.3 Submission of budget
plans
2.3.1
Submission of financial forecasts
2.4 Efficiency and value
for money
2.5
Virement
2.6 Audit:
General
2.7 Separate
external audits
2.8 Audit of voluntary and private funds
2.9 Register of business
interests
2.10
Purchasing, tendering and contracting requirements
2.11
Application of contracts to schools
2.12
Central funds and earmarking
2.13
Spending for the purposes of the school
2.14
Capital spending from budget shares
2.15
Notice of concern
2.16
Schools Financial Value Standard (SFVS)
2.17
Fraud
3. INSTALMENTS OF BUDGET SHARE; BANKING
ARRANGEMENTS
3.1 Frequency of
instalments
3.2 Proportion of budget share payable at each
instalment
3.3 Interest
clawback
3.3.1
Interest on late budget share payments
3.4 Budget shares for
closing schools
3.5 Bank and building
society accounts
3.5.1
Restrictions on accounts
3.6 Borrowing by
schools
3.7 Other
provisions
4.
THE TREATMENT OF SURPLUSES AND DEFICIT BALANCES ARISING IN RELATION
TO
BUDGET SHARES
4.1 Right to carry
forward surplus balances
4.2 Controls on surplus
balances
4.3 Interest on surplus
balances
4.4 Obligation to carry forward deficit balances
4.5 Planning for deficit
budgets
4.6 Charging of interest on deficit balances
4.7 Writing off
deficits
4.8 Balances of closing and replacement schools
4.9 Licensed
deficits
5. INCOME
5.1 Income from
lettings
5.2 Income from
fees and charges
5.3 Income from
fund-raising activities
5.4 Income from the
sale of assets
5.5 Administrative
procedures for the collection of income
5.6 Purposes for which income may be used
6. THE CHARGING OF SCHOOL BUDGET SHARES
6.1 General provision
6.2 Circumstances in which charges may be made
7. TAXATION
7.1 Value
Added Tax
7.2 Construction Industry
Tax Scheme
8. THE PROVISION OF SERVICES AND FACILITIES BY THE CITY
COUNCIL
8.1 Provision of services from centrally retained
budgets
8.2 Provision of services bought back from the
City Council using delegated
budgets
8.2.1 Packaging
8.3 Service level
agreements
8.4 Teachers
Pensions
9.
PRIVATE FINANCE INITIATIVE / PRIVATE
PUBLIC PARTNERSHIPS
10.
INSURANCE
10.1
Insurance cover
11. MISCELLANEOUS
11.1
Right of access to information
11.2
Liability of governors
11.3
Governors’ expenses
11.4
Responsibility for legal costs
11.5
Health and Safety
11.6
Right of attendance for the Chief Finance Officer
11.7
Special Educational Needs
11.8
Whistleblowing
11.9
Child protection
11.10
Redundancy and early retirement costs
12. RESPONSIBILITY FOR REPAIRS AND MAINTENANCE
12.1
Categories of work
12.2
Delegation
13. COMMUNITY FACILITIES
13.1
Introduction
13.2
Consultation with the City Council – financial aspects
13.3
Funding agreement – authority powers
13.4
Other prohibitions, restrictions and limitations
13.5 Supply of financial information
13.6 Audit
13.7 Treatment of income and surpluses
13.8 Treatment of deficits
13.9 Health and safety matters
13.10 Insurance
13.11
Taxation
13.12 Banking
Appendix A – Responsibility for redundancy and early
retirement costs
The Outline
Scheme
References throughout this statutory
guidance to:
‘the Act’ are to the
School Standards and Framework Act 1998;
‘the authority’ means
Leeds City Council;
‘the Regulations’ are the
School and Early Years Finance (England) Regulations.
The Regulations state that schemes
must deal with the following matters:
1.
The carrying forward from one funding period to another of
surpluses and deficits arising in relation to schools’ budget
shares.
2.
Amounts which may be charged against schools’ budget
shares.
3.
Amounts received by schools which may be retained by their
governing bodies and the purposes for which such amounts may be
used.
4.
The imposition, by or under the scheme, of conditions which must be
complied with by schools in relation to the management of their
delegated budgets and of sums made available to governing bodies by
the authority which do not form part of delegated budgets,
including conditions prescribing financial controls and
procedures.
5.
Terms on which services and facilities are provided by the
authority for schools maintained by them.
6.
The payment of interest by or to the authority.
7.
The times at which amounts equal in total to the school’s
budget share are to be made available to governing bodies and the
proportion of the budget share to be made available at each such
time.
8.
The virement between budget heads within the delegated budget.
9.
Circumstances in which a local authority may delegate to the
governing body the power to spend any part of the authority’s
non-schools education budget or schools budget in addition to those
set out in section 49(4)(a) to (c) of the 1998 Act.
10.
The use of delegated budgets and of sums made available to a
governing body by the local authority, which do not form part of
delegated budgets.
11.
Borrowing by governing bodies.
12.
The banking arrangements that may be made by governing bodies.
13.
A statement as to the personal liability of governors in respect of
schools’ budget shares having regard to Section 50(7) of the
1998 Act.
14.
A statement as to the allowances payable to governors of a school
which does not have a delegated budget in accordance with the
Scheme made by the authority for the purposes of Section 519 of the
1996 Act.
15.
The keeping of a register of any business interests of the
governors and the head teacher.
16.
The provision of information by and to the governing body.
17.
The maintenance of inventories of assets.
18.
Plans of a governing body’s expenditure.
19.
A statement as to the taxation of sums paid or received by a
governing body.
20.
Insurance.
21.
The use of delegated budgets by governing bodies so as to satisfy
the authority’s duties imposed by or under the Health and
Safety at Work etc. Act 1974.
22.
The provision of legal advice to a governing body.
23.
Funding for child protection issues.
24.
How complaints by persons working at a school or by school
governors about financial management or financial propriety at the
school will be dealt with and to whom such complaints should be
made.
25.
Expenditure incurred by a governing body in the exercise of the
power conferred by Section 27 of the 2002 Act.
SECTION 1: INTRODUCTION
1.1 The Funding Framework
The funding framework
which replaces Local Management of Schools is set out in the
legislative provisions in sections 45-53 of the School Standards
and Framework Act 1998.
Under this
legislation, local authorities determine for themselves the size of
their schools budget and their non-schools education budget –
although at a minimum an authority must appropriate its entire
Dedicated Schools Grant to their schools budget. The categories of
expenditure which fall within the two budgets are prescribed under
regulations made by the Secretary of State, but included within the
two, taken together, is all expenditure, direct and indirect, on an
authority's maintained schools except for capital and certain
miscellaneous items. Authorities may deduct funds from their
schools budget for purposes specified in regulations made by the
Secretary of State under s.45A of the Act (the centrally retained
expenditure). The amounts to be deducted for these purposes are
decided by the authority concerned, subject to any limits or
conditions (including gaining the approval of their Schools Forum
or the Secretary of State in certain instances) as prescribed by
the Secretary of State. The balance of the schools budget left
after deduction of the centrally retained expenditure is termed the
Individual Schools Budget (ISB). Expenditure items in the
non-schools education budget must be retained centrally (although
earmarked allocations may be made to schools).
Authorities must
distribute the ISB amongst their maintained schools using a formula
which accords with regulations made by the Secretary of State, and
enables the calculation of a budget share for each maintained
school. This budget share is then delegated to the governing body
of the school concerned, unless the school is a new school which
has not yet received a delegated budget, or the right to a
delegated budget has been suspended in accordance with s.51 of the
Act. The financial controls within which delegation works are set
out in a scheme made by the authority in accordance with s.48 of
the Act and regulations made under that section. All proposals to
revise the scheme must be approved by the Schools Forum, though the
authority may apply to the Secretary of State for approval in the
event of the forum rejecting a proposal or approving it subject to
modifications that are not acceptable to the authority.
Subject to any
provision made by or under the scheme, governing bodies of schools
may spend such amounts of their budget shares as they think fit for
any purposes of their school* and for any additional purposes
prescribed by the Secretary of State in regulations made under s.50
of the Act. (*Section 50 has been amended to provide that amounts
spent by a governing body on providing community facilities or
services under section 27 of the Education Act 2002 are treated as
if they were amounts spent for the purposes of the school (s50(3A)
of the Act.)
