DERBYSHIRE COUNTY COUNCIL CABINET. 25 June Report of the Head of Corporate Finance

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1 In preparing this report the relevance of the following factors has been considered: prevention of crime and disorder, equality of opportunity; and legal, financial, environmental, health, respect for human rights, personnel and property considerations. DERBYSHIRE COUNTY COUNCIL CABINET 25 June 2007 Report of the Head of Corporate Finance REVENUE OUTTURN 2006/07 (STRATEGIC POLICY AND BUDGET) 1 Purpose of the Report To report the outturn position for To identify significant variations from the revised estimate To make proposals for the use of underspends (including transfers to reserves) 2 Information and Analysis Attached as Appendix 1 to this report is a statement setting out the overall revenue position for 2006/07. The revised estimate was increased from the original by almost 13m to meet the cost of equal pay claims in the year (Cabinet 17 October 2006) plus a further 5.435m in respect of approved carry forwards from 2005/06 (Cabinet ) Net expenditure was after allowing for the equal pay claim expenditure 13m, and the capitalisation of revenue expenditure of 4.9m arising from external contributions. PSA Reward Grant of 1.819m and LABGI income of were received and transferred to reserves as they had been anticipated but not included in budgeted income. The total variance column shows the position for each service including capital charges and recharges from other services. The controllable variance column shows those items of expenditure for which the service is directly responsible. Financing Proposals for financing this expenditure are also shown at Appendix 1. A reduction in grant of 617,000 was budgeted, a retrospective cut relating to 2004/05 based on changes to the census data and this is reflected in actual reductions to RSG and NDR but overall external funding was in line with budget. 1

2 External financing costs were virtually on budget but interest on balances continues to be buoyant and came in at 8.2m, 3.15m over budget. SERVICE EXPENDITURE Detailed reports for each service are attached as Appendices to this report and the main elements are summarised below: Chief Executive s The net position on controllable expenditure was almost 692,000 underspent with underspends across all services primarily on staffing. Funding of 50,000 each for the Food and Drink Fayre and Community Safety Publicity Campaign forms part of a total of 163,000 of the underspend which, as already committed, is requested to be carried forward. Of the remaining 529,000 approval is sought to carry forward funds to meet the following specific priorities: Equalities 25,000 LAA and administrative support 60,000 Contingency 84, ,000 Further detail on these proposals is included in the service report in the Appendix. If these are approved 360,000 would be returned to corporate reserves. Corporate Resources The net position on controllable expenditure was 2.086m, with no significant overspends on any service area. Major variances occurs on: IT Services County Property Corporate 526,000 underspend as a result of vacancies and additional income generated 505,000 underspend mainly as a result of additional income generated from design fees. 730,000 underspend, primarily in relation to the development costs of the Core Systems Project. Of the 2.086m, 1,294m has been previously approved and is committed. The major elements of this are 1.043m on Core Systems (Cabinet ) and 150,000 in relation to Village Greens (Cabinet ). 2

3 The balance remaining is 792,000 and against this bids have been made to earmark the following items: Single Status Team 150,000 Vulnerability software 7,000 PC Replacement Programme 70,000 Legionella Surveys 25,000 Asbestos work 50,000 Contingency 240, ,000 Approval of these items would permit the return of 250,000 to corporate reserves. Children and Younger Adults Excluding expenditure funded by Dedicated Schools Grant the service returned an underspend on controllable items of 1.149m but of that 112,879 relates to ROWA and 368,629 represents underspend on Standards Fund, as grant for the period up to August 2007 was received during 2006/07. Both these items have, in line with normal policy, been transferred to respective reserves. The remaining underspend of 667,000 comprises a number of significant variations. Agency Residential/Agency Fostering Disabilities Management and Resources Catering Contingency 3.914m overspend due to the high cost of independent sector placements overspend due to growth in the demand for adaptations and care packages m underspending arising from the holding of vacancies and an underspend on Home to School Transport m overspend due to an increase in maintenance and repair costs and a reduction in demand m underspend as this budget was not allocated during the year. In addition LAA funding of 4.1m was available to meet pressures in 2006/07 but will not be available for general purposes in 2007/08 and beyond. It is proposed that the Catering overspend of is carried forward but recovered from DSG in 2007/08 which would permit a net 1.386m to be allocated. Proposals have been made to utilise this sum on the following items. 3

4 Further Development of Childrens Centres (intended 950,000 use of LAA funding) Completion of Inter-Generational Project 26,000 Establishment of reserve to fund exit costs associated 410,000 with potential reductions in external grants 1,386,000 Dedicated Schools Grant A separate report on this agenda deals with DSG. Total DSG for the year was 376m against which there was an underspend of 1.987m. Significant variations arose on Schools delegated budgets School related spending Special Needs 515,000 underspend arising from reductions in rates bills following successful appeals against recent revaluations. 1,247,000 underspend arising from lower than anticipated costs in respect of special staff costs and the contingency. 883,000 overspend arising from continuing pressure on placements in other local authorities and the independent sector. Any underspend on DSG is ring fenced and must be used for specific school related purposes. The proposal to utilise 719,000 to meet the catering deficit referred to above would leave a balance of 1.268m, proposals for which will be subject to a future Cabinet report. Schools Balances Overall Schools balances continue to increase and stand at m in total as at 31 March2007, although Nursery and Special Schools balances reduced. The number of schools in deficit fell during the year and those with deficits continue to be monitored closely. Work is also ongoing to consider action in respect of excessive balances at individual school level. Cultural and Community Services The net position on controllable expenditure was an underspend of 1.159m, arising primarily for 3 areas: Trading Standards Branch Libraries 4 358,000 underspend arising from continuing vacancy levels and an excess of income over budget. 219,000 underspend due to staff vacancies which were held pending the divisional

