Technical notes for use with financial template developed in accordance with recommendation 22 of the Commission on the Delivery of Rural Education (published April 2013).
The purpose of the template is to present financial information that is relevant and appropriate in relation to school closure decisions in a complete and consistent manner. This financial information would form only part of the evidence that would be presented in support of a particular school closure.
The template is designed to be flexible and to be adapted so as to be applicable in a wide range of different scenarios.
The template is presented as a framework to suit the particular local circumstances. Therefore it is appropriate that columns and rows can be added and removed in order to accommodate the local circumstances.
For example, if there is more than one school proposed for closure or more than one receiving school, then additional columns should be inserted in the template and completed for each school.
Please note that:
- it will also be important to include relevant narrative around the financial issues in the school closure documentation
- not all the boxes will be relevant to every Council and therefore only appropriate boxes should be completed
- costs entered into the template will reflect both the devolved and centrally held budgets (DSM and non-DSM budget)
- the figures may include non-educational budgets depending on an individual Councils structure e.g. capital budgets may be held centrally
All costs entered should be actual costs, using best estimates where actuals are not available.
Layout of tables and what should be included in each column
Columns can be added to take into account individual scenarios.
Revenue (table 1)
Columns 1 and 2 cover the current revenue costs of the school proposed for closure. The costs entered should relate to those that would have been incurred if the school remained open for a full financial year (irrespective of when the proposed school closure may take place).
Column 3 should include all additional revenue costs and incomes for the receiving school as a result of taking the extra pupils.
Column 4 shows the annual recurring savings (or increase) for the headings in column 1 that are achieved by the proposed school closure. This is calculated by removing the total recurring annual costs (column 3) from the budget for the school (column 2).
Row 42 of column 4 gives a total for all the savings.
Row 44 provides space to record the unit cost per pupil per year.
Capital (table 2)
Columns 5 - 7 cover the impact on capital expenditure as a result of the proposed school closure.
Table 2 records the capital life cycle cost for both the school proposed for closure and the new school provision. The capital cost for the receiving school should be taken across the life cycle of the school in line with the life expectancy of that school. This is likely to be highlighted in either the school estate management plan or an optional appraisal document. In order to make a comparison between capital costs, then the capital costs that would be incurred by the school proposed for closure if it did stay open should also be taken across the same life cycle period as the receiving school.
The capital requirements for any capital works identified should include those to make it fit for purpose (and should include any backlog maintenance costs) that would be avoided as a result of the school closing.
Annual property costs incurred (moth-balling) until disposal (table 3)
Table 3 should include annual revenue costs related to 'moth-balling' the surplus to requirement school that will be incurred by the council on an on-going basis prior to sale or transfer. Moth-balling costs could include security, maintenance, on-going contracts, dealing with vandalism etc. With regard non domestic rates, the time limit on certain NDR reliefs should be considered.
The table gives the total revenue costs that are recurring until the surplus property is disposed of.
Non-recurring revenue costs (table 4)
Table 4 should include any one-off, non-recurring costs that the Council will incur as a result of the proposed school closure.
Grand Aided Expenditure (GAE) impact (table 5)
The template includes space for entering the impact on Grant Aided Expenditure (GAE), if any, as a result of the proposed school closure.
Four of the almost 100 GAE lines can theoretically be impacted as a result of a school closure, however not all four of these GAE will necessarily be impacted in all school closures and there can be some school closures which will not impact on GAE at all. The following GAE lines could potentially be impacted:
- Primary school teaching staff, adjusted by secondary indicator to take account of the % of pupils in small schools (less than 70 pupils)
- Educational deprivation (based on Free Meal Registrations)
- Gaelic provision
- "Floor" mechanism
Primary school teaching staff is the GAE line that has the most potential to be impacted as a result of a school closure.
Primary school teaching staff, adjusted by secondary indicator to take account of the % of pupils in small schools (less than 70 pupils).
This GAE is based on the number of primary school pupils in each local authority. The distribution is then adjusted by a secondary indicator to take into account the percentage of pupils in small schools (less than 70 pupils) to reflect the greater cost of providing education in smaller schools. This adjustment redistributes the provision between all authorities within the same all-Scotland total.