An authority may
suspend a school's right to a delegated budget if the provisions of
the authority’s financial scheme (or rules applied by the
scheme) have been substantially or persistently breached, or if the
budget share has not been managed satisfactorily. A school's right
to a delegated budget share may also be suspended for other reasons
(schedule17 to the Act)
Each authority is
obliged to publish each year a statement setting out details of its
planned Schools Budget and other expenditure on children’s
services, showing the amounts to be centrally retained and funding
delegated to schools. After each financial year the authority must
publish a statement showing outturn expenditure at both central
level and for each school, and the balances held in respect of each
school.
The detailed
publication requirements for financial statements are set out in
directions issued by the Secretary of State, but each school must
receive a copy of each year's budget and outturn statements so far
as they relate to that school or central expenditure.
Regulations also
require a local authority to publish their scheme and any revisions
to it on a website accessible to the general public, by the date
that any revisions come into force, together with a statement that
the revised scheme comes into force on that date.
1.2 The role of the scheme
The scheme sets out the financial
relationship between the City Council and the maintained schools
which it funds. Contained within the scheme are requirements
relating to financial management and associated issues, binding on
both the City Council and on schools.
1.2.1 Application of the scheme to the City Council and
maintained schools
The scheme applies in respect of all
community, nursery, special, voluntary, foundation (including
trust), community special or foundation special schools and pupil
referral units (PRUs) maintained by the City Council. It does not
apply to schools situated in Leeds which are maintained by another
authority, nor does it apply to academies.
1.3 Publication of the scheme
The scheme will be available on the
Leeds City Council website together with a statement as to when it
came into force. An electronic copy of the scheme will be supplied
to the head teacher and governing body of each school covered by
the scheme, and any approved revisions will be notified to each
school in accordance with the regulations.
1.4 Revision of the scheme
Any proposed revisions to the scheme
will be the subject of consultation with the governing body and the
head teacher of every school maintained by the authority before
they are submitted to the Schools Forum for approval, apart from
any revisions that are the result of a direction by the Secretary
of State.
1.5 Delegation of powers to the head teacher
Each governing body is required to
consider the extent to which it wishes to delegate its financial
powers to the head teacher, and to record its decision (and any
revisions) in the minutes of the governing body. The first formal
budget plan of each financial year must be approved by the
governing body, or a committee of the governing body. The
delegation of financial powers should be reviewed at least annually
and where there is a new head teacher, at the earliest opportunity.
Guidance is set out in the Finance Manual for schools.
1.6 Maintenance of schools
The City Council is responsible for
maintaining the schools covered by the scheme, and this includes
the duty of defraying all the expenses of maintaining them (except
in the case of a voluntary school where some of the expenses are,
by statute, payable by the governing body). Part of the way in
which the City Council maintains schools is through the funding
system put into place under sections 45 to 53 of the School
Standards and Framework Act 1998.
SECTION 2: FINANCIAL CONTROLS
2.1.1 Application of financial controls to schools
Schools are required to abide in the
management of their delegated budgets by the City Council's
requirements on financial controls and monitoring, not only those
in the scheme but also those requirements contained in more
detailed publications referred to in the scheme but outside and
compatible with it.
2.1.2 Provision of financial information and
reports
Schools are required to provide the
City Council with details of anticipated and actual expenditure and
income, in a form and at times determined by the City
Council.
However, schools are not required to
submit such details more often than once every three months except
for those connected with tax or banking reconciliation - unless the
City Council has notified the school in writing that in its view
the school’s financial position requires more frequent
submission or the school is in its first year of operation. This
restriction to a minimum 3 month interval does not apply to schools
which are part of an online financial accounting system (FMS Leeds)
operated by the LA.
2.1.3 Payment of salaries; payment of bills
Payment of salaries
and payment of bills shall be in accordance with procedures
detailed in the Finance Manual for schools, and procedures
published by the Business Support Centre and HR.
2.1.4 Control of assets
Each school must maintain an
inventory of its moveable non-capital assets, in a form to be
determined by the Chief Finance Officer of the City Council, and
follow the basic authorisation procedures for disposal of assets
laid down. Detailed procedures are contained in the Finance Manual
for schools. Schools are allowed to determine the form of register
maintained for assets worth less than £1,000, but must keep a
register in some form.
2.1.5
Accounting Policies (including year-end procedures)
Schools are required to abide by
procedures specified by the Chief Finance Officer.
2.1.6 Writing off of debts
Procedures to be followed for the
write-off of debts are contained in the Financial Regulations for
Schools, within the Finance Manual for Schools.
2.2
Basis of accounting
Reports and accounts furnished to the
LA by a school will be on an accruals basis.
2.3 Submission of budget plans
Once a school has been notified of
its school budget share, it is the responsibility of the Governing
Body to set and approve the school’s budget for the coming
financial year.
The Director of Children’s
Services will, through a service level agreement, provide advice
and support to schools for this process including budget
preparation guidance notes and a proforma set of budget preparation
papers.
A copy of the approved budget,
certified by the Chair of the Governing Body, is to be returned to
the Director of Children’s Services by the required date,
which will be notified each year. The formal budget plan will not
be required to be submitted before 1 May.
Details of the approved budget should
be entered into the school’s management information system so
financial control can begin immediately. Any adjustments to the
approved budget during the financial year must be notified to the
Director of Children’s Services.
The Director of Children’s
Services will ensure that the approved budget of each school is
entered into the City Council’s Financial Management System
(FMS Leeds).
The City Council will supply schools
with all school income and expenditure data which it holds which is
necessary to efficient planning by schools, and supply schools with
an annual statement showing when this information will be
available. Schools will be allowed to
take account of estimated deficits/surpluses at the previous
31st March in their budget plan.
The school’s formal annual
budget plan must be approved by the governing body or a committee
of the governing body. Any revisions to the annual budget must be
submitted to the City Council no later than every three months.
2.3.1 Submission of financial forecasts
The City Council may
require schools to submit a financial forecast covering each year
of a multiyear period for which schools have been notified of
budget shares beyond the current year. Such a forecast may be used
as evidence to support the LA’s balance control mechanism or
viability of deficit action plans.
2.4 Efficiency and value for money
Schools must seek to achieve
efficiencies and value for money, to optimise the use of their
resources and to invest in teaching and learning, taking into
account the Authority’s purchasing, tendering and contracting
requirements.
It is for heads and governors to
determine at school level how to secure better value for money.
2.5 Virement
Virement is the transferring of
budgetary provision between one budget head and another after the
budget has been approved.
Governing bodies are free to do this
at any time but must ensure that there is sufficient left in the
original budget head to meet known commitments or statutory
provision.
In order to ensure the efficient
running of the school, governing bodies are encouraged to delegate
some of this responsibility to the head teacher and/or others, so
that virement up to a predetermined amount may take place without
prior consultation with the governing body.
Governing bodies should set this
virement level annually at the time of budget approval. Guidelines
for this will be issued annually, within the budget preparation
papers.
2.6 Audit: General
The accounts of a school, being part
of the overall accounts of the City Council, will be subject to
Internal and External Audit.
Under Section 151 of the Local
Government Act 1972 and the Accounts and Audit Regulations, the
Chief Finance Officer (CFO) shall maintain an effective internal
audit of the accounts of the council. In so doing the CFO shall
review, appraise and report on:
•
the economy, efficiency and effectiveness of financial and other
management controls
•
the extent of compliance with, relevance and financial effect of,
established policies, plans and procedures
•
the extent to which an organisation’s assets and interests
are accounted for and safeguarded from losses of all kinds arising
from
1.
fraud and other offences
2.
waste, extravagance, inefficient administration, poor value for
money or any other cause.
•
the suitability and reliability of financial and other data
produced within the organisation.
In order to fulfil this
responsibility the CFO or representative, and External Auditor
shall have authority to:
•
enter at all reasonable times on any council premises or land, and
any part of any school maintained by the City Council under this
scheme;
•
have access to all records, documents, data held on computer media
and correspondence, or unofficial funds operated by an employee as
part of their duties;
•
require and receive such explanations as are necessary concerning
any matter under examination;
•
require any employee of the council or of the governing body to
produce cash, stores or any other Council property under his/her
control, belonging to the council or held as part of the
employee’s duties;
Whenever any matter arises which
involves, or is thought to involve, irregularities concerning cash,
stores or any other property of the council (including unofficial
funds), the Directors of Children’s Services and Finance
must be notified
immediately.
2.7 Separate external audits
A governing body may spend funds from
its budget share to obtain external audit certification of its
accounts, separate from any City Council internal or external audit
process.
