Agenda item

(To receive a report from Mark Popplewell, Head of Finance – Children's Services, which provides the Schools' Forum with an update on the mainstream schools funding)

Consideration was given to a report from Mark Popplewell, Head of Finance, Children's Services, which provided the Schools' Forum with a summary of the national funding formula for schools and high needs for 2018/19 and 2019/20.

In guiding the Forum through the report the Head of Finance, Children's Services highlighted the following points:-

·         The national funding formula for schools and high needs that had been announced by the government on 14 September 2017 for a 2018/19 implementation.  It was noted that stage 1 consultation on 7 March 2016, had outlined the principles that would underpin the proposed formula and pupil characteristics, and factors that were to be included in the formula; and stage 2 consultation on 14 December 2016, had provided details of the proposed funding formula, including illustrative school funding allocations.  It was noted further that in July 2017, the government had confirmed the introduction of the national funding formula would be supported by additional investment of £1.3bn for schools and high needs (£416m in 2018/19, and £884m in 2019/20).  It was highlighted that overall the schools budget would increase by £2.26 billion between this year and 2019/20.

It was reported that the government planned to transition to the national funding formula through a 'soft' approach in 2018/19 and 2019/20, where by Local Authorities (LAs) would continue to be responsible for calculating schools funding allocations.  LAs were encouraged to move forward to the national funding formula, to ensure that schools' allocations were on a sensible trajectory towards the move to a 'hard' national funding formula for 2020/21.

The Forum noted that the government had still not released the schools national funding formula Technical Guidance; national funding formula school level details; and the Authority Proforma Tool to allow the LA to undertake financial modelling;

·         Schools National Funding Formula – Details of the 14 formula factors with the building blocks of the schools national funding formula were detailed on page 20 of the report for the Forums consideration.  It was highlighted that the funding for Lincolnshire schools was planned to increase, however, the current funding settlement was up to 2019/20, and that funding beyond that date would be subject to decisions taken in the government's next spending review;

·         Funding distribution – It was highlighted that the government was intending to maintain the primary to secondary in line with the current national average of 1:1.29 (i.e. secondary funding being on average 29% higher overall than primary funding);

·         Per-pupil funding – The Forum noted that funding would continue to differentiate basic per-pupil funding between key stages, primary, key stage 3,  and key stage 4 to reflect the higher costs as pupils progressed.  It was noted further that the government's additional £1.3bn investment had enabled the AWPU rates to increase to: - primary £35, key stage 3 £66; and key stage 4 £74.  The Forum was advised that the national funding formula basic per-pupil factor would distribute 72.9% of total schools funding; and 90.7% of total funding would be allocated through per-pupil factors.  The government's drive was to move more funding through pupil-led factors, therefore, pupil numbers were the most critical factor in a schools financial viability.  It was also reported that the transfer of the total amount spent through Looked After Children factors in the local formulae in 2017/18 to the pupil premium plus budget, had resulted in Lincolnshire being disadvantaged financially from the approach being proposed by the government;

·         School-led funding – The Forum was advised that every school would continue to be provided with a lump sum, but at a lower level than the current national average, to enable more funding to be directed to pupil-led factors.  It was noted that the lump sum would be set at £110,000 for all schools; and its purpose was to make a contribution to the costs that did not vary with pupil numbers rather than the fixed costs entirely.  It was highlighted the monetary value was lower than the current average set by LAs; and reflected the government's objective to encourage schools to share resources, which was an area of work Lincolnshire had been working very positively on, however it was highlighted that rurality challenges existed for counties like Lincolnshire.  The Forum also noted that the school-led funding would have a sparsity factor to provide small and remote schools with additional funding over and above the lump sum.  It was noted further that eligibility for sparsity funding depended on the distance the pupils in the school would have to travel to their next nearest school and the average number of pupils per year group.  A qualifying primary school could attract up to £25,000; and secondary schools up to £65,000, through a scaling approach;

