I’m always a bit concerned when governments claim, “this is the right thing to do” as the DfE’s national funding formula consultation does (p10), but this time it really is the right thing to do. Fair funding is something schools have been lobbying for consistently over the past 15 years at least. Successive governments have promised this and failed to get anywhere, but this one seems to have the bit between its teeth and the prospect of fair funding seems better than ever, with some caveats.

Various critics (notably, unions) have protested that it’s probably just a way to cut funding on the sly, (though not very sly, since the 2015 spending review announced a “saving” of £600m from the ESG) but you should read the consultation for yourself and judge it on its own merits. However, if time is pressing (it’s 66 pages long), here’s out take on it…

The dedicated schools grant (DSG) is the aspect of funding that’s affected and it will be combined with the education services grant (ESG): LAs will still receive funding for school places, access and admissions, transport and “to encourage an increasing number of academies”. This combination will be a new fourth block of the DSG: the central schools block. Some of it will continue to be retained by LAs. The main, schools block funding will passed entirely on to schools and LAs will have much less flexibility on what they can spend the other blocks on.

Pupil Premium isn’t affected “for the duration of this parliament”, oddly as it’s the biggest contributor of unfairness in funding. Worthy, it may be, effective: probably not (see previous posts).

The schools block will be based on a hard national funding formula that sets the budget for each school – that is, no local variation and no local formula for allocating school budgets within LAs, as happens now. More details on the formula below.

Where’s that £600m saving coming from?

A straightforward cut of £72m in 2016-17, to be achieved by LAs and academies making “manageable efficiencies” – that’s a £10 per pupil cut compared to this year.

LAs will also be expected to “step back from running school improvement from the end of the 2016/17” – so won’t need any funding for that.

LAs responsibilities will be cut back to:

  • School places
  • Meeting the needs of vulnerable pupils
  • Acting as champions for all parents and families

£40m of planned spending by LAs on music services, visual and performing arts, pupil support, and outdoor education and so on will now have to be met from schools’ own budgets instead. Music hubs will still be supported separately by the DfE.

Alert for academies

“The proposed arrangement for local authorities to retain some of their maintained schools’ DSG centrally for duties currently funded by the ESG general funding rate would result in an effective reduction to their core schools funding, which would be equivalent to the arrangement for academies. Many multi-academy trusts already take a top-slice to fund the services that they provide to academies, and the reduction to the general funding rate means that they will be top-slicing core academy budgets. Standalone academies will need to use their core schools funding to meet the costs of these duties.”

A school-level national funding formula

So, what does this funding formula look like?

It refers to the schools block only. The new central block, high needs and early years blocks are still administered via the LA. It will comprise:

  • Per-pupil costs (currently comprised 76% of school budgets) – basic funding
  • Additional needs: based on the characteristics of pupils in each school, but not ring-fenced. Based on deprivation, low prior attainment and EAL. Note: not SEN.
  • School costs: to cover specific fixed costs, such as to protect small schools, meet PFI repayments, or running split sites. Based on a lump sum, sparsity, rates, premises and growth.
  • Geographic costs: schools’ funding is increased if they are situated in areas of higher cost.

Per-pupil costs

This will be based on ages of children in the school:

  • Basic funding for each primary pupil (covering key stages 1 and 2)
  • Basic funding for each key stage 3 pupil
  • Basic funding for each key stage 4 pupil

Additional needs

Deprivation will be calculated using a combination of free school meals (Ever6 and current FSM) status and IDACI data (see http://www.education.gov.uk/cgi-bin/inyourarea/idaci.pl) – the DfE seems uncertain quite how to incorporate this area deprivation factor, however.

Low prior attainment in primary schools was intended to be calculated on the basis of the reception baseline test, but the DfE are keeping this “under review” and the consultation gives no more clarity on this component of the funding.

EAL: While the DfE admits that it’s looking at the robustness of the data EAL data it collects, they propose to use the EAL3 measure (pupils registered as EAL at any point during the last 3 years).


School costs

Lump sum: This is mainly to protect smaller schools: the consultation says little about how much this might be, simply noting instead that there is currently a wide range allocated according to school size by LAs in the current system.

Sparsity is a common ingredient in LA funding – intended to support (small) remote schools. DfE intends to use the same sparsity measure as now: eligible schools will be primaries with 150 pupils, living on average >2 miles from the next school; secondaries 600 and >3 miles.

Rates: funded via LA – will continue as now.

Split sites: Additional funding will be flat-funded, based on the past two years’ funding.

PFI and exceptional premises costs: Schools which have PFI contracts or where EFA have allocated extra, will continue to receive separate funding, though the DfE would like to move this into the formula, too.

Other school cost factors: these are too messy and unclear for the DfE to be able to calculate, so they’ll be flat-funded, based on the past two years’ funding.

Growth is obviously very difficult to anticipate: local variation in demographics and demand mean that this is very difficult to include in a formula, so the intention is that local authorities would receive the total of any spend in the previous year.


Geographic costs

The area cost adjustment (ACA) is largely to reflect regional variation in labour market costs – it will be applied as a multiplier to the factors included in the formula (not those based on historic funding or costs). A London fringe factor would give additional funding to Buckinghamshire, Essex, Hertfordshire, Kent and West Sussex.


What’s lost?

Factors no longer a factor in a new funding formula include:

  • Looked-after children and those leaving care (will still be covered by pupil premium plus).
  • Mobility: currently to increase funding for pupils entering outside the normal times of year.
  • Post 16 top up: the £16m per year currently spent by LAs will be distributed via the formula.
  • Disability is “not sensible or feasible to include” – can be met by the high needs block instead.

The consultation is open until 17 April at https://consult.education.gov.uk/funding-policy-unit/schools-national-funding-formula