2.8 Audit of voluntary and private funds
Schools are required to provide
annual independent inspection statements in respect of voluntary
and private funds held by them and audit certificates in respect of
the accounts of any trading organisations administered by school
staff as part of their normal duties or controlled by the school. A
school refusing to provide audit certificates to the authority is
in breach of the scheme and authority can take action on that
basis. Further guidance on school fund accounting can be found in
the Finance Manual for schools.
2.9 Register of business interests
The governing body of each school is
maintain a register which lists for each member of the governing
body and the head teacher, any business interests they or any
member of their immediate family have; to keep the register up to
date with notification of changes and through annual review of
entries, and to make the register available for inspection by
governors, staff, parents and the Director of Children’s
Services, Chief Finance Officer or their representative. A
pro-forma and definition of interests can be found in the Finance
Manual for schools.
2.10 Purchasing, tendering and contracting
requirements
Schools are required to abide by the
City Council’s financial regulations and standing orders for
schools in purchasing, tendering and contracting matters. The full
documents are contained in the Finance Manual for schools.
Purchasing:
Governing bodies are free to purchase
goods and services from any source, unless they are bound by a
contractual obligation in section 2.11 below. However, governing
bodies will be expected to obtain value for money by way of price,
quality and convenience for the school at all times. Furthermore,
they must always have due regard for the proper accountability and
control over the expenditure of public funds. There is also a
requirement to assess in advance, where relevant, the health and
safety competence of contractors, taking account of the City
Council’s policies and procedures.
The specific requirements regarding
contracts for goods and services, including the necessary
arrangements relating to obtaining quotations or tenders, are
contained in the Leeds City Council Procurement Handbook for
schools.
Ordering and Commitments:
The school will be the source of
orders, but their format and preparation shall be as approved by
the Chief Finance Officer.
As the signing of an order commits a
school to that expenditure, it is necessary that the governing body
officially authorise those members of staff who may do this. They
should be senior staff and wherever possible they should be
different from those authorised to certify invoices for payment.
The same person must not sign the order and the corresponding
invoice.
The signing of an order is deemed to
cover the following:
•
that the goods or services are necessary for the discharge of the
responsibilities and functions of the school
•
that there is provision in the school’s budget for the item
being ordered
•
that financial regulations and standing orders with respect to
contracts have been followed.
Upon the placing of an order it is
essential that the value of the order is committed against the
appropriate heading in the school budget. Under normal
circumstances the school’s computerised management system
will do that automatically, but where that is not in use manual
records should be updated at the time of ordering.
Schools will not be required:
a)
to do anything incompatible with any of the provisions of the
scheme, or any statutory provision, or any EU Procurement
Directive;
b)
to seek LA officer countersignature for any contracts for good or
services for a value below £60,000 in any one year;
c)
to select suppliers only from an approved list.
Schools will be required:
d)
to seek at least three tenders in respect of any contract with a
value exceeding £20,000 in any one year. (Whilst not seeking
formal tenders, schools should be obtaining Value for Money in all
purchases through the use of written quotations and/or the use of
approved suppliers, following requirements held in the Procurement
Handbook for Schools).
The City Council will inform schools
of approved suppliers.
2.11 Application of contracts to schools
Schools have a right to opt out of
LA-arranged contracts. However, the financial interest of the City
Council is protected under section 6 of this scheme.
Although governing bodies are
empowered under paragraph 3 of schedule 1 to the Education Act 2002
to enter into contracts, in most cases they do so on behalf of the
LA as maintainer of the school and the owner of the funds in the
budget share.
Other contracts may be made solely on
behalf of the governing body, when the governing body has clear
statutory obligations – for example, contracts made by aided
or foundation schools for the employment of staff.
2.12 Central funds and earmarking
The LA may make sums available to
schools from central funds, in the form of allocations which are
additional to and separate from the schools' budget shares. Such
allocations will be subject to conditions setting out the purpose
or purposes for which the funds may be used; and while these
conditions need not preclude virement (except, of course, where the
funding is supported by a specific grant which the LA itself is not
permitted to vire); this should not be carried to the point of
assimilating the allocations into the school's budget share.
Earmarked funds must be returned to the LA if not spent in-year, or
within the period over which schools are allowed to use the funding
if different.
It is a requirement
that any such earmarked funding from centrally retained funds is
spent only on the purposes for which it is given, or on other
budget heads for which earmarked funding is given, and is not vired
into the budget share. Governing bodies will maintain an accounting
system to be able to demonstrate that this requirement has been
complied with.
The LA will not make any deduction,
in respect of interest costs to the LA, from payments to schools of
devolved specific or special grant.
2.13 Spending for the purposes of the school
Under section 50(3) of the SSAF Act
1998 governing bodies are allowed to spend budget shares for the
purposes of the school, subject to any provisions of the
scheme.
The Secretary of State may prescribe
additional purposes for which expenditure of the budget share may
occur. By virtue of section 50(3A) (which came into force on 1st
April 2011), amounts spent by governing bodies on community
facilities or services under section 27 of the Education Act 2002
will be treated as if spent for any purposes of the
school.
2.14 Capital spending from budget shares
Governing bodies are allowed to use
their budget shares to meet the cost of capital expenditure on the
school premises. This includes expenditure by the governing body of
a voluntary aided school on work which is their responsibility
under paragraph 3 of Schedule 3 of the SSAF Act 1998. However, the
governing body must notify the LA of any capital spending from
budget shares, and, if the expected capital expenditure from the
budget share in any one year will exceed £15,000, take into
account any advice from the Director of Children’s Services
as to the merits of the proposed expenditure. If the premises
and/or land are owned by the LA then the governing body must seek
the consent of the LA to the proposed works, but such consent can
be withheld only on health and safety grounds.
In seeking the consent of the LA the
school should provide the following, in writing, to the Director of
Children’s Services:
1)
details of the proposal;
2)
details of how the proposal will be financed (including any
continuing revenue costs); 3) evidence of agreement to the above by
a resolution of the full governing body.
For all schools covered
by the scheme, any additional floor area created by work proposed
by a school will only be included in the overall area funded if the
Director of Children’s Services confirms that the
construction is necessary to improve the efficient provision of
education.
2.15 Notice of concern
The City Council may issue a notice
of concern to the governing body of any school it maintains where,
in the opinion of the Chief Finance Officer and the Director of
Children’s Services, the school has failed to comply with any
provisions of the scheme, or where actions need to be taken to
safeguard the financial position of the City Council or the
school.
Such a notice will set out the
reasons and evidence for it being made and may place on the
governing body restrictions, limitations or prohibitions in
relation to the management of funds delegated to it.
These may include:
•
insisting that relevant staff undertake appropriate training to
address any identified weaknesses in the financial management of
the school;
•
insisting that an appropriately trained/qualified person chairs the
finance committee of the governing body;
•
placing more stringent restrictions or conditions on the day to day
financial management of a school than the scheme requires for all
schools – such as the provision of monthly accounts to the
City Council;
•
insisting on regular financial
monitoring meetings at the school attended by City Council
officers;
•
requiring a governing body to use City Council’s financial
management systems; and
•
imposing restrictions or limitations on the manner in which a
school manages extended school activity funded from within its
delegated budget share (e.g. by requiring a school to submit income
projections and/or financial monitoring reports on such
activities).
The notice will clearly state what
these requirements are and the way in which and the time by which
such requirements must be complied with in order for the notice to
be withdrawn. It will also state the
actions that the City Council may take where the governing body
does not comply with the notice.
2.16 Schools
Financial Value Standard (SFVS)
All local authority maintained
schools (including nursery schools and pupil referral units that
have a delegated budget) must demonstrate compliance with the
Schools Financial Value Standard (SFVS) and complete the assessment
form on an annual basis. It is for the
school to determine at what time in the year they wish to complete
the form.
Governors must demonstrate compliance
through the submission of the SFVS assessment form signed by the
Chair of Governors. The form must
include a summary of remedial actions with a clear timetable,
ensuring that each action has a specified deadline and an agreed
owner. Governors must monitor the progress of all
actions to ensure they are cleared within specified
deadlines.
2.17 Fraud
All schools must have a robust system
of controls to safeguard themselves against fraudulent or improper
use of public money and assets.
The governing body and head teacher
must inform all staff of school policies and procedures related to
fraud and theft, the controls in place to prevent them; and the
consequences of breaching these controls. This information must also be included in
induction for new school staff and governors.
SECTION 3: INSTALMENTS OF THE BUDGET SHARE; BANKING
ARRANGEMENTS
Leeds City Council has adopted the
CIPFA Code of Practice for Treasury Management in Local Authorities
and schools covered by the scheme must act within the code.
