Agenda item

Members to note the contents of the report and nominate representatives for a working group to respond to the consultation.

The Forum received a report which informed Members of the Government’s proposal on the detail of the implementation of the direct National Funding Formula (NFF).

 

In 2021 the government had held their first-stage consultation on the direct NFF for schools.  Fair school funding for all: completing our reforms to the National Funding Formula.

 

The Government had confirmed that they would begin moving towards the direct NFF from the 2023-24 funding year.

 

This consultation had been issued on 7th June 2022 and closes on 9th September 2022.  It set out proposals for the continuation of two current elements of funding for special educational needs (SEN), and for alternative provision, but considered how these would need to change in operation as the government moved to the direct NFF: first, continuing to have some flexibility within the funding system to move funding to local authorities’ high needs allocations and second, the determination of notional budgets for mainstream schools’ SEN and disability support, within their direct NFF allocations.

 

The consultation also set out proposals for how funding for schools experiencing significant growth in pupil numbers, or falling rolls, could operate under a direct NFF.

 

As the government moves to the direct NFF, it set out how the minimum funding guarantee (MFG) would operate.  The MFG protected schools against excessive year-on-year changes in its per-pupil funding.  In the current system, the "funding floor” in the NFF mirrored the operation of the minimum funding guarantee in the local formulae.  When the direct NFF was introduced, the MFG and the NFF funding floor would merge into one single funding protection mechanism, which would continue to be referred to as the MFG.

 

Lastly, the government set out proposals on how the funding cycle should operate in the direct NFF; that was, the regular timescales for gathering data to calculate funding allocations, and then confirming these allocations to schools.  The government was considering how it could support schools’ budget planning, by giving them early indication of future funding levels.

 

The government had stated that whilst this consultation set out a detailed picture of how it proposed that the direct NFF would work in practice.  They “were not setting a definitive final end date at which the direct NFF would be implemented, as it would be important to continue to be guided by the impact of the initial transition towards the direct NFF, before deciding on the further pace of change.”

 

The government had, however, tried to provide a sense of the likely timescales to inform schools’ and local authorities’ planning, and had also set out that it expected to have moved to the direct NFF within the next five years; which was by the 2027-28 funding year.  The government further went on to say, “We hope that we may be able to move to the direct NFF sooner than this – but not later”.

 

Further consultations are also planned as follows:

 

•        The additional reforms required to high needs funding arrangements which would be based on the outcomes and government response to the consultation on the SEND and alternative provision green paper.

•        The funding for local authority services through the central school services block (CSSB), as government moved to the direct NFF, and in light of the future role for local authorities as set out in the Schools White Paper, Opportunity for all.

 

The interaction between the direct NFF and funding for high needs

The Government had published the SEND and alternative provision green paper, “Right support, right place, right time” on 29th March 2022.  The consultation deadline was 22nd July 2022.

 

The government had stated in future consultations that it planned to cover the operation of funding bands and tariffs to support the development of a national framework for SEND provision.  This would involve addressing a range of complex issues, and potentially making significant changes to the current system of place and top-up funding for specialist provision, as well as the current expectation that mainstream schools would provide for the first £6,000 of additional expenditure on pupils with SEND, before they became eligible for high needs top-up funding.

 

Flexibility to transfer funding to high needs

 

In the current funding system, local authorities had a degree of flexibility to transfer funding between the blocks of their Dedicated Schools Grant (DSG) allocations.  Local authorities could transfer up to 0.5% of their schools block with the approval of the Schools Forum, but transfers above 0.5%, or where the Forum did not agree, must be decided by the Secretary of State.

 

In the Government response to the first stage of the direct NFF consultation, it committed to retaining the flexibility to transfer funding from mainstream schools to local authorities’ high needs budgets in the direct NFF.

 

The government proposed that local authorities should continue to have responsibility for preparing and submitting any applications to the Secretary of State for funding to be transferred to their high needs budgets, via an adjustment to the NFF allocations for mainstream schools in their area.

 

Indicative SEND budget

 

The SEND and alternative provision green paper set out proposals for an inclusive system, starting with improved mainstream provision that was built on early and accurate identification of needs, high-quality teaching of a knowledge-rich curriculum, and prompt access to targeted support where it was required.  The government believed there should be a national expectation on how much of the additional costs of supporting pupils with SEN mainstream schools should meet from their formula funding, so that schools and local authorities could plan their budgets appropriately.

