school funding reform 16 th and 19 th july 2012 – handout 1 page 1

School Funding Reform 16th and 19th July 2012

– Handout 1

Presentation to Swindon Headteachers and Governors

“School Funding Reform”

16th and 19th July 2012

Steve Haley, Head of Finance - Education & Innovation

Paddy Bradley, Head of Commissioning – Economy & Attainment

Page 2

Presentation Outline 1)Overview to current school funding (SH)

2)Background to the school funding reform programme (SH)

3)DfE requirements from 2013/14 and options for local decisions (PB)

(Please ask questions at the end of each section or at any time)

Summary of Handouts1. This power point presentation

2. Schedule of current mainstream and special school sector funding (3rd July Schools Forum Annex 4 & 5)

3. Charts showing current funding allocated to mainstream settings for deprivation, SEN, EAL and lump sum fixed costs

4. Summary of IDACI scores for each school

5. Summary of mainstream formula consultation issues

Part 1 – Overview to current school funding

Abbreviations • DfE – Department for Education• EFA – Education Funding Agency

(was YPLA)• DSG – Dedicated Schools Grant• GUF – Guaranteed Unit of Funding• SF – Standards Fund• EOTAS – Education other than at

school• PRU – Pupil Referral Unit• PLASC – Pupil Level Annual

School Census • AWPU – Age Weighted Pupil Unit• LA – Local Authorities• ESS – Education Support Service• PBST – Primary Behaviour

Support Team

• ISB – Individual School Budget• AEN – Additional Educational

Needs• SEN – Special Educational Needs• PVI – Private, Voluntary and

Independent • FNE – Free Nursery Entitlement• LAC – Looked After Children• CFR – Consistent Financial

Reporting• EYSFF – Early Years Single

Funding Formula• FSM – Free School Meals• IMD – Index of Multiple Deprivation• IDACI – Income Deprivation

Affecting Children index

Current School Funding Arrangements• Revenue funding for schools and academies is

allocated to each LA via the DSG (Dedicated Schools Grant)

• Each LA has a unique GUF (Guaranteed Unit of Funding) per pupil

• Each January there is a census of age 3 to 16 pupils in early years, schools, academies and alternative provision

• DSG = pupils x the GUF

Current School Funding Arrangements

• For 2012/13 Swindon’s DSG is 29,852 pupils @ £4,696.48 = £140.2m

• The LA is retaining £18m for central services and £122m is distributed (i.e. delegated) across schools and academies in accordance with factors in the local fair funding formula

• The LA consults with the Schools Forum each year on the value retained for central services and on changes to the local formula

Current DSG Funding Rates • City of London (highest) £9,372.60

• National average £5,082.53

• South West Region average £4,773.96

• Swindon (25th lowest) £4,696.48

• Leicestershire (lowest) £4,428.70

• DfE acknowledge the current system is unfair – but to maintain stability changes are to be considered after the next election

• If Swindon was funded at the national average we would receive an extra £11.5m (8.2% DSG increase) to share across early years settings, schools and academies

SF agreed - 2012/13 Retained BudgetEarly Years Single Funding Formula – paid to Swindon schools and PVI Providers each term

£7.5m

Out of Borough School fees – paid to Independent and OLA schools throughout the year

£3.1m

Set up costs and trigger funding – paid to Swindon Schools (including new Croft Academy) to reflect pupil increases after January

£1.4m

Special Education Needs funding – paid to Swindon Schools and Academies during the year

£1.5m

Schools in Challenging Circumstances , Redundancies and Equal Pay – paid to / for Swindon schools during the year

£0.6m

Provision of LA services – EOTAS, Tuition Service, Portage, Speech & Language, Admissions, FSM admin. etc.

£2.3m

Share of Corporate overheads relating to DSG services - Legal, Finance, HR . £0.9m

Provision for Converter Academy Funding Clawback £0.7m

Total Retained Budget 2012/13 (£14.3m is paid out in year to settings) £18.0m

10

SF agreed - 2012/13 Formula Allocations Forum agrees factors in the local formula – mainstream schools;

• Pupil Led Funding• Standard AWPU factors for different key stage pupils (more

pupils = more cash)• Factors for Deprivation, Special Needs, English as an

Additional Language (higher needs = more cash)

• Site Specific funding • Variable Flat rate funding to reflect overall size of school• Funding to match rate bills and PFI affordability costs• Specific funding for Borough wide facilities -Special Resource

