SCHEME FOR FINANCING SCHOOLS

Transcription

1 SCHEME FOR FINANCING SCHOOLS UNDER SECTION 48 OF THE SCHOOL STANDARDS AND FRAMEWORK ACT 1998 DfE Approved - Marh 1999 With amendments Marh 2001, Marh 2002, April 2003, July 2004, Marh 2005, February 2007, January 2010, Sept 2011, July 2012 and Sept 2013.

2 CONTENTS 1. INTRODUCTION 1.1 The Funding Framework The Role of the Sheme Appliation of the Sheme to the Authority and Maintained Shools 1.4 Publiation of the Sheme Revision of the Sheme 1.6 Delegation of Powers Maintenane of shools 2. FINANCIAL CONTROLS 2.1 Appliation of Finanial Controls to Shools 2.2 Provision of Finanial Information and Reports Payment of Salaries; payment of bills Control of Assets Aounting Poliies (inluding year-end Proedures) Writing off of Debts Basis of Aounting Submission of Budget Plans Effiieny and lue for money Virement Audit: General Separate External Audits Audit of Voluntary and Prite Funds Register of Business Interest Purhasing, Tendering and Contrating Requirements Appliation of Contrats to Shools Central Funds and Earmarking Spending for the Purposes of the Shool Capital Spending from Budget Shares Notie of Conern Shools Finanial Value Standard (SFVS) 2.22 Fraud 3. INSTALMENTS OF BUDGET SHARE AND BANKING ARRANGEMENTS 3.1 Introdution Frequeny of Instalments, Proportion of Budget Share Payable at eah Instalment and Banking Arrangements Interest Claw-bak Budget Shares for Closing Shools Bank and Building Soiety Aounts Restrition on Aounts Borrowing by Shools...

3 4. THE TREATMENT OF SURPLUS AND DEFICIT BALANCES ARISING IN RELATION TO BUDGET SHARES 4.1 Right to Carry Forward Surplus Balanes Reporting on the intended use of Surplus Balanes Interest on Surplus Balanes Obligation to Carry Forward Defiit Balanes and Submission of Reovery Plans Planning for Defiit Balanes Charging of Interest on Defiit Balanes Writing off Defiits Balanes of Closing and Amalgamating Shools Liensed Defiits Loan Shemes Lending by Shools INCOME 5.1 Inome from Lettings Inome from Fees and Charges Inome from Fund Raising Ativities Inome from the Sale of Assets Administrative Proedures for the Colletion of Inome Purposes for whih Inome may be used THE CHARGING OF SCHOOL BUDGET SHARES 6.1 General Provision Cirumstanes in whih Charges may be made TAXATION 7.1 Value Added Tax Constrution Industry Taxation Sheme THE PROVISION OF SERVICES AND FACILITIES BY THE AUTHORITY 8.1 Provision of Servies from Centrally Retained Budgets Timesales for the Provision of Servies bought bak from the LA using Delegated Budgets Pakaging. 8.4 Servie Level Agreements. 9. PUBLIC/PRIVATE PARTNERSHIPS 10. INSURANCE 10.1 Insurane Cover.. 2

4 11. MISCELLANEOUS 11.1 Right of Aess to Information Liability of Governors Governors Expenses Responsibility for Legal Costs Health and Safety Right of Attendane for Chief Finane Offier Delegation to New Shools Speial Eduational Needs 11.9 Whistle-blowing Child Protetion Teahers Pensions and Adned Voluntary Contributions Responsibility for Redundany and Early Retirement Costs 12. RESPONSIBILITY FOR REPAIRS AND MAINTENANCE AND CAPITAL 13. POWER TO PROVIDE COMMUNITY FACILITIES 13.1 Introdution Consultation with the LA Finanial Aspets Funding Agreements LA Powers 13.4 Other Prohibitions, Restritions and Limitations 13.5 Supply of Finanial Information 13.6 Audit Treatment of Inome and Surpluses Health and Safety Matters 13.9 Insurane Taxation Banking ANNEX A - Shools within the Sheme ANNEX B - Responsibility for Redundany and Early Retirement osts ANNEX C - Approved Banks and Building Soieties ANNEX D LA Capital/Revenue Split 3

