The Scrutiny Performance Panel – Education met to discuss the annual budget proposals as they relate to education matters. The panel welcomed an increase in the education budget and the baselining of one-off payments, but raised concerns about the sustainability of funding, particularly in relation to additional learning needs, school reserves, and national insurance contributions.

Annual Budget Proposals for Education

The panel reviewed the annual budget proposals for education, which represent a 12% increase in the delegated schools budget, amounting to just over £213 million. This includes the baselining of an £11 million one-off payment from the previous year and an additional £11.8 million. This increase is described as the largest single item of expenditure within the council budget and reflects a commitment to prioritising education.

Kelly, an officer, presented the report, highlighting that education is projected to come in with an underspend this financial year, partly due to the transfer of home-to-school transport budgets and the use of the Local Authority Education Grant (LAEG) to offset core costs. However, she cautioned that relying on grants to cover core expenditure is risky as they are temporary. The underspend will be used to replenish the IT reserve.

A significant point of discussion was the £11.5 million one-off funding provided to schools in the 2024-25 financial year, which comprised £4.5 million for energy costs and a £7 million transfer from the IT reserve for infrastructure and device replacement. This funding has now been provided from April 2025, protecting schools from a potential sharp drop in support.

The report also noted that pay for schools and the education centre has been funded at estimated inflationary rates for the coming year. However, any shortfalls in actual pay decisions, which are made outside the council's structure, would need to be funded from the schools' delegated budget unless additional grant funding is provided by the Welsh Government.

Despite the relative prioritisation of the budget for schools, the report acknowledged that it will be difficult to avoid pressures on schools in the medium-term financial plan. This is due to schools being funded by a formula and local management decisions, which has already led to some schools operating with deficit budgets. A key pressure identified is the increasing demand for learners with additional learning needs (ALN).

The School Budget Forum, a statutory body comprising headteachers, governors, and union representatives, acknowledged that the settlement was better than expected but raised ongoing concerns about curriculum reform, ALN pressures, attendance, and staff recruitment and safety. The forum's response is available in Appendix G of the reports pack.

Additional Learning Needs (ALN) Funding and Provision

A significant portion of the discussion focused on the increasing demand for ALN support. Councillor Mike Day highlighted the £1 million allocated to ALN and questioned how officers forecast future needs. Helen Morgan-Rees, Director of Education, explained that the council has two ALN strategies and is working to understand future needs for specialist places and provision. She noted that the council is expanding places in special schools and reviewing specialist teaching facilities, while also building the capacity of the workforce to support ALN in mainstream settings.

The council is collaborating with health providers and the health board to understand the landscape of ALN, particularly neurodiversity, and the increasing prevalence of certain diagnoses. While acknowledging the exponential growth in demand for some conditions, officers stated they are working to project these needs and provide the required provision in both mainstream and specialist settings.

Kelly added that a new special school is being built with an additional 100 places to keep learners within Swansea. She also mentioned the ongoing review of specialist teaching facilities and the continuous review of the funding formula through the School Budget Forum. Schools are reminded that their entire budget, not just the ALN line, should be used to support all learners. A new database and data officer are being introduced to better track pupils and plan for the 0-25 age group.

Councillor Sandra Joy questioned the justification for centralising ALN and special school provision when decentralisation had previously been pursued to reduce costs. Kelly explained that centralisation aims to reduce the number of learners travelling out of county for provision and allows for consolidated transport, such as using minibuses instead of taxis, which has proven effective.

Robert Smith, Cabinet Member for Education & Learning, added that officers have analysed learner locations and journeys to school, and that the Specialist Teaching Facility (STF) review aims to make efficiencies in transport and improve learner well-being. However, Helen Morgan-Rees cautioned that as demand increases, it becomes difficult to keep costs down, and that while efficiencies are sought, the growing demand for ALN provision means costs will continue to rise.

School Reserves and Financial Stability

The issue of school reserves was a recurring concern. National statistics indicate that Swansea schools generally have higher reserve balances compared to other local authorities. However, if the current rate of reserve depletion continues, more schools are expected to face deficits in the coming years, a situation already prevalent in other Welsh local authorities.

