/ Schools Forum / Item 9 /
/ 19 October 2016 /
/ School Funding Formula – Arrangements for 2017/18 /
/ Report of the Director of Corporate Resources- Corporate Services and Director of Children’s Services /
Contact: Andrew Minall 01962 846408;
Kathryn Stevens, 01962 845185;
1 Summary
1.1 The Department for Education (DfE) publishes annual changes to school funding arrangements. The 2017/18 Operational Guidance was released in July 2016.
1.2 This paper sets out arrangements for the Hampshire school revenue funding formula for 2017/18 for consideration by school, academy and early years representatives of Schools Forum.
1.3 In a change to previous years, local authorities will no longer be required to submit a return to the DfE in October 2016. Instead local authorities will submit one authority proforma tool (APT) in January 2017 showing funding formulae and values agreed by Schools Forum.
1.4 Final allocations for schools and high needs blocks will be announced in December 2016 on the basis of pupil numbers recorded in the October 2016 census.
1.5 As per previous years, budget share notifications for 2017/18 will be notified to schools by 28 February 2017. Academies receive their notification of funding via the General Annual Grant (GAG) statement issued by the EFA.
2 Background
2.1 Following the 2015 spending review, it was announced that the DfE would introduce a national funding formula for schools, early years and high needs to match funding directly and transparent to need. This involved creating a new central schools block, allow local flexibility on the minimum funding guarantee and to ring-fence the schools block within the dedicated schools grant.
2.2 The first stage consultation on the DfE proposals in March 2016 indicated an intention to implement from 2017/18, however this has now been delayed until 2018/19.
2.3 At this stage, the DfE have not yet released their response to the first stage or the second stage of the consultation.
2.4 Schools funding is provided mainly through the Dedicated Schools Grant (DSG), which comprises three notional blocks: Schools, Early Years and High Needs. This funding formula relates to the schools block element of DSG and, therefore, the amount allocated through the formula is determined by the overall funding position.
2.5 Schools Forum will further consider the overall funding distribution at its December 2016 and January 2017 meetings. This formula relates to the methodology to be applied and unit values will be determined as part of the budgetary process. Appendix 1 provides the values applied in 2016/17.
3 Changes to the overall funding system
3.1 For 2017/18, there are a number of changes to the overall funding system which includes three changes to the DfE list of allowable funding factors.
3.2 For 2017 to 2018, the government has confirmed that no local authority will see a reduction from their 2016 to 2017 funding (adjusted to reflect local authorities’ most recent spending patterns) on the schools block of the dedicated schools grant (DSG) (per pupil funding) or the high needs block (cash amount). An uplift for high needs will be applied later in the year as normal (the amount was £2.4m in 2016/17).
3.3 The current minimum funding guarantee (MFG) for schools will be retained so that no school can face a funding reduction of more than 1.5% per pupil in what it receives through the local authority funding formula, providing continued protection from excessive year-on-year changes.
3.4 The DfE requested Local Authorities complete an exercise to establish accurate 2016/17 baselines upon which to base 2017/18 allocations through the national funding formulae. As a result the DfE will use these new 2016/17 baselines in calculating allocations for the schools block and high needs block in 2017/18. This is to ensure the starting point is the pattern of planned spending by local authorities within their annual DSG allocation, rather than how central government has allocated funding since 2013.
4 Education Services Grant (ESG)
4.1 The Education Services Grant (ESG) is a un-ringfenced grant paid to local authorities and academy trusts to pay for specific services to schools.
4.2 It is currently comprised of two funding rates; the retained funding rate which is paid to local authorities only on a per pupil basis, regardless of whether they attend a maintained school or academy. The retained funding ensures that local authorities can deliver services for all schools in acknowledgment that not all responsibilities transfer to the academy trust.
4.3 The general funding rate is paid to local authorities for every pupil in a maintained school and to academies for every pupil on roll.
4.4 In the 2015 Spending Review, the DfE announced a saving of £600 million from the Education Services Grant (ESG) general funding rate by 2019 to 2020 (about a 75% reduction). Local authorities will receive transitional ESG funding from April 2017 to August 2017. The general funding rate will then be removed from September 2017. The retained duties element of the ESG will be added to the schools block for 2017 to 2018 at £15 per pupil. The DfE will provide more information about the transitional protection in respect of the general funding rate later in the year.
4.5 As proposed in the first stage of the national funding formula consultation, the DfE will amend regulations to allow local authorities to retain some of their schools block funding to cover the statutory duties that they carry out for maintained schools which were previously funded through the ESG.
4.6 Further information about ESG will be circulated at the meeting.
4.7 The amount to be retained by the local authority will need to be agreed by the maintained schools members of the schools forum. If the local authority and schools forum are unable to reach consensus on the level of the DSG to be retained by the local authority, the matter will need to be referred to the Secretary of State.
4.8 Local authorities should set a single rate for all mainstream maintained schools (both primary and secondary). They may choose to establish differential rates for special schools and PRUs if the cost of fulfilling the duty is substantially different for these schools.
5 Funding formula – schools block
5.1 The list of allowable funding factors remains broadly the same for 2017 to 2018 with the exception of the post-16 factor which has been removed. As set out in the first stage of the national funding formula consultation, the post-16 factor is a legacy factor which a small number of local authorities use for a small number of schools. Hampshire is not affected by this change.
5.2 As a result of the updated 2015 income deprivation affecting children index (IDACI) dataset, the DfE have recognised this showed a markedly different distribution to the previous 2010 dataset resulting in unexpected and unhelpful turbulence in budgets, towards the latter stages of the local formula-setting process.
