1.1 The funding framework

1.2 The role of the scheme

1.2.1 Application of the scheme to the Authority and maintained schools

1.3 Publication of the scheme

1.4 Revision of the scheme

5. Delegation of powers to the Headteacher
6. Maintenance of Schools

2.1.1 Application of financial controls to schools

2.1.2 Provision of financial information and reports

2.1.3 Payment of salaries; payment of bills

2.1.4 Control of assets

2.1.5 Accounting policies (including year-end procedures)

2.1.6 Writing off of debts

2.2 Basis of accounting

2.3 Submission of budget plans

2.4 Best value

2.5 Virement

2.6 Audit: General

2.7 Separate external audits

2.8 Audit of voluntary and private funds

2.9 Register of business interests

2.10 Purchasing, tendering and contracting requirements

2.11 Application of contracts to schools

2.12 Central funds and earmarking

2.13 Spending for the purposes of the school

2.14 Capital spending from budget shares

3.1 Frequency of instalments

3.2 Proportion of budget share payable at each instalment

3.3 Interest clawback

3.4 Budget shares for closing schools

3.5 Bank and building society accounts

3.5.1 Restrictions on accounts

3.6 Borrowing by schools

7. Other provisions

4.1 Right to carry forward surplus balances

4.2 Reporting on the intended use of surplus balances

4.3 Interest on surplus balances

4.4 Obligation to carry forward deficit balances

4.5 Planning for deficit balances

4.6 Charging of interest on deficit balances

4.7 Writing off deficits

4.8 Balances of closing and amalgamating schools

4.9 Borrowing for agreed purposes

4.9.1 Licensed deficits

4.9.2 Loan schemes

4.9.3 Credit union approach

4.10 GM schools' balances

5.1 Income from lettings

5.1.1 Income from legal leases and other arrangements

5.2 Income from fees and charges

5.3 Income from fund raising activities

5.4 Income from the sale of assets

5.5 Administrative procedures for the collection of income

5.6 Purposes for which income may be used

1. General provision

6.1.2 Charging of salaries at actual cost

6.2 Circumstances in which charges may be made

7.1 VAT (Value Added Tax)

7.2 CITS (Construction Industry Taxation Scheme)

10.1 Insurance cover

11.1 Right of access to information

11.2 Liability of governors

11.3 Governors expenses

11.4 Responsibility for legal costs

11.5 Health and Safety

11.6 Right of attendance for Chief Finance Officer

11.7 Delegation to new schools

12.1 GM schools’ balances

12.2 s.255 loans

13.1 School responsibilities for repairs and maintenance

13.2 Position of voluntary aided schools

13.3 De minimis limit

14.1 School responsibilities for school meals

14.2 Assessing eligibility for free school meals

15.1 Centrally retained funding for supply costs

Since 1995 Norfolk has delegated funding to all its primary, secondary and special schools in accordance with its Local Management of Schools scheme as approved by the Secretary of State. Under the terms of the School Standards and Framework Act 1998, LEAs were required to draw up a new scheme for financing schools to replace the existing LMS scheme.

The funding framework to replace Local Management of Schools is based on the legislative provisions in sections 45-53 of the School Standards and Framework Act 1998.

Under this legislation, LEAs determine for themselves the size of their Local Schools Budget (LSB). Included within the LSB is all expenditure, direct and indirect, on an authority's maintained schools. The categories of expenditure which fall within the LSB are prescribed under regulations made by the Secretary of State.

The LEA may retain funding for certain purposes. These purposes are defined in regulations made by the Secretary of State under s.46 of the School Standards and Framework Act 1998. The amounts to be retained centrally are decided by the authority concerned, subject to any limits or conditions prescribed by the Secretary of State. The amount not retained by the LEA is termed the Individual Schools Budget (ISB).

LEAs must distribute amounts from their ISB amongst their maintained schools using a formula which accords with regulations made by the Secretary of State, and enables the calculation of a budget share for each maintained school. This budget share is then delegated to the governing body of the school concerned, unless the school is a new school which has not yet received a delegated budget, or the right to a delegated budget has been suspended in accordance with s.51 of the School Standards and Framework Act 1998 (SSAF).

Section 48 of the SSAF requires the financial controls within which delegation works to be set out in a scheme made by the LEA and approved by the Secretary of State. All revisions to the scheme must also be approved by the Secretary of State, who has power to modify schemes or impose one. This document forms the required scheme for Norfolk.

Subject to provisions of this scheme, governing bodies of schools may spend budget shares for the purposes of their school. They may also spend budget shares on any additional purposes prescribed by the Secretary of State in regulations made under s.49 of the SSAF.

An LEA may suspend a school's right to a delegated budget if the provisions of the school financing scheme (or rules applied by the scheme) have been substantially or persistently breached, or if the budget share has not been managed satisfactorily. There is a right of appeal to the Secretary of State. An LEA may also suspend a school’s delegated budget for other reasons as set out in s17 of the SSAF.

The LEA is obliged to publish each year statements setting out details of its planned Local Schools Budget:

• Table 1 - the total planned education spending by the LEA;

• Table 2 - a summary of school budget shares;

• Table 3 - the LEA’s allocation formula: a description of its factors and their cash values;

• Table 4 - the calculation of each school’s budget share.

After each financial year the authority must publish a statement showing out-turn expenditure at both central level and for each school, and the balances held in respect of each school. Both budget and out-turn statements are subject to audit certification by the Council’s external Auditors, and information in them may be collated and published by the Secretary of State.