5 ICT restructuring (Cabinet 9 May 2006). 332,000 underspend arising from the virement from Change Management budget to fund the Library Management System which has yet to be spent. Of the 1.159m, 0.513m represents previously approved items and is treated as committed. The divisional restructure may result in redundancy, pension shortfall and protection of earnings costs and it is proposed that 378,000 of the balance is transferred to a specific reserve to fund such costs. Two further requests for carry forward relate to potential redundancy costs in respect of an animal health inspection project ( 34,800) and two community safety programmes ( 15,400). If these proposals are approved 218,000 would be returned to corporate reserves. Environmental Services Net controllable expenditure was 527,000 underspend, arising from a combination of under-overspends on individual service areas. Highways Maintenance Winter Maintenance 347,000 overspend primarily due to increased energy costs on Street Lighting. 138,000 underspend due to milder conditions. Network Management 0.687m underspend) Savings arose Consulting and Contracting 0.324m underspend) from additional Fleet Management 0.324m underspend) income and Public Transport Unit 0.224m underspend) underspending on employees budgets. Cabinet has previously agreed to transfer 0.750m of this underspend to maintenance. Waste Management Planning 0.282m underspend as waste requiring landfill was lower than forecast m overspend due to the creation of a provision for Countryside Ranger back pay claims. 5

6 After allowing for 750,000 already transferred for highways maintenance there is a balance of 527,000 available. It is proposed that 200,000 of this be returned to corporate reserves and the remainder, 327,203, transferred to the reserve established towards potential contractual claims associated with the Ilkeston/Awsworth bypass scheme. Older Adults The net position on controllable expenditure was a small overspend of 18,000, but in order to achieve this position significant use was made of one-off funding from grants and provisions. Analysis of the net position reveals; Older Peoples Services Mental Health Services Other Services 391,839 underspend arising from staffing vacancies and higher than anticipated income levels in residential homes 133,761 overspend due to the high cost of external residential placements offset by staffing vacancies. 276,191 overspend representing efficiency targets not yet allocated to operational areas. Corporate Underspend against controllable budget for corporate services amounted to 4.461m although 2.701m of this relates to the risk management provision which was not expected to be spent. Major variances occurred on a number of service heads. Change Management Programme County Buildings PFI BSF Team Registrars 6 412,000 underspend. Change Management is a multi year programme and under/overspends in particular years are dealt with by transfers to/from reserves. 265,000 overspend. This is mainly due to increased energy costs. 563,000 underspend represents the excess of grant/school contributions over unitary charge. This was anticipated but will reverse in future years. 548,000 underspend arises from delays to appointments to in-house team and external advisors. This funding will be required over the next few years. 237,000 underspend arising from

7 Second Homes Initiative Wellbeing grant to PCT buoyant income levels. 421,000 underspend due to slippage of the identified programmes. 600,000 overspend arising from the financing deal carried out to assist the PCT. This will be recovered in 2007/08. Existing commitments total 642,478, offset by the 600,000 repayment referred to above. Transfers to specific reserves in respect of Change Management and PFI total 975,567. Requests for carry forwards total 859,383 comprising: MIMS 133,000 BSF/PFI Team 548,000 Registrars 100,000 Other 78,000 Use of some of the remaining underspend for corporate priorities has been identified as follows: Single Status (Cabinet ) and ( ) Performance Management Systems (CABCO ) Civic Car Replacement Fund CPA Inspections If these items are approved 2.016m will transfer to corporate reserves. Summary Demand led pressures particularly on services for Children and Younger Adults and Older Adults continued to increase and although ultimately expenditure was contained within budget, the underlying position reflects an overspend in these areas, which was the subject of a report to Cabinet on 15 May Appendix 2 identifies controllable underspends by service and proposals regarding their use. If approved the overall position would be: m Service commitments Requested carry forwards General Reserves LABGI VR/VER m 7

8 In addition schools carry forward balances of m. 3 Background Papers None. 4 Key Decision Yes. 5 OFFICER S RECOMMENDATION That Cabinet: 1 Approve the revenue outturn and financing for 2006/07. 2 Approve the transfer to/from reserves as set out in the report. 3 Approve the proposals for use of underspends as set out in Appendix 2. 4 Note the position on reserves and balances. Graham Hunt Head of Corporate Finance 8

9 2006/07 Summary Revenue Out-turn Revised Actual Total Controllable Estimate Variance Variance Corporate Resources Department 2,553,398 1,156,909-1,396,489-2,085,870 Chief Executives 5,389,920 4,588, , ,647 Corporate 19,236,862 16,988,034-2,248,828-4,461,494 Cultural & Community Services 18,868,357 17,442,896-1,425,461-1,159,355 Children & Younger Adults 175,457, ,274, , ,000 Environmental Services 79,111,025 76,690,451-2,420, ,203 Older Adults 99,293,363 98,598, ,540 18,113 Total Service Expenditure 399,909, ,740,568-9,169,357-9,574,456 less Capital Charges -30,175,497-29,784, ,572 add external financing costs 32,405,000 32,400,030-4,970 less interest receipts -5,052,000-8,201,005-3,149,005 Charged against capital -4,916,542-4,916,542 0 Net expenditure 392,170, ,238,126-11,932,760 Transfers to/from(-) reserves -2,460,692 1,850,159 4,310,851 PSA Reward Grant -1,819,726-1,819,726 Local Authority Business Growth Initiative -1,521,200-1,521,200 Use of reserves for equal pay claims -13,000,000-12,956,789 Use of reserves for expenditure b/f -5,435,000-5,435, ,275, ,355,570-10,962,835 Financed by RSG 21,159,369 20,901, ,694 Amending report -617, ,000 NNDR 109,613, ,254, ,983 Council Tax 240,989, ,989, ,145, ,146, Use of balances 129,438-10,790,753 Appendix 1 9

