Council searches for answers as schools face budget crisis

Alec Doyle, Local Democracy Reporter

The number of schools falling into debt in a north Wales county looks set to double by April next year, according to the latest education budget report.

The situation is not being helped by the fact that schools in Wrexham are also having to foot the bill for £671,000 of teaching staff redundancy pay from this year’s budgets in order to reduce their costs in the medium-term.

Wrexham County Borough Council’s Lifelong Learning Scrutiny Committee will consider the data and make recommendations to the Executive Board on how it might avert a crisis in education across the borough on Wednesday, November 26.

That’s when the latest Schools and Education and Early Intervention Budget Update – a joint report by  the education and finance departments – will go before the committee.

It will show councillors that this year 31 schools are expected to request a licensed deficit – where their spending is higher than their budget. Typically they are given assistance from the council and have three years to get their spending back in-line with their budget allocation.

Last year there were 16 schools in a licensed deficit. In 2023/24 there were 14.

The total individual school budget across Wrexham is projected to be in deficit by almost £3 million by April 2026. That is 4.8 million down on last year when overall the schools budget was in the black to the tune of £1.8m.

The report highlights that Wrexham is part of a national trend, as last year eight of Wales’ 22 local authorities showed negative school budget balances.

In the report it does indicate that the authority is taking action to manage the situation.

“Senior finance and education officers are monitoring school budget positions closely,” it said. “There is a monthly monitoring meeting which includes the Lead Member for Education and Early Intervention where the current financial position of every school is reviewed.

“Where necessary, relevant escalation and intervention procedures take place, where a school’s financial position is deviating from their submitted budget plan for the financial year.”

Cost reduction 

Part of that financial management is cost reduction. As a result for a number of years schools have been reducing the number of staff as pupil numbers have fallen and budgets tightened.

Redundancy costs in recent years have been settled with a ringfenced fund set aside by the council outside of the schools budget.

Initially £200,000, it has previously been extended if required to help schools manage challenging budgets by not having to pay full redundancy costs out of existing budgets.

But according to thre report this year there are no plans to extend the provision beyond £200,000. With schools facing a redundancy bill of £817,000, it means that over £600,000 of additional budget pressure will sit with schools this year.

“During the 2024/2025 financial year a total of 40 staff left their positions within schools as part of this process,” says the report.

“The leaving costs associated with these staff totalled £403,976. The funding for these costs was met via the £200,000 set aside from school budgets at the start of the financial year as per normal practice. The balance of £203,976 was met by the council in order to support schools with this process.

“For the 2025/2026 financial year to date a total of 53 staff have left their posts within schools. The leaving costs associated with these departures totals £871,456.

“The funding is being met with £200,000 set aside from school budgets at the start of the year as per normal practice. The balance of £671,456 is currently being met from the individual school delegated budgets.”

Recommendations

Councillors will make their recommendations at committee on Wednesday.

Meanwhile the situation across Wales is becoming so dire that the Welsh Local Government Association has written to Education Cabinet Member Lynne Neagle MS appealing for more support for schools.

“We urge you to review the issues, particularly those concerning rising Additional Learning Needs (ALN) demands, underfunded pay awards, increased pension contributions and ongoing inflationary pressures, all of which are contributing to mounting school budget deficits and an unsustainable reliance on reserves,” it wrote.

“Additionally, we ask that careful attention be given to the need for urgent investment in workforce, transport, specialist provision and school infrastructure.

“This will help ensure the sustainability and quality of education services, while also supporting compliance with critical policy goals, such as achieving net-zero carbon targets.”