The detailed publication requirements for financial statements and for schemes are set out in Regulations made under Section 46, 47, 48 and 52 of the School Standards and Framework Act 1998, but each school must receive a copy of the scheme and any amendment, and each year's budget and out-turn statements so far as they relate to that school or central expenditure.

A budget statement must be published before the beginning of the financial year to which it relates.

This scheme sets out the financial relationship between the Authority and the maintained schools which it funds. It contains requirements relating to financial management and associated issues, which are binding on both the Authority and on the schools.

This scheme applies to all existing community, voluntary, foundation, and special schools in the area of the LEA (as listed in Annex A). The scheme will also apply to any maintained schools which open in the future.

A copy of the scheme will be supplied to the governing body and the Headteacher of each school covered by the scheme, and any approved revisions will be notified to each such school.

Any proposed revisions to the scheme will be the subject of consultation with all schools and will require approval by the Secretary of State.

Each Governing body is asked to consider the extent to which it wishes to delegate its powers to the Headteacher, and to record its decision (and any revisions) in the minutes of the governing body.

The LEA has no wish to impose uniformity on schools but considers that the following level of delegation to Headteachers is desirable:

• Each Headteacher should be accountable for the management of staff and the security, custody and control of all other department resources, including land, buildings, plant, materials, cash and stores.

• To ensure effective management of the budget resources Governing Bodies are advised to delegate responsibility for day-to-day financial management to the Headteacher.

• The Governing Body should ensure that the Headteacher reports progress on a regular basis to the full Governing Body or a finance committee of that body.

The LEA is responsible for maintaining the schools covered by the scheme, and this includes the duty of defraying all the expenses of maintaining them (except in the case of a voluntary aided school where some of the expenses are, by statute, payable by the governing body; and in the case of Foundation schools where there is a power but not a duty to meet capital expenditure). Part of the way an authority maintains schools is through the funding system put in place under sections 45 to 53 of the SSAF.

In managing their delegated budgets schools must abide by the Authority's requirements on financial controls and monitoring. Financial Regulations which were previously an annex to Norfolk’s LMS Scheme are now an integral part of this scheme and appear in the appropriate section. Contract Standing Orders are part of this scheme and are reproduced at Annex D.

Schools are required to provide the authority with financial information.

If a school has all its budget share and earmarked sums paid into its bank account, the following returns will be required:-

Required each month

1. A summary of actual receipts and payments analysed at subjective code level for its budget share and subjective code level for EACH earmarked sum.
2. A bank reconciliation statement certified by the Headteacher or Responsible officer.
3. A copy of the bank statement used to complete the bank reconciliation.
4. A VAT reimbursement Claim certified by the Headteacher or Responsible officer.

Required each quarter

5. Cash flow forecasts.

If a school has all but payroll elements of its budget share and earmarked sums paid into its bank account, the following returns will be required on a monthly basis:-

1. A summary of actual receipts and payments analysed at subjective code level for its budget share and subjective code level for each earmarked sum.
2. A bank reconciliation statement certified by the Headteacher or Responsible officer.
3. A copy of the bank statement used to complete the bank reconciliation.
4. A VAT reimbursement Claim certified by the Headteacher or Responsible officer.

If a school uses an imprest style bank account to facilitate local payments and receipts, the following returns will be required on a monthly basis:-

1. A summary of actual receipts and payments analysed at subjective code level for its budget share and subjective code level for each earmarked sum and an analysis of VAT.
2. A bank reconciliation statement certified by the Headteacher or Responsible officer.
3. A copy of the bank statement used to complete the bank reconciliation.

Each month the LEA will provide schools who operate bank account types B and C a list of transactions processed by the LEA and, where applicable, a Budget Control Report(s).

The procedures for these will vary according to the choices schools make about the holding of bank accounts and the buying back of the authority’s payroll system.

If a school operates a Bank Account type A, payroll services can be carried out by the school or using an external provider. If the school is granted an "Inland Revenue collection reference no." all statutory returns are completed and or signed by the school and any penalties levied by the Inland Revenue will be a charge against the schools budget share. Note that the LEA remains the employer for staff in all schools for the purposes of paying over contributions for teachers’ pensions to the Teachers’ Pensions Agency. A Procedure Note explains how those schools managing their own payroll should pass pension contributions to the LEA.

If a school operates a Bank Account type B or C, payroll services will be carried out by Norfolk County Council. The payment of all salaries, wages, pensions, compensation, travelling expenses and other emoluments to employees or former employees of the County Council shall then be made by the Director of Finance and Information or under arrangements approved and controlled by him. Each Headteacher shall notify the Director of Finance and Information as soon as possible, in the prescribed form, of all matters affecting payment of emoluments.

Payment of bills is carried out by the school using its Bank Account type A, B or C. The Headteacher shall be responsible for all payments and prior to authorising a bill for payment the Headteacher shall carry out such examination and verification of the accounts as the Governing Body shall determine.

Schools are able to make small payments by cash and are encouraged to make other payments by direct debits. In the case of rates payable to a district council schools must pay by 10 instalments.

Schools must ensure that payments are made in accordance with the terms specified by the supplier; interest on late payments will be a charge to the school’s budget share.

Each school must maintain an inventory of its moveable non-capital assets, in a form determined by the authority, and setting out the basic authorisation procedures for disposal of assets.

Each Headteacher is responsible for maintaining security at all times for all buildings, stocks, stores, furniture, vehicles, equipment, cash, etc. under his control. He shall inform the Director of Finance and Information in any case where security is thought to be defective.

Keys to safes and similar receptacles shall be carried on the person of those responsible at all times; the loss of any such keys must be reported to the Director of Finance and Information forthwith.

The Authority has issued a Procedure Note which details how schools may maintain an inventory and the control and security of assets.

