1. FINANCIAL TRAINING FOR ELECTED MEMBERS

2. THE ROLE OF FINANCE

3. Section 151 Officer Section 151 of the Local Government Act 1972 requires that every local authority in England and Wales should “... make arrangements for the proper administration of their financial affairs and shall secure that one of their officers has responsibility for the administration of those affairs”

4. Section 114 unlawful expenditure or unbalanced budget Requires a report to all the local authority’s members to be made by that officer, in consultation with the Monitoring Officer and Head of Paid Service, if there is or is likely to be unlawful expenditure or an unbalanced budget.

5. The Local Government Act the full council meeting has a statutory role to set the authority’s policy framework as well as approving the budget and setting the council tax. local authorities will need to ensure that the S151 Officer and the Monitoring Officer have access as necessary to meetings and papers and that members must consult with him/her regularly.

6. Financial Services Assists managers to manage their budgets; Provides technical advice on accounting law; Provides budget monitoring information to Committees & Management Board; Prepares the Statutory Accounts; Treasury Management activity; Financial systems, creditors and debtors; Cashiering, insurance, housing benefits subsidy, asset management,and financial support.

7. Internal Audit (South West Audit Partnership) Role: Independent appraisal of risk and internal control systems. Reports on adequacy of systems of financial, managerial and operational control. Ad hoc reviews.

8. Internal Audit Will report on: – relevance of policies, plans and procedures; – extent of compliance; – extent of risk exposure; – adequacy of guidance; – extent that assets and interests are safeguarded; – reliability and integrity of financial and management systems (incl. computer systems); – actions taken to remedy identified weaknesses.

9. FINANCING LOCAL SERVICES

10. The Legal Position Full Council must approve the budget. Delegation of responsibility for monitoring to the Executive. Policy changes should be reflected in budgets. Scrutiny can call in reports.

11. Setting the Budget A Medium Term Financial Strategy and a five year Plan. Annual balanced budget now an ongoing exercise to look for budget savings. Efficiency agenda Assess income due and compare to planned expenditure. Assess funds available for new capital schemes through capital strategy.

12. Potential Budgets

13. Use of Revenue and Capital Resources Revenue funds can finance both revenue and capital. Capital resources can only be used for capital schemes. De-minimus £10,000 (£500 for capital grants)

14. Funding Revenue Budgets

15. Fees and Charges Planning fees Car parking Licencing Trading – Octagon – Markets – Property

16. Borrowing and Investments Prudential Code Approximately £42million investments including cash flow “Debt free” Investments will raise £0.8 million in interest in 2011/12

17. Council Tax Local control but …… gearing Banding system Community consultation/referendum Council tax freeze grant

18. Gearing Current Budget £10 million Council Tax £ 1 million Plan Budget £11 million (+ 10%) Council Tax £ 2 million (increase of 100%)

19. Council Tax Billing Council tax bands set by central government. Council tax rates set by local councils. Discounts, exemptions and reductions set by central government but with some local discretion. 2 nd homes and empty property rates

20. Where my Council Tax Goes

21. Council Tax Collection Billing authorities are Metropolitans, Unitaries, and Districts. Bills delivered before 1 st April. Legislation prescribes collection process – some local discretion. All funds collected go into Collection Fund and redistributed to precepting authorities. Collection rate 2010/11 98%.

22. Assets and Capital SSDC asset holdings Levels of investment (past, current, future) Capital Strategy Asset Management Plans

23. Government Grant Assessment of need through 4 block model Formula Grant = RSG + NNDR Damping “Spending Power” £1.4 million cut in 2011/12 £0.9 million cut for 2012/13

24. MANAGING FINANCES EFFECTIVELY

25. Balancing the Revenue Budget Income Due Fees and Charges Council taxes Formula grant Use of balances Other grants Planned Expenditure Start with this year’s budget Add inflation/pay increases Inescapable commitments Corporate Plan bids Identify savings

26. 2011/12 Budgets Revenue Budget £17.3 million net. £81.9 million gross. Capital Programme £5.3 million.

27. The Capital Programme Capital Strategy. Existing schemes reviewed to ensure funding remains accurate. Priority given to essential schemes e.g.maintenance of existing facilities and assets. Capital Appraisal procedures and project management process All bids assessed through a scoring methodology.

28. Approving the Budget In February and should include: council tax increase and amounts for each band; totals delegated to Assistant Directors/Managers; levels of balances and reserves; statement of robustness of budget and adequacy of reserves.

29. Criteria for Good Financial Standing Consistency year on year. Appropriate general fund balance based on financial risks. Specific reserves. Clear annual audit opinion.

30. Good Financial Management Clear officer delegation. Regular monitoring by Management Board. Regular monitoring by Executive. Clear virement rules.

31. Financial Management Guidance and Law Financial Procedure Rules Procurement Procedure Rules CIPFA Code of Practice Local Government Acts

32. Understanding the Committee Budget Reports Reports show movements from the original budget approved at the beginning of the year Levels of balances and reserve Areas of risk Partnerships Virements requiring approval and noting

33. Projecting figures for the year end Under Financial Procedure Rules, managers cannot overspend Predictions for variations Managers should manage fluctuations within resources … cont’d

34. Reserves and Balances Types – Working balances – Provision for specific purposes – Delegated to Committees Level – Strategy – Risks Balanced budget (MTFP)

35. TREASURY MANAGEMENT

36. Treasury and Cash Management Short term cashflow management. Long term borrowing strategy. Long term investment strategy.

37. Aims of Treasury Management Strategy Sets limits for borrowing. Prudential Indicators. Minimise interest payable and maximise interest receivable. (Note - protection of the capital sum is paramount). Control and management of the risks.

38. Managing the Risk Members approve the Treasury Management Policy and Strategy Statement annually. Senior officer responsible for processes and procedures. Adequate officer time input into the activity. Regular reports to Audit Committee and full Council. Effective performance management and comparison.

39. Managing Funds In-house management Borrowing External consultants

40. Types of Investment Term Deposits Gilts Eurobonds Floating Rate Notes Money Market Funds Reserve Accounts Cash DMADF

41. Importance of Treasury Management to SSDC On average, £40+ million invested. Supports Revenue Account - budgeted income £0.8 million. An increase of 3% in interest rates would double our income. Currently 5% of net budget.