10 Controllable Committed Transfers to Requested Return to Variance Expenditure Specific Carry Corporate Reserves Forward Reserves Corporate Resources Department -2,085,870-1,294, , ,870 Chief Executives -691, , , ,949 Corporate -4,461,494-42, ,000-1,427,000-2,016,016 Cultural & Community Services -1,159, , , ,955 Children & Younger Adults -667, , ,000 0 Environmental Services -527, , ,000 Older Adults 18,113 18,113-9,574,456-2,988,376-1,422,403-2,138,000-3,025,677 Appendix 2 10

11 CHIEF EXECUTIVES AND CORPORATE RESOURCES In preparing this report the relevance of the following factors has been considered: prevention of crime and disorder, equality of opportunity; and legal, financial, environmental, health, respect for human rights, personnel and property considerations. DERBYSHIRE COUNTY COUNCIL CABINET MEETING 25 June 2007 Joint Report of the Chief Executive and Strategic Director of Corporate Resources REVENUE OUTTURN (STRATEGIC, POLICY AND BUDGET PORTFOLIO) 1 Purpose of the Report To report the revenue outturn position for for the Chief Executive s Office and Corporate Resources Department. To identify significant variations in expenditure from the budget and the impact of growth items built into the budget To make proposals for the use of any underspends To identify the impact of the 2006/07 outturn on future years and any action proposed 2. Information and Analysis 2.1 Summary In respect of the Chief Executive s Department, Appendix 1 sets out the outturn position for Net expenditure was 9.257m against a budget of 9.765m resulting in an underspend of 0.508m. The underspend on controllable items, ie excluding capital charges and recharges from other services, was 0.692m. For the Corporate Resources Department, Appendix 2 sets out the outturn position for Net expenditure was m against a budget of m resulting in an underspend of 2.329m. The underspend on controllable items, ie excluding capital charges and recharges from other services, was 2.086m, slightly in excess of recent monitoring. 11

12 2.2 Variances Chief Executive s Office The key variances for the department are as follows: Policy and Research ( 76k) The main underspend was due to vacancies and maternity leave in the year of approximately 38k Public Relations ( 125k) The bulk of the underspend ( 104k) relates to the corporate publicity budget, of which 50k relates to a Community Safety publicity campaign which was approved in March and has yet to be initiated Call Centre ( 86k) There were several vacancies in the year, but also benefited from lower charges as a result of the work of the IT communications team on tariffs. Emergency Planning ( 72k) The section is now operating the new structure, brought about by the changes in funding for civil defence within local authorities. Staff provide services under SLA s to other public bodies such as District Councils. The budget set up to fund the new arrangements underspent in the year due to a vacant post and expenditure on supplies and services not being as high as anticipated. Corporate Resources Department The key variances for the Department are as follows: IT Services ( 0.526m) The Division carried a number of vacancies during the year, and generated income for the services it provides to other Departments and outside organisations. County Property ( 0.505m) A significant part of the underspend was from income on design fees. The design input on many of the Councils capital projects is carried out within the Property Division. The income generated by the work on these projects is dependent on the funding stream of each individual scheme. 12

13 Corporate ( 0.730m) The major variance relates to the budget allocated to the Core Systems project. In 2006/07, the project was allocated a budget of 660k. Expenditure in the year was 117k, mainly on the new team set up to deliver the project, giving an underspend of 543k. 2.3 Growth Items Corporate Resources Department was allocated a budget increase in 2006/07 of 250k to deal with a number of service pressures: Additional posts - 100k The Department had three posts that were previously being funded from underspends. This extra budgetary provision enabled the department to continue receiving the services provided by the postholders. This is particularly relevant in Business Support Personnel where there has been significant pressure dealing with major projects such as implementation of the Learning and Development system and the Core systems Project. Additional post in Pensions - 27k The funding allowed the Division to provide extra staffing to help meet the increased demands on services, particularly due to changes in the pension regulations. Funding of IT disaster recovery contract - 50k The extra funding enabled the IT Division to meet the increased costs of the disaster recovery contract as approved by Cabinet. Statutory requirements - 73k Property Division had to carry out fire certification work which was previously the responsibility of the Fire Service as a result of a change in legislation. The funding enabled the employment of staff to carry out this function and meet our ongoing statutory requirements. 2.4 Reserves and Provisions The reserves relating to both Departments are set out in appendix 4. 6 Proposals for the use of Underspends Chief Executive s Office 13

14 The Department has a number of commitments against the underspends which have already been approved by Cabinet/Cabco totalling 163k and are listed in Appendix 3. It is requested that the following proposals are met from the remaining underspend of 529k: Equalities - 25k Progress is being made to reach level 3 of the Equality Standard but external assessments of the Authority continually refer to the slow pace of progress relative to our standing as a 4* council. One-off funding would enable the council to make quicker progress as the Authority moves forward to meeting level 5 of the Equality Standard. Funding would be used to support the corporate centre and departments in meeting statutory requirements and in implementing local programmes to address highlighted areas. Local Area Agreement and admin support - 60k The LAA continues to develop and from 2008/9 it will be the only place in which central government agrees improvement targets with the county council and its partners. The county council is being placed under a statutory duty to prepare the LAA and will be ultimately responsible for its management and delivery. Future funding arrangements are unclear at this point in time. Currently one officer is dedicated to the work of the LAA but this is insufficient. It is proposed to allocate one-off funding of 40,000 to meet the costs of one additional officer with a view to this being top-sliced in future from the LAA once funding becomes clearer. The current freeze on recruitment to admin posts is causing some difficulties within the department which this funding will help to alleviate Contingency - 84k For use in providing training, IT replacements, supporting IiP and e-gov targets; and to fund other approved initiatives to meet Council goals. Return to Corporate Reserves - 360k The balance of the underspend to be returned to corporate reserves is for use in helping deliver other council priorities, build reserves and meet future demands arising from single status pay reviews. There are also other pressures that might warrant support on a one off basis which may be the subject of further reports: B line campaign - 50k To support further development of the student travel/discount scheme to include additional promotions relating to looked after children and combating negative images of young people 14

