Grant-maintained schools which hold back money in their bank accounts at the end of the year could be penalised under new powers given to the Funding Agency for Schools.
The FAS will be able to take into account excessive surpluses held when determining a school's grant. The powers will come into force if a school is found to be holding back 20 per cent of its turnover. The FAS will consult the school's governing body to ensure the money is being held back for a particular and proper purpose. This gives the FAS a power local education authorities do not have.
According to a recent survey by the National Association of Schoolmasters Union of Women Teachers, schools in England and Wales have more than Pounds 808 million unspent from their budgets. The union analysed the budgets of 17, 868 schools in 199495 and discovered that unspent balances have risen by 6. 45 per cent from Pounds 27,459 to Pounds 29,230 per school.
While these figures are for LEA schools, the NASUWT says that GM schools hold on average larger balances, even when their extra spending responsibilities are taken into account.
However, the full figures are not publicly available. In the FAS's evidence to the School Teachers' Review Body, Michael Collier, the chairman, said GM schools balances were getting smaller. The average total reserve for all schools was Pounds 91,000 from 199394, Pounds 89,000 from 1994-95 and he estimated the average for 199697 would be Pounds 70,000.
A spokesman for the FAS said: "GM schools are allowed to carry forward whatever of their grant income they choose, but we do not want the build-up of excessive balances. Therefore we will question a school which is carrying over more than 20 per cent and it will be required to provide evidence to support its case for keeping the money back."
This would mean, for example, that a school would have to forward an architect's plan if the money was for a proposed building project or give other evidence of work in hand.
David Whitbread, education secretary of the Association of County Councils, said that while some councils may wish to have a similar power, most would prefer to be able to work from a formula which allows more judgment and is tailored to a school's needs.
Pauline Latham, chairman of the Standing Advisory Committee for Grant-Maintained Schools, welcomed the new regulations. She said: "Schools that are given public money should make sure it is spent on the pupils it is meant for and not for the future."
Ms Latham said she doubted that many schools would have seriously underspent. A survey carried out by The TES last year revealed that more than 50 GM schools were living on overdrafts agreed with by the FAS.