Schools must abide by procedures issued by the authority in relation to:-

• Year end procedures for closing the accounts are issued by the LEA to all schools during March each year; the timetable for closure is as determined by the Director of Finance and Information.

• The financial information system of the County Council shall be the statutory accounts for each school and will be used to assess financial performance.

• All official accounting procedures and the form and content of official financial records shall be as agreed by the Director of Finance and Information in accordance with the Accounts and Audit Regulations.

• Headteachers shall ensure that accounting procedures and financial records are maintained accurately and kept up to date.

• The following principles shall be observed in the allocation of accounting duties:-

• All financial records, both manual and computerised, shall be completed in a permanent form agreed by the Director of Finance and Information. Financial records, books, forms or documents shall not be amended by use of correcting fluid. Amendments or corrections shall be shown as such.

Governing bodies are only authorised to write off debts up to a level as stipulated in Procedure Notes issued by the LEA.

In the case of larger debts the school must consult the Head of Education Financial and ICT Services; who must refer the write off to Norfolk County Council Education Committee.

2. Basis of accounting

Annual reports and accounts furnished to the LEA must be on an accruals basis.

Each school will receive formal notification of its budget share each year by the 28^th February.

Each school is required to submit a formal budget plan to the LEA by 1^st May each year. The LEA would consider it good practice for Governing bodies to agree their budget plan prior to the start of the new financial year on 1^st April; if schools are not able to agree their formal budget plan, a provisional one must be submitted by 1^st April.

The budget plan must show the school’s intentions for expenditure and income in the current financial year and the assumptions underpinning the budget plan. The following year’s budget plan should be prepared to reflect the full year effect of decisions made in the current year, the estimated effect of pupil number increase/decrease and any other developmental issues. Schools are encouraged to prepare the third year in outline.

The LEA would consider it necessary for revised budget plans to be submitted to the LEA by the end of the Summer Term when the actual balance in hand/overspending is known for the previous financial year. A second revision should be carried out during the Autumn term to reflect possible staffing changes and the number of pupils on roll; this to be submitted to the LEA by the end of the Autumn term. If necessary, a final revision be carried out early in the Spring Term; any final revision should be submitted to the LEA no later than 28^th February.

The LEA will supply schools with all income and expenditure data which it holds and which is necessary to efficient planning by schools.

The statutory duty of ‘best value’ does not apply to the governing bodies of schools. However, given the very high proportion of local authority spending which flows through delegated budgets, the government considers it desirable that schools should demonstrate that they are following best value principles in their expenditure. Annex C provides guidance for schools on how they may meet this requirement. (note this paragraph is due for further revision)

Schools are free to vire between budget heads in the expenditure of their budget shares but governors are advised to establish criteria for virements and financial limits above which the approval of the governors is required. It is good practice that the Headteacher reports on a regular basis to the full Governing Body or a finance committee of that body, of all the virements made. Virement does not apply to specific grants devolved to schools on an earmarked basis, except as allowed by the terms of the specific grant.

Schools are required to co-operate both with auditors employed by the local authority (internal audit) and auditors appointed by the Audit Commission to audit the local authority itself (external audit).

In regard to internal audit, all maintained schools come within the audit regime determined by the LEA.

Regular internal audit visits will continue and reports will be issued to the Director of Education and Headteachers/governors.

Both the Director of Finance and Information’s internal audit staff and the Councils external audit staff shall be given access to all records and given such explanations as they require.

The Director of Finance and Information shall maintain an independent, continuous, adequate and effective internal audit of accounting, financial and other processes of the County Council in accordance with the Accounts and Audit Regulations with regard to the following objectives. To:-

• Review, appraise and report upon the soundness, adequacy and application of financial and related management controls.

• Examine and report upon the extent to which the County Council’s assets and financial interests are accounted for and safeguarded from losses of all kinds arising from fraud, waste, extravagance, poor value for money or any other cause.

• Assess and report upon the suitability and reliability of internal financial and related management data.

• Contribute to monitoring the use of resources.

The Director of Finance and Information or his representative shall have authority to:-

• enter any Council premises or land;

• have access to all records, documents and correspondence relating to any financial or other transaction of the County Council. This will also apply to unofficial fund records for which an employee of the County Council or a governor of a school is responsible, by virtue of his position, where expenditure by the unofficial fund leads to a liability on the County Council;

• require and receive such explanations as are necessary concerning any matter under examination;

• require any employee of the County Council or governor of a school to produce cash, stores, equipment, vehicles or any other property of the County Council or of the school under his control.

With regard to external audit all schools come within the LEA external audit regime as determined by the Audit Commission.

In instances where a school wishes to seek an additional source of assurance at its own expense, a governing body is permitted to spend funds from its budget share to obtain external audit certification of its accounts, separate from any LEA internal or external audit process. Where a school chooses to seek such an additional audit it does not remove the requirement that the school must also co-operate with the LEA’s internal and external auditors.

An external audit commissioned by the school would have to take into account the status of the school as a spender of LEA funds.

In addition to the normal internal and external audits, schools must provide audit certificates to the LEA within 90 days of the financial year ending in respect of any voluntary and private funds they hold and of the accounts of any trading organisations controlled by the school. It is the responsibility of the governing body to determine, and comply with, any legal requirements in connection with the audit of such funds, e.g. Charity Commission requirements.

Accounting requirements regarding voluntary and private funds are contained in para 3.7.2.

The governing body of each school is required to establish by 31^st December 1999 (if it does not already have one), a register which lists for each member of the governing body and the Headteacher, any business interests they or any member of their immediate family have; to keep the register up to date with notification of changes and through annual review of entries, and to make the register available for inspection by governors, staff, parents and the LEA.