5.3 The DfE have updated the IDACI banding methodology to return the IDACI bands to a roughly similar size (in terms of the proportion of pupils in each band) as in 2015 to 2016. The revised bands are named “A” to “G”; with the most deprived neighbourhoods being captured by band “A” (previously bands 6 and 5).
5.4 Hampshire took action to reduce the impact of this change for 2016/17. Therefore further analysis is currently being undertaken to establish how much turbulence this update will cause.
5.5 The following table shows the Hampshire proportion of pupils in each IDACI band in the 2015 to 2016 schools block dataset, the 2016 to 2017 schools block dataset and how these pupils will be mapped onto the new IDACI bands for 2017 to 2018.
Bands used in 2015/16 and 2016/17 / IDACI Score / % Pupils in each Band (2015/16) / % Pupils in each Band (2016/17) / New Bands for 2017/18 / IDACI Score / % pupils in each new band (2015 October Census) Based on 2015 IDACI dataset; new IDACI bands for 2017/186 / 0.60 to 1.00 / 0% / 0% / A / 0.50 to 1.00 / 0%
5 / 0.50 to 0.60 / 1% / 0% / B / 0.40 to 0.50 / 1%
4 / 40 to 0.50 / 3% / 1% / C / 0.35 to 0.40 / 3%
3 / 30 to 0.40 / 7% / 8% / D / 0.30 to 0.35 / 5%
2 / 0.25 to 0.30 / 5% / 4% / E / 0.25 to 0.30 / 4%
1 / 0.20 to 0.25 / 7% / 7% / F / 0.20 to 0.25 / 7%
0 / < 0.20 / 78% / 81% / G / 0.20 / 81%
5.6 The DfE have advised of a new national weighting for secondary low attainment figures. For pupils assessed from 2011, eligible pupils are those who did not reach level 4 in any of the reading test, teacher assessed writing, or Maths. This reflects the new KS2 English assessment methodology which was introduced in 2012, to include separately a reading test and teacher assessed writing.
5.7 The 2016 KS2 assessments are the first which assess the new, more challenging national curriculum. At a national level, a higher number of the year 7 cohort in financial year 2017 to 2018 will be identified as having low prior attainment. The DfE intend to use a national weighting to ensure that this cohort does not have disproportionate influence within the overall total.
5.8 The weighting will be confirmed by the DfE in advance of finalising 2017 to 2018 allocations and included in the APT in December, having taken into account the latest data about year 7 pupils in the October census. Local authorities will not be able to change the weighting, but would be able to adjust their secondary low prior attainment unit value as usual.
5.9 The proposed funding formula for mainstream schools and academies for 2017/18, along with the 2016/17 expenditure, is detailed in appendix 1. Values will be set once the final dedicated schools grant (DSG) has been confirmed in December 2016.
5.10 As in recent years, the guidance states that local authorities must allocate a minimum of 80% of the delegated schools block funding through pupil-led factors (factors 1 – 6 within appendix 1). Hampshire currently allocates 85.85% through these factors.
6 Approval to dis-apply the regulations
6.1 There are various circumstances by which local authorities will need to apply to the EFA to dis-apply the regulations.
6.2 As per last year, applications for 2017/18 must be submitted by 30 November 2016. The following types of request will be made for which Schools Forum agreement is required:
· Variation to pupil numbers: when schools are adding new classes (as a result of a new school or permanent pupil growth) as advised by the School Organisation Team,
· Sparsity funding: for a school that doesn’t meet the distance criteria and they have significantly higher mileage if road distances had been used instead of crows flies (the local authority to define ‘significant’),
· MFG Exclusion: schools which previously qualified for funding such as split-site or sparsity, but are no longer eligible (or vice versa). Funding will need to be excluded from the baseline, when calculating MFG. This includes new delegation of funding.
6.3 The schools affected by these requests have not been identified, and many will not be known until after the DfE release the Authority Proforma Tool in December with updated data sets. Therefore, Schools Forum is being asked only to agree to the types of exceptional requests.
7 High Needs Funding
7.1 As in previous years, a detailed operational guide on high needs funding for 2017 to 2018 has recently been published. The guidance shows minimal changes to high needs funding from 2016/17.
7.2 Therefore local authorities are expected to manage the commissioning of places locally and to notify the EFA of any changes to academy places.
8 Early Years Funding
8.1 The DfE have recently consulted on the proposals to implement a national funding formula from 2017/18. A separate item on the agenda provides a detailed overview of this, including Hampshire’s response.
9 2017/18 School Funding Formula
9.1 In a change to previous years, local authorities are no longer required to submit a return to the DfE in October which sets out the agreed funding formula for mainstream schools for 2017/18. Instead, only one submission will be required in January 2017 which sets out both the funding formula and values that have been agreed by Schools Forum.
9.2 A separate item of this agenda discusses the requirement for a full consultation with schools. As part of this consultation, views will be gauged on the current school funding formula.
9.3 The results of the consultation, along with recommendations for the 2017/18 funding formula will be brought to Schools Forum in its next meeting in December.
10 Recommendation
10.1 It is recommended that Schools Forum notes the arrangements for funding in 2017/18.
10.2 It is recommended that Schools Forum agrees to the local authority’s application for requests to dis-apply the funding regulations as detailed within paragraphs 6.2.
- 13 -
Appendix 1 – 2017/18 School Funding Formula Factors
Factor / Description / Changes for 2017/18 / Hampshire’s Position / 2016/17 Unit Value / 2016/17 Budget / % of Overall Budget /Primary / Secondary /