ITEM EX5

EXECUTIVE – 22 JANUARY 2002

MONTHLY MONITORING REPORT – 2001/02 BUDGET

Report by Director for Business Support & County Treasurer

1. This report presents the overall financial position of the Council in 2001/02. It sets out the financial issues identified to date, incorporating projections submitted to scrutiny committees and updating the Executive on progress towards achieving the 2001/02 budget targets.

Presentation

2. Details of the Council’s financial position are contained in the following Annexes:

Annex 1 Projected year end variations compared with the 2001/02 budget (download as .rtf file)

Annex 2 An Estimate of Provisions, Reserves and Balances at 31 March 2002 compared with provisional actuals at 1 April 2001 (download as .rtf file)

Annex 3 Analysis of Committee Carry Forward Reserve (download as .rtf file)

Annex 4 Revenue Grants (download as .rtf file)

Carry forwards from 2000/01 and balances as at 1 April 2001 are based on the Statement of Accounts 2000/01

Reserves and Balances

3. The current projected outturn position on the Council’s main reserves and balances are shown in Annex 2, the principle ones being:

	Provisional Balance 1 April 2001 £’000	Projected Movement   £’000	Estimated Balance 31 March 2002 £’000
Schools’ Reserves	10,671	3,329	14,000
County Fund Balance	3,508	-470	3,038
Committee Carry Forward Reserve	3,213	-6,245	-3,031

4. The estimated balance at 31 March 2002 is subject to decisions of the Executive and the Council regarding 2 requests for supplementary estimates from the Community Safety Scrutiny Committee and a proposal to fund the revenue costs of installation of the Broadband Network arising in 2001/02.
5. Schools have submitted three year budget plans which show planned use of reserves in 2001/02 of £8.1m. Schools’ reserves increased at the end of 2000/01 by £2.5m, the main reason being the Schools Standards Grant awarded to schools in year of £3.4m. Given that at least the same level of grant will be received in 2001/02, then it remains unlikely that there would be substantial use of balances during the current financial year. The prediction at this stage is that school balances will rise to £14.0m by 31 March.

  Virements and Supplementary Estimates (Annex 1, Column 5)

6. Supplementary estimates of £592,000 previously approved by the former Strategy & Resources Committee are reflected in Annex 1, Column 5. Additionally there have been virements between committees and within committees which have been approved within the authority of each programme Committee. Virements are reported to the Executive on a quarterly basis.

Committee Carry Forward Reserve

7. An analysis of the Committee Carry Forward reserve at provisional outturn 2000/01, actual outturn 2000/01 and current estimated outturn 2001/02 is shown at Annex 3. The table demonstrates that if all committees spend in line with current projections, there will be a deficit of over £3.0m by March 2002. Further details on each committee are outlined below.

Education

8. The financial position shows an improvement of £432,000 for the current financial year, with a projected underspend of £453,000 on non delegated budgets. In relation to the Oxford City Schools Reorganisation, there is no change in the planned overspend of £1,739,000, which will be recovered in future years. The net position for Education is therefore an overspend of £1,286,000. (It was agreed at Strategy & Resources Committee on 26 September 2000 that in the short term the revenue costs of the City Reorganisation would be funded from the Council’s overall Committee Carry Forward reserve and in the medium term (from 2004/05) by savings in the Education Budget. These costs are predicted to rise to £2.9m at the end of 2002/03.

Social Services

9. The base budget pressures facing the department in 2001/02 are estimated at £6.7m, with potential savings of £3.5m leaving a net overspend of £3.2m, some of the potential savings will be difficult to deliver. The situation is being closely monitored and further updates will be reported regularly to the Executive. In 2002/03 is it estimated that action plans put in place this year could potentially produce savings of £3.8m which would bring the carry forward reserve back into balance.

