THE NEW FUNDING SYSTEM IN ENGLAND

NUT BRIEFING FOR DSB

OCTOBER 2012

Introduction

At DSB we will be delivering a workshop, “The New Funding System in England.” The workshop will have an organising focus and we’ll be using activity-led methods, so this briefing is intended to provide you with some key background information on the issues we’ll be covering. More information on school funding issues can be found on Hearth at Advice and Guidance > School Funding.

The changes announced by the Government on school funding reform in England will have significant consequences. The changes include those being made to facilities time funding. We will be covering that issue, on which separate guidance has been made available, but this briefing highlights a number of other key issues.

Overview of the Changes

  • The Government has decided against introducing a national funding formula before the next spending review period begins in 2015.
  • There will,therefore,be no redistribution of funding between local authorities before 2015. For 2013-14 and 2014-15, local authorities will be funded on an historic basic (with 2013-14 funding based on 2012-13 funding). The Minimum Funding Guarantee (MFG) of minus 1.5 per cent per pupil will also continue for 2013-14 and 2014-15.
  • Changes to funding rules for2013-14, however, require local authorities to distribute funding using a simpler formula and delegate as much funding to schools as possible.
  • Restrictions on the factors that can be used are causing problems in ensuring that funding meets the needs of schools.
  • The change to the pupil count from January to October is causing problems for some LAs, for example where a large number of children had not been allocated a school place early in the term.
  • New Dedicated Schools Grant (DSG) blocks will be introduced for schools, high needs and early years, with funding capable of being moved between the blocks.
  • Academies will be funded according to the current year local authority funding formula for schools (butwill still be funded on an academic year not financial year basis).
  • The new Education Funding Agency (EFA) will have an oversight role, holding observer status at Schools Forums, reviewing local authority compliance, calculating academy budgets and investigating potential unfairness.

Action Points for NUT Divisions

Involvement in local discussions on the impact of the funding changes, including in particular at Schools Forum level, will be important in this and future years as the Government makes further changes to funding.

In relation to discussion on the funding formula and funding allocations for 2013-14 and beyond, divisions should argue that local authorities should:

  • include, with any proposals for changes to the funding formula, detailed exemplifications showing how the funding of individual schools would be affected by any changes and also showing the impact of the MFG;
  • look again at any longstanding funding issues caused by the local funding arrangements;
  • encourage schools to opt for continued central retention of relevant funding, including in particular supply cover for time off for trade union duties (see section below);
  • encourage academies to buy back into local authority central services including supply cover for trade union and public duties;
  • consider carefully the need for contingency funding for primary pupil growth;
  • consider the use of exceptional local factors where this is appropriate, for example to protect schools against the impact of unavoidably large premises costs;
  • consider the use of separate funding rates for Key Stages 3 and 4, in the context of promoting funding on the basis of need;
  • argue for local funding arrangements which protect small schools against the unavoidable additional costs they face; and
  • argue that the participation of non-schools members including trade union representatives adds value to the deliberations of Schools Forums and should continue.

Funding Formula and Delegation

Local authorities have been examining their funding arrangements toidentify formula factors not allowed under the new system and discussing how to allocate funding through the remaining allowable factors. This will result in significant changes to the balance of funding between schools in many local authorities and may place some individual schools in significant danger.

Some funding which local authorities can currently retain centrally will now be delegated to schools, although some of this(such as facilities time funding) maystill be capable of being retained centrally if Schools Forums agree.

Local authorities will not be allowed to hold funding for new redundancy costs in the DSG, though they can hold such funding elsewhere. Funding for historic redundancy costs with ongoing financial commitments can continue to be held in the central part of the schools budget.

New lump sum arrangements will be implemented to help small schools, particularly those in rural areas.

No new commitments or additional funding will be allowed where funding is held centrally by the local authority within the schools budget in respect of local authority statutory responsibilities (e.g. Carbon Reduction Commitment, admissions).

The DfE is not yet introducing a prescribed primary/secondary funding ratio (proposed in the previous consultation document) but expects local authorities to calculate this ratio in case it decides to introduce a prescribed ratio in 2014-15.

The DfE says that the position of the six Londonlocal authorities which are in the teachers’ Inner London pay area but are funded as Outer London local authorities will be rectified in due course.

Funding Protection

The Minimum Funding Guarantee (MFG) of minus 1.5 per cent will continue to be used in 2013-14 and 2014-15. More schools may require MFG protection as a result of the changes to the funding formula being imposed by the DfE. The MFG will be the only protection for schools – the DfE has said that funding should be permitted to change with pupil numbers. There are separate protection arrangements for special schools and units. Overall gains for individual schools can be capped or scaled back to make the MFG affordable. Decisions on funding protection beyond 2014-15 will be subject to decisions made in the next Government Spending Review.

High Needs and SpecialSchool Funding

Specialist and mainstream provision will be funded on an equivalent basis. Consistent high needs funding arrangements for pupils and students from birth to 25 will be put in place. This will use a ‘place-plus’ methodology and will be made up of core funding, additional support funding and top-up funding.

A number of issues relating to SEN have featured in local authorities’ reviews of funding formulae, including: the definition of the ‘notional SEN budget’ for schools; arrangements for additional funding to schools from the new High Needs Block; the number of places in special schools, units and specially resourced provision; and funding for SEN post-16.

Special schools will no longer be funded on the same basis as primary and secondary schools; they will instead get £10,000 per place plus top-up funding for each pupil. PRUs will be receiving delegated budgets for the first time in 2013-14. Local authorities will need to identify the funding needed for PRUs as part of the local funding review.

Early Years Funding

Local authorities have been reviewing their individual early years formulae (the Early Years Single Funding Formula, or EYSFF) which can use school formula factors as well as early years-specific factors such as deprivation, quality and sustainability. Where EYSFFs use school factors, these will be limited as with school funding. A mandatory deprivation element will continue, but will need to be based on child-level definitions of eligibility instead of the setting level. From 2014-15 the 90 per cent funding floor for 3-year-olds’ participation will be removed.

Schools Forum Arrangements

LAs are required to check that the composition of their Schools Forum complies with the Schools Forums Regulations. This may affect representation on Schools Forums in some areas. The Regulations are being amended. Only schools members and PVI members will be able to vote on the funding formula. Nevertheless, all Schools Forums members will be able to take part in funding discussions.

Academy Funding

Academies will now be funded by the EFA. Their budgets will continue to be calculated on the basis of the local authority funding formula for schools. The current 17 month time lag for academy funding will be reduced to 5 months. Thus, while academies were funded for the academic year 2011-12 on the basis of the local authority funding formula for schools for the financial year 2010-11, academies’ funding for academic year 2013-14 will be based on the local authority funding formula for the financial year 2013-14. Free schools will be funded on a similar basis to maintained schools and other academies by 2013-14.

There will be no separate academies calculation of schools block LACSEG funding, as the maximum amount of funding will be delegated to schools. Local authority block LACSEG funding will be administered directly to local authorities and academies on a per pupil basis – the DfE is consulting on this.

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