2007 Budget Transfers and Additional Funding.

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A decision made (04/02/2008) regarding: 2007 Budget Transfers and Additional Funding.

Subject:	2007 Budget Transfers and Additional Funding
Decision Reference:	MD-ESC-2008-0003	Exempt clause(s):		none
Type of Report (oral or written):	Written	Person Giving Report (if oral):		n/a
Telephone or e-mail Meeting?	n/a	Report File ref:
Written Report – Title:	Budget Adjustments - 2007	Written report – Author:		J. Littlewood, Head of Finance.
Decision(s): The Minister approved the transfer of the sum of £500,000 from the Education, Sport and Culture Department’s revenue budget to the Department’s capital head of expenditure relating to the ICT strategy phase II. The Minister approved the transfer of the sum of £60,000 from the Education, Sport and Culture Department’s capital budget C2571 and the sum of £450,000 from budget C2574 to the Department’s capital head of expenditure relating to the ICT strategy phase II. The Minister agreed to request the transfer of £298,000 from the Treasury and Resources Department to the Education, Sport and Culture Department’s revenue budget in respect of the operating deficit of the Waterfront Pool in 2007. The Minister agreed to request the transfer of £250,000 from the Treasury and Resources Department to the Education, Sport and Culture Department’s revenue budget in respect of the overspend on Student Finance in 2007.
Reason(s) for decision: Funding for the part of second phase of the ESC department’s ICT strategy was identified in the revenue budget of the department for 2007. Financial Direction 3.6 requires that the Minister make application to the Minister for Treasury and Resources for permission to transfer budgets between revenue and capital heads of expenditure. Further funding was identified in 2006 from a number of capital projects that were nearing completion but were which not yet available for transfer – funding is now available from those projects. Financial Direction 3.6 requires that the Minister make application to the Minister for Treasury and Resources for permission to transfer budgets between capital heads of expenditure. In order to provide for the 2007 deficit funding for Serco in respect of the Waterfront Pool in the 2007 accounts it is necessary to reflect the expected out-turn as a creditor and transfer a budget from Treasury and Resources to cover the payment. In 2006 a number of reports were considered by the Ministers for Education, Sport and Culture and Treasury and Resources and the Council of Ministers concerning the future funding requirements of the Student Finance scheme. A student loans scheme was introduced to share the future funding requirement between the States, Parents and Students, but it was accepted that expenditure may exceed available budget in 2007. Accordingly, funding originally identified for vocation education in the sum of £1,000,000 was authorised to be allocated to the Student Finance scheme and the Treasury and Resources department set aside a reserve of £620,000 to cover any further deficit in 2007. The final figure for the scheme for 2007 indicates an overspend of £250,817 and it is requested that the sum of £250,000 is transferred from the reserve to cover this. These proposals have no additional financial or manpower implications on the States other than those already identified within the relevant resource allocation processes.
Action required: To transfer the identified revenue and capital budgets to vote C3314 – ICT Strategy phase II; To submit a request for the transfer the sum of £298,000 to the ESC department’s revenue budget in respect of the Waterfront Pool; To submit a request for transfer the sum of £250,000 to the ESC department’s revenue budget in respect of the Student Finance scheme.
Signature:			Date of Decision:

2007 Budget Transfers and Additional Funding.

Department for Education, Sport and Culture Report for Minister
Subject:	Budget Adjustments - 2007
Exempt Clause:	None	Date:	25 January 2008

Authors:	John Littlewood – Head of Finance

Introduction

The purpose of this report is to ask the Minister to approve the year end budget transfer in respect of ICT funding and to seek additional funding in respect of the Waterfront Pool deficit and the overspend on Student Grants.

Background

The Minister will recall that the issue of how to fund the ICT replacement programme and phase II of the ICT strategy has been on the agenda since the first phase of the strategy commenced in 1999. Future funding has now been identified within the States central IT vote, however, an amount of £500,000 was identified within the 2007 revenue budget of the ESC department and this needs to be transferred to capital expenditure.

In 2005 it was agreed that revenue and capital balances could be used to fund items from phase II of the strategy including enhancement of the existing wide area network, replacement of items bought during phase I of the strategy that were reaching obsolescence and developing new uses for the technology.