More detailed guidance on the maintenance of such a register is to be notified to schools in a Procedure Note.

Schools are required to abide by the Contract Standing Orders for Schools in purchasing, tendering and contracting matters. This includes a requirement to assess in advance, where relevant, the health and safety competence of contractors, taking account of the LEA’s policies and procedures. However, Contract Standing Orders for Schools shall not apply if they require schools:

3. to select suppliers only from an approved list;
4. to seek fewer than three tenders in respect of any contract with a value exceeding £5,000 in any one year.

The full Contract Standing Orders for Schools are reproduced at Annex D.

Schools have the right to opt out of LEA-arranged contracts except where they have lost that right for particular contracts (whenever started) in accordance with a specified written procedure: in which case they will be bound into the contract for its length (although the contract might contain clauses allowing variance of its terms and conditions); and for contracts approved by the Secretary of State for services for which funding is delegated after 1^st April 1999. Contracts with the LEA must be limited in duration as set out in Section 8.2.

Schools who received newly delegated funds from 1^st April 1999 are bound by the contracts the LEA currently has with external companies relating to the responsibilities delegated. The LEA will charge a school’s Budget Share with the costs incurred if the school chooses not to honour these contracts. A list of the relevant contracts is given in Annex F.

The LEA is authorised to make sums available to schools from central funds, in the form of allocations which are additional to and separate from the schools’ budget shares (the Standards Fund regulations will require LEAs to do this with many grants). Such earmarked allocations shall be subject to conditions setting out the purpose or purposes for which the funds may be used: an earmarked allocation may not be spent for purposes other than those specified in the conditions for that allocation.

Schools are free to vire additional money from their budget share to support earmarked funding, but must not vire from earmarked funding into the school’s budget share.

The accounting procedures for earmarked sums are issued by the authority to ensure that expenditure can be separately controlled. Earmarked funds must be returned to the LEA if not spent in year, except where the conditions of grant specify that carry forward is allowed.

Governing bodies are free in accordance with s.50(3) of the School Standards and Framework Act 1998 (the SSAF Act 1998) to spend budget shares ‘for the purposes of the school’, subject to any provisions of this scheme.

Governing bodies are permitted to use their budget shares to meet the cost of capital expenditure on the school premises. This includes expenditure by the governing body of a voluntary aided school on work which is their responsibility under paragraph 3 of Schedule 3 of the SSAF Act 1998.

If the expected capital expenditure from the budget share of any maintained school in any one year is expected to exceed £12,000 the governing body must notify the LEA prior to committing funds and take into account any advice from the Director of Education as to the merits of the proposed expenditure.

Schools are required to separately identify these works within their budget plans and in any financial information and reports provided to the LEA.

Schools with a Bank Account type A (see para 2.1.2) will be paid in 13 instalments. The initial instalment will be paid on the 1^st April (or the last banking day prior to the 1^st) followed by 12 subsequent instalments paid on the 19^th of the month or the last banking day prior to the 19^th and made by CHAPS transfer.

Schools with a Bank Account type B (see para 2.1.2) will be paid in 13 instalments; the first instalment to be on the 1^st April, followed by 12 instalments on the Thursday on or before the 15^th of each month.

Schools with a Bank Account type C may draw on their full budget share from the start of the financial year.

Amounts added to school budget shares for the financial year beginning 1^st April 2000, following a first redermination under the Financing of Maintained Schools (England) (No 2) Regulations 2000 shall be placed at the disposal of the governing body of each school within seven days of the date of that redetermination, irrespective of the existence of any deficit relating to expenditure of the school’s budget share. No interest clawback will be applied to these amounts before they are made available.

2. Proportion of budget share payable at each instalment

Schools using a school Bank Account type A will receive 4% of their budget share together with any known earmarked sums at the time of calculating the schools budget share on 1^st April followed by 8% each month.

Additions or reductions to the budget share will be advanced or recovered via the school’s bank account at monthly intervals. Other earmarked sums which are made available to the school after the allocation of the budget share, will be advanced to the schools bank account on a termly basis or as allocated by the DfEE.

Schools using Bank Account type B will receive 4% of their total calculated entitlement from the budget share and known earmarked sums at the time of calculating the budget share on 1^st April; followed by 8% each month.

The first instalment of 4% will be based on an estimate of non pay costs calculated as 15% of the budget share. Following monthly instalments will also use the 15% estimate until information is supplied by the school of the actual budget split between payroll and non-payroll expenditure.

Additions or reductions to the budget share will be incorporated in the instalment payments at monthly intervals. Other earmarked sums which are made available to the school after the allocation of the budget share, will be advanced to the schools bank account on a termly basis or as allocated by the DfEE - the non pay element only is as determined by the school.

3. Interest clawback

An interest clawback adjustment will be made depending upon the type of bank account the school selects to operate. Annex E gives details regarding the basis of the clawback adjustment. The adjustment may be revised on an annual basis to allow for variations in interest rates, CHAPS transfer dates and the size of the individual schools’ budget.

Budget shares of schools for which approval for discontinuation has been secured, will be made available until closure on a monthly basis, net of estimated pay costs, even where some different basis was previously used.

All schools may have an external bank account into which their budget share instalments (as determined by other provisions) are paid. Where schools have such accounts they shall be allowed to retain all interest payable on the account.

New bank account arrangements may only be made with effect from the beginning of each financial year. Schools will be required to give a period of notice of 4 months of their wish to opt for a new arrangement.

Any school requesting an external bank account for the first time shall not be able to have one until any existing budget deficit is cleared.

