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ITEM EX6 - ANNEX 1

EXECUTIVE - 11 DECEMBER 2001

FURTHER DELEGATION OF BUDGETS TO SCHOOLS

 

ANNEX 1

DELEGATION OF THE BUDGET FOR SCHOOL MEALS

TO PRIMARY AND SPECIAL SCHOOLS

Introduction/Legal Background

  1. Regulations issued by the DfES in 1999 required that the budget for school meals had to be delegated to secondary schools with effect from 1st April 2000. The position for primary and special schools is that the budget may be retained centrally by the council but individual schools may opt for delegation.

  2. Schools with a delegated budget have a legal duty to provide free school meals for eligible pupils (i.e. those pupils whose parents are in receipt of income support or job seeker’s allowance) and a paid for meal where parents request this "unless it would be unreasonable to do so". "Unreasonable" has not been defined and in effect is left to the courts to decide.

  3. With delegation, governors have the discretion as to how to secure the service in their school. In particular, and subject to meeting minimum nutritional guidelines, governors are free to determine what constitutes a meal and may set the price for paid for meals. (Under central provision the LEA must charge the same price for similar items countywide).

    4. Previous Consultation with Primary and Special Schools on Delegation

  4. In May 2000, all 248 schools were consulted on the option of taking delegation. There were 242 responses (97.6%):

    5. 204 opted for no delegation

    38 indicated a preference for delegation.

  5. Of the 38 indicating a preference for delegation, only 10 schools, 9 primary and 1 special, have taken up the option of delegation. Of these, 2 schools have decided to manage a hot meal service themselves, 5 have converted to sandwich provision, and 3 have entered into contracts with private sector providers. One further school is likely to opt for delegation for 2002/03 and to convert to sandwich provision.

    6.

    Proposed Delegation for 2002/03

  6. Given the very high response rate to the previous consultation and the overwhelming majority of schools that expressed a view that they did not want to have delegation, the obvious question is why now seek to impose it.

  7. The reason for resurrecting this matter is the need to achieve the government’s delegation target for 2002/03.

  8. Assuming that school views have not changed materially since last year, it is proposed that the budget should be delegated in such a way as to make it as easy as possible for schools to buy back into the service provided by CFM for those schools that would wish to continue with the existing arrangements.

  9. There is an economic case for so doing also. It is important that schools understand fully that their independent decisions could have material implications for other schools, including secondary schools who have opted to remain with CFM under service level agreements:

    • firstly, 99 schools operate as serveries receiving their meals from production kitchens in other schools. Here the action of one school could have direct consequences for other(s);

    • secondly, the meals service operates on very tight margins with low central overheads. If significant numbers of schools opted to make arrangements other than buying back the service from CFM then there would be a reduced capacity to recover overheads. Whilst it may be possible to reduce costs at the margins many of the central management costs are in effect fixed in nature. At the extreme, the capacity to continue providing a centrally managed meals service could be jeopardised.

Budget Details

  1. Whilst costing information is now produced on a site-by-site basis for management control purposes, the fact that many kitchens act as host kitchens for meals supplied to other schools with services serves to complicate matters when considering delegation of budgets. Income from the sale of meals is credited in the central trading accounts to the school with the servery whereas the costs relating to providing the meals are recorded as those of the host kitchen.

  2. Further work needs to be done to disaggregate the data and to link costs with income for each school in order to better inform the eventual formula for allocating the budget for individual schools. In practice, this can only be a nominal exercise.

    3.

    Formula for Delegation

  3. The existing formula allocations for 2001/02 applied to the 9 primary and 1 special school that have opted for delegation is as follows:

    4. Free School Meals £1.22 per primary pupil taking meal

    £1.59 per special pupil taking meal

    Repairs and Maintenance £ x assessed need

    Heavy Equipment £805 lump sum per school

    Energy £ 0 costs deemed to be offset by profit on paid meals

    Other £0.97 unweighted pupil nos per Form 7

  4. The problem with the above is that there is not a recognition of the higher costs associated with operating serveries i.e. the extra costs of transporting meals from production kitchens. Consideration needs to be given as to whether there should be a new factor to recognise these costs. If additional funding was allocated to schools with serveries, it would be on the basis that the school continues to operate as a servery, e.g. if the school were to opt to change to sandwich provision, the allocation for operating as a servery would be discontinued.

    5.

    Options open to Schools with Delegation

  5. Once the budget is delegated, schools will have the option:

    1. to enter into a service agreement with the existing provider CFM;

    2. to invite tenders, to either include or exclude CFM

    3. to undertake the work themselves, employing and managing the staff directly

  6. In terms of option (b), it is now probably too late for any school to tender for a private contractor for a contract to start in April 2002 if delegation has not already been requested by the school following consultation with parents.

  7. Whilst it would be possible for a school to consider letting a contract from September 2002, the school would need to make arrangements for CFM to continue to provide the service for the summer term. Any caterer would make a loss during the summer term since staff have to paid during the holidays, when there is no corresponding sales income, and turnover is also lower during the summer term. Consequently, schools would need to underwrite in full any trading loss for this period.

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