15 Quids in campaign - 50k To extend the successful Quids-in benefits take up campaign to target older people and families with young children across the county Sports Bursary Scheme for Talented Performers - 10k Derbyshire Sport is developing a Bursary Scheme for Talented Performers funded by local authorities and the private sector. Similar schemes operate in neighbouring counties and as a result Derbyshire youngsters are disadvantaged in competition. The County Scheme would provide small grants to support performers who are competing at regional or national level or nationally ranked and assessed by their governing body as having the potential to compete for England or GB. A target figure of 50,000 is being sought. Some district councils have already agreed to commit funding to the scheme and it is proposed that the County Council provides 10,000 as an initial one-off contribution. Corporate Resources Department The Department has a number of commitments against the underspends which have already been approved by Cabinet/Cabco totalling 1.294m and are listed in Appendix 3. It is requested that the following proposals are met from the remaining underspend of 792k: Single Status team - 150k The corporate job evaluation team is at full strength and is working towards meeting the implementation of single status. Unfortunately, the base budget is not sufficient to meet the costs of the team and other costs that may be needed. Vulnerability software - 7k The Audit Services unit have recently completed a security assessment on the Authority s key servers in conjunction with an external company. One of the needs identified is that the assessment should be carried out on a more frequent basis. To achieve this it will be necessary to purchase a specialist piece of software. This will help us to avoid using external consultants so extensively. Departmental IT Budget - 70k The Department introduced some time ago a policy of replacing all PCs every six years. To meet this and other IT needs there is a shortfall of 50k on the base budget. 15

16 It is also requested that 20k be set aside to cover any additional software costs arising from the corporate post and print room. Legionnella surveys - 25k This will enable the Legionella surveys to start on school premises Asbestos work - 50k For use in training for new staff, and dealing with emergency works that require removal or protection of the asbestos Departmental contingency - 240k It is proposed that the remaining balance forms a small contingency sum for the Department to enable it to respond to any departmental or corporate issues that may arise during the year. This represents approximately 0.8% of the department s budget. Contribution to corporate reserves - 250k For use to help deliver other council priorities, build reserves and meet future demands arising from single status pay reviews. The department has also made contributions of approximately 795k to corporate projects such as Core systems. 2.7 Impact on the future Both Departments are facing some significant challenges and changes over the next few years. They are each playing a key role in driving forward the Council s efficiency drive through projects such as Core systems, Shared Service Centre (HR), and ICT Service Redesign. The Departments are also working towards implementing the Single Status agreements by the end of the financial year. Both Departments will also be heavily involved in driving forward the Building Schools for the Future programme. 3 OFFICERS RECOMMENDATIONS 3.1 Subject to Cabinet approval that: The underspends outlined in the report be carried forward and ringfenced where stated, including the return to corporate reserves. That approval be given for the transfers to reserves as set out in the report. Nick Hodgson Peter Swaby Chief Executive Strategic Director Corporate Resources 16

17 Appendix 1 OFFICE OF THE CHIEF EXECUTIVE SUMMARY OUTTURN 2006/07 Controllable Division Budget Actual Variance Variance CHIEF EXECUTIVE 920, , ,982-9,183 POLICY / RESEARCH 1,137,977 1,101,765-36,212-76,566 CONSULTATION 130, ,531-23,837-23,837 SCRUTINY COMMITTEE 276, ,142-32,707-46,261 GRANTS TO VOLUNTARY BODIES 340, ,266-72,534-40,406 SUSTAINABILITY 84,517 71,567-12,950-6,349 REGENERATION UNIT 855, ,828 21,221-55,322 REGENERATION TREASURE CHEST 222, , TOURISM 247, ,506-50,251-50,251 COMMUNITY SAFETY 979, ,378-6,414-55,175 PUBLIC RELATIONS 1,227,002 1,247,900 20, ,836 CALL CENTRE 1,245,559 1,273,771 28,212-86,242 EMERGENCY PLANNING 641, ,907-43,367-72,089 YOUTH OFFENDING TEAMS 1,284,112 1,301,000 16,888-48,401 COMMUNITY ECONOMIC DEVELOPMENT 170, ,084 18,070 3,271 CHIEF EXECUTIVE'S TOTAL 9,765,044 9,257, , ,647 17

18 Appendix 2 CORPORATE RESOURCES DEPARTMENT OUTTURN 2006/07 DIVISION BUDGET ACTUAL VARIANCE CONTROLLABLE VARIANCE CORPORATE FINANCE 4,712,876 4,488, ,172-53,830 IT SERVICES 4,598,018 3,987, , ,586 COUNTY SECRETARY 3,470,606 3,564,043 93,437 14,535 COUNTY PERSONNEL 3,592,332 3,411, , ,554 COUNTY PROPERTY - CLIENT 5,760,630 5,228, , ,146 BUSINESS SUPPORT 2,905,504 2,682, , ,813 CORPORATE 2,421,708 1,752, , ,675 PROPERTY MAINTENANCE 8,054,946 8,072,145 17,199 17,199 TOTAL 35,516,620 33,187,738-2,328,882-2,085,870 18