Accounts may only be held for the purpose of receiving budget share payments, at the following banks or building societies:-

Abbey National PLC

Alliance and Leicester

Bank of Scotland

Barclays Bank

Halifax PLC

Lloyds/TSB PLC

Midland Bank

National Westminster

Royal Bank of Scotland

Woolwich

GM schools and ex-GM schools are allowed to nominate as the account for budget share payments the account used in 1998-99 for payments of Annual Maintenance Grant by the Funding Agency for Schools, even if it is not on the above list. If a GM school closes this account any new account must be chosen from the approved list.

Schools are allowed to have accounts for budget share purposes which are in the name of the school rather than the LEA. Money paid by the LEA and held in such accounts remains LEA property until spent (s.49(5) of the SSAF Act).

The LEA will continue with the arrangements negotiated with Lloyds/TSB PLC whereby the accounts are in the name of the LEA but specific to each school, for schools which wish to continue to use School Bank Accounts type C, i.e. imprest style accounts.

Governing bodies may borrow money only with the written permission of the Secretary of State. No overdrafts are permitted.

The restriction on Governing bodies does not apply to Trustees and Foundations, whose borrowing, as private bodies, makes no impact on Government accounts. These debts may not be serviced directly from the delegated budgets, but schools are free to agree a charge for a service which the Trustees or Foundation are able to provide as a consequence of their own borrowing. Governing bodies do not act as agents of the LEA when repaying loans.

This document issued by the Audit Commission provides a useful means for schools to ensure that their internal financial procedures and controls are adequate and are reviewed on a regular basis. Keeping your balance should form part of the schools adopted procedures and therefore should be reviewed on a 2 year basis.

Where a Headteacher, or a member of staff, or a governor of a school is, by virtue of his/her official position, responsible for money or goods which are the property of an unofficial fund connected with a County Council establishment or service:-

• that person shall keep money or goods belonging to the unofficial fund separate from other money or goods;

• proper records shall be kept of money or goods belonging to the unofficial fund, and such records shall be kept separate from other records;

• an auditor or auditors with suitable qualities shall be appointed;

• audited accounts shall be submitted annually to the trustees of the unofficial fund;

• a copy of the audited accounts shall be sent to the LEA within 90 days of the end of the accounting period.

More details are contained in Procedure Notes.

Payment for delegated services purchased by schools will all be processed by direct debit or an invoice will be raised for schools with Bank Account type A; other transactions are passed to such schools on a monthly basis. For schools with School Bank Account type B and C the cost of delegated services will be charged against the budget share.

Schools may carry forward from one financial year to the next any surplus/deficit in net expenditure for the year plus/minus any balance brought forward from the previous year.

In order to allow the LEA to monitor balances in hand and overspending, Governing Bodies are required to provide explanations to the LEA by the end of June following the financial year in cases where the total balance in hand or overspending exceeds:

• £15,000, or

• 3% of the school’s previous year budget share, whichever is the larger.

Schools without external bank accounts may set aside an earmarked part of an underspend in a centrally held fund. The fund attracts a competitive market rate of interest and will be administered within the County Council’s formal accounts. Interest is calculated every six months and schools receive a statement confirming the amount of interest earned.

Deficit balances will be carried forward by the deduction of the relevant amounts from the following year's budget share (see also para 4.9).

Schools may only plan for a deficit budget in accordance with the terms of para 4.9 below.

The LEA will charge interest on deficit balances (see Section 12 for treatment of GM balances).

The basis of the calculation of interest shall be as follows:

• Planned (licensed) deficits will be charged interest as described in para 4.9.1.

• All other deficits (unplanned) will be charged interest at the rate which the LEA would have earned by investing the funds.

The LEA has no power to write off the deficit balance of any school.

When a school closes any balance (whether surplus or deficit) shall revert to the LEA; a balance cannot be transferred, even to a successor or replacement school to the closing school. However, there are separate provisions in the LEA’s formula to allow successor or replacement schools to be given additional funding equivalent to the surplus balances of closed schools. Deficit balances may be deducted from additional funding that would otherwise be given to the new school, but may not be recovered by reducing the new school’s main budget share.

The general provision in para 3.6 above forbidding Governing bodies to borrow money shall not apply to schemes run by the Authority as set out in the following sections:

4.9.1 Licensed deficits

The LEA may permit schools which have no existing deficit to plan for a deficit budget in particular circumstances. The funding to allow such a deficit budget shall be provided from the collective surplus of school balances held by the authority on behalf of schools.

The detailed arrangements applying to this scheme are:

1. the maximum length over which schools may repay the deficit is 3 years (i.e. reach at least a zero balance);
2. deficit arrangements will only be agreed by the LEA to bring the school’s expenditure in line with the annual budget share;
3. a recovery plan must be produced by the school and agreed with the LEA;
4. an annual review will take place to ensure the deficit will be repaid within the term agreed;
5. schools, under this scheme, may plan to have a maximum of 10% of their annual budget share as a deficit;
6. the maximum proportion of the collective balances held by the LEA which will be used to back the arrangement, shall not exceed 40%;
7. deficit arrangements for any school must be agreed by the Director of Education or the Head of Education Financial and ICT Services.

The LEA shall provide a form of loan arrangement for schools which does not operate by way of a licensed deficit but rather by way of actual payments to schools or expenditure by the LEA in respect of a particular school on condition that a corresponding sum is repaid from the budget share.

