ITEM 6

2015-16 Funding Formula and Budget Principles

Schools Forum – 15.12.2014

Recommendation
The Schools Forum is asked to :-
Approve the Budget Principles to be used against the 2015-16 DSG allocation to set the 2015/16 DSG budget.

Members of Forum allowed to vote :- All school and academy members are able to vote. Only early years representatives from the non-schools members are able to vote. Non-school members even if represented by school staff are not eligible to vote.

  1. Introduction

The paper below summarises both the previously agreed and the required changes to the funding mechanisms for 2015/16, using 2014-15 pupil data for comparison purposes, in order to provide an indicative rate for the 2015-16 budget purposes.

In January 2015 the DSG funding formula will be submitted to the EFA (education Funding Authority) using actual pupil data for 2015-16 based on the January 2015 census. At this point the final budget allocation for 2015/16 will be agreed and the final agreed rates will be made available.

  1. Formula Allocation (Including allocation of Fairer Funding)

Changes to the 2014-15 Formula are based on the following papers / decisions:-

  • Fairer Funding – agreed at the schools Forum on the 17th November 2014
  • PFI – Discussed at the Schools Forum on the 17th November 2014 and further discussed today in a separate paper

Fairer Funding

The following allocations for Fairer Funding were agreed at the Schools Forum on the 17th November 2014.

Factor / Change / Allocation for 2015/16 – based on 2014/15 Pupil Numbers
All Factors / None – allows the one off £3m used from the C/F in 2014-15 to become a recurring allocation / £3m
Key Stage 4 AWPU / Increase by £150 per pupil to move closer to the national average / £1.114m
Prior Attainment / Allow r and Y1 unit numbers to be weighted at 100% / £1.048m
Split Sites / Additional Criteria added / £0.095m
Deprivation / Move closer to the national averages / £2.460m
MFG / Remove Capping / £0.8m
High Needs / Allocate monies to allow the 2014/15 baseline to be maintained (one of C/F used in 2014/15 to balance the budget) / £1.089m
APWU – all ages / Allocation of the Balance of funding / £3.097
Total / £12.7m

Factors

The table below summarises the current rates, and how these would change using the agreed and required methodology changes for 2015/16, based on adjusted 2014/15 pupil data. Appendix 1 provides a summary description for each of the factors.

Appendix 2 contains a summary comparison of attainment against the national averages for the factors where applicable.

Appendix 3 contains a summary of IDACI (Income Deprivation Affecting Children Index) modelling discussed at the Schools Forum Working group on the 27th November 2014. The Working Group recommended the use of Option 2, as detailed in Appendix 3, in the 2015-16 formula calculations.

  1. MFG (Minimum Funding Guarantee)

The pre-16 MFG for mainstream schools is set at minus 1.5% per pupil in 2015-16. The Fairer Funding monies will be used to remove the current cap that is used to fund the MFG in 2014-15.

  1. Centrally Retained Services

4.1Centrally Retained Services – (No restriction on changes to expenditure or commitments in the Regulations)

4.1.1Growth

A growth fund can be established to fund schools using the following general principles:-

  • Funding for significant Pre-Pupil growth
  • Funding to enable schools to meet the infant school size requirement
  • Funding for good or outstanding schools with falling rolls where growth is expected within three years

Growth Criteria are set in order to establish how this fund is used and managed in year. The following criteria are proposed for inclusion in the formula for 2015-16. Currently this budget funds maintained and academy schools for growth.

Criteria / Current / Proposed / Impact
Start Up / £150k primary / £100k secondary / £150k for both primary and secondary / £50k per secondary start ups
Inefficiency Factors / None / To reduce the current lump sum in equal instalments over the remaining forms post year 1. E.g. for a 7 form primary school:-
Year 1 – start up £150k
Year 2 - £150k / 7*6 = £128k
Year 3 - £150k / 7*5 = £107k
Year 4 - £150k / 7*4 = £85k
Year 5 - £150k / 7*3 = £64k
Year 6 - £150k / 7*2 = £42k
Year 7 - £150k /7 *1 =£21k
Year 8 - £0 / From 2014/15 1 primary start up this would cost £347k over the next 6 years
Bulge / Calculated based on a 25 pupil assumption * APWU * AEN / Allocate based on 30 pupils * APWU * AEN / Increased funding by 5 – circa £11k
Expansion Classes / As Above / As Above / Increased funding by 5 - circa £11k
Contingency / To re-adjust bulge and expansion estimates for actuals–an additional 5 places / Remove as funded on a 30 average.
If numbers were below 30 in January census to look to adjust funding to a cap of 25 / Reduced funding by 5 – Circa (£11k)
Equipment / £2.5k / £5k / Increase of £2.5k

4.1.2Other

The following other principles can be provided for if required.

