Agenda item

(To receive a report by Mark Popplewell, Head of Finance – Children's Services, which provides the Committee with the opportunity to consider stage 2 of the consultation launched by government for a schools national funding formula with a closing date of 22 March 2017.  The proposed implementation for this national funding formula is 2018/19)

The Committee gave consideration to a report from Debbie Barnes, Executive Director of Children's Services, which provided an update on the stage 2 consultation for a schools national funding formula.

It was highlighted that through the government's national funding formula, Lincolnshire mainstream schools collectively were set to receive additional funding from the current level of Lincolnshire's Dedicated Schools Grant Funding. A copy of the report considered by the Lincolnshire Schools Forum was attached as Appendix A to the report. Page 33 of the said Appendix provided the Local Authority Observations of the school national funding formula.

The Executive Director of Children's Services guided the Committee through the report and Appendix A, making reference to:-

·         That the government had proposed the building blocks of the schools national funding formula to be basic per-pupil funding, additional needs, school-led funding and geographical funding.  Details of the 13 formula factors with the building block were detailed on page 24 of the report;

·         The Schools National Funding Formula comparison with Lincolnshire's Local Funding Formula;

·         Illustrative Local Authority Allocations for 2018/19.  It was noted the Local Authorities illustrative allocations baseline that had been used by the government was from each Local Authorities 'Authority Proforma Tool'.  It was highlighted that the baseline approach would influence each schools  final notional budget by the application of the 'funding floor' and minimum funding guarantee, and the gains cap during the transition period;

·         Lincolnshire Schools Position – It was highlighted that the introduction of the national funding formula was positive news for Lincolnshire schools; as Lincolnshire would receive additional funding of £15.534m per annum using 2016/17 data compared to the current level of funding provided by government for Lincolnshire schools.  Examples were provided within the report regarding the financial impact for schools prior and after the application of the 'funding floor' and minimum funding guarantee, and the gains cap. It was highlighted that prior the application the largest primary gain would be £130,512; and the largest primary loss would be (£299,403); the largest secondary gain would be £507,904 and the largest secondary loss would be (£174,751).  After the application the largest primary gain would be £130,512 and the largest primary loss would be (£52,667); likewise the largest secondary gain would be £507,904; and the largest secondary loss would be (£82,067).  It was further highlighted that through the government's application of the 3% gains cap, Lincolnshire schools would lose out on funding in 2018/19 by £7.865m following the application of the minimum funding guarantee;

·         Lincolnshire Schools Position – Academy Schools – It was highlighted that the government was proposing through the National Funding Formula changes to use the General Annual Grant (which included Local Authority Central Spend Equivalent Grant  protection funding) or Education Funding Agency termed 'local minimum funding guarantee' for the academy schools' baseline.  The baseline would be compared to the national funding formula before the application of the funding floor and minimum funding guarantee, and the gains cap.  Examples were provided within the report of the financial impact on Lincolnshire Academy schools prior to and after the application of the funding floor and minimum funding guarantee, and the gains cap. It was highlighted that prior the application the largest primary gain would be £129,577 and the largest primary loss would be (£302,321); the largest secondary gain would be £309,584 and the largest secondary loss would be £1,281,031). After the application the largest primary gain would be £129,577 and the largest primary loss would be (£55,780). The largest secondary gain would be £309,584 and the largest secondary loss would be (£176,357); and

·         The Local Authority observations of the schools national funding formula.  These were detailed on page 33/34 of the report presented.

During discussion, the Committee raised the following issues:-

·         The complexity of the new national funding formula – The proposed approach was far too complicated, and as a result very few people understood it. It was felt that the proposed formula should be made easier to understand and more transparent;

·         The use of national averages rather than a "needs based approach" – The use of national averages did not provide suitable evidence that funding levels for schools were sufficient to meet the needs of pupils and the costs of operating schools of different sizes;

·         The financial pressures facing schools – It was highlighted that Schools were estimated to be facing financial pressures of around 8% between 2016/17 and 2019/20 as a result of pay increases, employer contributions to national insurance and pensions, and the Apprenticeship Levy. These increased financial costs would lead to a reduction in real terms of funding for schools. This reduction in funding would have an impact on schools being able to keep, and recruit, good staff;

·         Schools in Lincolnshire were already poorly supported in terms of funding - No schools in Lincolnshire should end up with a cash reduction in its funding when schools locally were already underfunded when compared to schools nationally. Lincolnshire 2017/18 per pupil value was £4,305.40 compared to an England average of £4,618.63. However, under the proposed formula, it was estimated that 17 primary schools and 9 secondary schools in Lincolnshire would lose funding.  Any funding formula that included Lincolnshire should have a floor mechanism that ensured that no school in Lincolnshire would be worse off than they already were;  

·         The lump sum rate of £110,000 for all schools - The proposal to fix the lump sum rate at the same value for primary and secondary schools appeared unjustified.  The proposals did not seem to recognise or understand the fixed costs in running a school. The lump sum rate should vary depending on the size of the school;

·         The sparsity factor did not reflect reality - In Lincolnshire, there was a large number of small rural primary schools, but as these schools were close together, such as in neighbouring villages, they would not benefit from the sparsity factor; The loss of Looked After Children funding - Lincolnshire would be disadvantaged financially by the Looked After Children factor monies being added into the Looked After Children pupil premium.  By putting the Looked After Children factor monies into the national pot, would dilute the Looked After Children funding for those local authorities that use the formula factor.  The separate Looked After Children factor should be retained to maximise the funding available to support Looked After Children;

·         Pupil Premium and Deprivation Funding – The inclusion of additional needs funding for deprivation while still providing pupil premium funding meant that there would be double funding for schools that were eligible for both funding streams; and

·         A fairer funding settlement for each school – The 3% per pupil 'funding floor' and the protection for early academy convertors was unlikely to create fairness and equity across all schools.  It was unclear whether the level of protection for schools losing funding could be sustained and what would happen to those schools losing funding once the protection ended in 2019/20.

RESOLVED

1.    That the report on the Schools National Funding Formula be noted.

2.    That the concerns raised by the Children and Young People Scrutiny Committee as detailed above be forwarded on to the Department of Education in response to the consultation on the Schools National Funding Formula.