5 SECTION 1: INTRODUCTION 1.1 The Funding Framework The funding framework whih replaes Loal Management of Shools is set out in the legislative provisions in setions of the Shool Standards and Framework At Under this legislation, loal authorities determine for themselves the size of their shools budget and their non-shools eduation budget although at a minimum an authority must appropriate its entire Dediated Shools Grant (DSG) to their shools budget. The ategories of expenditure whih fall within the two budgets are presribed under regulations made by the Seretary of State, but inluded within the two, taken together, is all expenditure, diret and indiret, on an authority's maintained shools exept for apital and ertain misellaneous items. Authorities may dedut funds from their shools budget for purposes speified in regulations made by the Seretary of State under s.45a of the At (the entrally retained expenditure). The amounts to be deduted for these purposes are deided by the authority onerned, subjet to any limits or onditions (inluding gaining the approl of their Shool Forum or the Seretary of State in ertain instanes) as presribed by the Seretary of State. The balane of the shools budget left after dedution of the entrally retained expenditure is termed the Individual Shools Budget (ISB). Expenditure items in the non-shools eduation budget must be retained entrally (although earmarked alloations may be made to shools). Authorities must distribute the ISB amongst their maintained shools using a formula whih aords with regulations made by the Seretary of State, and enables the alulation of a budget share for eah maintained shool. This budget share is then delegated to the governing body of the shool onerned, unless the shool is a new shool whih has not yet reeived a delegated budget, or the right to a delegated budget has been suspended in aordane with s.51 of the At. The finanial ontrols within whih delegation works are set out in a sheme made by the authority in aordane with s.48 of the At and regulations made under that setion. All proposals to revise the sheme must be approved by the shools forum, though the authority may apply to the Seretary of State for approl in the event of the forum rejeting a proposal or approving it subjet to modifiations that are not aeptable to the authority. Subjet to any provision made by or under the sheme, governing bodies of shools may spend suh amounts of their budget shares as they think fit for any purposes of their shool* and for any additional purposes presribed by the Seretary of State in regulations made under s.50 of the At. (*Setion 50 has been amended to provide that amounts spent by a governing body on providing ommunity failities or servies under setion 27 of the Eduation At 2002 are treated as if they were amounts spent for the purposes of the shool (s50(3a) of the At.) An authority may suspend a shool's right to a delegated budget if the provisions of the authority s finanial sheme (or rules applied by the sheme) have been substantially or persistently breahed, or if the budget 4

6 share has not been managed satisfatorily. A shool's right to a delegated budget share may also be suspended for other reasons (shedule17 to the At) Eah authority is obliged to publish eah year a statement setting out details of its planned Shools Budget and other expenditure on hildren s servies, showing the amounts to be entrally retained and funding delegated to shools. After eah finanial year the authority must publish a statement showing out-turn expenditure at both entral level and for eah shool, and the balanes held in respet of eah shool. The detailed publiation requirements for finanial statements are set out in diretions issued by the Seretary of State, but eah shool must reeive a opy of eah year's budget and out-turn statements so far as they relate to that shool or entral expenditure. 1.2 The Role of the Sheme The sheme sets out the finanial relationship between the authority and the maintained shools whih it funds. It ontains requirements relating to finanial management and assoiated issues, and is binding on both the authority and on shools. 1.3 Appliation of the Sheme to the Authority and Maintained Shools The sheme applies in respet of all ommunity, voluntary, foundation, ommunity speial or foundation speial shools and pupil referral units (PRUs) maintained by the authority. The shools inluded in the sheme are listed in Annex A. 1.4 Publiation of the Sheme A opy of the sheme will be made ailable to the Governing Body and headteaher of eah shool overed by the sheme, via the Counil website and any approved revisions will be notified to eah suh shool. 1.5 Revision of the Sheme Any proposed revisions to the sheme will be the subjet of onsultation with shools, before they are submitted to the Shools Forum for approl by members of the forum representing maintained shools Delegation of Powers The Governing Body has responsibility for overall finanial management of the shool and must ensure the requirements of the sheme and assoiated guidane from the Chief Finane Offier are met. The first formal budget of eah finanial year must be approved by the governing body. In order to meet these requirements the shool must prepare its own Finanial Management Poliy and Proedures doument for internal use to 5

7 be approved by the Governing Body. The Governing Body must ensure that it s Poliy and Proedures is implemented. The Governing Body of eah shool is required to onsider the extent to whih it wishes to delegate its finanial powers to ommittees, individual governors, the Headteaher or other staff, and to reord its deision (and any revisions) in the minutes of the governing body. The details of the finanial responsibilities and proedures must be set out in a Finanial Management Poliy and Proedures doument speifially approved by the full Governing Body. 1.7 Maintenane of shools The loal authority is responsible for maintaining the shools overed by the sheme, and this inludes the duty of defraying all the expenses of maintaining them (exept in the ase of a voluntary aided shool where some of the expenses are, by statute, payable by the governing body). Part of the way an authority maintains shools is through the funding system put in plae under setions 45 to 53 of the Shool Standards and Framework At SECTION 2: FINANCIAL REQUIREMENTS 2.1 Appliation of Finanial Controls to Shools In the management of their delegated budgets shools are required to omply with the authority's requirements on finanial ontrols and monitoring not only those in this sheme but also those requirements ontained in more detail in the Finanial Guide for Shools with Delegated Budgets. Where the Governing Body is permitted under this sheme to take or authorise ation to be taken up to a limit set by the Chief Finane Offier, suh limits are ontained in paragraphs 2.4, 2.6 and Provision of Finanial Information and Reports Shools are required to provide the authority with details of the approved budget and atual expenditure and inome, VAT and statements of bank and ledger reoniliation on a monthly basis, in a form and at times determined by the Chief Finane Offier on either of the following basis Monthly submission of VAT and bank reoniliation with quarterly submission of atual expenditure and inome unless the Chief Finane Offier has notified the shool in writing that in view of the shool s finanial position requires more frequent submission, or, Monthly submission of VAT, bank reoniliation and atual expenditure and inome The LA will furnish to shools on a periodi basis a statement of the LA s aount of the shool s approved budget and atual inome and 6

