Five reasons to reply to the school funding consultation

Your school budget could be affected – have your say

Most people agree the current school funding system is unfair, especially those who see other schools, with a similar profile to theirs, getting more money simply because of historic decisions by the local authority they are in. The government has been trying to do something about this for some time.  Now they are tackling it – at a time of austerity, which makes it much more difficult.

DfE has published a consultation on the Schools and High Needs (SEND) proposals, with responses invited by 17th April. This doesn’t tell you the details of what will be in the new formula for school or High Needs budgets; a second stage consultation on that will be published later. This first stage is more about the principles and the structure of the new formula. Nor does it say anything about Early Years, which will be the subject of a separate consultation later this year.

Even if you only tick the Yes/No boxes, please respond to DfE with your views, as this could influence decisions in the next stage. If you would like a summary of the consultation content and some guidance on issues to consider when replying, click this link: Ask for your PDF Guide

The DfE response forms can be found at:

https://consult.education.gov.uk/funding-policy-unit/schools-national-funding-formula

and https://consult.education.gov.uk/funding-policy-unit/high-needs-funding-reform

So, why should you reply to the consultation? Here are five reasons.

Reason No. 1: It will change how much money your school receives

Because the government hasn’t provided a magic pot of money to bring all the schools that are currently underfunded up to the right level, it has to reduce budgets for schools that are currently better funded.

The Chancellor has provided an extra £500m over the next 3 years to help speed up the rate of increases for those that need to gain. However, that won’t prevent some schools from losing money, as the intention is to move everyone to a needs-based funding system, based on a new National Funding Formula (NFF). There will be a two-year transition to this with schools being directly funded by government from 2019/20.

From 2017/18, the amount each school should get will be calculated using the NFF, with a single value for each factor within it. This is in contrast to the current variation in factors and values across the country. This means there will be winners and losers for individual schools as well as at local authority level.

The factors in the NFF will be similar to those that local authorities can use now, except for pupil mobility and post-16 adjustments. The money currently given out for looked after children in school budgets will be transferred to the Pupil Premium Plus for Looked After Children.

So what will this all mean for your school’s budget in the long term? That will depend on what you currently get from the local authority (for academies your GAG is replicated from the local formula) compared to the NFF calculation.

Protection against losses

The changes won’t all happen at once. There will be a phasing in of both losses and gains over a period (as yet unknown). For those losing money, the Minimum Funding Guarantee will still provide some protection, but we are waiting for the second consultation to find out at what level it will be set. At present the maximum loss is -1.5% per pupil per year, but it could get worse if government wants to speed up the movement of funds to schools that need more funding.

Depending on how many schools lose funding, the Minimum Funding Guarantee (MFG) might be unaffordable. In that case, schools gaining won’t see all of their increase straightaway – gains will be ‘capped’ at a level that helps to cover the cost of the protection for losses. The MFG and capping will be worked out nationally, not locally.

Transition to the new system

For the first two years of the new system, i.e. 2017/18 and 2018/19, your local authority will receive the aggregated total of all the school-level NFF calculated budgets for its area. This will be its Schools Block allocation. It will still be able to run a local formula using the same factors as now, to help it redistribute some funding like rates, PFI costs and pupil number growth where the need might be slightly different to the assumptions in the national formula. It can also still fund pupil mobility during this time, though not the post-16 adjustment.

But the local formula must add up to the exact total in the Schools Block allocation (i.e. this amount must be ‘passported’ to schools intact). DfE recognises that where local authorities are receiving less money than before, it might be very difficult to balance a local formula. So the proposal is to let local authorities take more money from schools losing funding than the national MFG would allow during these two years. A poisoned chalice indeed!

Reason No. 2: Government will take control of school funding

Now you understand more about what the new system is, let’s consider what it really means aside from the impact on individual schools.

There is no doubt that the under-funding of some schools needs to be addressed if their needs really are as high as others receiving more funding for the same sort of children. The need for an objective formula to even out the more extreme variations is pretty obvious.

But can a national formula truly recognise the needs of every type of school in every type of area? Even if you could find two schools that are exactly alike in their profile of children and school circumstances (which seems doubtful), will they each receive sufficient funding to meet their children’s needs in their own unique ways?

What it really means

The conclusion that the government has reached is that a fully centralised system is the solution. It wants a pure model where after two years, it will have total control over the funding for every school in the country. There are evident parallels with the push for total academisation and the removal of the local authority role in school improvement.

You can see the logic: if local areas can move money around, there is a risk of not achieving parity between similar schools in different areas. But the issue is the balance between simplicity and fairness. A truly fair formula can’t be simple, because it needs to take into account specific needs in particular areas.

Every area has local priorities, and a balance needs to be struck that sees schools receive sufficient funding to meet needs. There are some exceptional circumstances that are currently funded, but as government tries to simplify the formula further to make it easier to operate centrally, some of these may disappear.