The secondary indicator calculation for small schools is based on a co-efficient calculated for each settlement, from a regression analysis of local authority expenditure per primary school pupil against the percentage of pupils in small schools. It takes into account changes of average expenditure per unit of primary school pupils and is averaged with the co-efficient from the previous settlement to increase stability.
For any given year or local authority the amount per pupil in a school of less than 70 pupils can be calculated. If the number of qualifying pupils increases or decreases, the gain or loss to any Council would be the number of pupils multiplied by this value, whatever actions other Councils had taken in relation to their own primary school provision.
The overall value of the secondary indicator to a council depends upon the number of qualifying pupils. For a given settlement this number is calculated as a two year average. Consequently the effect of changes to the number of qualifying pupils will take a number of years to be reflected fully in a council's revenue grant allocation. Since this is a re-distribution mechanism, any reduction in the total value of the secondary indicator is re-distributed to all other Councils in proportion to their total number of primary pupils.
Educational deprivation and Gaelic provision
The educational deprivation and Gaelic provision GAE lines could be theoretically impacted under certain scenarios, although these scenarios are considered unlikely. In addition, due to the allocation methodologies for these two GAE lines, the ability to calculate an accurate figure in isolation for a particular local authority related to a particular school closure is difficult. In considering the impact of these two GAE lines by a proposed school closure, then, if appropriate, narrative should be included within the report.
Individual GAEs cannot be considered in isolation of the whole local government settlement as there is a 'floor' stabilising mechanism built into the system which guarantees a minimum increase to all 32 local authorities (when there is an overall increase in the level of the local government finance settlement) and a guaranteed maximum decrease when overall funding levels decrease. Traditionally around 4 or 5 Councils are supported by the floor in each year of a settlement. If a Council was supported by the floor mechanism, then any calculated reduction in GAE as a result of the above GAE lines would not have an actual impact on the overall GAE allocation. If the 'floor' mechanism is relevant, then it is considered that the most appropriate place to capture this impact is in the narrative within the report.
In simple terms, GAE is the system by which the total resources from central government are allocated equitably across Councils. It is important to be aware that individual service GAEs are not and never have been budgets, spending guidelines or targets.
They are simply an allocation methodology which is designed to allocate the available resources on the basis of relative need. The GAE component is a proportion of a total amount rather than a fixed amount and may be subject to variation. It should also be noted that actions taken during a particular settlement period do not have any retrospective effect, but will affect future settlements.
Further details on GAE and distribution of funding to local government can be found in a finance paper issued as an appendix to the report produced by the Commission on the Delivery of Rural Education.
Assistance with understanding GAE allocation can be gained from the Local Governance Analytical Unit at the Scottish Government, telephone 0300 244 4000.
Other costs identified
Non-educational use of school proposed to be closed
Consideration needs to be given to the impact on co-located services and the community from the proposed school closure, and also at any new building. These services may be non-statutory educational services (e.g. breakfast clubs, other wrap-a-round services) or non-educational (e.g. out of school care, other public services).
Due to the potential wide range of arrangements for such co-located services, the local delivery structures in place, the practicalities involved in re-locating them and that the issue is one of community impact, it is considered inappropriate to include these costs within the template. Impacts of a proposed school closure on non-educational uses of a school should however be covered within the narrative in the report.
Central Management Support Services Costs
There are a number of centrally established support services within an education department such as Quality Improvement and management support which provide support to each school within a local authority area. A closure of a school is unlikely to lead to a reduction in the costs in providing these support services and any such costs charged to a school proposed for closure would be recharged across the remainder of the school estate, and therefore would not constitute a real saving. In consideration of the purpose of the template to present the relevant data is a consistent manner, these central management costs have not been included in the template as they would not constitute a saving and would not be a material consideration in the closure decision. In the unlikely situation where a school closure does impact the level of central management support, then this should be covered in the narrative in the report.
A school closure and migration of pupils to another school(s) could involve a PPP/PFI school and therefore impact on contractual arrangements. It is considered unlikely that a PPP/PFI school would be proposed for closure but there may be a need to renegotiate contracts, and therefore incur additional costs, at a receiving school. As this is likely to be a rare event and given the unknown impact on any particular PPP/PFI contract, it would be inappropriate to capture such costs within the template. In the situation where a school closure does impact on a PPP/PFI contract, then this should be covered in the narrative in the report.