Appendix 2
Extract from ‘REVIEW OF SCHOOL FUNDING 2006/07’, report to Education Panel on September 8th 2005 by Claire Cook, Head of CSF Finance
4Review of School Funding 2006/07 and 2007/08
5.1Given the continued operation of the Minimum Funding Guarantee and the need to maintain stability within the funding mechanism, there is limited scope for changing the formula in 2006/07 and 2007/08.
5.2However, it was agreed with the Schools Forum that, as part of the funding review work for 2006/07, the relative levels of funding between the sectors would be reviewed. This was particularly in response to primary headteacher concerns over the level of resource, principally in relation to the funding of Planning, Preparation and assessment (PPA) time. This review was undertaken in two stages:
- Comparison of the funding quantum made available from government against the planned spend against each sector
- Comparison of the staffing resource in primary schools allocated through the local funding formula against the average costs.
5.3The findings of this review are set out in the following paragraphs.
5.4Comparison of SFSS to sector budgets
5.4.1The government allocate the SFSS in four blocks; under 5’s, primary secondary and high cost pupils. Whilst this method of allocation does not determine how authority’s should use this resource, it is useful to benchmark budgeted spend against this allocation as the funding quantum for each sub block is based to a large extent on the national aggregate budgets and therefore the national average spend. The Under 5’s allocation includes both private sector and authority nursery provision. The HCP block provides funds for statemented pupils across all sectors.
5.4.2The table overleaf compares the level of Hertfordshire budgeted spend for each school sector against the SFSS sub block allocation for 3 financial years 2003/04 – 2005/06. Adjustments have been made to the SFSS sub blocks to take account of where the provision for the pupils is to be delivered i.e. under 5’s into the primary sector for reception and nursery children within primary schools, or in the case of statemented pupils to the HCP block.The degree and policy on statementing can affect whether certain expenditure is allocated within the HCP block or remains within the sector block, and this should be taken into account in the comparison.
Table 1 Comparison of sector SFSS to budgeted spend
Under 5s/ Nursery / Primary / Secondary / HCP/ Special / Total£’000 / £’000 / £’000 / £’000 / £’000
2003/4
Adjusted Block Allocation / 10,727 / 222,411 / 196,901 / 50,411 / 480,438
Budgeted Expenditure / 10,054 / 218,458 / 202,599 / 51,493 / 482,694
Difference / -673 / -5,875 / 5,698 / 1,094 / 2,256
2004/5
Adjusted Block Allocation / 11,462 / 228,791 / 210,213 / 55,239 / 505,705
Budgeted Expenditure / 13,376 / 225,866 / 212,802 / 55,917 / 507,981
Difference / 1,914 / -2,925 / 2,589 / 678 / 2,258
2005/6
Adjusted Block Allocation / 12,276 / 239,921 / 218,325 / 57,915 / 528,347
Budgeted Expenditure / 14,813 / 234,615 / 221,178 / 59,091 / 530,697
Difference / 2,537 / -5,306 / 3,853 / 1,176 / 2,260
5.4.3Hertfordshire has consistently spent above SFSS over the last 3 financial years and this resource is tied into the level of funding that we are required to pass on to schools.
5.4.4This comparison reveals the apparent under funding of primary in relation to the other sectors. The contributory factors for this are summarised below:
- The roll out of Universal provision for 3 year olds has caused an increasing pressure on the under 5’s block
- The fixed costs of the authority’s comparatively small size nursery schools has also impacted on the under 5’s block, although the unit costs of these schools are comparative with statistical neighbours. The impact is estimated to be £1.7m.
- SFSS is based on the pupil numbers for the preceding January and there is potentially a lag between the number of pupils funded through SFSS and the local formula. As there are falling rolls in the primary sector this is estimated to account for £1m of the difference in 2005/06.
- The decision in 2002/03 to put an extra £3.7m into the secondary block to protect the Age Weighted Pupil Units (AWPU) for Key Stage 3 and 4 has impacted on the relative level of spend in the secondary sector.
- The authority has traditionally been a comparatively high spender on statemented pupils and this is reflected in the block comparison.
5.4.5There may be potential for reducing the impact of the high cost of maintained nursery schools on the Under 5’s block in the context of the development of Children’s Centres, which will bring a broader role for these schools.
5.4.6Given the findings of this analysis the impact on the funding through the local formula on primary schools was reviewed.
5.5Analysis of Primary School Budget Share Allocation
5.5.1Targeted Support Grant has been available to support schools facing a deficit in Hertfordshire for the last two financial years (2004/05 and 2005/06). The work undertaken with primary schools who have made application for this grant has highlighted particular issues in staffing budgets for JMI schools without nurseries and Junior schools. These schools were not impacted by falling rolls.
5.5.2A review of the average staff costs for 2005/06, compared to the formula funding allocations, highlighted issues around the flexibility of the budget in various size schools. The graph below demonstrates that there is greater flexibility in staffing budgets in larger schools, particularly those with nurseries.
Graph 1Comparison of schools budget share allocation for staffing with average costs
The flexibility in budget ranges from £3,300 in a 0.5 FE JMI (with Key Stage 1 funding) to £44,000 in a 2 FE JMI with a 60 place nursery. There are particular issues in the 1.5 FE JMI without a nursery as it does not qualify for Key Stage 1 funding under the formula but needs to fund an additional 0.5 teacher.
5.5.3This lack of flexibility will have a particular impact for schools that have above average costs. For instance a 1 FE JMI school with all teaching staff at the top of the scale would have to find a further £21,000 per annum. Similarly if the school were not full this could also have an impact. A 1 FE JMI with 28 pupils in each class would have £22,000 less funding per annum. Larger schools have the capacity to absorb these issues.
5.5.4Funding for staffing costs in the schools is provided through a combination of lump sum funding per school and the AWPU. Given the proportion of financial flexibility for larger schools relative to the size of the school, it would indicate that the level of AWPU is too high relative to the lump sum.
5.5.5This analysis would suggest that the primary sector is under funded relative to other sectors and that smaller schools of 0.5 FE up to 1.5 FE do not have the flexibility to meet the fixed costs. Further work will be undertaken in conjunction with the Schools Forum to model the impact of adjustments to the lump sum formula to address this issue. This would be conditional on availability of headroom in the funding settlement after application of the minimum funding guarantee.