8 expenditure to date, whih the shool will be required to reonile with its own aounts. The LA s aounts will only inlude expenditure and harges authorised by the shool exept as allowed under Setions 4 and 6 of the Sheme. Shools are required to supply the authority with foreasts of inome and expenditure at the year-end, prepared at the end of September and Deember. The foreasts must be in a format and ontain those items of inome and expenditure presribed by the Chief Finane Offier and must take aount of the defiit/surplus at the previous 31 Marh. Note shools have to opt for either a monthly or quarterly system before the beginning of the finanial year. Claims for VAT reimbursement need to be made on a monthly basis in order that the LA an satisfy Customs and Exise requirements. 2.3 Payment of Salaries; Payment of Bills Note - Employment - the employer of staff with regard to legal and finanial responsibilities is as follows - Community, Voluntary Controlled and Community Speial shools - LA Foundation and Foundation Speial shools - Gov Body V A shools - Gov Body Salaries All Community shool employees must be appointed and paid in aordane with the relent national onditions of servies. All shool employees must be appointed and paid in aordane with poliies and proedures agreed or adopted by the Governing Body. The Governing Body must establish proedures for appointments and setting remuneration rates, it must authorise speifi posts/employees to vet and authorise payroll payments and make them responsible for this. Details must be inluded in the shool s Finanial Management Poliy and Proedures doument All payments onneted with employment must be made under arrangements approved by the Chief Finane Offier. Salaries, wages, pensions, gratuities and all taxable benefits must be paid through payroll administration by diret redit to employees bank aounts. Invoies All invoies and aounts for payment must be paid promptly and in time to avoid any penalty or to obtain any disount. The Governing Body must authorise speifi posts/employees to examine, verify and ertify invoies and any other payment vouhers or aounts and make them responsible for this having regard to the neessary separation of duties in the ordering and payments proess. 7

9 The names and speimen signatures for payroll and other transations must be sent to the Chief Finane Offier together with any revisions required to ensure the list of authorised signatories is kept up to date. Details of the shool s proedures must be reorded in the shool s Finanial Management Poliy and Proedures doument. Further details of requirements and administrative proedures for payment of salaries and bills are ontained in the Finanial Guide for Shools with Delegated Budgets. 2.4 Control of Assets Eah shool is required to maintain an inventory of all its moveable assets with a lue in exess of 1,000 and in a form that omplies with the guidane given by the Chief Finane Offier. Shools may determine their own arrangements for assets worth less than 1,000 but must keep a register in some form and have regard to insurane requirements. Surplus or obsolete inventory or stok items may only be disposed of with the prior approl of the Governing Body and in a way whih provides lue for money for the shool. 2.5 Aounting Poliies (inluding year-end Proedures) Shools are required to abide by proedures issued by the Chief Finane Offier. 2.6 Writing Off of Debts The Governing Body may write off its debts, for whih all reasonable ost effetive reovery ation has been demonstrated to have been taken, within the limit of 500. Beyond that limit it shall inform the Chief Finane Offier before taking suh ation. 2.7 Basis of Aounting The final aounts of the LA will be drawn up on an aruals basis. Any reports and aounts furnished to the LA for this purpose must also be provided on an aruals basis. 2.8 Submission of Budget Plans Eah shool will be given a provisional indiation of its share of the Individual Shools Budget (ISB) for the following finanial year by the 15 February On the basis of the provisional indiation, and other relent budgetary information supplied by the LA, the Governing Body must then onsider the shool's requirements for that year and prepare draft estimates of spending and inome. 8

10 Eah shool will be given a statement of its atual budget share by the 15 Marh. The full Governing Body must onsider and approve a budget plan by the 31 Marh and report it to the Chief Finane Offier by the 1 May. The budget plan must be in the format and ontaining those items of inome and expenditure presribed by the Chief Finane Offier and must take aount of the estimated defiit/surplus at the previous 31 Marh. At the same time as issuing its budget statement as required by setion 52 of the Shools Standards and Framework At 1998, the authority will inform eah maintained shool of its estimate of the shool s budget share and entral government grant inome paid via the LA for the two finanial years following the year for whih the statement is being issued. The estimate will be provided in a format determined by the authority and this format may inlude provision of information within an eletroni budget modelling system. The estimate will use information ailable to the authority at the date of preparation and will neessarily be provisional in nature, implying no ommitment on the part of the authority to fund the shool at the level shown in the estimate. The authority may issue additional budget estimates from time to time. The LA may require shools to submit a budget foreast overing eah year of a multi-year period for whih shools have been notified of budget shares beyond the urrent year in a format presribed by the Chief Finane Offier. 2.9 Effiieny and lue for money (replaes Best Value) Shools must seek to ahieve effiienies and lue for money, to optimise the use of their resoures and to invest in teahing and learning, taking into aount the Authority s purhasing, tendering and ontrating requirements. It is for heads and governors to determine at shool level how to seure better lue for money Virement Governing Bodies are able to vire freely between budget heads in the expenditure of their budget shares, provided that all suh virements are approved by the Governing body or arried out under powers delegated by the Governing Body. All virements approved under delegated powers must be reported to the next meeting of the Governing Body or an appropriate Committee as agreed and reorded in the shool s Finanial Management Poliy and Proedures doument Audit: General The Chief Finane Offier shall arrange an adequate and effetive internal audit, under his/her independent ontrol, to examine the shools 9

