Councils can claw back school surpluses using new audit tool

24 Mar 05
Schools sitting on large budget surpluses could have their funds clawed back by councils following moves to make school accounts more transparent.

25 March 2005

Schools sitting on large budget surpluses could have their funds clawed back by councils following moves to make school accounts more transparent.

An Audit Commission web tool, launched on March 21, allows local education authorities to benchmark their performance against their neighbours and identify schools holding on to excessive surplus revenue.

Tim Priestley, senior manager at the Audit Commission, told Public Finance the tool would help councils put pressure on schools deemed to be 'outliers'.

'A number of authorities are already recycling or clawing back funds. Perhaps authorities that haven't gone down that route will be encouraged to do so,' he said.

Budget surpluses over 5% for secondary schools and 8% for primaries are regarded as excessive. Priestley said that, although there were benefits in saving up for long-term projects, the majority of schools' money needed to be spent on pupils.

The web tool was developed to combat the confusion surrounding how and where school money is allocated. Last year's Audit Commission investigation into the so-called funding crisis of 2003 pointed the finger of blame at the lack of information on school funding and called on councils to be more proactive in managing and challenging school expenditure.

But the move threatens to put further pressure on already strained relations between schools and councils over the issue of financial autonomy.

The Secondary Heads Association is worried that benchmarking data could be misinterpreted and misused by local authorities.

SHA general secretary John Dunford told PF that only a very small minority of schools held on to unhealthy balances, while in many cases there was a good reason for a contingency fund.

'Schools should have a clear budget policy which they share with the LEA. In turn, local authorities should support and provide strategic guidance to schools. LEAs should not be managing school budgets, contrary to what the Audit Commission suggests,' he said.

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