What next for school funding?
Last week, the Queen’s Speech confirmed that the government intends to press ahead with the National Funding Formula (NFF) in its quest to achieve fairer funding for schools. No details were given about timescales, or whether the manifesto policy of a ‘no loss’ guarantee will be implemented (and if so what this really means). We hope it won’t be long before an announcement is made, to put an end to the uncertainty that schools have been living with for such a long time.
However, one thing is clear: DfE will not be able to fund schools directly (the so-called ‘Hard NFF’) from 2019/20, because this requires primary legislation and no such Bill was proposed for the two-year period covered by the Queen’s Speech. So it sounds as though direct funding could be off the agenda for a while. This isn’t exactly surprising, given the amount of parliamentary time needed for Brexit legislation.
There are also some difficult aspects which need to be resolved before a Hard NFF can be introduced, and the delay buys time for solutions to be found. These include finding a formulaic approach to fund costs such as PFI, rates, split sites, growth and exceptional circumstances for individual schools. The Soft NFF will allocate these items on the basis of historic allocations.
What does the announcement in the Queen’s Speech mean?
The wording on school funding was very brief: ‘My government will continue to work to ensure that every child has the opportunity to attend a good school and that all schools are fairly funded.’ This suggests the Soft NFF will go ahead, whereby local authorities (LAs) will continue to run individual local school funding formulae to distribute the Schools Block element of the Dedicated Schools Grant (DSG) to the schools in their area. The local formula should still form the basis of academies’ General Annual Grant.
From the implementation date (yet to be confirmed), the Schools Block allocation for each LA will be calculated using the NFF. But the allocation will be a net figure after applying national protection and capping. This is likely to mean it’s much more difficult for LAs to balance the formula if they decide to depart from the NFF values for particular local reasons. Even so, it would not be surprising if the DfE decided to impose much greater restrictions on the ability of LAs to change the level of funding for individual schools.
Without primary legislation to introduce a Hard NFF, the mechanisms open to DfE to achieve any changes are the annual Schools and Early Years Finance Regulations which stipulate how DSG can be used, and the Schools Forum Regulations which outline the powers of local Schools Forums to take certain decisions and the issues they must be consulted on. In the first NFF consultation, a review of Schools Forums was promised, but this seems to have fallen by the wayside.
There are two separate issues to consider when we hear the government’s decisions: firstly how the NFF will redistribute Schools Block funding to schools (via LAs in the initial Soft NFF phase), and secondly how much money there will be in the pot. While additional funding was promised in the Conservative manifesto, it isn’t possible to work out how much will be available to cover cost pressures until we know what values are going to be assigned to the NFF. The final formula will determine the extent of losses for individual schools, and hence the cost of protection. That will put a dent in the extra money that is on offer.
Once the genie was out of the bottle, it was clear that the government would not be allowed to forget about underfunded schools. So it’s not surprising that it has decided to press on with the NFF. But finding the right balance is extremely difficult. Because everyone’s definition of fairer funding seems to be that they should get more, it needs the wisdom of Solomon to find a politically acceptable solution. We await an announcement and will be providing a detailed analysis to our subscribers when it happens; you can sign up on our home page.
Since we don’t yet know what the DfE is planning, for the rest of this post we will explore why it’s advisable to keep an eye on the issues your local Schools Forum will be discussing in the coming year.
What is the Schools Forum?
There is a Schools Forum in every local authority area; it is a statutory body established and governed by the Schools Forum Regulations. Essentially it provides an arena for decision making by schools on certain issues (though not many) and is a prime means of consultation and stakeholder engagement for issues where the LA has decision making powers.
There are two categories of Schools Forum membership: schools and non schools members. Schools members are split between maintained schools and academies, usually on the basis of pupil numbers. These groups can decide on the balance between sectors or staff/governor members. There must be members for Pupil Referral Units, nursery schools and special schools where they exist. If you want to know more about how Forums work, check out the DfE’s good practice guide for Schools Forums at https://www.gov.uk/government/publications/schools-forums-operational-and-good-practice-guide-2015.
What decisions does the Schools Forum take?
The main decision making power for Schools Forums is the top slicing of Schools Block funding to fund services that are managed by the LA. Forum has to take this decision afresh each year. After this deduction, the remainder of the money goes into the local school funding formula. So the Forum decisions directly affect the amount available for school budget shares and academy GAG.