11 aounting, finanial and other operations. Eah shool will be audited on a three year yle, unless the irumstanes of a shool require an audit on a more frequent basis. The Chief Finane Offier, in the role of auditor, and anyone he/she may authorise, shall have authority to:- 1. enter any shool premises or land at any time; 2. have aess to all reords, douments, orrespondene, equipment, ash stores and other assets relating to the finanial and other transations of the shool; 3. require and reeive explanation and answers to questions about anything that is being examined. 4. Require anyone in possession of Counil property to produe it on request. The Chief Finane Offier must be told immediately about: 1. anything that involves (or is thought to involve) irregularities onerning ash, stores or other property; 2. any other suspeted irregularity in the running of the shool and may investigate and report as he/she thinks neessary. When an audit is ompleted the Governing Body must, on reeipt of a report from the Chief Finane Offier, respond within three months from that date. The response must: 1. indiate whether or not the reported risks and respetive agreed ations have been aepted; 2. state when and how the agreed ation have been or will be implemented; 3. explain why any risks or agreed ations are not aepted. The LA s external audit regime will be determined by the Audit Commission and shools are required to o-operate with any external auditors appointed Separate External Audit A Governing Body is allowed to spend funds from its budget share to obtain external audit ertifiation of its aounts, separate from any LA internal or external audit proess Audit of Voluntary and Prite Funds The Governing Body is responsible for all voluntary and prite funds held by the shool and the aounts of any trading organisations ontrolled by the shool. Its permission is required before any unoffiial fund is started. The Governing Body may delegate responsibility for a fund to the Headteaher or other employee and spending from the fund may then be at his/her disretion. 10

12 The Governing Body must monitor the ativities of all unoffiial funds to ensure they omply; where appropriate, with HM Revenues & Customs and Charity Commissioners requirements. The Governing Body must appoint auditors, whose fee must be harged to the unoffiial fund. Where a fund's turnover (or the turnover of all the shool s unoffiial funds) exeeds 10,000 any auditor must be a qualified aountant. Within six months of the end of the fund's aounting year the Governing Body must reeive the audited aounts of all unoffiial funds together with a report from the responsible employee. Further an Unoffiial Fund Aount Auditors Statement (in a form determined by the Chief Finane Offier) or a ertified opy of the audited aounts must be submitted to the Chief Finane Offier, who may report to the Governing Body if he/she thinks it fit Register of Business Interests The Governing Body of eah shool must establish a register, whih lists for eah member of the Governing Body, the headteaher and any member of staff who is authorised to enter into a ontrat on behalf of the shool, any material business interests they or any member of their immediate family have. The register must be kept up to date with notifiation of hanges and through an annual review of entries. It must be ailable for inspetion by governors, staff and parents, during normal shool hours and at Governing Body meetings Purhasing, Tendering and Contrating Requirements Shools must abide by the authority's Contrat Standing Orders for Shools with Delegated Budgets. The Governing Body must approve written proedures for obtaining and approving tenders ordering goods and servies and for the payment of aounts, whih must be inluded in its Finanial Management Poliy and Proedures doument. The proedures must inlude a requirement to assess in adne, where relent the health and safety ompetene of ontrators Appliation of Contrats to Shools Shools have the right to opt out of LA-arranged ontrats exept where they have lost that right for ontrats (whenever started) that they have freely entered into, in whih ase they would be bound into the ontrat for its length. They would also be subjet to the lauses within the ontrat allowing riation of its terms and onditions. In relation to the supply of shool meals, where the authority has entered into a ontrat with a prite supplier, or an agreement with Team Barnet 11

13 Catering (the authority s servie organisation), shools, whih are part of that arrangement, will be bound by the terms of the ontrat/agreement until its expiry. This applies even where the responsibility for providing shool meals has been delegated to the Governing Body. Although governing bodies are empowered under paragraph 3 of Shedule 10 of the Shool Standards & Framework At 1998 to enter into ontrats, in most ases they do so on behalf of the LA as maintainer of the shool and owner of the funds in the budget share aount. Other ontrats may be made solely on behalf of the governing body when the governing body has lear statutory obligations for example, ontrats made by aided or foundation shools for the employment of staff Central Funds and Earmarking The LA is authorised to make sums ailable to shools from government grants, e.g. Standards Fund, and from other soures, in the form of alloations, whih are additional to and separate from the shool's budget shares. Suh alloations will be subjet to onditions setting out the purpose or purposes for whih the funds may be used. Virement will only be possible where the onditions of suh alloations allow it. These alloations must be aounted for separately from the shool s budget share. Shools must be able to demonstrate that they have omplied with this aounting requirement. Shools are required to return all earmarked or alloations from entral funds to the LA if not spent in year, or within the period whih shools are allowed to use the funding if different. The LA will not make any dedution, in respet of interest osts to the LA, from payments to shools of devolved speifi or speial grant Spending for the Purposes of the Shool Governing Bodies are allowed to spend budget shares for the purposes of the shool, subjet to omplying with all legal requirements and the requirements of this sheme. The Governing Body may not make or santion gifts or ex gratia payments from publi funds. Payments to staff in ash or kind, gifts or benefits are not permitted. By virtue of setion 50(3A) amounts spent by governing bodies on ommunity failities or servies under setion 27 of the Eduation At 2002 will be treated as if spent for any purposes of the shool. Shools are also allowed to spend their budgets on pupils on the roll of other maintained shools Capital Spending from Budget Shares on Premises Governing Bodies are allowed to use their budget shares to meet the ost of apital expenditure on the shool premises. This inludes expenditure 12

