A council is planning to dip into its reserves to balance its budget this year's finances with school funding needs much higher than expected.

Rutland County Council had set a budget for £52.023m for the 2024-25 financial year to spend on services, with the bulk of this (£33.8m raised through council tax) but in its quarter two finance report published today, it predicts it will spend £53.222m. 

The money will be taken out of reserves that the authority has set aside to cover overspends, with the bulk of the unfunded costs (£563,000) due to the local plan. The authority had £26.9m in reserves in March but predicts this safety net will have shrunk to £18.4m by March 2028. 

After the reserves have been taken to fill the budget gap this year, the authority currently predicts it will have a small £30,000 overspend. 

The authority is also midway through a savings programme and is restructuring departments to cut the costs. 

Outside of this budget, the authority is also facing a significant overspend in its schools budget, primarily due to the extra costs in the high needs block. The overall schools budget provided is £9.3m – which is after the monies passported to academies – but the authority predicts it will spend £2.3m more than it has been granted by central government.  

The cost of providing high needs services was estimated to be £5.7m but will likely come in at around £7.9m This will add to the £3m that the schools budget is already in deficit, making it £5.3m overspent. Currently councils can carry a deficit in their schools budget, but current policy says this comes to an end in 2026 and local authorities may be faced with paying the money back. 

The report says: "In summary, in the absence of financially modelled plans that 'make good' the deficit over the period up to March 2026, the risk remains that the council will be required to fund all previous year overspends from its own general fund resources. Overspends have been incurred since 2018/19 as expenditure is greater than the grant received from the Department for Education. Using the projections shown in the following chart, the deficit may have grown to £7.0m by the end of 2025/26 when the override is removed."  

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Like most local authorities, the council is facing a tough time, with the cost of services increasing due to inflation pressures and the demand for services increasing. 

An upside is that the authority has received £568,000 more than thought in payments from investment, although partly this is due to having large capital sums in the bank due to some projects being delayed and the money in the bank not being spent. 

The finances will be discussed by the Liberal Democrat led cabinet on Tuesday, November 12.