  • Back-pay for equal pay claims - currently none
  • Remission of boarding fees at maintained schools and academies – currently none
  • Schools Carbon Reduction Commitment (CRC ) allowances - £10k

Places at independent schools for non-SEN pupils

In Croydon this is used to fund places to Key Stage 4 pupils at John Ruskin College, typically for children entering the country and requiring an education place to be provided - £684k requested in a separate paper to the Schools Forum.

4.2Centrally Retained Services – (Regulations state no increases in expenditure in 2015-16 from 2014-15)

4.2.1Admissions

It was agreed prior to 2014-15 that the admissions team should be restructured and that part of this restructure cost would be funded from this element of DSG. This was agreed at the Schools Forum on the 17th November 2014 that an additional £100k would be allocated for this purpose, and that this should be agreed as the restructure was agreed in principle before the expenditure restriction was implemented. Formal agreement by the EFA is required in order to implement this decision.

This will cost an additional £100k in 2015-16.

4.2.2Servicing of Schools Forum

£39k per annum for staffing and running costs which will continue.

4.3Centrally Retained Services – (Regulations state no new commitments or increases in expenditure in 2015-16 from 2014-15)

4.3.1Current Allocations

  • Capital expenditure funded from revenue – there is currently no charge allocated for this
  • Existing termination of employment costs – £213k per annum
  • Contribution to combined budgets - there is currently no charge allocated for this
  • Schools budget funded SEN Transport costs – there is currently no SEN transport costs funded centrally

4.3.2Prudential borrowing costs

There is a £3million annual charge for15 years borrowing costs associated with the creation of the ELPs (Enhanced Learning Provisions).

This is currently funded through £1million from High Needs and £2million from carry forward DSG. This funding mechanism is not a sustainable way of funding the agreed Prudential borrowing costs, committed in 2011-12, thus from 2015-16 it should be re-aligned to the centrally retained budget heading in line with the funding guidance for such costs.

The ELPS were created in order to bring provision in-borough and reduce the costs of out of borough provision. The current average top-up cost for the 272 places in ELPS is £2m per annum, the average top-up cost of 272 places out of borough if these ELP places did not exist would be at least£11.6m per annum. Therefore, this capital programme has created significant cost savings to the borough.

Formal agreement by the EFA is required in order to implement this decision.

  1. De-Delegation

Criteria / Current / Proposed / Comments
Contingencies / Nil / To develop a Contingency fund to have available limited in-year funding of in-year events / deficits / issues. £2million suggested / Examples of use would be deficit funding / to aid schools in financial difficulties. In year use would be subject to SF agreement and any underspends would be carried forward
Behaviour and Support Services / Nil / Nil
Support to underperforming ethnic groups and bilingual learners / £200k / Assume £200k as per last year but TBC by a paper to come to a future SF
Free School Meals eligibility / Nil / Nil
Insurance / Nil / Nil
Museum and Library Services / Nil / Nil
License / Subscriptions / £93k / Assumed circa £93k - TBC
Provision of Union Duties / £96.5k / £106k – estimate based on 2014/15 data. This will be finalised once 2015/16 data is available.
Staff Costs / Supply Cover / Nil / Nil
  1. Schools Block Transfers

It is expected that the block adjustments previously agreed will continue in future years. These are as follows:-

  • (£747k) budget transfer from the Schools Block to the High Needs Block – agreed at the Schools Forum on 13th January 2013 for Post 16 Provision demand
  • (£300k) budget transfer from the Schools Block to the high Needs Block - agreed at the Schools Forum in October 2013 for SEN support provided above the 12.55 hours included in the 36k element
  • (£1.089m) budget transfer from the Schools Block to the High Needs Block from the Fairer Funding allocation – agreed at the Schools Forum on the 17th November 2014
  1. High Needs

The Cash Limit budget before block adjustments and EFA recoupment is anticipated to be £51.407m. It is expected that the block adjustments previously agreed will continue in future years. These are as follows:-

  • £747k budget transfer from the Schools Block to the High Needs Block – agreed at the Schools Forum on the 13th January 2013 for Post 16 Provision demand
  • £300k budget transfer from the Schools Block to the high Needs Block - agreed at the Schools Forum in October 2013 for SEN support provided above the 12.55 hours included in the 36k element
  • £958k budget transfer from the Early Years block to the High Needs Block- agreed at the Schools Forum on the 13th January 2013 to fund special education provision for the under 5s
  • £539k budget transfer from the Early Years Block to the High Needs Block – agreed at the Schools Forum on the 6th October 2014 to support the early years 0 – 5 provision
  • £1.089m budget transfer from the Schools Block to the High Needs Block from the Fairer Funding allocation – agreed at the Schools Forum on the 17th November 2014

A detailed budget breakdown will be provided by the High Needs Working Group to the meeting.