The arrangements applying to this scheme are:

1. the maximum length over which schools may repay the loan is 5 years;
2. loan arrangements will only be agreed by the LEA to facilitate the purchase of large items of capital expenditure which could not otherwise be purchased in a single year;
3. if a school makes use of this scheme, there is no upper limit to the amount which can be borrowed;
4. the maximum proportion of the collective balances held by the LEA which will be used to back the arrangement, shall not exceed 30%;
5. arrangements under this scheme for any school must be agreed by the Director of Education or the Head of Education Financial and ICT Services;
6. interest will be charged based upon the Local Authority Internal Finance House Rate.

Where LEA maintained schools experience excessive pupil number increases, measured between the January Form 7 numbers used in the resource allocation formula and the following Form 7 count, they may apply for a fixed term loan from a central fund to finance the short term additional costs incurred.

The arrangements applying to this scheme are:

1. the maximum length over which schools may repay the loan is 4 years;

 

2. if a school makes use of this scheme, there is no upper limit to the amount which can be borrowed;
3. the loan advances are made from a central fund in the revenue budget, the amounts are restricted by funds available for pupil number loans;
4. arrangements under this scheme for any school must be agreed by the Director of Education or the Head of Education Financial and ICT Services;
5. no interest will be charged.

Schools shall be able to retain income except in certain specified circumstances.

Schools may retain income from lettings of the school premises that would otherwise accrue to the LEA, subject to alternative provisions arising from any joint use or PFI agreements. Schools are permitted to cross-subsidise lettings for community and voluntary use with income from other lettings, provided there is no net cost to the budget share. However, community, voluntary aided and voluntary controlled schools shall be required to have regard to any directions issued by the LEA as to the use of school premises. Income from lettings of school premises should not normally be paid into voluntary or private funds held by the school.

Income from leases and similar legal arrangements relating to school grounds or property shall be distributed according to the terms of the lease or as may be otherwise agreed by the school and LEA.

Schools may retain income from fees and charges except where a service is provided by the LEA from centrally retained funds. However, schools are required to have regard to any policy statements on charging produced by the LEA.

Schools may retain income from fund-raising activities.

Schools may retain the proceeds of sale of assets except in cases where the asset was purchased with non-delegated funds (in which case it will be for the LEA to decide whether the school should retain the proceeds), or the asset concerned is land or buildings forming part of the school premises and is owned by the LEA.

Because of the potential VAT implications of providing services which lead to fees and charges, fund raising activities and the sale of assets a VAT user guide has been issued to schools. Schools must comply with the procedures in this guide (See Section 7).

Income from the sale of assets purchased with delegated funds may only be spent for the purposes of the school.

The budget share of a school may be charged by the LEA without the consent of the governing body only in circumstances set out in para 6.2 below.

The LEA shall consult a school as to the intention to so charge, and shall notify a school when it has been done.

Schools are reminded that the LEA cannot act unreasonably in the exercise of any power given by this scheme, or it may be the subject of a direction under s.496 of the Education Act 1996.

The LEA will charge salaries of school based staff to schools budget shares at actual costs where schools operate Bank Accounts type B or C.

A VAT user guide is issued to all schools for their use; amendments to this guide are issued when required. The net amount of VAT incurred by schools can be recovered from Customs and Excise and therefore all schools are required to submit a monthly analysis and or reimbursement claim form.

Schools who need their bank account to be reimbursed, will receive payment within 6 weeks of submitting a complete claim. A complete VAT claim consists of all the returns listed in para 2.1.2.

7.2 CITS (Construction Industry Taxation Scheme)

To fulfil the Authority’s statutory responsibilities all payments made relating to construction industry suppliers/companies, must be correctly examined to ensure that tax is deducted when appropriate.

From 1^st April 1999, all invoices greater than £500 in value (excluding VAT) in respect of the budget headings listed below:-

Internal Decoration

Building repairs and maintenance

Building improvements

must be processed for payment in accordance with the procedure as issued by the Authority.

Invoices will be prepared for payment at the school, but the cheque, made payable to Norfolk County Council, together with the invoice, must be passed to the Director of Finance and Information for processing.

If an individual invoice does not exceed £500 exclusive of VAT, this can be paid by the school and charged to a subjective code called Building repairs / maintenance < £500.

SECTION 8: THE PROVISION OF SERVICES AND FACILITIES BY THE AUTHORITY

The LEA shall determine on what basis services from centrally retained funds (the term services includes Premature Retirement Costs and redundancy payments) will be provided to schools, but the LEA is debarred from discriminating in its provision of services on the basis of categories of schools except where:

1. funding has been delegated to some schools only or;

The term of any arrangement with a school starting on or after 1^st April 1999 to buy services or facilities from the LEA shall be limited to a maximum of three years from the inception of the scheme or the date of the agreement, whichever is the later, and periods not exceeding five years for any subsequent agreement relating to the same services.

Schools are free to choose from the range of services provided by the LEA. Each school is required to submit a Contract to Purchase Form to the LEA by 1^st April each year; this form indicates the subscription type services that each school requires. Other services can be purchased on an ad hoc basis during the financial year.

The LEA may provide any services for which funding has been delegated. But where the LEA is offering the service on a buyback basis it must do so in a way which does not unreasonably restrict schools' freedom of choice among the services available.

If services or facilities are provided under a service level agreement - whether free or on a buyback basis - the terms of any such agreement starting on or after the inception of the scheme will be reviewed at least every three years if the agreement lasts longer than that.

Services, if offered at all by the LEA, shall be available on a basis which is not related to an extended agreement, as well as on the basis of such agreements.

The LEA may issue regulations from time to time relating to Private Finance Initiative or Public/Private Partnership projects. Amongst other issues these may deal with the reaching of agreements with the governing bodies of schools as to the basis of charges relating to such schemes; and the treatment of monies withheld from contractors due to poor performance. Any proposed regulations applying to schools generally would be consulted on with schools and would be subject to DFEE approval.