Provision, Education Support Services, BME project

•

SF agreed - 2012/13 Formula Allocations

Forum agreed new funding scheme for special schools

• Pupil / place led funding• New banding system introduced to provide higher funding for higher needs

• Funding allocated for current pupils and planned September increases

• Site specific funding • Some flat rate funding allocated but greater proportion of funding allocated via banding rates

Revising Formula Allocations

• Every time any factor or funding rate in the local formula is reviewed this results in reallocations between settings – “winners and losers”

• LA does not wish to see any school in financial difficulty but appreciates the effect that reduced funding can have

• For 2012/13 Swindon Forum agreed to change the distribution of former Standards Fund grants which were not previously allocated to all settings – some schools very unhappy despite LA allocating £0.6m in transitional funding

• Further changes must be implemented in 2013/14 therefore further reallocations of funding across settings is inevitable

SF agreed - 2012/13 Formula Allocations

Current formula factors and values

• Explanations of all current mainstream and special school funding factors and values were included in a report to the 3rd July 2012 Schools Forum and are included at handout 2

• Also included at handout 3 are a series of graphs which show the value of funding currently allocated across Swindon settings for areas subject to review

• These hand outs may be useful reference documents during part 3 of today’s presentation

Part 2 – Background to the school funding reform

programme

School Funding Reform Programme

• Some immediate changes made after the last election- Greater simplification - Reduced schools protection- Frozen DSG funding- New Pupil Premium introduced

• Interim changes 2013/15- Further simplification and transparency- Increased delegation

• National school funding system 2015/16?

DfE Changes so far…Simplification• Immediately moved all Standards Fund Grants (£16.8m) into

the DSG thereby removing all ring fencing and distribution constraints imposed by the previous government – some grants were distributed to a small number of Swindon schools

• From 2011/12 all school funding could be distributed in accordance with local decisions but Swindon Schools Forum supported the LA proposal not to implement changes in that year to maintain stability

• This was addressed in 2012/13 budget setting and all funding is now proportionately allocated across all settings via factors agreed by each Headteacher Association

DfE Changes so far……..Protection• As part of the local fair funding arrangements all LAs are

required to operate MFG (Minimum Funding Guarantee) which provides a degree of stability to school funding

• It does not provide protection against falling pupil numbers but for most other areas of funding the local formula must guarantee a degree of protection;

- From 2005/06 to 2010/11 the MFG guaranteed that annual per pupil funding would increase by at least 2.1%

- From 2011/12 to at least 2014/15 the MFG guarantees that annual per pupil funding will not reduce by more than 1.5%

DfE Changes so far………..Funding• All DSG GUF rates have been frozen

• Although much better than grant settlements for other public services (e.g. Local Government) the “flat cash” settlement for schools is in real terms a cut unless they can absorb the impact of inflation on pay and running costs

• The table below summarises recent and future DSG GUF increases Year Increase Year Increase

2006/07 + 6.7% 2011/12 0%

2007/08 + 6.5% 2012/13 0%

2008/09 + 4.3% 2013/14 0%

2009/10 + 3.6% 2014/15 0%

2010/11 + 4.1% 2015/16 ?

DfE Changes so far………..Funding• New Pupil Premium introduced (in addition to DSG) to target

extra funding for 3 categories of pupils whose attainment levels are historically lower than other pupils - £625m in 2011/12 rising to £2.5bn in 2014/15

• Current funding rates are;- Deprivation element - £600 per pupil who in any of the last

6 years has been registered as eligible for FSM- Extra needs - £250 per Service pupil- Extra needs - £600 per Looked After pupil

• For 2012/13 Swindon settings are receiving PP funding totalling £3.8m and must be able to demonstrate how this is being used to narrow attainment gaps

Public Sector Funding & Austerity • DfE have concluded that there is a flaw in the DSG and that

the individual GUF rates paid to LAs need revising

• Due to the poor health of national public sector finances there is no scope to increase overall school funding within the government’s 2011/15 spending plans

• The only way low funded LAs DSG rates could be increased is therefore by reducing the funding rates paid to other LAs

• Despite lobbying (the F40) DfE have decided against any redistributions but will consider this after the next election

• Will Swindon’s rate increase or is it more likely that other LA rates will reduce? – see Institute of Fiscal Studies extracts

National context - Extract from a study by the Institute of Fiscal Studies

DfE Changes………Interim Changes

Coalition government very critical of current school funding arrangements;

“The current system is opaque, inconsistent and unfair with huge differences between areas. Some local formulas are so complicated that they take account of over a hundred different elements – many of which have no impact on pupil attainment”

