Future of education report

Education budgetary outlook

The Education Authority (EA) overspent on its allocated budget by £16.6 million in 2017/18 and this could have been £9.3 million higher but for a revision to its accounting policy for the year, according to Northern Ireland’s Comptroller and Auditor General.

The overspend by the Education Authority follows on from a £19.1 million overspend in 2016-17 and it appears that similar issues including cash flat allocation, systemic constraints and limited powers in respect to school budgets, will remain prevalent.

The EA’s target is to contain expenditure “within the accrued limits approved by the Department of Education (DE) and the Department for the Economy”.

The budget allocation process in Northern Ireland has been altered because of the absence of ministers, rather than a pre-determined budget with potential in year budget increases, in 2017–18 the budget setting process was delayed and DE provided EA with cash limits between July–March 2017 before a budget was formally confirmed in June 2017. DE approved the EA’s completed budget plan in January 2018.

While a £1,833.5 million allocation was given, the EA’s expenditure was £1,851.1 million. Factoring in an underspend on student and further education support services, the EA’s annual overspend was some £16.6 million.

Overspend on the education budget was recognised as being driven by overspends in Special Educational Needs (£12.7 million) and school meals (£2.4 million), as well as from an underfunding of £5.3 million arising from the introduction of the Apprenticeship Levy.

The report by the Comptroller and Auditor General indicated that the issues related to an overspend in education are recurring themes. “The EA stated that as budget allocations have essentially remained cash flat, it was unable to absorb in-year pay and price inflationary pressures and increased demand pressures,” the report said.

The EA highlighted attempts to mitigate overspend by delivering some £31 million in saving efficiency’s in 2017-18 but that systemic constraints within the system need transformation. One example is the fact that as over 90 per cent of the services are driven with a significant proportion of staff-related costs, giving the EA “limited powers in respect of school budgets”.

The Comptroller and Auditor General noted that the EA had revised its accounting policy to include schools stocks of £9.3 million as inventory for the first time in 2017–18. Had the change not have been made, then the £9.3 million would have been an additional overspend.

Following awareness of the 2016–17 overspend, the Comptroller and Auditor General launched a report to examine the financial health of schools and examine the extent to which schools have been able to manage within their delegated budget for the period 2012–13 to 2016–17.

In his findings, Kieran Donnelly outlined “an environment where there is pressure on school budgets, increasing pupil numbers and schools with sustainability issues. Therefore, it is clear the system is coming close to a tipping point and action needs to be taken as a matter of urgency”.

Recognising a 9.3 per cent reduction in the general schools budget over the period, the report found that the number of controlled and maintained schools in Northern Ireland with a deficit increased from 197 to 315 and that 16 per cent of controlled and maintained schools in Northern Ireland had accumulated deficits in excess of the Education Authority’s prescribed thresholds at 31 March 2017.

Commenting on his most recent findings, Donnelly summarised: “I am concerned that once again the EA has overspent on its budget. My recently published report on the financial health of schools highlighted the pressure on education funding and I therefore welcome the EA and DE’s recognition of the need to reform the education sector, which I consider urgent.”

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