All schools have four options for
their banking arrangements
1)
To maintain a bank account with the LA, with a petty cash imprest
account for small urgent items of expenditure;
2)
To maintain a bank account with the LA, and a local cheque book
facility operated through an imprest account;
3)
To maintain an external bank account through which all expenditure
is charged, excluding payroll and rates;
4)
To maintain an external bank account through which all expenditure
is charged.
3.1 Frequency of
instalments
Schools opting for an external bank
account will have their budget share made available on a monthly
basis. Schools not opting for an
external bank account will be able to draw on their entire budget
share from the start of the year. Top-up payments for pupils with
high needs will be made monthly unless alternative arrangements
have been agreed.
3.2 Proportion of budget share payable at each
instalment
The proportion of the budget share
payable at each instalment will be based on an agreed profile.
Where a school is operating an account for expenditure excluding
payroll and rates, the initial estimate of pay costs will be based
on the staffing complement of the school as at January prior to the
start of the year.
3.3 Interest clawback
The LA will deduct from budget share
instalments an amount equal to the estimated interest lost by the
LA in making available the budget share in advance. The calculation
basis of the deduction is shown below:
amount of the advance x prevailing
interest rate x No of days interest lost/365 days
Where a school has determined to have
its whole budget share paid into an account on a monthly basis,
advances will be made at a date close to that on which salaries are
due.
3.3.1 Interest on late budget share payments
The LA will add interest to late
payments of budget share instalments, where such late payment is
the result of LA error. The interest rate used will be that used
for clawback calculations.
3.4 Budget shares for closing schools
Budget shares of schools for which
approval for discontinuation has been secured, will be made
available until closure on a monthly basis net of estimated pay
costs, even where some different basis was previously used.
3.5 Bank and building society accounts
All maintained schools are permitted
to have external bank accounts into which their budget share
instalments (as determined by other provisions) are paid. Where
schools have such accounts they shall be allowed to retain all
interest payable on the account unless they choose to have an
account within an LA contract which makes other
provision.
New bank account arrangements may
only be made with effect from the beginning of each financial year.
Any school requesting a bank account shall not be able to have one
until any deficit is cleared.
Schools will be responsible for all
charges arising from the operation of external bank accounts. If a
school opens an external bank account the LA will, if the school
desires, transfer immediately to the account an amount agreed by
both school and LA as the estimated surplus balance held by the LA
in respect of the school’s budget share, on the basis that
there is then a subsequent correction when accounts for the
relevant year are closed.
3.5.1 Restrictions on accounts
Bank accounts may only be established
with a bank or financial institution chosen from a list of
organisations approved for the purpose by the Chief Finance Officer
(unless a facility already exists at the commencement of the scheme
with a bank or financial institution not on the list). A list of
banks currently approved can be provided by the Chief Finance
Officer . Accounts should be opened in the name of Leeds City
Council with reference to the individual school or alternatively in
the name of the school if the school wishes it. If a school has
such an account the scheme requires that the account mandate should
provide that the LA is the owner of the funds in the account; that
it is entitled to receive statements; and that it can take control
of the account if the school’s right to a delegated budget is
suspended by the LA.
Only LA employees and school
employees are to be signatories for bank accounts operated under
this scheme.
Any school closing an account used to
receive its budget share and opening another must select the new
bank or financial institution from the approved list, even if the
closed account was not with an institution on that list.
3.6 Borrowing by schools
Governing bodies are only permitted
to borrow money with the written permission of the Secretary of
State. Any investment or borrowing must be in accordance with the
code of practice on treasury management
Schools may not use
credit cards, which are regarded as borrowing. The use of
Procurement cards is allowed as a means of facilitating electronic
purchase (contact the Business Support Centre).
These restrictions do not apply to
Trustees and Foundations, whose borrowing as a private body, makes
no impact on Government accounts. These debts may not be serviced
directly from the delegated budget but schools are free to agree a
charge for a service which Trustees or Foundations are able to
provide as a consequence of their own borrowing. Governing bodies
do not act as agents of the authority when repaying loans.
The DfE can provide further advice
via their website: www.education.gov.uk/contactus.
3.7 Other provisions
Detailed guidance notes will be
contained in the Finance Manual for schools which will cover
requirements relating to the administration of external bank
accounts including;
Payroll
administration - including National Insurance,
Superannuation, Aggregation of Earnings and other payroll related
items
Accounting
returns - to enable details of budget plans and
transactions to be entered into the City Council’s
accounts
VAT – the completion of required returns and
compliance with Customs and Excise Regulations
Late
Payment of Commercial Debts (Interest) Act 1998 -
compliance with these regulations
Construction Industry Tax Deduction Scheme – compliance with these
regulations
Bank
reconciliations - completion as required in a format as
determined by the Chief Finance Officer
Detailed guidance notes will also be
issued covering requirements relating to the administration of a
local cheque book facility through an imprest account and also
relating to petty cash imprests.
SECTION 4: THE TREATMENT OF SURPLUS AND DEFICIT
BALANCES ARISING IN RELATION TO BUDGET SHARES
4.1 Right to carry forward surplus balances
Schools will be allowed to carry
forward from one financial year to the next any shortfall in
expenditure relative to the school's budget share for the year
plus/minus any balance brought forward from the previous year.
The amount of any balance to be
transferred to a school’s bank account will be estimated
based on the balance as per the City Council’s Financial
Management System (FMS) as at 1st April, adjusted for
any known transactions relating to the previous year’s
accounts. The transfer would take place by 16th April,
pending a later reconciliation.
4.2 Controls on surplus balances
The Local Authority retains the power
to clawback excess surplus balances. This will be
applied having regard to the principle
that schools should be moving towards greater autonomy, should not
be constrained from making early efficiencies to support their
medium-term budgeting in a tighter financial climate, and should
not be burdened by bureaucracy. The mechanism is focused on only
those schools which have built up significant excessive uncommitted
balances and/or where some level of redistribution would support
improved provision across a local area.
Surplus balances held by schools as
permitted under this scheme are subject to the following
restrictions with effect from 31st March 2013:
a)
the City Council shall calculate by 31 May each year the surplus
balance, if any, held by each school as at the preceding 31 March.
For this purpose the balance will be the recurrent balance as
defined in the Consistent Financial Reporting Framework;
b)
the City Council shall deduct from the calculated balance any
amounts that are held by an individual school on behalf of a
partnership of schools, for instance funds held on behalf of an
inclusion partnership or cluster of schools;
c)
if the result of steps a-b is a sum greater than 15% of the current
year's budget share and the balance has remained greater than 15%
over three successive years then the City Council may deduct from
the current year's budget share an amount equal to the excess,
where schools have built up significant excessive uncommitted
balances and/or where some level of redistribution would support
improved provision across the local area.
Funds deriving from sources other
than the City Council will be taken into account in this
calculation if paid into the budget share account of the school,
whether under provisions in this scheme or otherwise.
Funds held in relation to a school's
exercise of powers under section 27 of the Education Act 2002
(community facilities) will not be taken into account unless added
to the budget share surplus by the school as permitted by the City
Council.
Whilst no excess balance will be
recovered where a balance is over 15% for less than three years all
schools with balances over 15% will be required to submit a
statement covering the anticipated use of the balance.
Where any School meets the threshold
under (c) above having carried forward a balance of over 15% for
three years a panel of members of the Schools Forum will review the
reasons for holding the balance and make a recommendation to the
Director of Children’s Services regarding any proposed
clawback.
The total of any amounts deducted
from schools' budget shares by the City Council under this
provision are to be applied to the Schools Budget of the City
Council.
4.3
Interest on surplus balances
Balances held by the City Council on
behalf of schools will not attract interest.
4.4 Obligation to carry forward deficit balances
Any deficit will be carried forward
and be deducted from the following year's budget share (see also
4.9).
4.5
Planning for deficit budgets
Schools may plan for deficits only in
certain approved circumstances (see 4.9)
4.6
Charging of interest on deficit balances
Interest will not be charged on
deficit balances.
4.7 Writing off deficits
The City Council cannot write off the
deficit balance of any school, but assistance towards the
elimination of a deficit balance can be provided through the
allocation of a cash sum from the authority’s schools budget
under the centrally-held de-delegated schools in financial
difficulties budget agreed by Schools Forum.
