Extended Schools Advice: Accounting for Community Services and Activities as From 1st April 2006

Use of delegated budget
At present schools must be able to identify any income and expenditure that relates to extended school activities, ensuring that the delegated revenue budget for the school is not used to subsidise extended activities.

From 1st April 2006 schools will be allowed to use their delegated budget shares for the 'purposes of the school', the DfES's view is that this term may be taken to include all activities that bring an educational benefit to the pupils registered at the school or at other maintained schools.

Therefore, schools will need to decide whether a particular extended school activity is eligible to be funded from its delegated budget. The governing body may find it useful to consider the questions and examples in Appendix A.

Schools will have to establish a clear distinction between those activities that are eligible for funding from the delegated budget and those that are not eligible for funding from the delegated budget, as this distinction has implications on the way schools report and manage spending on various activities.

For those activities that are eligible for funding from the delegated budget but not affordable if funded exclusively from that source, and for those activities that may not be funded from the delegated budget, the school will need to secure alternative sources of funding.

Funding Streams
There are grant funding streams through:

• The General Sure Start revenue allocation for 2006-07 is £460,995 and the same amount for 2007-08. This funding is to contribute to the development of a sustainable and sufficient childcare market as part of the extended schools service core offer. There is also a small amount of capital funding, which could be used for extended services.



• The Standards Fund allocation for 2006-07 is around £923,000 and the same amount for 2007-08. This will be used to pay for infrastructure, but part of the funding will be available for supporting the development of extended schools services core offer activities. The allocation of this funding is currently being reviewed; information regarding accessing this funding will follow.



• Schools already have funding within their School Development Grant for study support programmes but in 2006/07 and 2007/08 will also receive funding through their budget shares for personalised learning in primary schools and at Key Stage 3. The allocation for Primary schools is £1.320m in 2006 increasing to £3.033m in 2007/08. The Key Stage 3 allocation is £1.745m in 2006/07 increasing to £4.902m in 2007/08 (these allocations are dependent on the Norfolk pupil count equalling the DfES estimate). For both phases the amounts are allocated 15% on the relevant year group, 35% on free school meals and 50% on prior attainment. In addition to making provision for pupils that have fallen behind and for gifted and talented children, this money is to help children from deprived families to access after school and year round activities through the development of extended schools. Another source of funding is through the targeted primary and secondary Strategy Grants.



• From 1st April 2006, schools will be able to use money from their School Standards Grant (SSG) allocation to support the full range of extended school activities, including those that are ineligible for funding from the delegated budget. Schools will remain free to decide how to spend their SSG allocation.

Charging
It is likely that charging will be the main source of ongoing funding for many extended services that are delivered by schools but are ineligible for funding from the delegated budget.

All extended activities will need to be fully costed including the apportionment of schools' fixed costs. Schools will need to have a charging regime in place and will need to have procedures in place to support the financial management of the provision of extended services. A key requirement will be to ensure that such activities are not being subsidised from the delegated budget, and that income from charging is sufficient to cover the full costs.

For extended activities that are eligible for funding from the delegated budget, but cannot be afforded from the delegated budget alone, schools may wish to consider whether it would be appropriate to make a charge for such activities or ask for voluntary contributions.

Apportioning costs
Many community activities will share facilities, equipment and staff with the school. Where resources are shared, even when additional costs are not incurred, all costs will need to be apportioned between the schools delegated budget and community services budgets. Advice from the DfES has been sought on the situation where there is no additional cost to the school's budget. The DfES advise that the only exception to this above rule is if two activities are taking place in parallel and all the community costs, including apportioned costs, are covered by the first hiring then there is discretion not to charge for the second hiring.

Accounting procedures Schools' accounting procedures need to distinguish between extended school activities that can be funded through the delegated budget and those that must be funded from outside the delegated budget. The key principle will be that a school's financial management and reporting should identify separately spending on those activities that are not eligible for funding from the delegated budget. Schools must account for all income and expenditure relating to community-focused extended school activities separately to their pupil-focused school activities.

Schools need to ensure that due care is taken not to compromise the financial position of the school's delegated budget whilst extending the provision of services. They will need to demonstrate a clear audit trail confirming their decisions to undertake individual extended activities and their sources of funding including whether such activities were eligible or ineligible for funding from the delegated budget.

Accounting codes
To support this approach, from 1st April 2006 the DfES will introduce additional codes to the Consistent Financial Reporting framework, to capture separately income and expenditure that relate to activities that cannot be funded from the school's delegated budget. See Appendix B. Schools will receive upgrades to incorporate the new codes in the new financial year.

Bank Accounts
There will be no requirement for separate bank accounts to be used. Only if extended school activities are significant, largely free standing and managed separately, will a separate bank account possibly be appropriate. VAT
We are currently considering the VAT implications of these changes and will be meeting with the Director of Finance and his external VAT consultants to discuss this. The consultants consider there may be significant problems. Schools will be advised of any required changes in the near future.

Advice
Schools wishing to seek advice or support on the new accounting arrangements for extended schools should contact their Finance Support Officer.

Training
Training for schools will be available from the Children's Services Finance Training team for those staff who will be responsible for the administration, processing and accounting for Extended School Activities, details of which will be in the brochure sent to schools at beginning of the financial year.

Appendix A

Appendix B