19 Appendix 3 Items already received approval Corporate Resources Department Approval given Core systems 1,038,000 Cabinet 3/04/07 Village greens 150,000 Cabinet 27/06/06 Document Controller 25,000 Cabinet 27/06/06 Training 66,000 Cabco 30/03/07 Professional fees 15,000 Cabinet 3/04/07 Total Approvals 1,294,000 Chief Executive s Office Disability Equality Scheme 2,000 Cabinet 3/04/07 BME advisory forum 1,339 Cabinet 09/05/06 Comprehensive Survey project 3,717 Cabinet 09/05/06 Education Climate change 2,000 Sustainable Communities Cabco 15/03/07 Holmewood ind. est. publicity 2,662 Regeneration Cabco 08/09/05 Food and drink fayre ,000 Regeneration Cabco 23/2/07 Park Mark signage scheme 997 Community Safety Cabco 23/05/06 Chesterfield Violent Crime scheme 27,133 Community Safety Cabco 17/10/06 Ctty Safety Publicity campaign 50,000 Community Safety Cabco 06/03/07 Weather Equipment 6,100 Community Safety Cabco 20/03/07 Tupton Youth club secure storage 1,750 Community Safety Cabco 02/01/07 Graduate work placement programme 5,000 Strategic Cabco 14/8/06 Total 162,698 19

20 CHIEF EXECUTIVES OFFICE AND CORPORATE RESOURCES DEPARTMENT Appendix 4 CHIEF EXECUTIVE'S OFFICE STATEMENT OF RESERVES 2006/07 Balance Movements in Reserve 01/04/ /03/2007 POLICY & RESEARCH various projects 253,000-48, ,243 REGENERATION various projects 108, ,119 COMMUNITY SAFETY PSA funding reserve 367,747-19, ,710 TOTAL 620,747 40, ,072 CORPORATE RESOURCES DEPARTMENT COMPUTER RESERVE FUND 1,020, ,885 1,141,739 PURCHASING - EQUIPMENT 523, ,803 REPLACEMENT FUND TOTAL 1,544, ,885 1,665,542 20

21 CHILDREN AND YOUNGER ADULTS In preparing this report the relevance of the following factors has been considered: prevention of crime and disorder, equality of opportunity; and legal, financial, environmental, health, respect for human rights, personnel and property considerations. DERBYSHIRE COUNTY COUNCIL CABINET MEETING Report of the Strategic Director for Children and Younger Adults & Head of Corporate Finance REVENUE OUT-TURN 2006/07 CHILDREN AND YOUNGER ADULTS DEPARTMENT (CHILDRENS SERVICES) 1 Purpose of Report To report the revenue out turn position for 2006/2007 for the Children and Younger Adults Department. To identify significant variations of expenditure from the budget and assess the impact of growth items approved as part of the 2006/07 budget settlement. To make proposals for the use of any underspends and approve the transfers to and from reserves. 2. Information and Analysis 2.1 Summary This report excludes the expenditure funded by the Dedicated Schools Grant. The outturn position on this ring-fenced grant is the subject of a separate report to Cabinet covering the use of the grant and proposals for the allocation of residual balance. Attached as Appendix 1 to this report is a summary statement setting out the final out turn position for the Children and Younger Adults department (CAYA) for 2006/07. Net expenditure in 2006/2007, including the cost of services provided by other departments and capital charges, was 175.3m. The net controllable expenditure before transfers to reserves was 129.5m compared to a budget of resulting in a controllable underspend of 1.1m. 21

22 2.2 Retention of funds within Local Area Agreement The reported position for CAYA has been significantly improved by the decision of the Children s Trust Board to allow CAYA to retain all of the funding allocated to it through the Local Area Agreement (LAA) to support the aims and outcomes of the LAA. This funding was originally reported to Cabinet in May 2006 as being allocated primarily to fund the services provided through Children s Centres. Restrictions within the LAA guidance on the transfer of funding across financial years advised later in the year meant that it would not have been possible to fund the development of Children s Centre based services in this way and so the Children s Trust Board agreed that CAYA could retain funds in 2006/07 to relieve budget pressures in 2006/07 but would have to ensure sufficient allocation of funds to services and Children Centres in 2007/08. Excluding the retention of this money, the underlying overspend was 3.2m. 2.3 Explanation of Major Variances The significant services that have expenditure at variance with their budget allocation are detailed below. The retention of funds from the LAA has been excluded from this analysis so that the underlying position is explained. Agency Residential/Agency Fostering (including Disabled Children) 3,914k overspend The main reason for the overspend is the use of high cost independent sector placements both residential and via independent fostering agencies. Although above budget, the expenditure on agency residential has fallen year on year in 2005/06 and 2006/07. This is because the number of children housed in this type of accommodation has reduced by one third over this period. Expenditure on Independent Fostering arrangements has not shown the same reduction as the number of children in these placements has remained broadly unchanged over this period. Disabilities 1,978k overspend Demand above the level supported by the budget for adaptations and care packages has led to the overspend within this service. For Physical Disabilities, there has been a shift in the mix of packages provided with a move away from nursing and residential homes to more use of day care centres where appropriate. This has led to a reduction in the average cost of care per user. This change is outweighed by the growth in the number of users accessing packages. 22