Elms Day Centre Witney

10. A sum of £130,000 is included in the 2001/02 Revenue Budget, (shown in Annex 1 as part of a contribution from the Capital Reserve of £201,000) in respect of a capital receipt as a result of the sale of Elms Day Centre. The Elms will not now be sold and there will therefore be a shortfall of £130,000 in 2001/02 as a result. This shortfall could be met by asking Social Services to find alternative options. This may be difficult in the short-term, so pragmatically it is recommended that the shortfall be met from balances in the first instance and to note that Social Services may be required to reimburse balances if an alternative funding source is identified.

Environmental

11. There is a predicted overspend of £711,000 on the 2001/02 base budget funded by £1,544,000 brought forward from 2000/01. This is due mainly to spending in the current year on work deferred from 2000/01. The current estimated underspend in 2001/02 is therefore £833,000.

Public Protection

12. The Chief Fire Officer has estimated an overspend on the retained firefighter budgets of £250,000 with the establishment now almost up to full strength. There is also an estimated overspend of £365,000 on the firefighters Pension account. Council policy is for these items to be met from balances.
13. An amount of £66,000 will be returned to Council balances in respect of additional grant received in relation to emergency planning.
14. It is currently anticipated that the Committee carry forward reserve will be £75,000 at the end of 2001/02, comprising £50,000 slippage in expenditure on the Fire Service into 2002/03 and £25,000 on Trading Standards Service that will be used to enable the Best Value Performance Plan to be implemented within the approved budget.
15. There are two requests for supplementary estimates, one for £35,000 for the Fire Service in relation to increased costs in the fire pay award, and £10,000 to the Emergency Planning Service in respect of increased costs arising as a result of their office relocation to Woodeaton Manor.

Cultural Services

16. There is an increase in the committee carry forward at 31 March 2002 of £28,000 to £68,000. This reflects slippage in the retroconversion programme being undertaken by the Records Management Unit which is due to be completed during 2003.

Operations

17. The latest estimate of the position on the carry forward reserve is an improvement of £237,000 representing projected underspendings across most headings.
18. There is a planned £70,000 to be returned to balances (an increase of £20,000 since the last report being a further £10,000 for election expenses and £10,000 for the Better Government for Older People project which is now complete).
19. The Director of Environmental Services has reported a potential planned overspend of around £1m on urgent works as a consequence of the inadequate budget level for repairs and maintenance. The Executive at its meeting on 11 December 2001 recommended Council to approve a virement of upto £1m for urgent building repair and maintenance works to be funded from other budgets controlled by Environmental Services.

Strategic Measures

20. It is currently anticipated that there will be savings of £500,000 this year in respect of improvements in cash flow. This is an improvement of £300,000 on the last reported figure.
21. The Executive will recall that block appeals have been submitted in respect of the 2000 rate revaluations. It is unlikely that the appeals will be determined in this financial year and therefore no significant savings on rates are anticipated.

Capital Reserve

22. Current projections indicate that there will be a surplus of £4.749m on the Capital Reserve by March 2002 based on the latest capital programme update. These resources will be used in future years. However it is likely that the City Schools Capital Reserve will be fully utilised during 2001/02. A full update on the Capital Programme is given elsewhere on this agenda.

Oxfordshire Community Network (Broadband)

23. The County Council gave approval to the installation of a Broadband Network at its meeting on 11 December, together with a budget commitment from 2002/03 of £1.5m. However there are estimated net costs of £821,000 occurring in 2001/02 and ongoing costs above £1.5m from 2002/03 onwards. Of the £821,000 occurring this year some £697,000 could be regarded as capital expenditure and £124,000 is revenue expenditure. It is proposed to meet the capital costs from the Capital Programme and that the revenue costs in 2001/02 are met from balances. The capital costs are dealt with in the capital programme report elsewhere on the agenda. If the capital costs of £697,000 are charged to the Capital Programme the balance in the Capital Reserve at 31 March 2002 will reduce to £4.052m.