4.8 Balances of closing and replacement schools
When a school closes, any balance
(whether surplus or deficit) reverts to the LA. It cannot be
transferred as a balance to any other school, even where the school
is a successor to the closing school, except that a surplus
transfers to an academy where a school converts to academy status
under section 4(1)(a) of the Academies Act 2010.
4.9 Licensed deficits
In certain circumstances schools will
be allowed to plan for a deficit budget.
Detailed guidance on the procedure to
be undertaken is held within the Finance Manual for schools,
however the following principles will hold:
a)
A school must reach at least a zero balance within a three year
period, and progress towards this position will be open to termly
review to ensure that the deficits are not simply extended
indefinitely;
b)
Deficits will only be agreed where the Director of Children’s
Services agrees it would be impractical to balance the budget in
year;
c)
The maximum size of the deficit which may be agreed for any school
will be 12½% of the school budget share, and the minimum
size for a licensed deficit will be the minimum of £10,000 or
3% of a schools budget share;
d)
A maximum of 40% of the collective balances held by the LA will be
used to back the arrangement
e)
All arrangements will require the approval of the Director of
Children’s Services and the Chief Finance Officer of the City
Council.
SECTION 5: INCOME
The basic principle will be that
schools should be able to retain income except in certain specified
circumstances. Where income is derived as a direct result of
letting school premises or facilities, from the sale of assets or
from fees and charges, the income shall always be credited to the
school budget share and not to any other school fund. However,
school fund income may at any time be credited to the
school’s budget share through the procedure set out in
guidelines issued by the Director of Children’s Services.
5.1 Income from lettings
Schools will be allowed to retain
income from lettings of the school premises which would otherwise
accrue to the LA, subject to alternative provisions arising from
any joint use or PFI agreements. Schools are allowed to
cross-subsidise lettings for community and voluntary use with
income from other lettings, provided there is no net cost to the
budget share. However, schools are required to have regard to
directions issued by the LA as to the use of school premises,as
permitted under the School Standards and Framework Act 1998 for
various categories of schools.
5.2 Income from fees and charges
Schools are allowed to retain income
from fees and charges except where a service is provided by the LA
from centrally retained funds. However, schools are required to
have regard to any policy statements on charging produced by the
LA.
The LA
will provide, and keep under review, a statement of its charging
and remission policies. Governing bodies are required to do
likewise with their own charging policies. The LA charging policy
is contained within the Finance Manual for schools.
5.3
Income from fund-raising activities
Schools are allowed to retain income
from fund-raising activities.
5.4 Income from the sale of assets
Schools are allowed to retain the
proceeds of sale of assets except in cases where the asset was
purchased with non-delegated funds (in which case it will be for
the LA to decide whether the school should retain the proceeds), or
the asset concerned is land or buildings forming part of the school
premises and is owned by the LA.
5.5 Administrative procedures for the collection of
income
The detailed requirements referring
to the receipt, safeguarding and banking of income are stated in
Financial Regulations for schools with delegated budgets. The main
issues are:
•
all income to be receipted on approved receipts
•
money, whilst on school premises, or in transit, must be
safeguarded in accordance with the City Council’s money
insurance policy
•
banking must be regular
•
cash income must never be used to make refunds or to pay invoices
or staff
personal cheques must not be cashed out of income.
•
VAT must be accounted for where there is a VAT liability.
5.6 Purposes for which income may be used
Income from sale of assets purchased
with delegated funds may only be spent for the purposes of the
school.
SECTION 6: THE CHARGING OF SCHOOL BUDGET SHARES
6.1 General provision
The LA has a right to protect its
financial position from liabilities caused by the action or
inaction of governing bodies by making a charge on the budget share
of a school. The budget share of a school will be charged by the LA
without the consent of the governing body only in circumstances
expressly permitted by the scheme, after consultation with schools
as to the intention to so charge, and schools will be notified when
it has been done.
6.1.2 For a school that has
determined to operate a separate bank account, charges will be
actioned by a reduction in the next available monthly advance.
6.1.3 The City Council is required to
charge salaries of school-based staff to school budget shares at
actual cost.
6.1.4 The LA is allowed to
de-delegate funding for permitted services without the express
permission of the governing body of maintained primary and
secondary schools, provided this has been approved by the
appropriate phase (primary/secondary) representatives of the
Schools Forum. The LA cannot de-delegate funding from SILCs, PRUs
or academies but they can buyback these services if required and if
offered.
6.2 Circumstances in which charges may be made
6.2.1 Where premature retirement
costs have been incurred without the prior written agreement of the
Director of Children’s Services to bear such costs (the
amount chargeable being only the excess over any amount agreed by
the Director of Children’s Services);
6.2.2 Other expenditure incurred to
secure resignations where the school had not followed LA
advice;
6.2.3 Awards by courts and industrial
tribunals against the City Council, or out of court settlements,
arising from action or inaction by the governing body contrary to
the LA's advice
6.2.4 Expenditure by the LA in
carrying out health and safety work or capital expenditure for
which the LA is liable where funds have been delegated to the
governing body for such work, but the governing body has failed to
carry out the required work;
6.2.5 Expenditure by the LA incurred
in making good defects in building work funded by capital spending
from budget shares, where the premises are owned by the LA or the
school has voluntary controlled status;
6.2.6 Expenditure incurred by the LA
in insuring its own interests in a school where funding has been
delegated but the school has failed to demonstrate that it has
arranged cover at least as good as that which would be arranged by
the LA;
6.2.7 Recovery of monies due from a
school for services provided to the school, where a dispute over
the monies due has been referred to a disputes procedure set out in
a service level agreement, and the result is that monies are owed
by the school to the LA;
6.2.8 Recovery of penalties imposed
on the LA by the Board of Inland Revenue, the Contributions Agency,
HM Customs and Excise, West Yorkshire Pensions Fund, Teachers
Pensions, the Environment Agency or regulatory authorities as a
result of school negligence.
6.2.9 Correction of LA errors in
calculating charges or credits to a budget share (e.g. pension
deductions)
6.2.10
Additional transport costs incurred by the City Council arising due
to decisions made by the governing body on the length of the school
day, or failure to notify the Council of non-pupil days.
6.2.11 Legal costs which are incurred
by the City Council because the governing body did not accept the
advice of the Director of Children’s Services (see also
section 11).
6.2.12 Costs of necessary health and
safety training for staff employed by the LA, where funding for
training had been delegated but the necessary training not carried
out.
6.2.13 Compensation paid to a lender
where a school enters into a contract for borrowing beyond its
legal powers, and the contract is of no effect.
6.2.14 Cost of work done in respect of teacher pension remittance
and records for schools using non-LA payroll contractors, the
charge to be the minimum needed to meet the cost of the City
Council’s compliance with its statutory obligations;
6.2.15 Costs incurred by the LA in
securing provision specified in a statement of SEN where the
governing body of a school fails to secure such provision despite
the delegation of funds in respect of low cost high incidence SEN
and/or specific funding for a pupil with high needs;
6.2.16 Costs incurred by the LA due
to submission by the school of incorrect data;
6.2.17 Recovery of amounts spent from
specific grants on ineligible purposes;
6.2.18 Costs incurred by the LA as a
result of the governing body being in breach of the terms of a
contract;
6.2.19 Costs incurred by the
authority or another school as a result of a school withdrawing
from a cluster arrangement, for example where this has funded staff
providing services across the cluster.
6.2.20 Interest payable for late
payment of a commercial debt under the Late payment of Commercial
Debts (Interest) Act 1998, where the school is responsible for the
delay.
SECTION 7: TAXATION
7.1 Value Added Tax
When a Governing Body enters into a
contract to spend part of its delegated budget it does so on behalf
of the City Council. The City Council retains the ownership of any
items purchased in this way.
Under Section 33 of the VAT Act 1994,
the City Council is able to claim refunds of VAT on purchases in
respect of its non business activities, of which purchases by
governing bodies are one. Therefore, there is no need for any
school to register for VAT in connection with its activities
involving the use of its delegated budget.
As regards Voluntary Aided Schools, the City Council cannot
claim refunds of VAT on items of expenditure which are the
responsibility of the governors (e.g. external repairs to
buildings).
In order to reclaim VAT on purchases
schools will have to follow procedures detailed in the Finance
Manual for schools. Any amounts of VAT reclaimed will be passed
back to the school.
7.2 Construction Industry Taxation Scheme
Schools are required to abide by
procedures issued by the City Council in connection with CITS.
Procedures can be found in the Finance Manual for schools.
