More Powys schools are in a financial deficit

By Elgan Hearn, Local Democracy Reporting Service

More Powys schools are in financial deficit now than they were a year ago, a report has revealed, and more schools could face closure.

But senior Liberal Democrat and Labour councillors are optimistic and believe school finances are improving slowly. However, they warned that more school closures will be needed to balance the books.

At a meeting of Powys County Council’s Cabinet earlier this month, senior councillors received an update report on schools’ financial position at the end of March and their budget proposals for the financial year.

This year, schools’ share of the council’s £390.5 million budget will be £103.8 million.

This is nearly £10 million more than the £93.9 million which was agreed in the 2025/2026 budget.

The report shows that 32 Powys schools were in a deficit position to a cumulative total of £7.7 million as of March 31, which is up from 23 schools in 2024/2025.

The number of schools posting a surplus is 50 – which is down from 64 last year.

The combined surplus is £4.5 million, which is less than the £5.8 million recorded in 2024/2025.

Despite all the work to redress school finances, the report also showed that historic deficits in schools have risen from £3.7 million in 2020 to £7.6 million by the end of 2025/2026.

Education portfolio holder Cllr James Gibson-Watt (Liberal Democrat – Glasbury) said: “In general, it shows an improving position but one that the council should remain concerned about and poses a significant risk.

“There are more schools now returning in-year balanced positions.”

This means that they are living within their means – but unable to bring down any historic deficits.

Cllr Gibson-Watt explained that some primary schools have a surplus which “skews the figures.”

This is because, under the rules, a school cannot keep money in reserve and is expected to provide plans on how it will be spent during the year.

Cllr Gibson-Watt continued: “The funding formula is being fully funded and that is stabilising the secondary sector – but again doesn’t mask the longer-term concerns.

“There is a message hidden within the report: we have falling pupil numbers and yet the authority is having to increase funding to our schools.

“That is telling us we have an unsustainable system in the long term unless we make some of the uncomfortable transformational changes.”

He added that the deficits carried by the county’s high schools would not be paid down by “shaving bits off” their budgets and that structural change was needed to enable them to be funded properly.

Finance portfolio holder Cllr David Thomas (Labour – Tawe Uchaf) said: “An in-depth analysis does point to the fact that the situation is stabilising.

“I would prefer to see them stabilising at a more rapid rate; the picture nationally in Wales as a whole is one of deteriorating budgets.”

He stressed that schools need to focus on their “in-year” budget position and act so that their total deficits do not get worse.

Cabinet member for children’s social services and Welsh, Sandra Davies (Labour – Cwm Tawe), welcomed the package of support the council has given to schools.

Cllr Davies added that she is “very concerned” about the schools in deficit and “our shrinking population.”

Cabinet then noted the report.