Powys council loans to tackle schools' £1.7m deficit

Twelve Powys schools are to be offered a 10-year council loan in an attempt to tackle their budget deficits, which total more than £1.7m.

Schools are allowed some overspend, but Brecon High School's accumulated deficit stands at more than £700,000.

Powys council is to offer four secondary and eight primary schools the loan and is demanding they draw up recovery plans by 30 September.

The council said schools were taking steps to tackle the problem.

The local authority is reacting to demands by the Welsh school inspection service Estyn to take action against schools with large unlicensed deficits.

Primary schools in the county are allowed to go over budget by a maximum of £50,000, or 5% of their budget.

Secondary schools are permitted an overspend by a maximum of £100,000 or 7.5% of their budget.

The four worst accumulative deficits are at Brecon High School, with £704,012, Builth Wells High School, £269,690, John Beddoes School at Presteigne, £245,787 and Ysgol Maesydderwen in Ystradgynlais, £233,282.

Powys council said the deficits were partly due to falling pupil numbers. Schools are paid for each pupil, but problems arise when they fail to adjust their budgets when numbers drop.

A council report said with effective planning, Brecon High School was capable of repaying around £50,000 a year, although its governing body believed the deficit was partially the responsibility of the council.

"The council's policy framework is very clearly not to write off deficits," the report said.

"However, the recovery of accumulated deficits needs to be sensitive to the need to protect and improve the education provision for current and future pupils."

The council said schools with unlicensed deficits who accepted the loans would have to pay interest charges.

The report added: "The loan will effectively discharge the deficit and set the school on a more positive financial footing.

"The period of the loan will be negotiated with each school on the basis of a realistic recovery plan. In no circumstances will the period of the loan exceed 10 years."

The loan agreement will allow schools to pay off their debt earlier.

David Meredith, the chairman of Brecon High School's governors, declined to comment until after a meeting with the council.

He said: "Representatives of the school's governors are meeting the council in about 10 days and we will make a response after that meeting."

The council report said Maesydderwen school had plans in place which could clear its deficit by the 2016 financial year, while John Beddoes proposes to cut its cumulative deficit to £91,000 by 2014-15.

The report added that Builth Wells school should be in surplus this year, but there were unresolved issues with its ongoing plan, although it showed a reducing deficit.

Last year a majority of teachers at Brecon High School took strike action against planned compulsory redundancies, and the NASUWT union accused the school's governors of financial mismanagement over a £650,000 deficit.

At the time, the head teacher said the school had more staff than it needed.