Budget Transfer: Central Contingencies to Education Department (2016 Voluntary Release Scheme Costs)

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A decision made 20 July 2016:

Decision reference: MD-ESC-2016-0021
Decision Summary Title:	Allocation of Central Contingencies – Redundancy Provision to the Education Department to fund the Voluntary Release Scheme in 2016.		Date of Decision Summary:	6th July 2016
Decision Summary Author:	Finance Manager		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Allocation of Central Contingencies – Redundancy Provision to the Education Department to fund the Voluntary Release Scheme in 2016.		Date of Written Report:	6th July 2016
Written Report Author:	Finance Manager		Written Report : Public or Exempt?	Public
Subject: Central Contingency funding allocation to the Education Department to fund the Voluntary Release Scheme in 2016.
Decision(s): The Minister agreed the amount and requested that the Minister for Treasury and Resources approve a non-recurring budget transfer of £88,745.56 in 2016 from Central Contingency – Redundancy Provision to the Education Department revenue head of expenditure to fund the Voluntary Release Scheme.
Reason(s) for Decision: Article 17(2) of the Public Finances (Jersey) Law 2005 states that the Minister for Treasury and Resources is authorised to approve the transfer from contingency expenditure to heads of expenditure of amounts not exceeding, in total, the amount available for contingency expenditure in a financial year. On 16th and 17th April 2015, the Council of Ministers agreed to the request to approve non-recurring funding in 2015 totalling £5,100,000 from the Central Contingency – Redundancy Provision to various departments for the funding of the Voluntary Release Scheme. This request is to fund the next tranche of VR Applications to 30th June 2016.
Resource Implications: The Education Department revenue head of expenditure to increase by a total of £88,745.56 in 2016 and the Central Contingency – Redundancy Provision funding to decrease by an identical amount. This decision does not change the total amount of expenditure approved by the States for the period of the current MTFP 2016 to 2019.
Action required: The Minister for the Education Department to seek approval from the Minister for Treasury and Resources in accordance with Financial Direction 4.3 – Contingency Allocations to heads of expenditure, for the above described budget transfer.
Signature:		Position: Deputy Rod Bryans Minister for Education Department
Date Signed:		Date of Decision:

Budget Transfer: Central Contingencies to Education Department (2016 Voluntary Release Scheme Costs)

Education Department

Ministerial Decision Report

ALLOCATION OF CENTRAL CONTINGENCIES – REDUNDANCY PROVISION TO THE EDUCATION DEPARTMENT TO FUND THE VOLUNTARY RELEASE SCHEME IN 2016.

Purpose of Report

To enable the Minister to agree the amount and to request that the Minister for Treasury and Resources approves a non-recurring budget transfer of £88,745.56 in 2016 from Central Contingencies – Redundancy Provision to the Education Department revenue head of expenditure to fund the Voluntary Release Scheme.

Background

The Voluntary Release (VR) Scheme provides a mechanism for employees who wish to volunteer to leave the organisation through redundancy or early retirement to receive a redundancy payment or immediate pension. The scheme was made available to all employees in 2015 and closed at the end of July. As at the 31st May 2016 a total of 502 applications for VR had been received (329 in 2015 and 173 to date in 2016) and a total of 155 had been approved. The scheme remains open for the foreseeable future in order to support organisational change initiatives.

The Council of Ministers approved the allocation of £2,000,000 from Central Contingencies to create a Redundancy Provision in 2015 to fund the first tranche of the scheme. The States Assembly approved a further £20,000,000 to be added to the Redundancy Provision across 2015 and 2016 to be funded by transfers from the Strategic Reserve Fund with £4,000,000 to be transferred in 2015 and £16,000,000 in 2016. Following the completion of the 2015 VR scheme the remaining money was drawn down for funding of new applications in 2016. In total this left over £17 million available for VR funding from January 2016.

International Financial Reporting Standards (IFRS) interpreted for the States of Jersey in the Jersey Financial Reporting Manual (JFReM) require termination benefits to be recognised as an expense at the point at which the entity can no longer withdraw the offer of those benefits. Accordingly, the full cost of all VRs must be recognised at the point a binding contract has been signed with the employee.

The total cost of the approved VR packages for the Education Department in 2016 is £88,745.56. The recurring saving achieved as a result of releasing these employees will be £62,511.71 and 1.6 FTE.

Recommendation

The Minister is recommended to agree the amount and request that the Minister for Treasury and Resources approves a non-recurring budget transfer of £88,745.56 in 2016 from Central Contingency – Redundancy Provision to the Education Department revenue head of expenditure to fund the Voluntary Release Scheme.

Reason for Decision

Article 17(2) of the Public Finances (Jersey) Law 2005 states that the Minister for Treasury and Resources is authorised to approve the transfer from contingency expenditure to heads of expenditure of amounts not exceeding, in total, the amount available for contingency expenditure in a financial year.

On 16th and 17th April 2015, the Council of Ministers agreed to the request to approve non-recurring funding in 2015 totalling £5,100,000 from the Central Contingency – Redundancy Provision to various departments for the funding of the Voluntary Release Scheme.

This request is to fund the next tranche of VR Applications to 30th June 2016.

Resource Implications

The Education Department revenue head of expenditure to increase by a total of £88,745.56 in 2016 and the Central Contingency – Redundancy Provision funding to decrease by an identical amount. This decision does not change the total amount of expenditure approved by the States for the period of the current MTFP 2016 to 2019.

Report author :	Document date: 6th July 2016.
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