14 by the Governing Body of a voluntary aided shool on work, whih is their responsibility under paragraph 3 of Shedule 3 of the Shool Standards and Framework At However if the expeted apital expenditure from the budget share and/or balane brought forward, in any one year exeeds 50,000 the Governing Body must notify the LA and take into aount any advie from the hief eduation offier as to the merits of the proposed expenditure. If the premises are owned by the LA, then the Governing Body must seek the onsent of the LA to any proposed apital works, but onsent an be withheld only on health and safety grounds Notie of Conern The LA may issue a notie of onern to the governing body of any shool it maintains where, in the opinion of the Chief Finane Offier and the Diretor of Children s Servie, the shool has failed to omply with any provisions of the sheme, or where ations need to be taken to safeguard the finanial position of the loal authority or the shool. Suh a notie will set out the reasons and evidene for it being made and may plae on the governing body restritions, limitations or prohibitions in relation to the management of funds delegated to it. These may inlude: insisting that relent staff undertake appropriate training to address any identified weaknesses in the finanial management of the shool; insisting that an appropriately trained/qualified person hairs the finane ommittee of the governing body; plaing more stringent restritions or onditions on the day to day finanial management of a shool than the Sheme requires for all shools suh as the provision of monthly aounts to the loal authority; insisting on regular finanial monitoring meetings at the shool attended by loal authority offiers; requiring a governing body to buy into a loal authority s finanial management systems; and imposing restritions or limitations on the manner in whih a shool manages extended shool ativity funded from within its delegated budget share for example by requiring a shool to submit inome projetions and/or finanial monitoring reports on suh ativities. The notie will learly state what these requirements are and the way in whih and the time by whih suh requirements must be omplied with in order for the notie to be withdrawn. It will also state the ations that the 13

15 authority may take where the governing body does not omply with the notie Shools Finanial Value Standard (SFVS) All loal authority maintained shools (inluding nursery shools and Pupil Referral Units (PRUs) must demonstrate ompliane with the Shools Finanial Value Standard (SFVS) and omplete the assessment form on an annual basis. It is for the shool to determine at what time in the year they wish to omplete the form. Governors must demonstrate ompliane through the submission of the SFVS assessment form signed by the Chair of Governors. The form must inlude a summary of remedial ations with a lear timetable, ensuring that eah ation has a speified deadline and an agreed owner. Governors must monitor the progress of these ations to ensure that all ations are leared within speified deadlines. As agreed by the Shools Forum, all maintained shools with a delegated budget must submit the form to the loal authority before 31 January 2013 and annually thereafter Fraud All shools must have a robust system of ontrols to safeguard themselves against fraudulent or improper use of publi money and assets. The governing body and head teaher must inform all staff of shool poliies and proedures related to fraud and theft, the ontrols in plae to prevent them; and the onsequenes of breahing these ontrols. This information must also be inluded in indution for new shool staff and governors. SECTION 3: INSTALMENTS OF THE BUDGET SHARE AND BANKING ARRANGEMENTS 3.1 Introdution The sheme offers four options for payment of the budget share and banking arrangements. These are set out below as Options A, B C and D. For any shool requesting payment of their total budget share into their bank aount the frequeny of instalments will be as in Option B or D. No later than 28 February eah year the Governing Body must inform the Chief Finane Offier in writing of the arrangements for the payment of instalments of the budget share and banking for the forthoming finanial year. In the event of the failure of a Governing Body to notify the Chief Finane Offier of its preferred option for the forthoming finanial year, arrangements will be put in plae that most losely reflet those of the previous year. 14

16 For the purposes of this setion, Budget Share inludes any plae-led funding for speial shools or pupil referral units; estimated top-up payments for pupils with high needs are also inluded in the sums paid under the funding options. 3.2 Frequeny of instalments, Proportion of budget share payable at eah instalment and banking arrangements Option A Under this option, if a shool opts to hold their Shool Budget Share Aount with the LB Barnet ontrated banker as one of the Counil's aounts and use the Counil s payroll servie, then the shool will reeive its budget share, less the estimated amount for salaries into that aount at the beginning of the finanial year. (Money paid into suh aounts remain the property of the LA until spent by the shool (S49 (5) of the SSaF At 1998) and any interest arues to the LA). Under this option, the estimated amount for salaries will be held entrally by the LA in the shool s Salary Aount. From this aount a shool will authorise payment of salaries and assoiated expenses on prodution of a statement giving details of payments to be made by the Counil s payroll servie in aordane with the terms and onditions of a servie agreement. Shools are permitted to open a Reserve Aount with the ontrated banker or other approved bank or building soiety in whih they an deposit 1. any amount up to the lue of their arry forward from the previous finanial year 2. any sum in relation to profit from lettings approved by the Chief Finane Offier or 3. a sum set aside for a apital projet in future years approved by the Chief Finane Offier. Option B Under this option, if a shool opts to hold their Shool Budget Share Aount with an approved bank or building soiety, but not the Counil s ontrated banker, then the shool will reeive twelve monthly instalments of their total budget share inluding salaries. The standard monthly amount will be one twelfth of the total budget share, exept April when an additional one thirty sixth is paid and Marh when one thirty sixth less is paid. Monthly payment will be made three working days before the shool s teahers salaries are paid. Exeptions may be made, in agreement with the Chief Finane Offier, where a shool is able to demonstrate the standard payments do not met the shool s reasonable needs. Under this option, the amount for salaries will be in their Shool Budget Share Aount. From this aount, shools will authorise payment of salaries and assoiated expenses, on prodution of a statement giving 15

