Agenda item

DfE CONSULTATION - FINANCIAL TRANSPARENCY OF LOCAL AUTHORITY MAINTAINED SCHOOLS AND ACADEMY TRUSTS

Report and appendix attached.

Minutes:

The report presented to the School Funding Forum provides detail on the recent consultation document issued by the DfE on improvements to the transparency of the financial health of LA maintained schools. The document is aimed at LAs and LA maintained schools.

 

Issue 1 proposed that if LAs fail to comply with two deadlines for financial data submissions the LAs’ names will be published on GOV.UK.

 

Issue 2 details proposals on how to strengthen DSG annual assurance returns. The DSG assurance statement will include the number of schools with suspended budgets and notices of financial concern. This is to enable extra support to be provided to LAs that report a high number of suspended delegations or notices of financial concern.

 

Issue 3 proposes that LA maintained schools must provide the LA with 3-year budget forecasts. The Forum expressed concerns over this stating that many factors can affect a budget and a 3-year forecast for some LA maintained school is unrealistic, implausible and improbable. Only between 5 and 10% of Havering maintained school currently provide a 3-year budget forecast.

 

Issue 4 advises that academy trusts must currently report all Related Party Transaction (RPTs) to the EFSA in advance of the transaction taking place. Since April 2019, all academy trusts have to seek approval from the EFSA for RPTs of more than £20,000 and all payments under £20,000 must be declared. The Government have put forward 3 proposals;

 

1.    Schools must append a list of RPTs in their Schools Financial Value Standard document.

 

2.    All schools must report all RPTs, or RPTs above a certain amount, directly to the LA.

 

3.    Schools must seek the permission of the LA to enter into any RPT above a certain amount.

 

Issue 5 raises the issue of the internal audit for LA maintained schools being too infrequent and proposes to change this so schools must be subject to an internal audit at least every 3 years.

 

Issue 6 outlines the proposal to strengthen the arrangements to help schools in financial difficulty. They plan to make a requirement that schools submit a recovery plan to the LA if their revenue deficit goes above 5%; through the DSG annual assurance return from the CFO, the Government wish to collect data on the number of recovery plans in each LA, or; request high level action plans from some LAs.

 

Issue 7 summaries the lack of transparency when it comes to reporting high pay for school staff. The Government states that there are currently discrepancies between public access to data with regards to high salaries in LA maintained schools and academies. Academy trust must currently disclose details of each staff member with a salary of over £100k in their published financial statements, specifically their FTE salary in £10k bands (e.g. £100k-£110k), their job role and description and whether they are focussed on curriculum or school business management.  The Forum commented that the publication of salary information on a school’s website would make it easier to identify the person whereas for academies, reporting is at Trust level.

 

Issue 8 proposed the publication of CFR statements of income and expenditure annually on their website.

 

The document details arrangements for LA maintained schools which are currently more rigorous than for academy trusts. LA maintained schools are required to annually complete the Schools Financial Value Standard (SFVS) which is signed by the Chair of governors and submitted to the LA. The Self-Assessment Tool will be made mandatory for all academy trusts with effect from the end of the 2018/19 academic year.

 

David Allen would consider a response to the consultation.

 

The Schools Funding Forum noted the report and appendices.

Supporting documents: