Date: 7 December 2016
REPORT TITLE: Early Years Budget Update & Funding Formula Review
Report by: Early Years & Childcare
Contact details:
1. Purpose of report
1.1. To update Forum on the forecast budget requirement for 2016/17 of the two, three & four year old Free Early Education Entitlement (FEEE), including the Early Years Pupil Premium (EYPP).
1.2. To update the Forum on QIS
1.3. To update the Forum on FEEE 30 hours extended offer - DfE Early Years Capital Fund
1.4. To update the Forum on the consultation on the early years national funding formula
1.5. To update the Forum on the status of the Preschool SEN budget
2. Recommendations
2.1. That Forum notes the Early Years Block forecast expenditure in 2016/17 (Table 1).
3. Relevance to Strategic Plans
3.1. Early Years & Childcare (EYCC) are committed to ensuring ‘Children in Essex get the best start in life’. Our vision is underpinned by Essex County Council’s (ECC) Corporate Outcomes April 2014 - 2018:
· Objective 1: Children in Essex get the best start in life:
o children ready for school
o children achieving a good level of development
· Objective 3: People in Essex have aspirations and achieve their ambitions through education and lifelong learning
o children attending a good school
o children achieving at school (measured at Foundation stage, KS2 and KS4)
3.2 FEEE supports Essex County Council’s priority of ‘enabling every individual to achieve their ambitions by supporting a world-class education and skills offer in the county’ and the current Children’s Partnership Commissioning Plan.
4. Background
4.1. FEEE funding supports the statutory universal offer to all three and four year olds. In September 2014 FEEE funding was extended to 40% of the least advantaged two year olds, these are children who meet predetermined eligibility criteria.
4.2. The take up of the two year old FEEE during the autumn term is in line with the forecast however we will not receive the final data until the end of term. Currently 67% of the 4,724 eligible two year olds in Essex have taken up a funded place. By the end of term we are expecting to reach 74% which would put us slightly above the national average.
There has been an increase in numbers of children accessing their two year old FEEE in school nursery classes, up from 91 in the spring term to 175 in the autumn term, see Annex A. Since September 2015 fourteen schools have lowered their age range and are taking two year olds in addition to both nursery schools.
Any schools that have lowered their age range to take 2 year olds or 3&4 year olds and have set up a new early years provision using 1-13 ratio will be funded at the rate of £4.01 per hour. Where a school has set up a new provision, or taken over an existing private, voluntary and independent (PVI) setting on their site, and are running the provision using the ratio of 1-8 will be funded at the rate of £3.82 per hour.
4.3. The take up of three and four year old FEEE at the autumn term headcount was 18,081. This figure indicates that the take up rate is still at around 99%.
The number of children accessing FEEE places with a childminder has decreased slightly this term compared to the corresponding term in the previous financial year although the actual number of childminders providing FEEE places has increased. In autumn term 2015/16 there were 482 children accessing their FEEE with 231 childminders whereas in autumn term 2016/17 there were 474 children with 269 childminders.
4.4. During the summer term 1984 children attracted the Early Years Pupil Premium (EYPP) and a total of £218,895 was paid to 394 providers, including schools. At the autumn term headcount 1256 children were confirmed as eligible for EYPP and a total of £125,917 was paid to 321 providers, including schools. The total expenditure in 2016/17 so far is £344,812.
The DfE have stated that from 2016-17 funding for the EYPP will be based on actual participation. Initial allocations were announced in summer 2016 based on the data from the January 2016 early years census and school census. In September the DfE announced a final EYPP allocation to the Early Years Block of £380,000 which allocation is much lower than anticipated. The take up of EYPP at the January census was 1775 children and an allocation for the financial year based on this figure should be £536,227 which would be sufficient to cover the forecast expenditure. We will be challenging the DfE on the reduction in allocation and will update the Forum in due course.
5. Financial Implications
5.1 Budget required for 2016/17
Following the receipt of the autumn term headcount data the forecast for the 3&4 year old FEEE has been revised. Table 1 indicates the updated budget requirement from the Early Years Block for 2016/17.
The forecast requirement for 3&4 year old FEEE is now £50.15m, a decrease of £474k on the forecast presented at the last Forum. However a reduction in DSG funding following a revision of the Early Years Block allocation by the DfE in September has increased the forecast over spend for 2016/17 from £2.64m to £2.77m.
The overall pressure requiring mitigation by the end of 2016/17 is £4.17m, which includes £2.77m from 2016/17 and £1.4m overspend from 2015/16.
Table 1 – Budget requirement 2016/17
Early Years Block£ / Forecast Outturn
£ / Variance (Under)/over
£
FEEE2 Offer / 9,761,015 / 8,357,716 / (1,403,299)
FEEE 3&4 PVI / 38,542,964 / 42,379,065 / 3,836,101
FEEE 3&4 SNC & NS / 7,059,109 / 7,246,756 / 187,647
EYPP / 380,000 / 532,442 / 152,442
EYCS Area SENCOs / 1,300,000 / 1,300,000 / 0
EYCC QI Team / 1,247,500 / 1,247,500 / 0
Total / 58,290,588 / 61,063,479 / 2,772,891
6. QIS
A new ECC Quality Improvement Intervention structure has been designed and will be subject to consultation in the coming months. These proposals will enable ECC to release funding back into the DSG Early Years block, in the longer term to mitigate some of the overspend in FEEE. The full budgetary position of these proposals will be detailed in the EYCC Schools Forum report in April 2017.