  1. Early Years

The budget, based on pupil numbers, before block adjustments and EFA recoupment is anticipated to be £24.728m. It is expected that the block adjustments previously agreed will continue in future years. These are as follows:-

  • (£958k) budget transfer from the Early Years block to the High Needs Block- agreed at the Schools Forum on the 13th January 2013 to fund special education provision for the under 5s
  • (£539k) budget transfer from the Early Years Block to the High Needs Block – agreed at the Schools Forum on the 6th October 2014 to support the early years 0 – 5 provision

A detailed budget breakdown will be provided by the Early Years Working Group.

  1. Assumptions
  • The above principles for the Schools Blockhave been calculated using 2014-15 pupil numbers. The rates and total budget allocations will change based upon the census information provided in January 2015.
  • EFA Recoupment has a nil impact on the bottom line.
  • Re-alignments to the centrally retained budgets are approved by the EFA

Recommendation
The Schools Forum is asked to :-
Approve the Budget Principles to be used against the 2015-16 DSG allocation to set the 2015/16 DSG budget

Author’s Name -Maria Norfolk

Author’s job title – Finance Business Partner - CFL

Date 27/11/2014

Appendix 1 – Summary of Factors

Description
1. / Basic Entitlement (AWPU) – funding allocated against the age weighted pupil unit. The balance of the Fairer Funding £12.7m, post allocation of the agreed other factors will be used to increase this in year
2. / Deprivation – Income deprivation affecting children index (IDACI) – a rate allocated according to the 6 bands. This funding will be increased from the Fairer Funding.
3. / Prior Attainment – rate applied for primary pupils identified as not achieving the expected level of development within the early years’ foundation stage and for secondary pupils not reaching L4 at KS2 in either English or Maths – this rate will be increased from the Fairer Funding.
4. / Looked after Children - a single value that may be applied for any child who has been looked after for one day or more as recorded on the LA SSDA903 return as at 31st March 2014
5. / English as an Additional Language – additional funding may be provided for EAL pupils for up to 3 years after they enter the statutory school system
6. / Pupil Mobility – allocates funding above a 10% threshold for pupils who entered a school during the last three academic years but did not start in August or September (Jan Reception pupils)
7. / Sparsity – Funding if the average distance for pupils is greater than 2 miles for a primary and 3 miles for a secondary / fewer than 150 pupils for a primary / 600 for a secondary
8. / Lump Sum – The maximum lump sum is £175,000 including London fringe uplift. Different rates can be set for primary and secondary
9. / Split Sites – to support schools that have un-avoidable increased costs due to split sites
10. / Rates – Funded at the LA’s estimate of actual costs
11. / PFI – to support schools with unavoidable extra premises costs because they are PFI and / or to cover situations where the PFI “affordability gap” is delegated and paid back to the LA
12. / London Fringe – only applicable to 5 Las of which Croydon is not one
13. / Post 16 – a per-pupil value that continues funding for post 16 pupils up to the 2014-15 level
14. / Exceptional Premises Factors - Must apply to the EFA to be used

Appendix 2 – Comparison of Croydon Attainment Vs National Averages – 2013/14

Croydon results in reading, writing and mathematics L4+ combined maintained at 74%. This is set in the context of a 5% national increase. We are currently attaining 3% lower than our statistical neighbours, 4% below national and 6% below London.

At Key Stage 4, GCSE results (5 A* - C GCSE inc English and Maths) were above the national average, in line with statistical neighbours but below the London average based on unvalidated data.

Prior Attainment – rate applied for primary pupils identified as not achieving the expected level of development within the early years’ foundation stage and for secondary pupils not reaching L4 at KS2 in either English or Maths – this rate will be increased from the Fairer Funding. / EYFSP (GLD): % achieved
Croydon:57
National:60
KS2 (L4+ RWM) % achieved
Croydon :74
National:75

Appendix 3 – IDACI Modelling

Background

The working group initially kept cash allocations for deprivation by post code cash flat through the funding reform conversion from 12/13 into the 13/14 formula. From 13/14 onwards, the rates were kept consistent and the pot size was driven by demand via eligible children year on year.