SECTION 8: THE PROVISION OF SERVICES AND FACILITIES BY
THE CITY COUNCIL
8.1: Provision of services from centrally retained
budgets
It is for the City Council to
determine on what basis services from centrally retained funds will
be provided to schools. This includes all expenditure included
within the Section 251 Statement outside of the Individual Schools
Budget. However, there will be no discrimination in the provision
of services on the basis of categories of schools except where (a)
funding has been delegated to some schools only or (b) such
discrimination is justified by differences in statutory
duties.
This includes access to any funding
to cover premature retirement costs and redundancy payments which
may not ordinarily be thought of as services.
8.2 Provision of services bought back from the City
Council using delegated budgets
The term of any arrangement with a
school to buy services or facilities from the LA is limited to a
maximum of three years from the date of the agreement, whichever is
the later, and periods not exceeding five years for any subsequent
agreement relating to the same services.
When a service is provided for which
expenditure is not retainable centrally by the LA under the
regulations made under section 46 of the Act, it will be offered at
prices which are intended to generate income which is no less than
the cost of providing those services.
The total cost of the service will be met by the total income, even
if schools are charged differentially.
8.2.1 Packaging
Any service that is being provided on
a buy-back basis will be offered in a way that does not
unreasonably restrict schools’ freedom of choice among the
services available, and where practicable, will include provision
on a service by service basis as well as in packages of
services.
8.3 Service level agreements (SLAs)
Service level agreements will operate
on an academic year basis where practical for them to do so,
although some may have to operate on financial years. However,
service level agreements will be issued at least one month prior to
the date from which they will be effective, and schools will have
at least a month to consider the terms of agreements.
8.3.1 If services or facilities are
provided under a service level agreement – whether free or on
a buyback basis – the terms of any such agreement will be
reviewed at least every three years if the agreement lasts longer
than that.
8.3.2 Services, if offered at all by
the LA, will be available on a basis which is not related to an
extended agreement, as well as on the basis of such agreements.
Where services are provided on an ad
hoc basis they may be charged for at a different rate than if
provided on the basis of an extended agreement.
Centrally arranged
premises and liability insurance are exempt from the requirements
of sections 8.2 and 8.3 as to service supply, as the limitations
envisaged may be impracticable for insurance purposes.
8.4 Teachers’ Pensions
In
order to ensure that the performance of the duty on the City
Council to supply Teachers Pensions with information under the
Teachers’ Pensions Regulations 1997, the following conditions
are imposed on the City Council and governing bodies of all
maintained schools covered by this Scheme in relation to their
budget shares.
The conditions only apply to
governing bodies of maintained schools that have not entered into
an arrangement with the City Council to provide payroll
services.
A governing body of any maintained
school, whether or not the employer of the teachers at such a
school, which has entered into any arrangement or agreement with a
person other than the City Council to provide payroll services,
shall ensure that any such arrangement or agreement is varied to
require that person to supply salary, service and pensions data to
the City Council which the City Council requires to submit its
annual return of salary and service to Teachers' Pensions and to
produce its audited contributions certificate. The City Council will advise schools each year of
the timing, format and specification of the information required. A
governing body shall also ensure that any such arrangement or
agreement is varied to require that Additional Voluntary
Contributions (AVCs) are passed to the City Council within the time
limit specified in the AVC scheme. The governing body shall meet
any consequential costs from the school’s budget share.
A governing body of any maintained
school which directly administers its payroll shall supply salary,
service and pensions data to the City Council which the City
Council requires to submit its annual return of salary and service
to Teachers' Pensions and to produce its audited contributions
certificate. The City Council will
advise schools each year of the timing, format and specification of
the information required from each school. A governing body shall
also ensure that Additional Voluntary Contributions (AVCs) are
passed to the City Council within the time limit specified in the
AVC scheme. The governing body shall meet any consequential costs
from the school’s budget share.
SECTION 9: PRIVATE FINANCE INITIATIVE / PUBLIC PRIVATE PARTNERSHIPS
(PFI/PPP)
The LA has the power to charge to a
school’s budget share any amounts incorporated within a
PFI/PPP agreement entered into by the governing body of a school
with the LA, in relation to a PFI/PPP scheme involving the
school.
SECTION 10: INSURANCE
10.1 Insurance cover
The City Council requires that any
school wishing to arrange its own insurance must demonstrate that
cover relevant to the City Council's insurable interests, under a
policy arranged by the governing body, is at least as good as the
relevant minimum cover arranged by the City Council if the City
Council makes such arrangements, either paid for from central funds
or from contributions from schools' delegated budgets. The LA will
have regard to the actual risks which might reasonably be expected
to arise at the school in question in operating such a requirement,
rather than applying an arbitrary minimum level of cover for all
schools.
The following are pre-requisites for
any school wishing to arrange its own insurance:
1)
A valuation of the buildings on a reinstatement basis in accordance
with the specification determined by the City Council’s Asset
Management Service. The cost of the valuation will be at the
school’s expense.
2)
A complete inventory of school contents with replacement values as
referred to in the section on control of assets.
3)
Agreement that all policies will be in the joint names of the
governing body and Leeds City Council.
4)
Agreement that the indemnity limits currently insured by Leeds City
Council will be matched for Employers’ and Public Liability
insurances.
Detailed guidance on the subject of
insurance is available to all schools from the City Council’s
Insurance Service
(see also 6.2.6)
SECTION 11: MISCELLANEOUS
11.1 Right of access to information
There is a requirement on governing
bodies to supply all financial and other information which might
reasonably be required to enable the City Council to satisfy itself
as to the school's management of its delegated budget share, or the
use made of any central expenditure by the City Council (e.g.
earmarked funds) on the school.
11.2 Liability of governors
As the governing body is a corporate
body, and because of the terms of s.50(7) of the SSAF Act,
governors of maintained schools will not incur personal liability
in the exercise of their power to spend the delegated budget share
provided they act in good faith.
Insurance for Governors
The City Council will indemnify, and
will not seek a financial contribution from, Governors in relation
to claims arising out of any neglect, error or omission by the
governors in the course of their duties and within the scope of
their authority, subject to the following exceptions:
a) Loss or damage directly or
indirectly caused by or arising from:
(i)
fraud, dishonesty or criminal offence on the part of a governor
(ii)
the use of a motor vehicle belonging, hired, leased or loaned to a
governor.
b)
Liability in respect of surcharges made by the auditor.
c)
Ten per cent (10%) of the total cost of a libel or slander claim
(subject to a maximum
contribution by a governor of
£500)
d)
Liability which is already insured under a policy of insurance.
e)
Liability falling on the governor but not the City Council (i.e.
there is no vicarious liability)
The indemnity will not apply if a
governor admits liability or negotiates or attempts to negotiate
settlement of a claim without the written authority of the City
Council.
This indemnity will also extend
to:
•
Representation at any Coroner’s inquest or fatal Inquiry in
respect of any death.
•
Defending any proceedings in respect of any act or omission or
alleged breach of statutory regulations (which includes the Health
and Safety at Work Act) relating to any event which may result in a
claim for compensation.
Where there is the need for legal
advice and representation to a governing body, ordinarily this
would be met by the Council’s Legal Services team. Where a
conflict of interest arises between the Council and the governing
body/named members of staff, then Legal Services will only be able
to act for the Council, in accordance with the rules and guidelines
issued by the Law Society in respect of the professional conduct of
solicitors, as laid down from time to time by the Law Society.
11.3 Governors' expenses
The LA may delegate to the governing
body of a school yet to receive a delegated budget, funds to meet
governors' expenses
Under section 50(5) of the Act, only
allowances in respect of purposes specified in regulations made
under section 19 of the Education Act 2002 may be paid to governors
from a school's delegated budget share. The payment of any other
allowances is forbidden. Schools are also barred from payment of
expenses duplicating those paid by the Secretary of State to
additional governors appointed by him to schools under special
measures.
11.4 Responsibility for legal costs
Legal costs incurred by the governing
body, although the responsibility of the LA as part of the cost of
maintaining the school unless they relate to the statutory
responsibility of aided school governors for buildings, will be
charged to the school's budget share unless the governing body acts
in accordance with the advice of the City Council.
Should a conflict of interest arise
between the City Council and the governing body and the governing
body requires independent legal advice, then they should follow the
arrangements set out in 2.10 above.
11.5 Health and Safety
The primary responsibility for Health
and Safety rests with the LA, as the employer. However, for
Foundation and Trust schools the governing body replaces the LA as
the employer.