Kelly confirmed that reserves by school are published annually in the Section 52 Outturn Statement. She noted that late grants from the Welsh Government can sometimes increase reserve levels as schools are unable to spend them by the financial year-end. The council reviews the correlation between reserve levels and the funding formula but has found no obvious link.

Councillor Lyndon Jones MBE raised concerns about the rapid depletion of school reserves, with the School Budget Forum reporting a 30% drop in 2022-23 and a further 15% in 2023-24. He questioned the projection for 2024-25 and highlighted a potential imbalance, with some schools holding significant reserves while others are in deficit.

Kelly explained that while the burn rate of reserves is accelerating, projections are often worse than reality due to late grants from the Welsh Government. She acknowledged the uneven distribution of reserves across Swansea, with some schools already in deficit and others holding reserves beyond the recommended 5% of the total school budget. The council is triaging support for schools with dwindling reserves and has licensed deficit positions for schools in deficit, allowing them a period to recover.

Councillor Mike Day suggested the creation of a mutual fund where schools with excess reserves could contribute to help those in deficit, but this idea was not well-received by headteachers. Robert Smith indicated that the council would work with schools to examine staffing structures and expenditure points to identify potential savings.

National Insurance Contributions and Funding

Councillor Mike Day expressed disappointment that a significant portion of the increased funding for schools is being diverted to cover increased national insurance costs. Robert Smith stated that the council is committed to ensuring schools do not lose out as a result of these decisions, which are outside local control. The council is awaiting confirmation from the Welsh and UK Governments regarding compensation for these costs.

Expenditure Per Pupil and Statutory Services

Councillor Sandra Joy raised concerns about Swansea's expenditure per pupil being at the bottom of all local authorities in Wales for 2024-25, despite the announced budget increase. She also noted the School Budget Forum's comment that they do not believe they have enough money to deliver statutory education services.

Robert Smith acknowledged that the statistics indicate lower expenditure per pupil in Swansea but suggested there might be inconsistencies in how these figures are calculated by the Welsh Government. He stated that officers would review the statistics to understand what is included and the impact of factors such as the school estate and average costs.

Helen Morgan-Rees elaborated that while Swansea's overall expenditure per pupil may appear low, the deviation from the average is not substantial. She also pointed out that not all local authorities delegate the same services, and that Swansea's central provision of services like Pupil Referral Units (PRUs) can affect comparative statistics. She stressed that the council is asking a lot of schools and that national funding levels may not be sufficient to meet these demands.

Kelly added that the per pupil spending figures do include home-to-school transport, which can be higher in rural areas. She confirmed that the Welsh Government has been asked to review the comparability of statistical data. She also noted that the £11 million one-off funding provided in 2024-25 was not included in the statistics for that year, which may affect next year's comparisons.

Other Concerns Raised

• School Transport: Councillor Mike Day raised concerns about access to public transport and the hope that centralising transport provision would streamline services.
• School Redundancies: Councillor Angela O'Connor inquired about when more information on school redundancies would be available. Kelly stated that due to the nature of delegated budgets, school redundancies cannot be identified at this level until schools set their budgets.
• Support for Higher Ability Pupils: Councillor Angela O'Connor also asked about plans to support children with higher abilities who may be disengaged due to staff being moved around.
• Education Welfare Officers (EWOs): Councillor Lyndon Jones MBE asked about plans to make EWOs permanent, noting the impact of contract renewals and staff absences on the team's stability. Helen Morgan-Rees assured the panel that making the EWO team as solid as possible is a high priority.
• Safety Measures in Schools: The potential implications of recent security incidents, such as a stabbing in a neighbouring county, on school safety measures and budgets were raised.
• Cabinet Response to School Budget Forum: Councillor Mike Day asked when the leader or cabinet's response to the School Budget Forum's letter would be available. Robert Smith confirmed it would be shared with the scrutiny committee.

The panel agreed to summarise their views and recommendations for feedback to the Cabinet and the Finance Scrutiny Panel. The feedback will be consolidated and presented to the Cabinet.