17 details of payments to be made and an invoie for the sum due, by the Counil s or other payroll servie, in aordane with the terms and onditions of a servie agreement or ontrat. Shools are permitted to open a Reserve Aount, with an approved bank or building soiety, and transfer any funds beyond their immediate needs to that aount. Option C Under this option, if a shool opts to hold their Shool Budget Share Aount with an approved bank or building soiety (but not the Counil s ontrated banker) and use the Counil s payroll servie, then the shool will reeive its budget share, less the estimated amount for salaries, in twelve monthly instalments. The standard monthly amount will be one twelfth of the total budget share less salaries, exept April when an additional one thirty sixth is paid and Marh when one thirty sixth less is paid. Monthly payment will be made three working days before the shools teahers salaries are paid. Exeptions may be made, in agreement with the Chief Finane Offier, where a shool is able to demonstrate the standard payments do not meet the shool s reasonable needs. Under this option, the estimated amount for salaries will be held entrally by the LA in the shool s Salary Aount. From this aount, shools will authorise payment of salaries and assoiated expenses, on prodution of a statement giving details of payments to be made and an invoie for the sum due, by the Counil s payroll servie, in aordane with the terms and onditions of a servie agreement. Shools are permitted to open a Reserve Aount, with an approved bank or building soiety, and transfer any funds beyond their immediate needs to that aount. Option D Under this option, if a shool opts to hold their Shool Budget Share Aount with the Counil s ontrated banker but not use the Counil s payroll servie, then the shool will reeive twelve monthly instalments of their total budget share inluding salaries. The standard monthly amount will be one twelve of the total budget share, exept April when an additional one thirty sixth is paid and Marh when one thirty sixth less is paid. Monthly payment will be made three working days before the shool s teaher salaries are paid. Exeptions may be made, in agreement with the Chief Finane Offier, where a shool is able to demonstrate the standard payments do not meet the shool s reasonable needs. Under this option, the amount for salaries will be in their Shool Budget Share Aount. From this aount, shools will authorise payment of salaries and assoiated expenses, on prodution of a statement giving 16

18 details of payments to be made and an invoie for the sum due from a payroll servie, in aordane with the terms and onditions of a ontrat. Shools are permitted to open a Reserve Aount with the ontrated banker or other approved bank or building soiety in whih they an deposit 1. any amount up to the lue of their arry forward from the previous finanial year, 2. any sum in relation to profit from lettings approved by the Chief Finane Offier or, 3. a sum set aside for a apital projet in future years approved by the Chief Finane Offier. 3.3 Interest Claw-bak The sheme provides for the LA to dedut from the budget share of the shools using Option B an amount equal to the estimated interest lost by the LA in making ailable the budget share in adne. The amount determined as set out below will be deduted from eah monthly instalment. The alulation of this is as follows A x B x C where A = 85% of the lue of the instalment payment (deemed to be the salaries lue of instalment) B = the average daily interest rate for 7 day money in the month preeding instalment payment C = 3 days (number of days between reeipt of instalment and payment of salaries) The LA will add interest to late payments of budget share instalments where suh late payment is the result of LA error. The interest rate will be that of B above. 3.4 Budget Share for Closing Shools For shools where approl for losure has been seured, budget shares may be made ailable on a monthly basis until losure. 3.5 Bank and Building Soiety Aounts All maintained shools are required to have a bank/building soiety aount to hold their Shool Budget Share and other inome from whih all disbursements, exluding salaries and assoiated expenses in the ase of shools hoosing Option A, must be made. The sheme permits all shools to have external bank aounts into whih their budget share instalments (as determined by other provisions) are paid. The sheme provides that where shools have suh aounts they shall be allowed to retain all interest payable on the aount unless they 17