A secondary responsibility does rest
with the occupier and under section 4 and 36 of the 1974 Health and
Safety Act is also placed on individual staff to ensure they work
in ways which are without risk to themselves, other staff, pupils
and visitors to premises.
The LA has provided a written
statement of health and safety policy, but it requires each
governing body to have considered the issues as they affect their
schools and either to have accepted the LA’s policy as
sufficient or to have prepared and approved a written health and
safety policy for the school.
The LA’s Statement of Safety
Policy and all ensuing guidance has been sent to schools in the
manual ‘Health & Safety in Education Premises, and is not
contained in this scheme.
Under section 39(3) of the School
Standards and Framework Act the LA may issue directions to the
governing body and head teacher of a community, community special
or voluntary controlled school on health and safety matters; these
directions are enforceable, so far as governing bodies are
concerned, via section 497 of the Education Act 1996 if not
complied with.
11.6 Right of attendance for the Chief Finance
Officer
Governing bodies are required to
permit the Chief Finance Officer of the City Council (or his/her
representative) to attend meetings of the governing body at which
any agenda items are relevant to the exercise of her or his
responsibilities.
11.7 Special Educational Needs
Schools are required to use their
best endeavours in spending the budget share, to secure the special
educational needs of their pupils. As this is anyway a statutory
requirement, it would be possible for the LA to suspend delegation
where a situation is serious enough to warrant it. This would not
normally relate to an individual pupil.
11.8 Whistleblowing
The City Council has a Whistleblowing
Policy that details the procedure to be followed by persons working
at a school or school governors who wish to complain about
financial management or financial propriety at the school, and how
such complaints will be dealt with. The policy is contained within
the Finance Manual for schools.
11.9 Child Protection
Schools are required to release staff
to attend child protection case conferences and other related
events, and the funding is delegated to schools within the
school’s budget share.
11.10 Redundancy and early retirement costs
The 2002 Education Act sets out how
premature retirement and redundancy costs should normally be
funded. The City Council follows this procedure.
The default position is that for
staff funded from a school’s budget, premature retirement
costs must be charged to the Schools Budget, unless the local
authority agrees otherwise, and redundancy costs should be charged
to a local authority’s budget, unless there is a good reason
that they should be met from the Schools’ Budget. Where an
employee is over the age of 55, termination of employment
situations can involve both a redundancy payment and a premature
retirement payment.
For staff employed under the
community facilities power, the default position is that any costs
must be met by the governing body, and can be funded from the
school’s delegated budget if the governing body is satisfied
that this will not interfere to a significant extent with the
performance of any duties imposed on them by the Education Acts,
including the requirement to conduct the school with a view to
promoting high standards of educational achievement.
Further guidance is provided in
Appendix A.
SECTION 12: RESPONSIBILITY FOR REPAIRS AND
MAINTENANCE
12.1 Categories of work
Governing bodies must expect to
finance from their budget all categories of work treated as revenue
expenditure.
Governing bodies may finance from
their budget categories of work treated as capital expenditure.
However, voluntary aided schools may not seek to recover VAT where
such expenditure is a governing body responsibility.
12.2 Delegation
The City Council will delegate all
revenue funding for repairs and maintenance to schools. Only capital expenditure is to be retained, under
the definition of capital used by the City Council for financial
accounting purposes in line with the CIPFA Code of Practice on
Local Authority accounting.
For voluntary aided schools, the
liability of the City Council for repairs and maintenance is the
same as for other maintained schools, and no separate list of
responsibilities is necessary for such schools. However,
eligibility for capital grant from the Secretary of state for
capital works at voluntary aided schools depends on the de minimis
limit applied by DfES to categorise such work, not the de minimis
used by the City Council.
SECTION 13: COMMUNITY FACILITIES
13.1 Introduction
Schools which choose to exercise the
power conferred by section 27 (1) of the Education Act 2002 to
provide community facilities will be subject to a range of
controls. First, regulations made under section 28 (2) can specify
activities which may not be undertaken at all under the main
enabling power. Secondly, the school is obliged to consult the
authority and have regard to advice from the City Council. Thirdly,
the Secretary of State issues guidance to governing bodies about a
range of issues connected with exercise of the power and a school
must have regard to that.
However, under section 28(1), the
main limitations and restrictions on the power will be those
contained in the maintaining authority’s scheme for financing
schools made under section 48 of the School Standards and Framework
Act 1998. Paragraph 2 of Schedule 3 to the Education Act 2002
extends the coverage of schemes to the powers of governing bodies
to provide community facilities.
Schools are therefore subject to
prohibitions, restrictions and limitations in the scheme for
financing schools.
This section of the scheme does not
extend to joint-use agreements; transfer of control agreements, or
agreements between the City Council and schools to secure the
provision of adult and community learning
The City Council has the right to
require a school to make a charge against its school budget share
to meet an accumulated deficit. This right will not be applied
automatically where an activity shows an accumulated deficit but
would be applied following consideration of individual
circumstances. This right will not be exercised where the school
can provide a working business plan showing that the deficit will
be cleared within a two year period.
Mismanagement of community facilities
funds may be grounds for suspension of the right to a delegated
budget.
13.2 Consultation with the City Council –
financial aspects
Section 28(4) of the Education Act
2002 requires that before exercising the community facilities
power, governing bodies must consult the City Council, and have
regard to the advice given.
Before any decision is taken by a
governing body to exercise its power to provide community
facilities the governing body must notify the Director of
Children’s Services in writing of its intention to do so and
seeking his/her advice.
The notification should include such
details as:
•
proposed activities to take place
•
planned income and expenditure
•
use of school buildings (within and outside the normal school
day)
•
insurance arrangements
•
health and safety
•
assessment of any risk (financial or otherwise) associated with the
proposal
•
involvement of third parties
•
proposed banking arrangements
as well as specific information as to
how the school will ensure compliance with the requirements of this
section. In particular the governing body should indicate the
benefits for the school and community of exercising this power.
The City Council will respond within
six weeks of receiving formal notification so this time should be
built into the plan for implementing the proposal. Schools are
required to notify the Director of Children’s Services of
their decision following his/her advice before formally committing
itself to exercising its power.
If a governing body fails to inform
the Director of Children’s Services of its intention to use
its community facilities power, or chooses not to comply with
his/her advice to the extent that, in the view of the City Council,
is seriously prejudicial to the interests of the school or Council,
that may constitute grounds for suspension of the right to a
delegated budget.
13.3 Funding agreements – authority powers
The provision of community facilities
in many schools may be dependent on the conclusion of a funding
agreement with a third party which will either be supplying funding
or supplying funding and taking part on the provision. A very wide
range of bodies and organisations are potentially involved.
If the provision of community
facilities is dependent upon the conclusion of a funding agreement
with a third party, details of any such proposed agreement should
be submitted to the Director of Children’s Services for
his/her comments as part of its proposal. The LA may not impose a
right of veto over a school entering into such agreements directly
or by requiring any agreement to be countersigned. Schools are
advised to seek legal advice before entering into any such
agreement.
If agreement has been or is to be
concluded against the wishes of the City Council, or has been
concluded without informing the Director of Children’s
Services, which in the view of the City Council is seriously
prejudicial to the interests of the school or the Council, that may
constitute grounds for suspension of the right to a delegated
budget.
13.4 Other prohibitions, restrictions and
limitations
If the City Council has good reason
to believe that a proposed project carries significant financial
risks it may require that the governing body make arrangements to
protect the financial interests of the City Council by either
carrying out the activity concerned through the vehicle of a
limited company formed for the purpose, or by obtaining indemnity
insurance for risks associated with the project in question, as
specified by the LA.
The City Council does not intend to
impose any further specific restrictions on schools with regard to
this provision but would expect governing bodies to be aware of the
need to safeguard the financial position of the City Council or
school and to protect pupil welfare or education as well as the
sensitivities and needs of the community in exercising this
power.
13.5 Supply of financial information
Schools which exercise the community
facilities power will be required to provide the City Council every
six months with a summary statement, showing the income and
expenditure for the school arising from the facilities in question
for the previous six months and on an estimated basis, for the next
six months. Guidance on the provision of this information will be
provided by the City Council.
The Director of Children’s
Services, on giving notice to a school that it believes there to be
cause for concern as to the school’s management of the
financial consequences of the exercise of the community facilities
power, reserves the right to require such financial statements to
be supplied more regularly and, if the City Council sees fit, to
require the submission of a recovery plan for the activity in
question.
