Councils could face government intervention over their systems for overseeing schools’ budgets if just one school in their area breaches a deficit limit, under new plans from the Department for Education.
Under the plans, the department will approach a local authority if 2.5% of its maintained schools have been in deficit of 2.5% or more for the past four years.
The changes have been made after a National Audit Office report in October 2011 found that one in five secondary schools were in deficit at the end of 2009-10 and almost half of councils believed they lacked sufficient resources to effectively monitor schools’ financial management.
However, a DfE report shows some councils warned that under the new system, the department could intervene over just one school.
The report, which covers the responses to a consultation on the plans, said some respondents pointed out that: “As numbers of local authority maintained schools reduce, as a result of schools converting to academies, for smaller local authorities 2.5% may relate to only one school, in which case intervention may seem excessive.”
It also said some had called for a change to the system, so that the department would only intervene if a minimum number of schools had been running with a 2.5% deficit for four years.
However, the document said the department would introduce the original proposal. It did not mention implementing the threshold of a minimum number of schools.
It said 95 organisations responded to the question, “do you agree it is appropriate to approach an LA if it has 2.5% of schools that have been in deficit of 2.5% or more since 2007-2008 (i.e. for 4 years)?” Of these, 54 said yes, 34 said no and 7 were not sure.
The report said that, starting this year, the department would ask local authorities to “provide additional information” about their financial management of schools in cases where:
- A council had overspent its Dedicated Schools Grant (DSG) by 2% or more
- A council had underspent its DSG by 5% or more
- 2.5% of a council’s maintained schools had been in deficit of 2.5% or more for the last 4 years
- 5% of schools had had a surplus of 15% or more for the last 5 years
The DfE report can be read in full here.