2007 Funding

2007 revenue funding for phase II of the strategy has been identified as follows:

ICT section budget 350,000

Schools (top-sliced) 150,000

Total £500,000

In order to move this funding to the correct capital project, it is necessary to request the permission of the Minister for Treasury and Resources in accordance with Financial Direction 3.6 “Variations to Heads of Expenditure”.

Provision was made for a further £510,000 funding from capital once the final payments had been made on the three projects concerned. It is requested that the following sums are also transferred for the year ended 2007.

FP Sports Facilities £60,000

Hautlieu £450,000

Note: originally £300,000 had been identified from the Hautlieu project, however, a mispost of expenditure between that project and d’Auvergne has resulted in a higher underspend on Hautlieu and the budget being fully committed on d’Auvergne. As such, the funding of £150,000 that was to have come from d’Auvergne is now to come from the Hautlieu project.

Also as a result, £150,000 budget and £150,000 expenditure on d’Auvergne is still shown in the books of the ESC department, although this project has been transferred to States Property Holding. In order to regularise the position it is suggested that both the expenditure and budget are transferred to Treasury and Resources in 2008 to correctly identify the full expenditure and budget on that project.

Financial Position at 31 Dec 2007

A summary of the financial position is shown below:

	Budget £	Expenditure £
Brought forward 1 Jan 2007	1,844,697	1,496,623
Capital Projects transferred 07	510,000	-
Revenue transfer	500,000
Expenditure 2007		396,135
Out-turn position 2007	2,854,697	1,892,758

Figures in italics indicate transfers proposed in this report.

Waterfront Pool

The latest accounts from Serco (Jersey) Limited indicate an overspend of approximately £298,000 in respect of the operation of the Waterfront Pool for the year 2007.

The Waterfront Pool was transferred to the administration of the Department for Education, Sport and Culture (ESC) from the Waterfront Enterprise Board in the early part of 2005. At that time a commitment was made by the then Finance and Economics Committee that deficits (which are contractually bound to be paid to Serco) would be funded centrally and that there would be no adverse affects on the ESC budget.

The loss for 2006 was £275,456, which was paid to Serco in the early part of 2007 and a budget of £275,000 was transferred from T&R to cover this payment. A creditor was raised at the end of 2006 to correctly account for the deficit in that year.

Funding for 2009 has been agreed as an addition to the budget of the ESC department; however, for 2007 and 2008 the budget remains within the capital allocation held by the Treasury and Resources department. As such, the Minister for ESC is asked to request the funding from T&R in order that the expected deficit may be accounted for in 2007.

A further paper detailing the financial position of the Waterfront Pool will be presented to the Minister prior to any payments being made to Serco.

Student Finance

Final adjustments have now been made to account for the expected payments to Universities in respect of the Autumn Term 2007. In total, the student finance budget is overspent by £250,817 which is slightly lower than expected. This variance from forecast has not yet been fully analysed, but it appears that the number of students in the UK is slightly lower than forecast. An increase in parental incomes, the new loan system and choices of course type may also have had an effect on the total spend.

The States Treasury has a sum of money available for funding the shortfall on student finance and it is requested that the Minister approves a request to the Minister for Treasury and Resources for additional funding in the sum of £250,000 to cover the shortfall for 2007.

It is expected that the expenditure for 2008 will be maintained within budget assuming that predictions on student numbers for the Autumn Term 2008 are accurate.

Recommendations

It is recommended that the Minister:

notes the position with regard to ICT strategy expenditure for 2007;

requests the Minister for Treasury and Resources to approve the transfer of budgets totalling £500,000 from the ESC department’s revenue budget to capital in respect of the ICT strategy phase II;

requests the Minister for Treasury and Resources to approve the transfer of £60,000 from C2571 (FP sports facilities) to C3314 (ICT strategy II) and £450,000 from C2574 (Hautlieu) to C3314;

requests the Minister for Treasury and Resources to approve an additional budget allocation from the Waterfront Pool capital reserve to the ESC department’s revenue budget in the sum of £298,000 in respect of the operating deficit for 2007;

requests the Minister for Treasury and Resources to approve an additional budget allocation of £250,000 in respect of the shortfall on the Student Finance budget;

notes the future funding positions with regard to 2008 and beyond in respect of the above transfers.

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