“This complexity makes it virtually impossible to understand why a school receives the funding it does”

DfE Changes………Interim Changes

• Aiming to introduce a national funding formula for schools after next election which will ensure “children in similar circumstances living in different parts of the country will attract funding on the same basis”

• Interim changes imposed on LAs for 2013/15 to; - Retain less funding & delegate more of the DSG - Amend mainstream local formulas within a much narrower range of factors and constraints

- Introduce “place plus” funding for High Needs & Alternative Provision settings

Changes Required – DSG

DSG will be received by LAs in 3 separate blocks which initially will not be ring fenced

•Schools Block – value will be based on the October (not January) census

•High Needs Block – value will initially be based on levels of planned spending in 2012/13

•Early Years Block – value will be revised after each term based on actual take up (At present we receive funding for 90% of three year olds even though take up is only 84% - DSG will therefore reduce unless take up increases)

Changes Required – Central ServicesDfE require LAs to delegate more funding to schools;

•Some funding cannot be retained – we have already delegated all these items e.g. Insurance, Threshold pay grant

•Funding can be retained (de-delegation) if the value is agreed by phases/groups (Primary, Secondary, Special, Academies) of the Schools Forum e.g. Pupil growth, FSM eligibility, schools in challenging circumstances, support for minority ethnic pupils, Admissions, redundancy costs, equal pay

•For Admissions and redundancy costs the value retained in future years is capped at 2012/13 levels

(NB - the LA anticipates reducing central retentions by £1m next year - SICC £300k and Schools LACSEG £700k)

Changes required – Early Years Settings

• Minor changes required to Early Years Single Funding Formulas to ensure deprivation funding is allocated based on a measure of the pupils at each setting and not the location of the setting

• From 2013/14 funding for nursery education for disadvantaged 2 year olds is moving to the DSG to bring all early years funding together - at present 2 year old funding is provided to LAs within the Early Intervention Grant

(NB – the LA is currently developing a strategy to expand early years provision across the Borough to meet rising demand)

Changes required - Mainstream Settings

Significant changes required as formulas must be simplified and the maximum number of factors used to distribute funding is reducing from 37 to 10

Changes required – High Needs Settings

Major changes required to all High Needs settings via introduction of “Place Plus”

Special schools and Special Resource Provision

•£10,000 per planned place as agreed by the EFA based on local and national demand information

•Plus locally determined “top up funding” from LAs for placements made (this is also payable to pupils in mainstream settings)

•Actual occupancy will determine financial viability

(NB - LA can still centrally fund Borough wide provision e.g. ESS, PBST and CAMHS)

Changes required – Alternative Provision

Alternative Provision settings (Pupil Referral Units) • £8,000 per planned place as agreed by the EFA based on

local and national demand information • Plus locally determined “top up funding” from LAs and Schools

and Academies for placements made• Actual occupancy will determine financial viability

(NB – These services are not currently formula funded but from April will need to operate within formula based delegated budgets)

Changes required – EFA

• The Education Funding Agency will have an oversight role which is described as;

- A right to send an observer to Schools Forums- Reviewing each LAs formula to ensure compliance with

DfE requirements - Monitoring the impact of funding changes on different

types of schools

• One positive consequence of the interim changes is that Academy funding will be more closely linked to LA formulas

• From 2013/14 EFA will base Academy funding on the LAs 2013/14 formula - there is currently a 17 month time delay

Changes required – Schools ForumsAmended Schools Forum regulations proposed. Key issues are;

•Meetings must be public and all agendas and minutes made available (SBC is compliant)

•School membership must be broadly proportionate to pupil numbers (SBC is compliant but will annually review)

•PRU’s and Academies to be recognised as separate groups

•LA attendance restricted to Cabinet Member, Director of Children Services and technical advisers presenting reports (SBC is compliant)

•Only schools & PVI members can vote on funding issues (excl. Diocese, Trade Union, BME and 14-19 Partnership members)

LA Decisions & Schools Forum Consultation

Changing nature of school funding discussions;• 1997/98 to 2005/06 Standards Fund ring-fenced grants

introduced providing funds for specific government initiatives • 2006/07 to 2010/11 above inflationary DSG increases

including extra funds for ministerial priorities• Relatively high levels of MFG protection @ + 2.1%• Forum consulted on distribution of additional funding

•2011/12 to 2014/15 DSG frozen, former ring-fencing arrangements ceases, constraints introduced on local formula and MFG protection reduced to – 1.5%

