Budget Preparation 2: Statutory Requirement for a Three Year Budget Plan
Posted on 13 March 2017 by education.finance
This a reminder that maintained schools must submit a 3 year budget plan, approved by the full governing body, to the Authority by 1 May through HCSS Budgeting showing its intentions for expenditure and income in the current financial year and the next two years together with the assumptions underpinning the budget plan.
This is a statutory requirement from Central Government and it clearly states within the Scheme of Financing Schools the following: –
Planned expenditure must not exceed the resources available to the school, taking into account any balance due to or from the school for the previous year without specific approval by the Authority under Para 4.9 (licensed deficits). Failure to set a budget within the resources available may lead to the withdrawal of delegated powers from the school.
Explanatory note: The use of 3 year budget plans is considered to be good practice as the forward projection of commitments enables governing bodies to:
- recognise emerging pressures;
- demonstrate the sustainability of proposed actions;
- plan to manage change effectively.
Plans may be used to inform judgements about the achievement of the Financial Management Standard as well as for resource, staffing and other planning purposes.
As in previous years Devon are advising schools to budget based on the current rates and to adjust their budgets for the known changes to pupil numbers and other factors that are known by the individual school.
We appreciate that this is a very different year in that the introduction of a new National Funding Formula is looming, but none of this has yet been confirmed and we believe not likely to be until August 2017 at the earliest. However, we would suggest that the school should consider any reduction to the budget that may be shown from the NFF Stage 2 illustration and provide notes explaining the assumptions that have been made.