Deficit schools offered council loans

09/08/2012 @ 09:24

Two Welshpool area schools are among 12 in Powys to be offered a 10-year council loan in an attempt to tackle their budget deficits, which total more than £1.7m.

Leighton Primary Schoool has a deficit of £22,394 while Llandysilio Prtimary has a figure of £2,758. The county’s wortst performer is Brecon High School where there is an accumulated deficit of 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 September 30. 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.

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.

Unlicensed school deficits