•Forum consulted on re-distribution of existing funding

Part 3 – Options for local decisions

Consultation Programme• For 2013/14 a number of decisions will need to be made and

the LA will be formally consulting with each setting

• As in previous years, the LA will seek to make recommendations in line with the consensus view of Headteacher Associations - although final decisions will be made by the Director of Children Services

• A consultation questionnaire will be issued to each setting on 3rd September requesting returns to the LA by 30th September – Governors may wish to meet during September on this

• Feedback from this week’s events will be used to model options which will be reported to the 26th & 27th September Headteacher Associations and 9th October Schools Forum

Consultation Programme

• For High Needs settings the only issues for local consideration are the number of places required in each setting and the value of top up funding that is affordable – work is underway on both these areas

• For Mainstream Settings the areas requiring local decisions will be presented over the following slides and the LA is keen to gain initial views from Headteachers and Governors

• At the end of the presentation we will be keen to receive the views of Headteachers & Governors

Funding Reform – DfE Principles• DfE are aiming for a funding formula which is much more pupil

led and less reflective of school characteristics as they believe this will promote choice and raise quality.

• They express concerns that as schools have historically been funded through various grant schemes or because they offered different types of facilities or teaching staff, some settings offer a rich and varied curriculum whilst others only offer the basics.

• By ensuring that more funding follows pupils they envisage that those schools which attract pupils (either because of their curriculum or ethos or quality of teaching) will also attract the funding they need, thereby leading to pupils having greater choice over better schools.

Mainstream Funding – Options The table below shows the allowed mainstream funding factors

A) Basic per pupil amount – options!MandatoryB) Deprivation – options!

C) Looked After Children – not used?

Optional

D) Low cost high incidence SEN – options!

E) English as an additional Language – options!

F) Lump sum – options!

G) Split sites – OK no changes?

H) Rates & PFI contracts – OK no changes?

I) Pupil Mobility – not used?

Mainstream Factors no longer allowed

Very few existing SBC factors are not allowed by DFE in the new formula from 2013/14;

•Abatement (£105k) – provided to fund loss of LA interest arising from ISB & PP instalments being paid out in advance of grant receipts - move to pupil values

•Small schools allowance (£259k) – extra flat rate funding paid to schools with less than 140 pupils – linked to lump sums

•Deprivation FSM taken (£1.334m) – funding allocated to meet estimated cost of meals taken - linked to general deprivation

•Recent delegations (£730k) – funding transferred fro the retained budget in 2011/12 (maternity, primary and secondary strategy etc.) – move to pupil values

Principles to retain stability – new factors?• It is important to recognise that DfE are seeking steps towards

standardisation and simplification across all local formulas and that only 2 factors are mandatory.

• The LA does not currently allocate funding for LAC’s or for Pupil Mobility and, although this is optional;

- This has been available for many years but not used in Swindon and would create an avoidable extra complication if it was introduced now

- If either factor were to be introduced funding would have to be reduced in another area of the formula

Q1 - Do you agree that the LA should not introduce these optional funding factors?

Principles to retain stability–existing factors?

Although allocation methodologies and funding values need revising the LA currently allocates funding in the following optional areas;

• Low cost high incidence SEN• English as an Additional Language• Flat rate Lump sums

Q2 - Do you agree that the LA should retain these factors?

Principles to retain stability–existing factors?

The LA currently provides funding for the following factors which are allowed to continue unchanged but are optional areas;

• Split sites – additional funding allocated where a public highway crosses through school premises

• NNDR – funding is allocated each year to match each settings rate bill

• PFI – funding is allocated each year to match each settings rate bill

Q3 - Do you agree that the LA should retain these factors?

Mainstream Factors requiring local decisionsIf all existing factors that are allowed are retained, decisions will need to be taken on the following

- A) Secondary pupil funding - B) Deprivation- D) Low cost high incidence SEN- E) English as an Additional Language- F) Lump sum allowances

Hand out 5 summarises the options which are described on the following slides.

A) Basic Per Pupil Amounts? (Mandatory)

Primary pupil values must al be the same but for secondary pupils options are ;

•One rate for all age groups

•Separate funding rates for KS3 and KS4

LA view is that higher rate funding should be paid for KS4 pupils (as is current practice) to recognise costs associated with examinations

Q1 – should one or two funding rates be set for secondary age pupils?