23 For Learning Disabilities, there is an increase in average costs for those service users cared for in nursing and residential homes that more than offsets the benefit of reduced numbers of service users accessing this provision. There has also been a change of mix in this service with proportionately more people being provided with independent home helps rather than a day care placement. Management & Resources 706k underspend The underspend is mainly due to vacancies being held and an underspend on Home to School Transport where inflation in costs was not as high as anticipated when the budget was prepared. Catering 719k overspend Catering is operated as a traded service mainly to Schools and was budgeted to break even in 2006/07. The overspend has arisen mostly because of maintenance and repair charges which were 393k above budget. Additionally, labour costs were not able to be reduced quickly enough as demand for school meals fell generating an overspend of 258k. Other cost pressures during the year have been mitigated by the use of one-off funding. Contingency 2,024k underspend The budget has not been allocated to overspending areas in order to focus attention on bringing expenditure back within the levels supported by the agreed budget. Most of this underspend relates to budgets that were allocated for one year only. In addition there are a number of smaller underspends across all other areas which total 1.4m. These have mostly arisen where recruitment to vacancies and other activities have been restricted during the year to assist with reducing the expenditure of CAYA to within the level of the budget. 2.4 Proposals for use of underspends It is proposed that the Catering overspend of 0.7m is carried forward to 2007/08 and offset in that year by a contribution from the Dedicated Schools Grant proposed in the accompanying report It is proposed that 0.95m be carried forward to 2007/08 to fund the further development of Children s Centres and the services for children provided in and around the centres as intended when the money was put into the LAA. It is proposed that 26k be carried forward for the completion of the Inter-Generational project funded by Community Safety which was committed in October 2006 but is still underway. This is detailed in appendix 3. 23

24 2.5 Growth items At its meeting on 31 January 2006 Cabinet agreed the following major increases to the 2006/07 budget (excluding inflation and increases to schools delegated budgets): Home to School Transport 500k This was for growth in the number of contracted journeys for SEN pupils. In 2006/07, there has been further growth in the number of pupils being transported. Children s Services Development Fund 500k This one-off budget was held as a contingency during the year and has been used to mitigate the overspend of the department. The budget was also increased by ongoing growth items totalling 553k and one-off growth items of 233k which have been utilised as anticipated. 2.6 Transfers to/from Reserves and Provisions Provisions As at 1/4/2006 As at 31/3/2007 5,317k 5,546k Increase 229k An analysis of the provisions and the movements is contained at Appendix 2. Reserves (excluding Schools Balances) As at 1/4/2006 As at 31/3/2007 1,524k 1,291k Decrease 233k The authority receives Standards Fund grants which require match funding from the authority s budget. Since the Standards Fund can be spent over a 17 month period, a transfer to reserves is required at the end of each financial year which is equivalent to the amount of matched funding that is required to be carried forward to the following year. The reserve of 715k created to fund the authority s match funding for 2005/06 Standards Fund carried into 2006/07 has been released and spent during 2006/07. A reserve of 369k to provide the match funding for the 2006/07 Standards Fund has been created and will be carried forward to be spent in the period to end August

25 A further 113k representing the surplus of income over expenditure for ROWA! in 2006/07 has been transferred to the ROWA! reserve. The principle reasons for this surplus are that project delivery costs accounted for a smaller proportion of project funds than anticipated in the budget leading to an increased contribution to ROWA! s overheads. The ROWA! reserve is held to provide a financial cushion for ROWA! should there be a cessation of funding streams going into the organisation thus mitigating any additional liability that might fall on the County Council. It is also there to provide funds for investment in the future of the organisation. It is proposed to redesignate a reserve to fund the replacement of DSAS. DSAS is the financial package operated by schools that enables them to link with County Council Systems and fulfil their Local Management of Schools (LMS) obligations. The reserve that will be redesignated was originally a trading surplus accumulated by DESCIT and is now no longer required for any specific purpose. Approval is requested to establish a new reserve to mitigate against the exit costs that would be incurred if there were a significant change in grant funding. This is seen by the department as a key risk especially until the outcome of the Comprehensive Spending Review is published. Excluding grants used to fund School Budgets, Children and Younger Adults Department is entitled to receive almost 70m in specific government grants in 2007/08. It is proposed to establish this reserve at 0.4m. 3. Background Papers Files held in Resources Finance Cabinet Paper on DSG outturn 4. Key Decision Yes. 5. OFFICERS RECOMMENDATION That the report be noted and the use of underspends and movements to reserves proposed in the report be agreed. Bruce Buckley Strategic Director (Children and Younger Adults) Graham Hunt Head of Corporate Finance (Corporate Resources) County Hall, Matlock 25

26 Children & Younger Adults Department Out-turn 2006/07 Appendix 1 [Excluding expenditure funded by Dedicated Schools Grant] Budget Expenditure (Under)/ Over Transfer To/(From) Reserves Adjusted (Under)/ Over Children's Social Care 31,608 31,452 (156) (156) Planning & Service Development 1,646 1,486 (160) (160) Education Improvement 5,243 4,643 (600) 369 (231) Social Inclusion - Children & Family Support 10,535 10, Social Inclusion - Engagement & Skills 4,732 4, Disabilities Physically Disabled 16,612 16, Learning Disabled 34,574 36,169 1,595 1,595 Disabilities 51,186 53,164 1,978 1,978 Other Services Catering Home to School Transport 11,609 11,228 (381) (381) Contingency 1,388 (636) (2,024) (2,024) Management & Resources 12,482 11,776 (706) (706) ROWA! (123) 113 (10) Other Services 25,706 23,191 (2,515) 113 (2,402) Total Controllable Expenditure 130, ,507 (1,149) 482 (667) Recharges from Other Departments 22,313 23,346 1,033 1,033 Capital Charges 22,488 22,424 (64) (64) Total Expenditure 175, ,277 (180)