13.6 Audit
Schools are required to grant access
by the City Council’s internal and external auditors to the
school’s records connected with exercise of the community
facilities power, in order to facilitate internal and external
audit of relevant income and expenditure.
Any funding agreements with other
persons pursuant to the exercise of the community facilities power,
must contain adequate provision for access by the City Council or
its representatives to the records and other property of those
persons held on the school premises, or held elsewhere insofar as
they relate to the activity in question, in order for the Council
to satisfy itself as to the propriety of expenditure on the
facilities in question.
13.7 Treatment of income and surpluses
All net income derived
from community facilities except where otherwise agreed with a
funding provider, whether that be the City Council or some other
person, may be retained by the school.
The school may carry such retained
net income over from one financial year to the next as a separate
community facilities surplus or, subject to the agreement of the
City Council at the end of each financial year, transfer all or
part of it to the budget share balance.
If the school is a community or
community special school, and the City Council ceases to maintain
the school, any accumulated retained income obtained from exercise
of the community facilities power reverts to the City Council
unless otherwise agreed with a funding provider.
13.8 Treatment of deficits
If the activity results in a deficit
this must be charged against any accumulated community facilities
surplus previously generated by the school.
Where a deficit cannot be charged
against any accumulated surplus the City Council has the right to
require a school to make a charge against its school budget share,
or other funding that may be applied to support community
facilities, to meet the accumulated deficit. This right will not be
applied automatically where an activity shows an accumulated
deficit but would be applied following consideration of individual
circumstances.
This right will not be exercised
where the school can provide a working business plan showing that
the deficit will be cleared within a two year period
If the City Council incurs any third
party liabilities as a result of a governing body using its
community facilities power it reserves the right to charge the cost
against any accumulated community facilities surplus maintained by
the school.
13.9 Health and safety matters
The health and safety provisions as
set out in para 11.5 of the Leeds Scheme for Financing Schools
apply equally in regard to the community facilities power.
The governing body will be
responsible for meeting the costs of securing Disclosure and
Barring Service clearance for all adults involved in community
activities.
13.10 Insurance
It is the responsibility of the
governing body to make adequate arrangements for insurance against
risks arising from the exercise of the community facilities
power.
Any school proposing to provide
community facilities should, as an integral part of its plans,
undertake an assessment of the insurance implications and costs,
seeking professional advice if necessary. The school must seek the
advice of the City Council’s Insurance Officer before
finalising any insurance arrangement for community facilities.
The City Council reserves the right
to undertake its own assessment of the insurance arrangements made
by a school in respect of community facilities, and, if it judges
those arrangements to be inadequate, make arrangements itself and
charge the resultant cost to the school.
13.11 Taxation
Schools should seek advice from the
City Council on any issues relating to the possible imposition of
Value Added Tax on expenditure in connection with community
facilities including the use of the City Council VAT reclaim
facility.
If any member of staff employed by
the school or City Council in connection with community facilities
at the school is paid from funds held in a school’s own bank
account, the school is likely to be held liable for payment of
income tax and National Insurance, in line with HM Revenue and
Customs rules.
Schools must follow LA advice in
relation to the Construction Industry Scheme where this is relevant
to the exercise of the community facilities power.
13.12 Banking
Schools must maintain separate
accounts from the school budget share for income and expenditure in
connection with the community facilities power.
If a school wishes to maintain a
separate bank account for these funds then the requirements set out
in para 3.5 of the Leeds Scheme for Financing Schools will apply,
save that, where a bank account is set up specifically for
community facilities, the account mandate should not imply that the
City Council is the owner of the funds in the account except
insofar as those funds have been provided by the City Council
itself.
Schools are reminded that they may
not borrow money without the written consent of the Secretary of
State.
Appendix A: Responsibility for redundancy and early
retirement costs
This guidance note
summarises the position relating to the charging of voluntary early
retirement and redundancy costs. It sets out what is specified in
legislation and provides some examples of when it might be
appropriate to charge an individual school’s budget, the
central Schools Budget or the local authority’s non-schools
budget.
Section 37 of the 2002
Education Act says:
(4)
costs incurred by the local education authority in
respect of any premature retirement of a member of the staff of a
maintained school shall be met from the school's budget share for
one or more financial years except in so far as the authority agree
with the governing body in writing (whether before or after the
retirement occurs) that they shall not be so met.
(5)
costs incurred by the local education authority in
respect of the dismissal, or for the purpose of securing the
resignation, of any member of the staff of a maintained school
shall not be met from the school's budget share for any financial
year except in so far as the authority have good reason for
deducting those costs, or any part of those costs, from that
share.
(6)
The fact that the authority have a policy precluding
dismissal of their employees by reason of redundancy is not to be
regarded as a good reason for the purposes of subsection (5); and
in this subsection the reference to dismissal by reason of
redundancy shall be read in accordance with section 139 of the
Employment Rights Act 1996 (c. 18).
The default position,
therefore, is that premature retirement costs must be charged to
the school’s delegated budget, while redundancy costs must be
charged to the local authority’s budget. In the former case,
the local authority has to agree otherwise for costs to be
centrally funded, while in the latter case, there has to be a good
reason for it not to be centrally funded, and that cannot include
having a no redundancy policy. Ultimately, it would be for the
courts to decide what was a good reason, but the examples set out
below indicate the situations in which exceptions to the default
position might be taken
Charge of
dismissal/resignation costs to delegated school budget:
•
If a school has decided to offer more generous terms
than the authority’s policy, then it would be reasonable to
charge the excess to the school;
•
If a school is otherwise acting outside the local
authority’s policy
•
Where the school is making staffing reductions which
the local authority does not believe are necessary to either set a
balanced budget or meet the conditions of a licensed
deficit
•
Where staffing reductions arise from a deficit
caused by factors within the school’s control
•
Where the school has excess surplus balances and no
agreed plan to use these
•
Where a school has refused to engage with the local
authority’s redeployment policy.
Charge of premature
retirement costs to local authority non-schools budget:
•
Where a school has a long-term reduction in pupil
numbers and charging such costs to their budget would impact on
standards
•
Where a school is closing, does not have sufficient
balances to cover the costs and where the central Schools Budget
does not have capacity to absorb the deficit
•
Where charging such costs to the school’s
budget would prevent the school from complying with a requirement
to recover a licensed deficit within the agreed
timescale
•
Where a school is in special measures, does not have
excess balances and employment of the relevant staff is being/has
been terminated as a result of local authority or government
intervention to improve standards
Costs of early
retirements or redundancies may only be charged to the central part
of the Schools Budget where the expenditure is to be incurred as a
result of decisions made before 1st April 2013. Costs may not
exceed the amount budgeted in the previous financial
year.
It is important that
the local authority discusses its policy with its Schools Forum.
Although each case should be considered on its merits, this should
be within an agreed framework. It may be reasonable to share costs
in some cases, and some authorities operate a panel to adjudicate
on applications.
A de-delegated
contingency could be provided, if Schools Forum agree, to support
individual schools where “a governing body has incurred
expenditure which it would be unreasonable to expect them to meet
from the school’s budget share”.
For staff employed
under the community facilities power, the default position is that
any costs must be met by the governing body, and can be funded from
the school’s delegated budget if the governing body is
satisfied that this will not interfere to a significant extent with
the performance of any duties imposed on them by the Education
Acts, including the requirement to conduct the school with a view
to promoting high standards of educational achievement. Section 37
now states:
(7) Where a local
education authority incur costs:
(a)
In respect of any premature retirement of any member
of the staff of a maintained school who is employed for community
purposes, or
(b)
In respect of the dismissal, or for the purpose of
securing the resignation, of any member of the staff of a
maintained school who is employed for those purposes, they shall
recover those costs from the governing body except in so far as the
authority agree with the governing body in writing (whether before
or after the retirement, dismissal or resignation occurs) that they
shall not be so recoverable.
(7A) Any amount
payable by virtue of subsection (7) by the governing body of a
maintained school in England to the local authority may be met by
the governing body out of the school’s budget share for any
funding period if and to the extent that the condition in
subsection 7(B) is met.
(7B) The condition is
that the governing body are satisfied that meeting the amount out
of the school’s budget share will not to a significant extent
interfere with the performance of any duty imposed on them by
section 21(2) or by any other provision of the Education
Acts.
(8) Where a person is
employed partly for community purposes and partly for other
purposes, any payment or costs in respect of that person is to be
apportioned between the two purposes; and the preceding provisions
of this section shall apply separately to each part of the payment
or costs.