19 hoose to have an aount within an LA ontrat whih makes other provision. New bank aount arrangements may only be made with effet from the beginning of eah finanial year. The Chief Finane Offier must be informed of the details of all aounts opened by shools and whih of their representatives shall open and operate aounts. All withdrawals, heques, diret debits and standing orders from any of the shool's aounts must be authorised by members of staff (or governors in some speifi irumstanes) designated by the Governing Body and reorded in the shool s Finanial Management Poliy and Proedures doument. No shool aount may be overdrawn. All shools shall meet any bank harges for their aounts. 3.6 Restritions on Aounts Only aounts with an approved bank or building soiety may be held with the purpose of reeiving budget share payments and other inome and holding reserves. These are listed in Annex C The list will be reviewed and revised periodially to ensure it is onsistent with the authority s Treasury Management poliy. Shools must review their hoie of banker annually eah spring term to ensure it onforms to the approved list for the following finanial year. Shools having bank aounts with other banks prior to 1 April 2011 are reommended to hange to a banker on the approved list but will be allowed to retain those aounts, subjet to any sum in exess of the shool s operational needs being held in an aount with one of the banks on the approved list under arrangements approved by the Chief Finane Offier. Shools are allowed to have aounts, for budget share purposes and holding reserves, whih are in the name of the shool rather than the LA. However, if a shool has suh an aount, the aount mandate should provide that the LA is the owner of the funds in the aount; that it is entitled to reeive statements; and that it an take ontrol of the aounts if the shool s right to a delegated budget is suspended by the LA. The LA will ontinue to have arrangements negotiated with a ontrated bank whereby the aounts are in the name of the LA but speifi to eah shool and suh an arrangement is offered to shools. 3.7 Borrowing by Shools Governing Bodies may borrow monies only with the written permission of the Seretary of State. (This provision does not apply to Trustees and Foundations who borrow as prite bodies, nor does it apply to loan shemes run by the Authority). 18

20 Shools opening their own bank aounts must notify their bank in writing that their aounts must not beome overdrawn and instrut the bank to notify the Chief Finane Offier should the aount fall overdrawn. Shools are not permitted to use harge ards or redit or debit ards, exept under terms and onditions agreed with the Chief Finane Offier. SECTION 4: THE TREATMENT OF SURPLUS AND DEFICIT BALANCES ARISING IN RELATION TO BUDGET SHARES 4.1 The Right to arry forward Surplus Balanes Whilst shools reeive delegated budget shares and other revenue funding to meet the eduational needs of pupils in the shool at that time, shools are allowed to arry forward from one finanial year to the next any shortfall in expenditure relative to the shool's budget share for the year plus/minus any balane brought forward from the previous year. 4.2 Reporting on the intended use of Surplus Balanes Eah Governing Body is required to report to the LA on the use whih the shool intends to make of its balane brought forward, in ases where the balane exeeds 5% of the shool s budget share. 4.3 Interest on Surplus Balanes Where balanes are held by the authority, between the beginning of a finanial year and the formal notifiation to shools of their outturn position (inluding their surplus/defiit balane arried forward); the authority will pay interest on the differene between the previous year s balane arried forward and the new balane arried forward. This will be at a rate of interest equilent to the average seven day rate, for the period the balane is held. 4.4 Obligation to arry forward Defiit Balanes and Submission of Reovery Plans Shools are required to arry forward defiit balanes, and any suh defiit will be deduted from the following year's budget share (see also 4.9). Shools with a revenue defiit in exess of 2% of their budget share at the end of any one year, or a revenue defiit in exess of 1% of their budget shares in two suessive years, are required to submit a reovery plan with their balaned budget plan. The reovery plan to be agreed with the Chief Finane Offier and the Chief Eduation Offier must inlude details of 1. savings, effiieny gains and/or inreases in inome with implementation dates 2. a breakdown of inome budgets with soures of inome and timetable for the olletion of inome 3. the shool s management proedures for authorising expenditure and its finanial monitoring and ontrol system 19

21 Failure to meet the requirements set out above or implement an agreed reovery plan may lead to speifi diretions being made to the Governing Body by the LA of ation required to ahieve a balaned budget. Failure to implement speifi diretions may lead to a formal notie being made to the Governing Body that the LA intends to suspend delegation under Setion 51 and Shedule 15 of the Shools Standards & Framework At Planning for Defiit Budgets Shools are not allowed to plan for a defiit budget, exept in aordane with paragraph Charging of Interest on Defiit Balanes Where shools are using the Counil's banking ontrat the LA will advise the bank to harge interest on any shool aount that is overdrawn. This will be at Bank of England Base Rate plus one perent. 4.7 Writing off of Defiits The Counil annot write off the defiit balane of any shool. 4.8 Balanes of Closing and Amalgamating Shools When a shool loses any balane (whether surplus or defiit) reverts to the LA; it annot be transferred as a balane to any other shool, even where the shool is a suessor to the losing shool, exept that a surplus transfers to an aademy where a shool onverts to aademy status under setion 4(1) (a) of the Aademies At Liensed Defiits Shools may not generally plan for a defiit budget. In exeptional irumstanes, a defiit revenue budget may be permitted, whih must have the written approl of the Diretor of Children s Servie and the Chief Finane Offier and onform to the following terms and onditions, 1. the maximum period of defiit budgets to be 3 years; although in exeptional irumstanes this may be extended to 5 years; 2. the purpose of the agreed defiit must be to avert or redue the need for redundanies or other budgetary saving in the immediate finanial year that are not required to produe a balaned budget over a longer period; 3. the minimum size of an agreed defiit will be 10,000 and the maximum will be 10% of a seondary or 20% of a primary or speial shool s budget in the year of appliation; 4. a reovery plan being agreed with the Chief Finane Offier and the Diretor of Children s Servie, whih must inlude details of savings, effiieny gains and/or inreases in inome with implementation dates, 20