The worrying question is what will happen when the government has total control over funding for every school from 2019/20 onwards? What decisions will it take on funding for particular types of school? Will some be at risk more than others: small schools, those with high pupil mobility that isn’t recognised, those in highly deprived areas, schools with PFI contractual commitments?

Central budgets within DSG

The central budgets that are currently agreed by the Schools Forum will be moved to a new Central Schools Block, and redistributed on a per pupil amount, with the intention to wind down as many of these as possible. These include funds for schools in financial difficulty. This means that in future there may not be a safety net for schools that need transitional support while they address problems in their budgets. The government of the day will have free rein to decide who survives and who doesn’t.

There is one irony in this: Multi Academy Trusts receive all the funding for academies in their area and can redistribute it among them according to the Trust Board’s priorities. As more schools become academies, this alone will frustrate the government’s intention to achieve parity between similar schools. But even MATs could find that there simply isn’t enough money to keep their academies viable.

Reason No. 3: Funding for SEN and Disabilities is at risk

There will be a national formula for high needs as well as for school budget shares/GAG. The consultation outlines a set of factors proposed for this:

  • A basic entitlement per pupil in a specialist place
  • Child population aged 2-18 (said to be a ‘substantial factor’)
  • Children Not in Good Health indicator and Disability Living Allowance
  • Low attainment (below L2 in reading at KS2 and below 5 A*-G GCSE grades at KS4)
  • Deprivation (single census FSM and IDACI)
  • 2016/17 spending level on high needs (phased out over at least 5 years)

There will be a separate formula for Alternative Provision based on population and deprivation, and Hospital Education will continue to be funded on current spending levels until better data on hospital inpatient data can be explored.

It is questionable whether the most complex needs can be funded through proxies like these given the unpredictable incidence of some types of SEND. As for the NFF, the real impact will only be known when information is made available about the proposed values, particularly in relation to the weighting given to population which could mean a large proportion of funding would not be targeted to needs.

Rising demand for specialist places

The timing of data for the basic entitlement factor for pupils in specialist places (January 2016 for 2017/18 financial year) means that funding won’t take into account new places in September 2016, let alone September 2017. The value for this will be set at only around £4000, so the LA will be hoping the rest of the formula delivers enough to fund the rest of the £10k plus any top up that it has to pay.

The requirement to pass on the Schools Block intact to schools will prevent local DSG being managed across the blocks to cope with high needs pressures in consultation with the Schools Forum. LAs will be completely reliant on the High Needs Block allocation to meet their statutory responsibilities.

The consultation is silent about the variations in health contributions for medical-related costs, and we would be wise to lobby for some support in achieving a more level playing field for this issue, otherwise highly inclusive schools and those providing specialist education could be placed under even more pressure in some areas.

Reason No. 4: Risk of not getting money for pupil growth

Future pupil growth is one of the areas that is not suitable for a backwards-looking formula, although government wants to explore whether that might be possible from 2019/20. In the short term historic spend will be used, but it isn’t clear whether this means a freeze at 2016/17 levels or a one-year lag. Whichever it is, there’s a risk of the local authority not receiving sufficient money in the Schools Block to provide funding for two terms when a school takes an extra year group in September.

The local authority has a statutory duty to ensure sufficient places. If an LA doesn’t have growth funding to give to schools, it could face some resistance from headteachers with difficult budgets, who simply can’t afford to subsidise an expansion. To produce the funding that’s needed, an authority would have to impose a worse budget on other schools. Then from 2019/20, it will be up to the government as to how to fund pupil number growth.

DfE says temporary falling rolls funds are included in this category; DfE is unlikely to want to examine applications to check they meet criteria once LAs are cut out of the school funding formula process.

Reason No. 5: Loss of local influence for schools/Schools Forums

Currently the Schools Forum has to be consulted on changes to the school funding formula, and it has decision making powers on the central budgets that can be retained and operated by the local authority. Where there is significant change, it is usual for working groups to be set up; in many authorities there are headteachers and other school staff with a lot of expertise and knowledge of school funding formulae, built up over years of involvement. They work with the LA to ensure funding can be targeted to local priorities.

From 2019/20, there will be no local formula and Schools Forums will have no say in the NFF, as government will decide the values for each year. In the two-year transition period, DfE will undertake a review of the Schools Forum role and membership.

Local authorities will still retain responsibility for high needs, along with place planning and championing parents and children. So it is likely there will be a role for the Forum in relation to spending on SEND. However, given the risk of insufficient high needs funding in some areas, and the inability to transfer money from the most substantial block, the Schools Block, this will be extremely challenging. The composition of Schools Forums will obviously change as more schools become academies. There is considerable uncertainty over how this aspect of the school funding system will change.

Keep informed

For more information and the ability to join the debate, join my new Linked In group at the following link:  School Funding UK. Alternatively, clicking on the link to receive the guide to the consultation will also give you regular updates of my School Funding News publication: Ask for your PDF Guide

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