Meeting documents
Cabinet
Wednesday, 6th September, 2006
APPENDIX 8
Carried Forward Overspends from 2005/06
Transportation & Highways - Concessionary Fares
Background & Reason for 2005/06 overspend
The provision of Concessionary Travel is a statutory obligation, and is a demand led budget. The more eligible residents who apply for a bus pass, and the more they use their bus pass, the more it costs the Council in reimbursement to the bus operators. In addition to this, the Council is also financially exposed to increases in bus fares made by bus operators.
The overall reimbursement paid to the bus operators in 2005/06 exceeded our budget by £200,000, which was mitigated to £54,000 because:
· Bus fares increased in 05/06 by over 20%, and
· The number of bus passes applied for and issued of increased by 6%, and
· The total number of concessionary travel trips increased by 9%.
Position in 2006/07
The Council undertook a new statutory obligation from 1st April 2006 to provide free off peak bus travel to concessionary groups. The uptake of this has exceeded expectations. In 2005/06, the Council issued 13,500 half fare bus passes to eligible residents. So far in 2006/07, over 27,500 free travel bus passes have been issued. In addition, bus operators are currently challenging the reimbursement level through an appeal to central Government.
Whilst the service plan increased the budget provision, performance evidence outlined suggests on-going pressure and potential further overspend.
Elsewhere on Transportation & Highways portfolio budgets, current monitoring suggests pressures in respect of car parking fees and street lighting energy.
Therefore in it not considered that the 2005/06 overspend of £54,000 will be recoverable.
Education - Home to School Transport Overspend
Background
School transport costs have increased above the rate of inflation for the last few years. This has been a national trend (confed "Home to School Transport Survey 2004).
1.
|
2003/4 £000's |
2004/5 £000's |
2005/6 £000's |
2006/7 Prediction £000's |
|
|
Mainstream Transport |
1,325 |
1,425 |
1,927 |
1,855 |
|
SEN Transport |
1,267 |
1,286 |
1,301 |
1,544 |
|
Management Fees |
197 |
203 |
209 |
219 |
|
Total |
2,789 |
2,914 |
3,437 |
3,618 |
|
Budget |
2,615 |
2,737 |
2,868 |
3,246 |
|
Overspend |
174 |
177 |
569 |
372 |
The budget has only increased by the rate of inflation each year and the net result has been an overspend in the last three years. This was absorbed in 2003/4 and 2004/5 but there was a significant increase in the overspend in 2005/6. A further, but reduced overspend of approximately £372,000 is expected in 2006/7. Since route contracts were re-negotiated in 2005/6 and transport depends to a large extent on statutory requirements, a significant short term reduction in costs is unlikely to be achieved.
2. Reasons for sharp increase in costs for 2005/6
a) The largest single element in the increase in expenditure between 2004/5 and 2005/06 (£211,000) is the increase in number of school days between the two financial years. The number of school days increased significantly from 180 to 194 (term days excluding INSET). The number of school days will continue to vary from year to year depending on the pattern of term dates and in particular when Easter falls.
b) New routes showed a net increase of £132,000 for the financial year. Changing patterns of pupil locations, parental preferences for schools and increased SEN requirements all contribute to these changes. In addition, the closure of Clandown Primary School resulted in new transport requirement on hazardous route grounds.
c) The vast majority of the transport routes for both SEN and Mainstream pupils are provided through independent contractors. Environmental Services undertake the procurement of the transport and conduct a 5 yearly full tender exercise. A full tender process was run in the summer of 2005, with the new contracts starting September 2005. The effect of the tender increase was an average of 6.2% which was much lower than increases reported in other LAs, including those locally. However, this was well in excess of the inflation increase in the budget. The actual increase from September 2005 including annual inflation increase has averaged 9.8%. These cost factors totalled an estimated £112,000 in 2005/06.