27 Children & Younger Adults Provisions 2006/07 Opening Deletions Additions Closing Balance Balance Provision Derbys City Joint arrangements - Tech Aids (Deaf South) (32,191) (32,191) IT Connection costs (set up) Bolsover Sure Start - 2 sites (7,000) (7,000) Police Checks - Children (12,938) (12,938) Police Checks - Disability (15,647) (15,647) Sure Start - Bolsover - provision for gas bill (6,000) (6,000) Uninvoiced Foster Carer Property Alterations 0 (35,000) (35,000) Uninvoiced work re Red House Fencing 0 (15,073) (15,073) Clafe Support 0 0 (76,102) (76,102) Education Psychology 0 0 (12,021) (12,021) Recoupment (2,735,522) 2,657,825 (2,524,582) (2,602,279) Repayment of Grant Income (1,885,504) 0 0 (1,885,504) Slc Provisions (1,879) 0 0 (1,879) Joint Projects Provision (259,220) 34,168 (140,637) (365,689) Key Stage 4 Provison (115,127) 115,127 (102,217) (102,217) Ncsl - Networked Learning Coms (75,000) 75, Esf Recruitment Clawback (41,095) 0 0 (41,095) Statemented Central Reserve (22,000) 22, Rowa Lorry Provision (65,000) 0 0 (65,000) Specific Bad Debt (100,000) 20,000 0 (80,000) General Bad Debts (16,489) 83,104 (83,104) (16,489) Early Years - ESF project 0 0 (32,634) (32,634) Maternity Provision 06/ (78,016) (78,016) North Wingfield Closed Sch Bal 0 0 (41,959) (41,959) Secondary Central Provision 0 0 (20,963) (20,963) (5,316,836) 3,007,224 (3,236,084) (5,545,696) Appendix 2 27

28 Children & Younger Adults Reserves 2006/07 Opening Deletions Additions Closing Balance Balance Foster Carer equipment (144,186) (144,186) Special Pool Premium Reserve (10,000) 16,726 (16,726) (10,000) Primary Tch Pooled Premium Res (49,971) 144,450 (144,479) (50,000) Primary N.Tch. Pooled Prem Res (3,000) 398 (398) (3,000) Primary Senco Pooled Prem Res (12,000) 0 0 (12,000) Dsas I.T. (349,311) 0 0 (349,311) Rowa Reserve (240,784) 0 (112,879) (353,663) Standards Fund (715,311) 715,311 (368,629) (368,629) (1,524,563) 876,886 (643,112) (1,290,789) Appendix 2 Check 0.00 Analysis of Balances held on behalf of schools Nursery Schools (533,132) 4,693 0 (528,439) Primary Schools (15,904,469) 0 (972,026) (16,876,495) Secondary Schools (9,444,295) 0 (509,190) (9,953,485) Special Schools (1,451,948) 184,619 0 (1,267,329) Schools Capital Reserve (279,340) 279,340 (646,074) (646,074) (27,613,183) 468,651 (2,127,290) (29,271,822) 28

29 Children & Younger Adults Department Appendix 3 DCC Budget k Reported Controllable Underspend (1,149) Less Catering overspend 719 (to be covered by DSG) Carry forward for commitments 07/08 Children's Centres & Services 950 Inter - Generational Project 26 Transfers to reserves already established 482 (1,868) Establish reserve against withdrawal/reduction 410 1,868 of grant funding Balance remaining - 29

30 30

31 CULTURAL AND COMMUNITY SERVICES In preparing this report the relevance of the following factors has been considered: prevention of crime and disorder, equality of opportunity; and legal, financial, environmental, health, respect for human rights, personnel and property considerations. DERBYSHIRE COUNTY COUNCIL CABINET 25 JUNE 2007 Joint Report of the Strategic Director of Cultural and Community Services & Head of Corporate Finance REVENUE OUTTURN (CULTURAL AND COMMUNITY, COMMUNITY SAFETY) 1. Purpose of the Report: To report the revenue outturn position for for the service. To identify significant variations in expenditure from the budget and the impact of growth items built into the budget. To make proposals for the use of any underspends. To identify the impact of the 2006/07 outturn on future years and any action proposed. 2. Information and Analysis: 2.1 Summary Attached as Appendix 1 to this report is a statement setting out the final outturn position for Net expenditure was m against a budget of m resulting in an underspend of 1.425m. The underspend on controllable items, ie excluding capital charges and recharges from other services, was 1.159m. The main variations on controllable expenditure are itemised below. 2.2 Variances Trading Standards underspend 0.358m There is an underspend of 55k on staff costs. This figure includes the costs of staff funded by the Department for Environment, Food and Rural Affairs (DEFRA) and the EMCOTS Modernisation Fund, 31

32 for which we receive additional income. The underlying underspend due to current vacancies is 238k. Income also exceeded budget by 89k, of which 41k relates to grant funded expenditure and a further contribution of 36k was generated from the contracts to test water meters. Branch Libraries underspend 0.219m The underspend on Branch Libraries is due to staff vacancies which were held pending the restructuring of the Libraries and Heritage Division. This was the subject of a report to Cabinet on 9 May Mobile Libraries underspend 0.065m The variance on Mobile Libraries is due to an underspend on rental charges for the hire of fleet vehicles. Information Communication Technology underspend 0.332m This underspend relates to change management budget which was vired to Cultural & Community Service in the year and has not yet been spent. The total of this underpend is committed and expected to be spent in 2007/08. Derbyshire Record Office underspend 0.084m The underspend is due to employee costs being less than budget due to vacancies not being filled during the year. Controllable Central Overheads overspend 0.049m The overspend is due to the pension costs associated with a number of early retirements of former analysts staff. 2.3 Growth Items The following were included in the 2006/07 budget as recurring growth items. Increase in Library Materials fund 0.045m The growth money was incorporated into the materials fund to increase materials fund acquisition which will address the requirements of the public library standards. Services to housebound Clients 0.050m 32