 

The direct NFF would include a number of factors that acted as a proxy for the incidence of SEN in mainstream schools.  The government were keeping under review whether the current factors would remain appropriate in future (for example, considering the disruption to the flow of usable attainment data as a result of the pandemic, and in the context of future changes to assessment.

 

The government had proposed to continue the concept of identifying for each school a budget for the costs of additional support for its pupils with SEND.  This would be calculated by the Department under the direct NFF, rather than by local authorities.

 

Growth and Falling Rolls funding

 

In this section of the consultation, the government set out its proposals on how revenue funding for schools experiencing significant growth, or significant decline, in pupil numbers would operate under the direct NFF.

Local authorities had a statutory responsibility to ensure there were enough school places available in their area for every child aged 5 to 16.

 

Local authorities currently had discretion as to whether or not to operate a growth and / or falling rolls fund.  If they did, it must be used only in specific circumstances.  These were outlined in the consultation document.

 

The Education, Skills and funding Agency (ESFA) had also provided “popular growth” revenue funding where schools experience significant growth in pupil numbers due to increased popularity, to reflect their increased costs.  At present, this funding was available for academies with significant forecast growth in pupil numbers, not for maintained schools, however. Agreements were made on a case-by-case basis, on application by academy trusts.

 

The ESFA allocated a notional growth funding element to local authorities each year using a formulaic approach, as part of the DSG.  Growth funding was currently based on the actual pupil growth that local authorities experienced, at the level of Middle Layer Super Output Area (MSOA); these were smaller geographic areas within the local authority with an average population of 7,200.

 

Local authorities did not have to allocate all of the growth funding that they received and can spend more or less on growth funding than they received through the DSG for that purpose.  Sandwell had traditionally set pupil number growth funding more or less equivalent to the growth funding received.  However, in the last 2 years they have set funding at less than the funding received because of the balances that had accumulated.

 

Analysis of falling rolls funding

 

Only 24 authorities had set funding aside for a falling rolls fund in 2022-23, with half of these in London.

 

This consultation outlined two options for growth funding under the direct NFF: -

 

•        The first option would allow some continuing local flexibility in how growth funding was distributed to schools, but with “significantly greater consistency than in the current system”.

•        The second option was a national, standardised system without local flexibility, where the ESFA allocated growth funding directly to schools as part of their allocations based on information provided by local authorities.

The government’s favoured approach was the first option, which retained local control.

 

Popular Growth

 

Not all growth in schools was to meet demographic need.  Growth could also occur where a school became more popular with parents and children locally.  The ESFA currently made funding available for academies with significant forecast growth to reflect their increased costs.  Academies that were entitled to this funding provided the ESFA with an estimate for their number of pupils in the coming year, which they provided funding for subject to an adjustment process based on the actual, in-year autumn census. Agreements were made on a case-by-case application basis at academy trust level.

 

The government had confirmed their intention to retain a system of popular growth for academies which had seen an increase in popularity, after being recently sponsored by a multi-academy trust which had improved the school’s performance.

 

The government had stated that they recognised that a number of respondents had raised concerns about “popular growth” being available only to academies, and not local authority-maintained schools.  However, in order to address these concerns, it was consulting on whether maintained schools should also be able to access popular growth funding by basing their funding allocation on estimates.  This would be through a case-by-case application process where local authorities could apply for this funding on behalf of particular maintained schools where there was clear evidence of expected significant popular growth, along with evidence of recent improvements in school performance through pupil assessment data.

 

Premises Funding

 

In the Government’s first stage consultation, Fair school funding for all, it asked for views on reforming “premises” funding under a direct NFF.  The premises factors in the NFF included additional revenue funding for PFI schools, schools with split sites, and schools which faced costs relating to exceptional circumstances (such as rental costs for their premises).

 

In the Government’s response to the consultation, it recognised respondents’ concerns about the complexity of PFI contracts and plan to work closely with the sector to develop an appropriate approach to PFI schools under a direct NFF, to be consulted on at a later date.

 

Premises: Split sites

 

The split sites factor was intended to account for the extra costs associated with a school operating, and needing to duplicate services, across a number of separate sites.  Extra costs may be incurred from requiring additional reception facilities, travel time for teachers, and travel costs for pupils.

 

The government proposed to develop a split site factor which recognised costs through a basic eligibility criteria that attracted a lump-sum payment, and a distance eligibility criteria that attracted an additional lump-sum payment.

 

Basic eligibility: The proposal was that sites should be counted as ‘split’ where they were separated by a public road or railway as a clear marker of separateness.  The site must have a building and would exclude “ancillary buildings” e.g. storage sheds, and would exclude playing fields.