3. Actions undertaken to address the increasing cost of Home to School Transport
a) Proposals to improve management of Education Transport were presented to Directors (Education and Commercial services) in Autumn 2005. The option agreed was to improve existing management systems including closer liaison between Education and Commercial Services staff, more precise exception reporting and more detailed end of year projections.
b) Single member of staff in Education identified as lead officer for Education Transport - previously two staff with key responsibility.
c) A review of all routes to identify potential savings was carried out from November 2005.
d) New software (EMS Transport module) was introduced in summer 2005. Further work is on-going to enable this software to replace the previous Oracle system and enable route reviews and loadings to be continually monitored and reviewed to provide the most cost effective solutions.
e) Report undertaken by the Assistant Director of Finance in summer 2006 to investigate the detailed reasons for the overspend in 2005/6 and the mitigating actions to minimise the impact in 2006/7 and future years.
f) Following this report a detailed action plan has been produced to address the recommendations. Progress with this action plan is reported bimonthly to Children's Services Service Management team.
|
4. Education Service Budgets |
2005-6 |
|
|
Final position |
||
|
Overspends |
Underspends |
|
|
Schools Direct |
||
|
School Rents |
75,693 |
|
|
School Supply Budgets |
213,034 |
|
|
Closing Schools balances |
116,000 |
|
|
Strategy and Management |
||
|
Transport |
569,729 |
|
|
Pensions/Severance |
245,161 |
|
|
New School Set up costs |
43,850 |
|
|
Strategy and Management - Various |
39,777 |
|
|
Inclusion Service |
||
|
Statementing/Creative Packages |
41,302 |
|
|
Recoupment |
180,760 |
|
|
Independent Schools |
105,631 |
|
|
Inclusion Service - Various |
89,517 |
|
|
School Improvement |
||
|
EMS |
117,106 |
|
|
Advisory Service (incl. Post 16) |
39,150 |
|
|
School Improvement - Various |
23,376 |
|
|
Other Areas |
||
|
Adult Education closing balance |
39,352 |
|
|
Grants offsetting revenue |
447,872 |
|
|
Youth Service |
31,490 |
|
|
Other areas |
20,835 |
|
|
Total |
1,384,377 |
1,055,257 |
|
TOTAL OVERSPEND |
329,120 |
The table above shows the final budgetary position of the Education Service as at the 31st March 2006. The table shows the overspends amounting to £1.384m for the year. During the year, Education Service undertook a range of significant actions including the removal of 5.5 FTE posts in order to mitigate this overspend. This amounted to £1.055m. Thus, the net position was at an overspend of £329,000.
The total overspend includes the particularly excessive items of Home to School Transport (£560,000) and Pensions and Redundancy costs (£245,000).
Of the net overspend of £329,000 the department believes it should recover the £117,000 identified as Education Management System (EMS) as the overspend was created from management actions and decisions.
The remainder (£212,000) is requested to be written off against corporate reserves.
5. Education Budget 2006/7 - Strategy for Reducing Projected Overspend
The transport budget for 2006/7 includes a 4.6% inflation figure over 2005/6 budget. However, the actual increase in the costs of the bus contracts are likely to exceed this. As a result, actions resulting from the transport review which are mainly medium term in their impact are unlikely to produce a balanced budget in 2006/7. A number of additional actions have therefore already been put in place:-
a). Standards Fund Grants - to August 2006
All budget holders to detail committed expenditure to 31.08.06.
Unspent allocations as at 31.08.06. will be automatically clawed back.
b). Vacancy Management
Automatic freeze and clawback on all vacant posts - 1 month and recruitment costs.
c). All new grants/funding streams to be scrutinised by EMT. Budget holders to evidence need for full allocation for any savings to be identified.
d). Finance Manager undertake review of all centrally held budgets and costs to identify any service wide measures.
e). All teams/services required to restrict spending and operate very tight fiscal management. EMT to scrutinise budgets and spending patterns in September 2006.
f). Transport Review has been completed and an action plan is in place. Monthly reviews and bi-monthly progress report to Children's Services SMT are in place.