Redistribution of Balances

As you may be aware the DCSF proposal to remove and redistribute 5% of the surplus balances from 2006/07 onwards, as outlined in the Fair Funding consultation documentation, has been put in abeyance. This will be for a period of 3 years after which the DCSF reserve the right to look at the proposal again. This means that the proposed removal of balances will not happen at the end of this financial year.

However, schools must note that the LA balance control mechanism will be implemented using the same criteria as last year. These criteria can be found in the Norfolk Scheme for Financing Schools 2007/08 in the Financial Services A-Z pages.

Concerns have been raised by schools regarding the money being held within school budgets for Modern Reward Strategy and the effect this may have on year-end balances. In response to these concerns, it is proposed that if Modern Reward Strategy recommendations have not been implemented by the end of this financial year, automatic creditors will be raised for 5% of the total support staff budgets. The effect of this would be to remove this element from the requirement to be analysed within the balance mechanism. This reflects the fact that these costs relate to the 2007/08 financial Year. The creditors will be undertaken centrally and will be actioned automatically for all community schools. VA schools will be written to separately to obtain permission before this is carried out on their behalf.

All schools will be written to individually nearer to Year-end with further details.

If you have any questions please contact your Finance Support Officer.