In 14/15 the fairer funding consultation was published and it was decided that IDACI should be looked at to see if any additional funds should be allocated.

For the October formula submission, it was agreed that an additional £2.460m would be allocated through the IDACI factor, but unit rates were not confirmed.

This paper highlights some potential options for allocating the increased funding, with additional scope for further modelling for the January submission depending on the outcomes of the meeting.

15/16 IDACI funding – options considered

  1. Using national average data from 13/14 to change Croydon’s rates to meet the averages.
  2. Using national average data from 13/14 to raise IDACI bands 1 to 4 closer to the national averages, but leaving bands 5 and 6 at their elevated rate.

Options

Option 1 – Using national average rates

Current / Proposal / Change
Description / Primary amount per pupil / Secondary amount per pupil / Primary amount per pupil / Secondary amount per pupil / Primary amount per pupil / Secondary amount per pupil
IDACI Band 1 / £88.36 / £135.42 / £235.93 / £318.96 / £147.57 / £183.54
IDACI Band 2 / £160.65 / £270.80 / £289.04 / £421.17 / £128.39 / £150.37
IDACI Band 3 / £267.77 / £410.54 / £386.35 / £528.85 / £118.58 / £118.31
IDACI Band 4 / £338.37 / £491.40 / £452.05 / £594.37 / £113.68 / £102.97
IDACI Band 5 / £677.36 / £983.58 / £508.56 / £655.16 / -£168.80 / -£328.42
IDACI Band 6 / £1,026.14 / £1,490.49 / £737.47 / £888.38 / -£288.67 / -£602.11

Option 2 – Using national average rates for bands 1-4, leaving 5 and 6 unchanged.

Current / Proposal / Change
Description / Primary amount per pupil / Secondary amount per pupil / Primary amount per pupil / Secondary amount per pupil / Primary amount per pupil / Secondary amount per pupil
IDACI Band 1 / £88.36 / £135.42 / £164.74 / £280.37 / £76.38 / £144.95
IDACI Band 2 / £160.65 / £270.80 / £228.68 / £401.09 / £68.03 / £130.29
IDACI Band 3 / £267.77 / £410.54 / £313.96 / £492.39 / £46.19 / £81.85
IDACI Band 4 / £338.37 / £491.40 / £405.97 / £607.13 / £67.60 / £115.73
IDACI Band 5 / £677.36 / £983.58 / £677.36 / £983.58 / £0.00 / £0.00
IDACI Band 6 / £1,026.14 / £1,490.49 / £1,026.14 / £1,490.49 / £0.00 / £0.00

Initial comments on possible options:

All additional monies/shortfalls from various options have been apportioned equally over the affected bands, and then again equally between primary and secondary. No modifiers have been used to take into account pupil numbers affected, pot sizes, allocation percentage splits or the primary secondary ratio.

All models and calculations have been based on the assumption of a total allocation of the 14/15 rates with the latest NOR (14/15 census, plus non recoupment academies and new schools), plus the £2.460m allocated from fairer funding.

Option 1

Bands 5 and 6 heavily subsidising increases in bands 1-4.

Data is from 13/14 and may not be an accurate representation to date.

Proposal equates to much more even rates across the bands

Option 2

Funding allocation increase applied to bands 1-4 only but smaller increases than option 1 as there is no additional increase from the reduction of bands 5 and 6.

Maintains Croydon’s stance that as deprivation is a significant issue in the borough (in severity and also distribution) additional funding should be targeted to the most deprived. This is much more pronounced in option 2 than in option 1.

The 2013/14 National Averages are detailed below

Description / Primary amount per pupil / Secondary amount per pupil
IDACI Band 1 / £237.00 / £321.00
IDACI Band 2 / £290.00 / £423.00
IDACI Band 3 / £387.00 / £530.00
IDACI Band 4 / £453.00 / £596.00
IDACI Band 5 / £511.00 / £659.00
IDACI Band 6 / £741.00 / £894.00

Option 3

The third option, brought to schools forum, is to allocate the additional fairer funding monies separately from the methodology used for the rest of the pot, and allocate an equal increase, on a per pupil basis, across bands 1 to 4.

Example below:

Description / Primary amount per pupil / Secondary amount per pupil
IDACI Band 1 / £110.96 / £110.96
IDACI Band 2 / £99.16 / £99.16
IDACI Band 3 / £64.02 / £64.02
IDACI Band 4 / £91.66 / £91.66
IDACI Band 5 / £0.00 / £0.00
IDACI Band 6 / £0.00 / £0.00

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