County Fund Balance

24. The current position on the County Fund is shown below:
    
    

	£’000
Balance as at 1 April 2001	3,508
Plus contribution from revenue budget 2001/02	400
	3,908

Variations previously reported:

Less Supplementary Estimates for:

Operations – foot & mouth action plan	-10
Cultural Services – foot & mouth tourism strategy	-10
Public Protection – foot and mouth costs	-15
Cultural Services – Cogges	-35
Operations – District Audit Fee	-107
Operations – Job Evaluation	-60
50% of pay awards	-405
Operations – budget for scrutiny committees	-40
Operations – costs of Peer Review	-26
Additional costs of Members Allowances	-12
Home to school transport returned to balances	236
		-592

New requests for Supplementary Estimates



Public Protection – firefighters Pay Award	-35
Public Protection – Emergency Planning – moving location	-10
		-45

Variations to (+)/drawn from (-) Balances



Additional costs of firefighters pension account(previously reported)	-300
Additional cost of retained firefighters (previously reported)	-250
Public Protection Emergency planning – return of grant	66
Operations – under spend on election budget	50
Strategic Measures – improvements in cash flow	200
		-234




Operations – Better Government for Older People	10
Operation – further under spend on election budget	10
Additional costs of firefighters pension account	-65
Broadband Network Revenue Costs	-124
Elms Day Centre – Loss of Capital Receipt	-130
Strategic Measures further improvements in cash flow	300
		1
Projected Balance as at 31 March 2002		3,038

25. It should be noted that the balance brought forward has increased by £245,000 as a result of the finalisation of the 2000/01 accounts, as reported to the Strategy & Resources Committee on 25 September 2001.

Government Grants (Revenue)

26. Specific grants known about at the time of setting the budget are listed in the 20001/02 Budget Book. This information is summarised in Annex 4 and updated for further grants reported by service committees this cycle. Annex 4 also indicates the level of funding required to be input by the Council to access the grant. Copies of the detailed grant schedules are available in the Members’ Resource Centre.

Other Issues

Pension Rights for Part Time Workers

27. Claims have been made by 187 part-time and retained firefighters following a decision of the European Court to extend the pension rights of part-time employees. If the claims are successful, entry to the Firefighters Pension Scheme could be backdated to 1976. It is not possible to quantify the total potential liability at the stage.

Conclusions

28. In summary, the current projected outturn on the Council’s main reserves and balances is as follows:

1. Schools Reserves – It is currently anticipated that the year end balance will at least be in line with the previous years.
2. County Fund Balance – The current projection is that the County Fund Balance will reduce from £3.508m to £3.038m for the reasons stated in paragraph 25 above. The Executive will need to consider how it intends to replenish balances to £4.5m (1%) of the Revenue Budget in setting the 2002/03 Revenue Budget.
3. Committee Carry Forward Reserve – Current forecasts indicate a deficit of £3.0m, including sums repayable in subsequent years of £1.7m (Education) and £3.2m (Social Services) and this excludes the costs of the Broadband Network falling in 2001/02 of £821,000. The total deficit could rise to £4.0m if the planned overspend on repair and maintenance urgent works occur.
4. The consolidated position on Balances and Committee Carry Forward Reserve is analysed below:
   
   

   	£000
   County Fund Balance	3,038
   Less Committee Carry Forward Reserve	-3,031
   Less Broadband Capital Costs	-697
   Less Potential overspend on urgent works	-1000
   Deficit	-1,690

   Note it is proposed to fund the net Capital Costs of Broadband in 2001/02 from the Capital Programme.

   The shortfall of £1.690m can be covered in the short term from the balance on the Capital reserve of £4.7m shown in the Capital Programme report elsewhere on this agenda.

29. The Executive will need to take account of the issues set out in this report in recommending its Budget to Council.

RECOMMENDATIONS

30. The Executive is RECOMMENDED to:

1. receive the report;
2. approve:

(i) a supplementary estimate of £35,000 to cover the excess costs of the firefighters pay award;

(ii) a supplementary estimate of £10,000 to cover the costs of moving the Emergency Planning section to Woodeaton Manor;

3. agree:

CHRIS GRAY
Director for Business Support & County Treasurer

Background Papers Nil

January 2002