·         Other key funding factors – It was reported that Lincolnshire schools did not trigger any additional funding from the Area Cost Adjustment route; these were targeted mainly at inner and outer London areas.  The Forum was advised that schools could also receive gains of up to 3% per-pupil in 2018/19; and up to a further 3% in 2019/20; and that the government would apply a further criteria for smaller schools so that they were not restricted to small cash gains.  The report highlighted that the 0.5% per pupil increase had replaced the government's original proposal of having an overall 'funding floor' within the funding formula to protect a school seeing reductions of more than 3% per-pupil overall as a result of this formula.  It was highlighted that the government had identified the baseline for protective purposes to be the Authority Proforma Tool for maintained schools, but for academies it appeared to be the General Annual Grant data that included other government funding.  Details of the Schools National Funding Formula compared to the Lincolnshire's Funding Formula was tabled on page 23 of the report;

·         Lincolnshire Schools – The report highlighted that from the information provided by the government to date, Lincolnshire schools would be benefitting from the national funding formula changes through an increase in funding;

·         Next steps – The Forum was advised that once the government had released the schools national funding formula and guidance, the LA would undertake a financial modelling exercise at individual school level based on the 2018/19 national funding formula rates.  A consultation would then be undertaken with all maintained schools and academies in the area on the proposed funding formula for 2018/19, including the methodology, and rules adopted.  The LA would then be reviewing and considering the feedback received prior to consideration by the Schools' Forum at an extraordinary meeting scheduled to be held at the end of November, start of December 2017.  The funding formula would then be considered as part of the LA decision making process.  It was then planned for the LA Finance Team to undertake briefing sessions with all schools on the 2018/19 funding formula; and then the LA would be calculating individual schools budgets by 28 February 2018;

·         High Needs Block – Figure 5 on page 25 of the report provided the Forum with details of the structure of the high needs funding formula for LAs;

·         Early Years Block – The Committee was advised that the early years national funding implemented in 2017/18 had established a universal rate of £3.82 per hour per pupil for early years entitlement; and

·         Redetermination of budget shares – The Forum noted that this was new for 2018/19, and related to when pupils were excluded.  Details of the funding arrangements were shown on page 26 of the report presented.

In conclusion, the Forum was reminded to make their respective sectors aware of the forthcoming national funding formula consultation with Lincolnshire mainstream schools, and to encourage them to respond.  Officers confirmed that the consultation would be sent out to schools via the Schools' Bulletin.

During consideration of this item, the Forum raised the following issues:-

·         A question was asked as to how money would be distributed to Special and Alternative Provision Schools.  Officers advised that there was a different approach to these schools in that the LA determined the level of funding through the government's place and top up funding approach, which was underpinned by a local formula.  It was highlighted further that the LA was currently reviewing the formula for 2018/19.  The Forum noted that the National Funding Formula was focussed on mainstream primary and secondary schools and did not therefore relate to special schools directly.  A concern was expressed that at a national level special schools and alternative provision had been forgotten in the government's proposals;

·         One member enquired as to what the increase of 6% would look like for schools in 2020; and whether any modelling had been undertaken.  Officers advised that overall more funding would be coming into Lincolnshire schools, but the funding position for each school would be dependent on a schools' pupil numbers and characteristics, and original baseline funding.  Officers also confirmed that the modelling exercise would consider a schools position through  the  transition period and when fully implemented; and

·         A question was raised as to the profile of the 19 primary schools which would be funded on the 0.5% per pupil increase in 2018/19; and 199 schools gaining by 6% in 2019/20.  Officers advised that the schools gaining the least amount were typically schools with higher baselines who were in receipt of protection monies through the minimum funding guarantee.  Officers advised further that all schools were encouraged to complete a five year medium finance plan; to help them plan to be financially sustainable.  The Forum was advised that support would be given to vulnerable smaller schools, through means of an improvement package encouraging them to move to mixed aged classes.  The LA would be available to offer support and guidance to the governing body of any school who found they needed help.

RESOLVED

That the summary report on the National Funding Formula for Schools and High Needs for 2018/19 be noted.