A Root & Branch analysis of the work of the EYCC service has now been concluded and is currently being reviewed by an external DCS who is providing a ‘critical friend’ review. The outcome will help to inform any future considerations to redirect resources that support the EYCC sector.
7. FEEE 30 hours extended offer - DfE Early Years Capital Fund
In the summer term 2016 the Department for Education (DfE) invited local authorities to work with local childcare providers to bid for capital funding to expand childcare provision in their area for working parents. ECC was limited to apply for funding for a maximum of 6 projects and the total cost of each project had to be below £1m with a minimum of 25% of the total project cost funded from alternative sources. Projects would only be considered if they evidenced, the local sufficiency need, they would either build on an existing 15 hour place to create a 30 hour place or be an entirely new 30 hour place, and would be completed by 31st August 2017.
Local authorities had to make applications setting out specific provider-level projects in their area by 31 August 2016. Successful bids are to receive grants awards within financial year 2016-17 with successful bidders notified by December 2016.
The following providers were eligible for capital funding
• Private nurseries, voluntary nurseries, independent school nurseries
• Primary schools or all through schools with nursery provision, and maintained nursery schools
• Childminders – childminders may be involved in partnership bids with group based providers but are not eligible to be the sole, or lead provider of a project.
• Existing schools who currently do not offer provision for 3- and 4- year-olds are eligible to submit a proposal for doing so.
Providers had to have a track record with Ofsted or the Independent Schools Inspectorate or be part of a chain that does have a track record. Providers must have had at least one inspection, new providers were not eligible to apply. The types of project that would to be considered for a capital grant included new-builds, extensions, refurbishments or conversions.
Early Years and Childcare (EYCC) obtained approval to communicate this opportunity to all eligible providers in areas where there is a sufficiency need. In order to be considered for the funding application process, interested providers needed to evidence that they already had an expansion project in place, i.e. feasibility assessment, design, planning approval and tender all complete, in addition to the aforementioned criteria.
EYCC received 11 Expressions of Interest, all from PVI providers, which were evaluated against the DfE criteria as detailed above by EYCC with support from Finance colleagues. Nine of the Expressions of Interest were judged to have evidenced that they already did, or could meet all of the criteria. These providers were invited to submit further, detailed information to enable us to select 6 projects to take forward in a bid to the DfE. Three of the invited providers felt that they were not able to provide all of the information required within the timescales and stated that they would not be submitting an application.
The final six providers, which included two preschools, one Montessori and three day nurseries, were asked to submit additional evidence which was used to further assess the viability of their project. These 6 potential projects were presented to the EYCC Grants Panel meeting on 16 August. EYCC sought clarification from one of the providers regarding their ‘cost per place’ calculation and their answer indicated they would not be in a position to complete their proposed project without access to significant alternative funds. Therefore following discussion at the panel it was agreed that ECC would put forward just 5 projects in an application to the DfE.
EYCC submitted applications on 31st August 2016 for five separate projects amounting to a total of £1.16m of funding requested from the DfE. The providers will be funding 25% or more of the total required for each of their projects and ECC will also provide match funding of 5% of the total cost of each project. The projects including two new builds, one extension, one conversion and one refurbishment, will provide an additional 226, 30 hour FEEE places across the county. EYCC are expecting notification of the outcome of the applications by the end of December 2016.
- DfE Consultation on the early years national funding formula
ECC are still waiting for confirmation from the DfE of the funding allocation for 2017/18, once we have confirmed figures we will re-profile the budgets and forecasts and provide an update as soon as possible. Until we have figures from DfE we are unable to provide any profiling for 2017/18 or 2018/19 financial years.
Whilst we cannot confirm any funding rates at the moment the intention is to put all providers on the same rate with the exception of the nursery schools, who would receive a supplement. The implication of this would be that school nursery classes and childminders may see a drop in their funding rate.
- Preschool SEN
As reported in the last update, the responsibility for the Preschool SEN budget, which comes from the High Needs Block, is being moved from the head of Early Years to the Manager of SEN, Psychology & Assessment. Going forward the Manager of SEN will provide budget updates to the Forum, but for information during the transition the table below details the spend so far this financial year.
The figures projected are based on notified children likely take-up of hours by 31 March 2017, and an estimate for newly notified children based on historical patterns. Any significant changes over the next 4 months, to take-up of FEEE by children with SEND, numbers of newly notified children and levels of need, will affect the final outturn.
Table 2
Budget allocation£ / Total Spend at Period 7
£ / Forecast outturn
£ / Variance (Under)/over
£
910,328 / 560,460 / 904,311 / (6,017)
10. Supporting documents
Appendix A – FEEE2 forecast
Appendix B – FEEE 3&4 forecast
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Appendix A - FEEE2 forecast
Appendix B – FEEE 3&4 forecast
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