22 a breakdown of inome budgets with soures of inome and timetable for the olletion of inome, the shool s management proedures for authorising expenditure and its finanial monitoring and ontrol system. 5. the Diretor of Children s Servie being satisfied that the shool s staffing establishment is appropriate to the size and nature of the shool and that the agreed defiit and reovery plan will enable the shool to maintain standards; 6. the Chief Finane Offier being satisfied as to the soundness of the shool s finanial management and its ability to meet the redution of defiit shedule; 7. the total amount of defiits outstanding not exeeding 100% of the total shools balanes at the beginning of the finanial year. The full Governing Body must onsider and approve a draft defiit budget and reovery plan by the 1 May and report it to the Chief Finane Offier within five working days to failitate onsideration and agreement by the LA. No interest payments will be harged to the shool but the timing and size of payments to the shool will be at the disretion of the Chief Finane Offier and be made so as to allow the shool to meet its payroll and other responsibilities under legislation relating to debts. Failure to meet the requirements set out above or implement an agreed reovery plan may lead to speifi diretions being made to the Governing Body by the LA of ation required to ahieve a balaned budget. Failure to implement speifi diretions may lead to a formal notie being made to the Governing Body that the LEA intends to suspend delegation under Setion 51 and Shedule 15 of the Shools Standards & Framework At If a shool has a liensed defiit and the shool proposes to spend amounts reeived by it in respet of Shool Standards Grant on purposes other than reduing the liensed defiit, the LA will agree to suh a proposal unless in its view the proposed expenditure is unreasonable in the shool s finanial irumstanes Loan Sheme The Governing Body of a shool may approve an appliation for an adne of the budget share and/or apital for future years for a speifi projet. This will be granted subjet to the following terms and onditions being fulfilled:- 1. the maximum length of repayment to be 5 years; 2. the purpose of the adne must be for the aquisition of a tangible durable asset or an improvement to the shool s failities that will be of a durable nature, in relation to the proposed period of repayment; 21

23 3. the minimum size of an adne will be 10,000 and the maximum will be 500,000 or 12.5% of the shools budget share in the year of appliation, whihever is the lower; 4. the Diretor of Children s Servie being satisfied that the projet will make a signifiant ontribution to eduational standards ahieved by the shool; 5. the Chief Finane Offier being satisfied as to soundness of the shools finanial planning and its ability to met the repayment shedule without impinging on the delivery of eduation at the shool; 6. payment of interest alulated on a daily basis on the prinipal outstanding using the average 7 day interest rate for the finanial year. Number of prinipal instalments and date for interest payments to be agreed by the Chief Finanial Offier. 7. the total amount of adnes outstanding to shools not exeeding 10% of the total shools balanes at the beginning of the finanial year Lending by Shools Shools are not permitted to lend to any institution or individual exept the approved banks/building soieties within this sheme. SECTION 5: INCOME 5.1 Inome from Lettings Shools are allowed to retain inome from lettings of the shool premises whih would otherwise arue to the LA, subjet to alternative provisions arising from any joint use or PFI agreements. Shools are able to rosssubsidise lettings for ommunity and voluntary use with inome from other lettings, provided the shool an demonstrate that there is no net ost to the budget share. However shools are required to have regard to diretions issued by the LA as to the use of shool premises as permitted under the Shools Standards & Framework At 1998 for rious ategories of shools. Shools must inlude details of their approved lettings poliy and proedures in the shool s Finanial Management Poliy and Proedures doument. 5.2 Inome from Fees and Charges Shools are able to retain inome from fees and harges exept where a servie is provided by the LA from entrally retained funds. However, shools are required to have regard to any poliy statements on harging produed by the LA. 22

24 5.3 Inome from Fund-raising Ativities Shools are allowed to retain inome from fund-raising ativities. 5.4 Inome from the Sale of Assets Shools are allowed to retain the proeeds of sale of assets, exept in ases where the asset was purhased with non-delegated funds (in whih ase it will be for the LA to deide whether the shool should retain the proeeds), or the asset onerned is land or buildings forming part of the shool premises and is owned by the LA. 5.5 Administrative Proedures for the Colletion of Inome The Governing Body must approve and implement written proedures for the olletion of inome that take into aount the following matters: 1. Separation of, as far as pratiable, the responsibility for identifying sums due to the shool from the responsibility for olleting and banking suh sums; 2. where invoies are required they must be issued promptly; 3. the issuing of offiial, pre-numbered, reeipts or the maintenane of other formal doumentation for all inome olleted; 4. transfers of money between staff must be signed for; 5. reeipts, tikets and other reords of inome must be seurely retained; 6. ash and heques must be loked away to safeguard against loss or theft; 7. all inome olletions (inluding donations), in their entirety must be paid promptly into the Shool Budget Share Aount; 8. inome olletions must not be used for the enashment of personal heques or for other payments; 9. reoniliation of the sums olleted to the sums deposited at the bank.; 10. HMRC regulations on VAT must be applied where relent. 11. An effetive debt reovery proedure for any arrears. 5.6 Purpose for whih Inome may be used All inome inluding from sale of assets purhased with delegated funds may only be spent for the purposes of the shool. SECTION 6: THE CHARGING OF SCHOOL BUDGET SHARES 6.1 General Provision The sheme allows the budget share of a shool to be harged by the LA without the onsent of the Governing Body only in irumstanes expressly permitted by the sheme, and requires LAs to onsult shools as to the intention to so harge, and notify shools when it has been done. The sheme provides that the authority harge salaries of shool staff at atual ost. 23