33 Enhancement of service to housebound clients to meet public library standards. Trading Standards business inspections 0.030m Trading Standards business compliance inspections to meet CPA environment block targets. Costs of meeting public library impact standards 0.025m DCMS/MLA are still negotiating on a new performance management framework for public libraries. 2.4 Transfers to/from Reserves and Provisions Public PC Replacement Reserve This reserve has been used to replace Public Access PCs in libraries. There have been transfers out of the reserve totalling 122,000 during the year. The balance to be carried forward is 5,302. Museum Acquisitions Reserve There have been transfers to the reserve of donations received during the year of 851. The balance to be carried forward is 3,820. Museum Restoration and Development Fund This reserve has part-financed the purchase of the Tomlinson Collection of black marble. The balance to be carried forward is 1,006. PSA Reserve This reserve consists of the Department s share of PSA1 Reward Grant totalling 453,045. The reserve has been used to finance a range of standard compliances and service improvement initiatives (Report to Cabinet 8 March 2005). There have been transfers out of the reserve totalling 132,917. The balance to be carried forward is 320, Use of Underspends Of the total controllable underspend of 1.159m as shown in Appendix 2, 0.513m is committed expenditure made up of previously approved underspends which were carried forward from 2005/06 and will not be spent in full (Report to Cabinet 27 June 2006). 33

34 It is proposed that funding of 0.378m be requested from the 2006/07 underspend and transferred to a specific reserve to cover the redundancy, pension shortfall and protection of earnings costs expected as a result of the Library Service restructure. Provisional approval is sought to fund this item from the remaining underspend on the basis that the value of the reserve will be reviewed on an annual basis. Trading standards undertake animal health inspections on behalf of DEFRA. The underspend for this work in 2006/07 was 34,800. It is proposed that this amount be transferred to a specific reserve and used to fund the associated costs of redundancies when the project ceases. Funding for the provision of two community safety programmes was agreed by the Cabinet Member for Community Safety Services (Report to Cabinet 28 February 2006). It is proposed that the underspend of 15,400 be carried forward to fund these projects. It is proposed that the remaining underspend of 0.218m be returned to corporate reserves. 2.6 Impact on the future Meeting the Gershon savings continues to be a considerable challenge for the Department since the KPMG review of its budget carried out in early 2006 concluded that there were few savings to be made that would not impact on service delivery. Cashable savings in 2007/08 are being primarily identified through the Library Service restructuring, the mobile library review and a more efficient library management system. The Trading standards contribution is to be found primarily from staffing efficiencies. There is a continuing need to meet the requirements of the Service Assessment Framework under CPA regarding Service Block performance indicators particularly in relation to library visits, book stock and cost per visit. A significant challenge for the arts is the continuing need to identify funding to support arts activities based in local communities. A number of other pressures will also impact on the department. These relate to continued funding for temporary, fixed term posts which were due to expire, implications of any changes to meet new legislation to combat rogue trading, a new performance management framework for public libraries and national improvement tools for cultural services. 34

35 3. Background Papers: Cabinet Reports: 31 January February March May 2006 Full Council Reports: 25 April 2007 Cabinet Member Reports: 30 January Key Decision: Yes 5. Chief Officer s Recommendations: (i) (ii) That the report be noted. That the committed underspends of 0.513m outlined in the report be carried forward and ringfenced where stated. (ii) That Cabinet approves retention of 0.429m from the underspend to be used as outlined in Appendix 2. (iv) The balance of 0.218m remaining underspend be transferred to corporate reserves. MARTIN MOLLOY Strategic Director Cultural and Community Services GRAHAM HUNT Head of Corporate Finance 35

36 Cultural and Community Services Department Out-turn 2006/07 Appendix 1 Service Budget Expenditure (Under)/ Over Spend Controllable Uncontrollable Branch Libraries 7,592,073 7,946, ,532 (219,091) 573,623 Mobile Libraries 1,209,799 1,145,748 (64,051) (64,794) 743 Local Studies Library 103, ,740 (1,274) (1,274) - External & Match Funded (50) (265) 215 County Lead Arrangements 192, , (398) 423 City Lead Arrangements 100,791 92,212 (8,579) (8,579) - Materials Fund 1,972,301 1,963,117 (9,184) (9,184) - Total Libraries 11,171,275 11,442, ,418 (303,586) 575,004 Information Communication Technology 481, ,427 (332,406) (332,481) 75 School Library Service 41,797 36,571 (5,226) 9,070 (14,296) Total Library Services 11,694,905 11,628,691 (66,214) (626,997) 560,783 Derbyshire Record Office 486, ,876 (38,906) (83,993) 45,088 Museum Service 340, ,445 (8,567) 1,557 (10,124) Other Services 289, ,742 (31,319) (31,474) 155 Trading Standards Division 2,911,023 2,432,577 (478,446) (357,560) (120,886) Department HQ 2,951,715 2,237,523 (714,192) 26,929 (741,121) Underspend 145,000 - (145,000) (145,000) - Controllable Central Overheads 58, ,043 48,539 48,539 - Unallocated Cuts (8,645) - 8,645 8,645 - Total Cultural and Community Services 18,868,357 17,442,896 (1,425,461) (1,159,355) (266,106) 36