If funds for insurance are delegated to any school, the LEA will require the school to demonstrate that cover relevant to an LEA's insurable interests, under a policy arranged by the governing body meets the minimum standard cover set by the LEA.

Governing bodies shall supply to the LEA all financial and other information which might reasonably be required to enable the LEA to satisfy itself as to the school's management of its delegated budget share, or the use made of any central expenditure by the LEA (e.g. earmarked funds) on the school.

Because the governing body is a corporate body and because of the terms of s.50(7) of the SSAF Act, governors of maintained schools will not incur personal liability in the exercise of their power to spend the delegated budget share provided they act in good faith.

The LEA shall have the power to delegate to the governing body of a school yet to receive a delegated budget, funds to meet governors' expenses.

Only allowances in respect of purposes specified in regulations made under schedule 11 of the School Standards and Framework Act 1998 may be paid to governors from a school's delegated budget share. Schools are expressly forbidden from paying any other allowances to governors.

Schools are also barred from payment of expenses duplicating those paid by the Secretary of State to additional governors appointed by him to schools under special measures. The LEA has issued a Procedure Note that gives details regarding what is considered to be reasonable expenses.

Funding for legal costs incurred by schools has been delegated for several years. Therefore any legal costs incurred by the governing body should be charged to the school budget share. Legal costs incurred by the LEA will normally be funded centrally. However, where the LEA incurs legal costs as a result of a school failing to act in accordance with the advice of the Authority these costs may be charged to the school's budget share (see section 6.2.11).

The Law and Administration Department of the County Council offer a legal services subscription service to schools. This will normally include all necessary legal advice and assistance in relation to the matters identified in the Services to Schools Booklet. However, if there is a conflict or a significant risk of a conflict between the interests of the LEA and the governing body of the school, the governing body will be expected to seek their own independent legal advice. In these circumstances, Law and Administration will consider making a full or partial reimbursement of the subscription fee at the end of the year.

Governing bodies are required to have due regard to duties placed on the LEA in relation to health and safety, and the Authority's policy on health and safety matters in expending the school’s budget share.

Under Section 151 of the Local Government Act 1972 the Director of Finance and Information is responsible for the proper administration of the County Council’s financial affairs and he or his nominated representative has the right to attend a governors meeting and give advice when a significant financial issue is being discussed. The LEA would give prior notice of such attendance unless it is impracticable to do so.

Schools must notify the LEA in advance of a significant financial issue and when it will be discussed by the governing body.

• Proposals to enter into significant future year commitments (other than staffing);

• all leasing agreements;

• Budget monitoring reports which indicate that the school is likely to be in deficit.

The LEA is empowered to:-

1. delegate selectively and optionally to the governing bodies of schools which have yet to receive delegated budgets.

GM schools continue to have the right to spend any surplus balances which they brought with them from the period during which they were funded by the Funding Agency for Schools (FAS). Where a deficit balance existed at the end of FAS funding, that will have been carried forward; any schedule for eliminating the deficit agreed with the FAS and carried over into the change of status under the GM Finance Regulations will continue to be adhered to. The LEA may not charge interest on these deficit balances carried forward from the period of FAS funding.

See 6.2.19.

The attached Annex B sets out the categories of work which governing bodies must finance from their budget shares.

The different responsibilities of Voluntary Aided school governors are included in Annex B. VA governors will continue to be eligible for grant from the DfEE in respect of their statutory responsibilities; they will have responsibility for other repair and maintenance items on the same basis as Community and Foundation schools.

The LEA does not use a de minimis limit in determining the split between capital and revenue in the financial accounts. However, a financial limit is used in determining the split of responsibility for building maintenance. Details of this are in Annex B.

A school with a delegated budget for school meals takes on all the legal responsibilities connected with the delivery of school meals (with the exception of the assessment of eligibility for free school meals discussed below).

The LEA is retaining funding to allow it to assess the eligibility of pupils to free school meals, to maintain detailed records of those pupils entitled to free school meals and to conduct regular reviews of entitlement every six months. If schools wish to perform this function themselves they may do so. However, they will not receive any extra funding from the LEA. Schools who do wish to carry out these tasks themselves must register this intention with the LEA and confirm pupils' eligibility using the documentary evidence specified by the LEA.

The LEA retains centrally funding for supply cover for staff in certain special circumstances listed below. The exact definition for each of these circumstances is laid down in DfEE regulations.

• maternity leave and ante-natal care
• carrying out trade union duties
• performing public duties
• undertaking jury service
• carrying out duties as a safety representative
• acting as a member of the reserve forces
• suspensions of staff
• membership of the General Teaching Council or its Committees
• carrying out duties directly related to child protection

Schools are responsible for all supply not covered by the special circumstances listed in 15.1. In particular schools are responsible for supply costs related to sickness absence. The LEA operates a sickness insurance scheme to allow schools to manage these costs.

Acle Primary

• External redecoration (including preparatory work)
• Statutory servicing and testing (including consequential remedial work)
• Management of asbestos
• All revenue repairs to buildings and plant
• All grounds maintenance with the exception of work on mature trees

• Asbestos removal
• Treatment and removal of mature trees
• All work on caretakers’ houses
• Repairs to buildings and plant fitting the definition of capital in the attached schedule and costing more than £1,000 (£5,000 for secondary schools)

A school fully buying-back in respect of the responsibilities delegated for building maintenance from April 1999 will still be responsible for all the maintenance responsibilities delegated to schools in previous years. A full list of these was included in the LMS Scheme for 1998/99 and this list is attached.