 

Distance eligibility: To meet the distance eligibility criterion, the site would have to meet the basic criterion and meet a distance threshold of 500 metres (0.3 miles) by road.  Further detail could be found in the consultation document.

 

Premises: Exceptional circumstances

 

The exceptional circumstances factor was intended to account for additional premises costs that the majority of schools did not face. Currently, local authorities could apply to the ESFA to use an exceptional circumstances factor in their local formulae.

 

The ESFA believed that some costs currently being funded through exceptional circumstances arrangements would be better funded through formula factors.  Therefore, it was proposing changes to the following categories: -

 

•        Building Schools for the Future (BSF) school: The BSF factors would be incorporated into a modified PFI factor.

•        Amalgamating school: Local authorities could currently support schools with 85% of the combined lump sums of their predecessors as temporary support while cost structures adapted to the new arrangements.  In its proposals, this would be automatically allocated through the lump sum factor.  These schools may also become eligible for split site funding.

•        Super-sparse school: Local authorities could also provide additional funding to very small, rural secondary schools, on top of existing sparsity funding to be viable.  The government had proposed to automatically incorporate this into the sparsity factor.

 

There was a proposal to change the current criteria from that the cost is greater than 1% of the school’s budget and affected fewer than 5% of schools in the area.  Another proposal was to raise the exceptional circumstances funding threshold to account for at least 2.5% of a school’s budget, up from the current 1%.  The government wanted to significantly reduce the number of schools receiving exceptional circumstances funding “so that we target funding only to schools where costs are exceptional and meaningful, and are not maintaining the significant differences in funding between local authorities which reflect historic decisions”.

 

The government had stated that to ensure that it was flexible to changing needs in future, it would accept new requests that met their criteria where a school had clear, newly arising needs, which had fallen within the proposed criteria; however, it would expect this to apply in very rare circumstances.

 

The minimum funding guarantee (MFG) under the direct NFF

 

Under the current funding arrangements, local authorities had set a minimum funding guarantee (MFG) which protected schools from excessive year-on-year losses in per-pupil funding.  The NFF funding floor mirrors the MFG in the local formulae, and was important for ensuring the affordability of the MFG in the local formulae.

 

As government moved to a direct NFF, the NFF floor and the MFG in the local formulae would merge into one single protection mechanism, which would continue to be referred to as the MFG.  The MFG in the direct NFF would continue to play a crucial role for ensuring sufficient stability for schools funded above their “core” formula allocations, so that they did not see sudden drops in their per pupil funding levels.

 

Moving to a simplified pupil-led funding protection under the direct NFF

 

The NFF had school-led and pupil-led factors.  The school-led factors; the lump sum and sparsity funding were determined by the school’s characteristics, with one amount calculated per school through each factor.  Whereas, the pupil-led factors; basic per pupil funding additional needs factors, such as FSM, FSM6 and low prior attainment, were allocated in respect of the number of pupils, and their characteristics, in a school.

 

The aim of the NFF’s funding floor, and the MFG, was to protect schools from sudden losses in their pupil-led funding, per pupil:

•        It was a per pupil protection which allowed funding to go up and down with pupil numbers;

•        It protected pupil-led funding only (not total funding per pupil) as school-led funding should not increase or decrease with pupil numbers.

There were complications in the way the floor and the MFG currently worked and so the government was proposing moving to a simple pupil-led protection to avoid “perverse results”.  A worked example was included in the consultation document in Annex B.

 

The annual funding cycle

 

This section of the consultation asked questions on the proposed high level timeline for the annual funding cycle under the direct NFF; what early information would be most helpful for schools to aid them in their budget planning; and the timing and nature of information the ESFA would continue to collect from local authorities.

 

Data collected from local authorities

 

The ESFA had proposed to collect information in relation to: -

•        PFI

•        Exceptional circumstances

•        Split Sites

•        Growth Funding

•        Transfers to the High Needs Block.

 

Further detail on the proposals could be found in the consultation

document.

 

De-delegations

 

The ESFA had used information on de-delegation to make an adjustment to the funding academies received.  The proposal sought preference on whether to undertake on single data collection in March or several smaller data collections for mid-year converters, as well as any other comments on the timing and nature of data collections to be carried out under a direct NFF.

 

Agreed that: -

 

(1)     the contents of the report be noted;

 

(2)     the following representative be elected to sit on a Working Group to respond to the consultation: -

 

•        C. Handy-Rivett;

•        D Broadbent; and

•        A representative from Great Bridge Primary (A Timmins / R Kerr to consult with the school to determine an appropriate representative).