Management Information Sheet

Following a recent meeting between Norfolk's then Director of Children's Services, Michael Rosen, the Regional Schools Commissioner, Tim Coulson, and representatives from the DfE, the Local Authority has formally been asked to review the way it deals with schools that submit deficit budget plans.

Norfolk Scheme for Financing Schools, section 4.9 Licensed Deficits, states that it may permit schools to apply for a licensed deficit plan in certain circumstances. Historically, the Local Authority has, in the main, accepted deficit plans that show recovery within 3 years, and worked closely with those schools to ensure that they remain on track.

The dialogue between the Director, the DfE and the RSC has highlighted a number of risks for both NCC and the DfE if the Local Authority continues to permit such applications. These risks include:

• As the funding used to support deficit plans comes from other maintained school surpluses, the increase in the number of schools converting to academy status means that there is a direct reduction in the funding available to support licensed deficits. This means that there will become a time that the Local Authority will not be able to support deficits in any school.

• If a school does not recover from deficit before it converts to academy status, the Local Authority expects the DfE to repay the deficit to it, then negotiate repayment from the Trust the school is forming/joining. However, the DfE do not, in many cases, now have sufficient funds available to support deficits at the point of conversion.

• Additionally, the RSC is concerned that an increasing number of Trusts do not have sufficient resources within their reserves to support schools that might have deficit budgets.

Therefore, and with immediate effect following the above meeting, the Finance & Business Services Team were instructed by the Director of Children's Services not to accept any further licensed deficit budget plans. There are currently 12 schools of varying sizes and types where the Local Authority accepted a 2016/2017 deficit original or revision 1 budget plan.

Staff from the Finance & Business Services Team have been undertaking the revision 2 visits during the Autumn term 2016, and identifying those schools that are either continuing to have deficit budgets or which are at risk of developing deficits in the immediate future (i.e. within the next financial year). There are currently 7 schools that are projecting a deficit position at 31 March 2017.

Where schools have been identified as falling into this category, the Chair of Governors and Headteacher have been written to individually, and a visit from a member of the Finance & Business Services Management Team will be, or has been arranged, to discuss the change in strategy regarding acceptance of licensed deficit plans. This will include how the school will be supported towards recovery from the deficit position (if they have not already shown that they are recovering).

For all other schools, the Local Authority will no longer accept a deficit budget submitted by any LA maintained school. Any such plans submitted by the Governing Body of a school will receive a letter rejecting the plan, and asking that further work be undertaken, in conjunction with staff from the Finance & Business Services Team, to address the issues, and to show how the school intends to recover from the deficit position.

Advice may be obtained from the school's Finance Support Officer.