B) Deprivation (Mandatory)

• Primary deprivation funding is all currently allocated via IMD (Index of Multiple Deprivation Scores) plus FSM taken (£6.071m = 10.2% of sector funding)

• Secondary deprivation funding is currently allocated 50% via IMD and 50% via FSM (Free School Meals) plus FSM taken (£3.679m = 7.6% of sector funding)

• From 2013/14 LAs must use - IDACI (similar measure to IMD)- FSM or FSM ever 6- A mixture of FSM / FSM ever 6 and IDACI

B) Deprivation (Mandatory)• DfE have provided IDACI scores for each setting based on the

post codes of their pupils.

• Levels of pupils deprivation are shown by expressing the % of pupils over 7 bands – it is for the LA to allocate appropriate cash values to each band

Band IDACI score lower limit

IDACI score maximum limit

LA to determine values per pupil per band

Band 0 0 0.2 £0

Band 1 0.2 0.25 £TBC

Band 2 0.25 0.3 £TBC

Band 3 0.3 0.4 £TBC

Band 4 0.4 0.5 £TBC

Band 5 0.5 0.6 £TBC

Band 6 0.6 1.0 £TBC

B) Deprivation (Mandatory)

If we use FSM data as a basis for allocating deprivation funding we have two options

• FSM eligibility – current as at latest census

Or• FSM Ever 6 – this recognises pupils who are currently or have

at any time over the last 6 years been eligible for FSM

(NB – DfE use FSM ever 6 to allocate Pupil Premium funding and, given that this is not a perfect measure of deprivation, it may be appropriate to use IDACI data in local formula deprivation funding)

B) Deprivation (Mandatory)Q1 – should both sectors be funded on the same basis?

Q2 – for primary sector do we replace IMD with IDACI or FSM or a mixture & if a mixture what % of each - 25%, 50%, 75%?

Q3 – if we reintroduce FSM in the primary sector do we use FSM or FSM ever 6?

Q4 – for secondary sector do we replace the FSM / IMD split with IDACI or FSM or a mixture and if a mixture what % of each 25%, 50% or 75%?

Q5 – if we retain FSM in the secondary sector do we use FSM or FSM ever 6?

Q6 – Do we retain existing sector totals or allow deprivation funds to transfer across sectors?

•LA view is that to maintain stability whether IDACI or FSM is used the sector totals should remain the same

•Your view? See handout XX showing current levels of deprivation funding per setting

D) Low Cost High incidence SEN (Optional)

We currently allocate SEN funding via a mixture of prior attainment, EAL pupils and historic Band D SENRAP payments but for 2013/14, if we wish to continue providing this funding we must use prior attainment data provided by DfE;

• Secondary must be allocated based on KS2 pupils who achieve less than level 4 in English and Maths

• Primary must be allocated based on Early Years Foundation Stage Profile scores but there are two options

Q1 should we fund primary pupils scoring less than 78 points or less than 73 points?

Q2 – Do we retain existing sector totals or allow low cost SEN funds to transfer across sectors?

E) English as Additional Language (Optional)• We currently allocate EAL funding pupils for as long as they

are identified on the census but from 2013/14 we can only recognise EAL for 1, 2 or a maximum of 3 years

Q1 Should we recognise and allocate EAL funding to pupils for their first 1, 2 or 3 years after entering education?

• We currently fund EAL at £304 (primary) & £89 (secondary) per pupil - from 2013/14 secondary must be at least equal

Q2 Should a single rate be applied or higher secondary rate?

Q3 Should the rate be £304, £89 or a new average based on existing EAL funding divided by eligible EAL pupils?

Q4 Do we retain existing sector totals or allow EAL funds to transfer across sectors?

F) Lump Sum Allowance (Optional)

• We currently provide variable levels of lump sum funding proportionate to the size of each setting (£69k to £245k) but from 2013/14 only one rate up to £200k can be used for all settings

• The current average of £106,700 broadly equates to the level of funding the LA believes a small primary school would require to cover a Headteacher’s salary and other fixed costs

Q1 Should the lump sum be based on the current average of £106,700 requiring minor adjustments to pupil values or a higher figure up to £200,000?

• If a higher value is agreed primary pupil values will need to be significantly reduced

End of Presentation

• Any final questions on school reform issues?

• Please submit your views on the various mainstream funding issues raised today

• Consultation documents will be issued to each setting on 3rd September which will need to be returned to the LA by the 30th September

• Headteacher Association meetings are arranged for 26th and 27th September to progress these matters which will be reported to the 9th October Schools Forum

• Thank you for attending this event

school funding reform 16 th and 19 th july 2012 – handout 1 page 1

Documents

current funding

higher funding

current school funding

trigger funding

current school funding

higher needs funding

special school sector

overall size of school