The DfE tightly controls the type of expenditure that can be retained by LAs and limits most of it to the previous year’s level of spending. Therefore any changes are likely to be reductions in top slicing. Forums can also decide that specific discretionary funds can be top sliced from DSG for pupil growth, falling rolls and schools in financial difficulty; not all areas choose to have these funds.
Other funding can be taken solely from LA maintained schools after budget shares are calculated , under a process called de-delegation. The Forum members representing these schools have to agree this, with separate decisions taken by sector. Academies, nursery and special schools and PRUs can decide whether to buy into these arrangements on an individual basis.
Top slicing and de-delegation decisions are likely to be removed from Schools Forums in future and controlled by DfE. A Central Schools Services Block is proposed, divided into historic commitments and ongoing costs. The DfE is on a mission to see historic commitments ‘unwind’, but any savings would no longer go back to local schools as they do now when these budgets are reduced. They would go back to the national pot and DfE would decide how to use the money. Ongoing costs are likely to be allocated on a formulaic basis, mainly on population and a deprivation weighting.
What other influence does the Schools Forum have?
While the actual decision making powers of the Forum are quite slim, it has some influence on the budget setting process. It can give views on the budget strategy, e.g. how the overall DSG is used between the Schools, Early Years and High Needs categories of expenditure, and how the Schools Block – after central retention – should be distributed between schools in the area using the local funding formula. The main debates to watch out for are:
- Any variation in what goes into the Schools Block compared to DSG allocations – i.e. transfers to or from other blocks
- The proportions of the Schools Block allocated between primary and secondary sectors (this varies widely);
- Weightings for deprivation and other additional needs such as pupil mobility, English as an additional language and low prior attainment;
- Inflation on PFI contracts, and funding for exceptional circumstances that only apply to a few schools.
The other highly significant area for LA decisions where the Forum can express views is the High Needs budget. The LA has a statutory duty to ensure provision for pupils with SEND, so it has to have control over this budget. It is only required to consult the Schools Forum once a year on how it proposes to spend the High Needs Budget, but many LAs go further than this.
At the end of 2016, all local authorities were asked to conduct a review of their High Needs Budget in preparation for the introduction of the High Needs National Funding Formula in 2018/19. We are assuming this reform will go ahead, as there has been very little attention paid to it, certainly nothing like the lobbying we’ve seen in relation to the main Schools NFF proposals.
Our post ‘SEND Funding Alert’ https://schoolfinancialsuccess.com/send-funding-alert/ explains more about the problems this could cause for mainstream schools. Essentially, if an LA does not receive sufficient to cover high needs costs, it may need to transfer money from the Schools Block. This is likely to be a difficult debate as the funding squeeze is felt, and indeed DfE is planning to limit LAs’ ability to make such transfers.
All these decisions have the potential to affect the change in your per pupil funding from one year to the next. DfE decides the maximum permitted loss, which is currently -1.5% per pupil per year but is likely to be 0% in future. However, to balance the local formula, LAs currently have discretion over the cap on gains, so if your school has been underfunded in the past, any decision to have a lower cap locally (if permitted in the Soft NFF) could result in longer timescales for you to receive any increases.
Why keep an eye on the Schools Forum?
Apart from Forum decisions on central budgets, which are usually a fairly low proportion of the total Schools Block, it is the decisions of the LA that determine how much money your school receives in the coming years. But a good Schools Forum can initiate valuable debate and exert influence on these decisions.
When the ‘Soft NFF’ is introduced, you will still be able to express views to your LA on the local formula, and your funding will be calculated in relation to the data changes within your local area. We don’t yet know the details of the suggested ‘no loss’ guarantee, nor whether the LA will still be allowed to decide on a local cap on gains to achieve a balanced formula. But it seems likely that there could still be the ability to tweak the formula to achieve a different result locally, especially in areas where the NFF delivers more money. In some areas there is a Forum sub-group for a more detailed school involvement in any review of the funding formula.
Now is the time to watch for Schools Forum debates and decisions, while there are still decisions to play for. When the ‘Hard NFF’ is introduced, there will be no room for local decision making on the formula. The DfE will apply the NFF strictly to every school in the country, and your funding will be determined by your data as a proportion of the total across the country. If other areas have a higher increase in pupil numbers, for example, it will dilute the national per pupil value and you might not see much of a rise in funding if your growth isn’t as great. Your LA will not be able to juggle the overall formula to suit local circumstances.