Schools may return to the control of the LEA the additional funds delegated to them for building maintenance in April 1999. Schools will have the option of returning all funds or just the funds relating to statutory servicing and testing. The LEA will manage all such returned funds on a pooled basis and continue to undertake works in schools on the same basis as in 1998/99. This will include all required servicing and testing and, for those schools buying-back in full, undertaking urgently required repairs.

Budget constraints mean that the pooled funds will not be used for any work on external redecoration in 2000/2001. Schools are free to use their own funds for external redecoration outside the buy-back arrangements.

The financial limit of £1,000 (£5,000 for secondary schools) serves to distinguish between a school and an LEA responsibility for work that could be classed as capital. All such work is detailed in the attached schedules. All revenue repairs are the responsibility of the school whatever the cost involved. Similarly external redecoration, statutory servicing and testing, management of asbestos and all the maintenance responsibilities delegated to schools prior to April 1999 are the responsibility of the school whatever the cost involved.

Voluntary aided schools were already responsible for the majority of external repairs prior to April 1999. The existing system whereby the Governing Body seeks 85% grant aid for certain repairs from the DFEE remains unchanged. A separate schedule is attached showing the division of capital responsibilities between LEA and voluntary aided schools if schools choose not to fully buy-back in respect of the responsibilities delegated in April 1999. If schools do fully buy-back the division of responsibilities remains as detailed in Annex F of the old LMS Scheme. This division of responsibilities list is attached. The schedule has been updated from that in the LMS Scheme for 1998/9 to reflect the changes made in voluntary aided school responsibilities by the DFEE in August 1998.

Notes:

Even if a particular repair falls into one of the above categories the LEA will only be responsible if the cost of the individual repair is greater than £1,000 (£5,000 in secondary). If this is the case any work done will be fully funded by the LEA. The school will be fully responsible for any costs below the limit. Individual repairs may not be aggregated together in order to exceed the financial limits.

The above LEA responsibilities only refer to capital repairs / replacements. The LEA will still be responsible for major & minor capital projects, i.e. providing new or improved buildings or plant.

Even if a particular repair falls into one of the above categories the LEA will only be responsible if the cost of the individual repair is greater than £1,000 (£5,000 in secondary). If this is the case any work done will be fully funded by the LEA. The school will be fully responsible for any costs below the limit. Individual repairs may not be aggregated together in order to exceed the financial limits.

The above LEA responsibilities only refer to capital repairs. The split of responsibility between LEA and Governors (with the support of grant aid from the DFEE) for major and minor capital projects (for new buildings and improvements) remains unchanged.

ANNEX C (note this annex is due to be rewritten)

1. This statement is intended to assist in considering the relevance of best value principles to the expenditure of funds from their delegated budget share. When submitting annual budget plans, schools are required to say how best value principles are being followed.
2. Best value will be a statutory duty to deliver services to clear standards, covering both cost and quality, the most effective, economic and efficient means available. Legislation is to place a duty on local authorities to secure best value in respect of the way in which they exercise their functions. The new duty is not intended to apply to those functions which are exercised by the governing bodies of LEA maintained schools. However, schools will be encouraged to adopt the best value performance management framework.
3. In relation to schools and expenditure from delegated budgets, the main features of best value can be summarised as a need for the governing body of a school to ensure:

1. the existence of a programme review which will aim for continual improvement. Existing mechanisms such as school development plans and post-OfSTED inspection plans can be developed to satisfy the requirements for review. The reviews should include:

• challenging how and why a service is provided (including consideration of alternative providers);

• comparison of performance against other schools taking into account the views of parents and pupils;

• mechanisms to consult stakeholders, especially parents and pupils;

• embracing competition as a means of securing efficient and effective services.

1. the development of a framework of performance indicators and targets which will provide a clear practical expression of a school’s performance, taking national requirements into account.
2. that the following are included in the school development plans -

• a summary of objectives and strategy for the future;

• forward targets on an annual and longer term basis;

• description of the means by which performance targets will be achieved;

• a report on current performance.

1. that internal and external audit takes place ensuring that performance information is scrutinised. LEA oversight of school finances provides external review.

3.1.1 for the acquisition or disposal of any interest in land; or

3.1.2 for the lending or borrowing of money; or

3.1.3 of employment for an individual employee; or

1. Before any tender is sought the Headteacher shall decide and record the evaluation criterion to be used when the tenders are received.

a) % of non pay element 15 15 n/a

b) no of days loss of interest 8 29 n/a

c) % rate of interest 7.6875 7.6875 n/a

d) % of budget share 0.0253 0.0916 n/a

a) % of non pay element 19 19 n/a

b) no of days loss of interest 8 29 n/a

c) % rate of interest 7.6875 7.6875 n/a

d) % of budget share 0.0320 0.1161 n/a

a) % of non pay element 10 10 n/a

b) no of days loss of interest 8 29 n/a

c) % rate of interest 7.6875 7.6875 n/a

d) % of budget share 0.0169 0.0611 n/a

Basis of the calculation is as follows:-

1. This is based upon the average split of non-payroll/payroll budget share within each Education sector.
2. In a type A account, an initial advance of 4% is made on 1^st April followed by 12 further advances made on the 19^th of the month or the last banking day prior to this. In the case of the latter, there is a loss of interest to the Authority and the total number of days lost for the financial year 1999-2000 is 8. In a type B account, the number of days lost of 29 is based upon historical data.
3. The rate of interest is the 6 Monthly Local Government Borrowing Rate as at 1^st January each year.
4. This is derived from dividing the lost interest by the budget share.