Under direct funding, DfE will operate protection and capping nationally, using the previous year’s per pupil funding (set by the LA) for each individual school as a baseline. All schools in a local area that is benefiting from the NFF might see gains capped in order to send funding to another area where a majority of schools need protection.
The amount you are receiving in the year before the Hard NFF is introduced therefore assumes a high significance; it could constitute the maximum per pupil funding you receive for the foreseeable future. The LA decisions, taken on the basis of consultation with the Schools Forum, will form the basis of this figure.
So it’s definitely worth keeping a careful eye on the discussions at Schools Forum, to see how decisions on the budget strategy for 2018/19 are progressing. Some LAs may want to make as large a transfer as possible from the Schools and Early Years blocks next year, to guard against a tension between the new High Needs NFF and actual costs. Alternatively the LA might make a case for any unspent balances in central budgets to be retained to cover high needs pressures instead of going into school budgets; so far DfE hasn’t mentioned how unspent DSG will be dealt with in the new system.
Either of these courses of action can be reasonable and prudent, in the light of uncertainty over the decisions by DfE on the High Needs NFF. Your LA needs to justify any such proposals, ensuring that specialist provision is delivering value for money and that thresholds and funding values are operating effectively between mainstream and specialist settings.
Questions to ask to secure accountability in the Schools Forum
It’s worth considering how accountable your Schools Forum is to the schools it is representing. Here are some possible questions to discuss at headteacher meetings:
- Do your representatives on the Forum cover a wide enough spread of different types of school? The Forum should be reviewed regularly to ensure the right balance between LA schools and academies
- Is there an appropriate balance between sectors, size of school, levels of deprivation, perhaps faith and other schools, those experienced in SEND and other additional needs? If there isn’t a balance, some priorities might be watered down, even though they are highly significant for a small number of other schools.
- Is there a balance in representation across the range of inclusive practices, including some schools with specialist provision such as SEN units or resource bases? Special schools have a separate entitlement to be represented by a schools member.
- Is there any turnover of representatives on a regular basis? By regular, we don’t mean changing every year; representatives build up a lot of knowledge and understanding, including awareness of technical matters. It would not make sense to lose this all in one go. But if there is little change in representatives over a long period, things can get stale, and feedback to, and challenge from, the groups being represented may become less effective.
Being a Schools Forum representative brings important responsibilities. Members need to look at proposals and join in debates or voting as a representative of their constituency (such as a geographical cluster, or a sector), not purely from the perspective of their own school. It can be a difficult balancing act, even requiring them to vote for something that might disadvantage their school but which is in the common interest. You can judge the quality of a Schools Forum’s discussions by listening for members taking a strategic approach, rather than putting forward a very personal view, or focusing on the impact on staff rather than outcomes for pupils.
How can you find out more?
The collective groups of headteachers who elect the Forum representatives also have a responsibility, to pass on their views about the topics being discussed, and ask for detailed feedback after meetings about the discussions and any decisions taken. There may be useful information available that indicates how well the area is performing in value for money terms, such as financial benchmarking with comparator LAs on how Dedicated Schools Grant is used, an examination of how the area ranks in funding per pupil compared to statistical neighbours, or how the local funding formula compares in terms of targeting funding to different types of school and priorities.
All schools can keep themselves informed by reading the Schools Forum papers and minutes, which by law have to be available on a public facing website. Do a search for your area – some may have a different name, so you might need to try different search terms. If you still can’t find it, ask your Forum representatives to raise it.
Schools Forum meetings are public meetings and anyone can attend as an observer. This is a good way of keeping up to date, especially in the October to January period when decisions are made which affect your budget for the following year. In practice they can sometimes feel like closed meetings, as in most areas members of the public rarely attend. School Business Managers, senior leaders and governors (especially Chairs of Governors and Chairs of Finance Committees) might find it interesting from a CPD viewpoint to attend. Observers are not usually allowed to speak but may be permitted to do so by prior agreement with the Chair of the Forum.
We hope this post has helped you to see the importance of keeping up to speed with what is happening in your local Schools Forum, as we wait for the next phase of school funding reform. The resources it discusses are for all children from the area, so strengthening accountability in relation to the decisions taken by the Forum and the LA can only be beneficial as those resources are put under pressure.