Agenda item

The Education & Skills Funding Agency (ESFA) has recently made a number of important announcements about Dedicated Schools Grant (DSG) funding for 2020-21. The DSG has four component funding blocks:

Schools Funding Block

Within the Schools Block the finalised Primary and Secondary units of funding have been announced for Kirklees as £4,245.53 and £5,433.31 respectively. Application of these values to the October 2018 census data produces a £7.62m increase (from £293.50m to £301.13m) which is a 2.60% rise. There is an expectation that every mainstream school will see at least a 1.84% inflationary rise in their funding per pupil when compared to 2019-20 baselines. The difference between this requirement and the 2.60% overall rise is largely due to the inclusion of additional funds for a new formula-based pupil mobility factor next year and funding to support the (compulsory) increase to the minimum per pupil funding levels for 2020-21 (from £3,500 to £3,750 for primary schools and £4,800 to £5,000 for secondary schools). If the October 2019 census return contains more pupils than the previous October census does, Kirklees’ final Schools Block allocation will show a further increase above the illustrated £301.13m.

High Needs Funding Block

In terms of the High Needs Block there is some good news with increased funding being delivered for 2020-21 and a promise of a further increase after that. For funding year 2020-21 Kirklees’ High Needs Block will increase from £37.06m to £43.07m. The increase may be slightly more in the event once the latest census data is used. Kirklees will receive the maximum 17% increase per head of population compared to 2019-20. And the projected eventual outcome for our High Needs NFF has also been improved such that Kirklees is now projected to see a further increase in the funding block of £5.7m. [Funding beyond 2020-21 is still subject to confirmation by the Treasury and there is no indication about how quickly the additional money would flow through to the Council].

Another significant contextual change for our High Needs pressures is the ESFA’s consultation about changes to some DSG terms and conditions. That document proposes to remove from local authorities the ability to use their general fund to absorb or mitigate overspends within the DSG account. Kirklees has taken such action in each of the last two years to deal with its High Needs pressures but, if the proposal is adopted, will not be able to help with the 2019-20 DSG deficit. Instead, any deficit in the DSG will have to be rolled forward as a liability on the DSG balance sheet. The declared deficit will trigger further engagement with the ESFA and a requirement to agree a deficit recovery plan for the High Needs portion of the DSG.

Central Schools Services Funding Block

The 2020-21 Central Schools Services Block allocation to Kirklees will suffer an £87k decrease from its 2019-20 level. Part of this stems from the natural progression of NFF phasing protection withdrawal – Kirklees’ per pupil unit of funding drops from £33.99 to £33.14 next year. However, £34k of the total loss relates to a 20% cut in the amount of specific support provided for ‘historic DSG commitments’. The ESFA has assumed that local authorities should be in a position to unwind or reduce said commitments over time. This is not the case in Kirklees as its historic commitments relate to ongoing long-term annual teacher pension costs where any savings will only accrue slowly over a long period of time.

Early Years Funding Block

The Early Years Block is always announced sometime after the other three blocks. It is indicated that there will be (unspecified) increases to the hourly funding rate for disadvantaged two year olds and, in most local authorities, to the rate for three and four year olds. Kirklees is a local authority which should see the rate increase passed through in full.

Increases to the Schools National Funding Formula factor values 2020-21

Funding year 2020-21 will see the National Funding Formula factor values uplifted for the first time since their introduction. A paper was circulated setting out the change in each of the factor values between 2019-20 and 2020-21. Overall, there is an average increase of 4% in factor values. The exceptions to this are the Current Free School Meals factor and the Primary Minimum per Pupil funding factor. The FSM factor is meant to approximate to the annual cost to the school of providing a free meal so a basic inflationary uplift of 2.27% has instead been applied. The boost in the Primary minimum per pupil value from £3,500 to £3,750 represents a 7.14% increase.

The impact of the above funding changes will be different across different schools and how it feels will be largely determined by the amount of transitional cash protection a school is currently receiving. A small number of Kirklees schools are already wholly funded by the NFF method without the need for cash protection. Such schools will see the full effect of the uplifts to NFF values in 2020-21. For other schools the uplift to the minimum per pupil funding values will also be in their favour. The schools in both these categories are typically those which don’t receive much by way of funding support through the additional needs factors. The majority of schools in Kirklees in 2019-20 had their funding allocation shored up by some level of transitional cash protection. Like all other schools they will receive the average 4% increase to factor values but their cash protection level will reduce as a result, with the worst net result from the two movements being the minimum 1.84% increase per pupil. Those with lower levels of cash protection may stand to gain more than the minimum 1.84% if their protection disappears.

Decisions required for the 2020-21 Schools Funding Round

a)    Adoption of the new formula-based Pupil Mobility factor

b)    Disapplication requests to the Secretary of State for 2020-21

c)    Central Schools Services Block expenditure 2020-21 (all schools)

d)    De-delegation arrangements 2020-21 (maintained mainstream schools only)

a)    Adoption of the new formula-based Pupil Mobility factor

2020-21 sees the introduction to the Schools National Funding Formula of a new, formula-based Pupil Mobility factor. ‘Pupil mobility’ is defined as pupils starting at a school other than the normal September admission point. The new funding factor tracks for each pupil currently on roll the first census they appeared on at the school. If that first census is either the Spring census or the Summer census the pupil is counted in the mobility data set. A threshold has been set at 6% (lowered from the previous method’s 10%) of overall number on roll, beyond which pupils will start to attract mobility funding for the school [£875 per mobile primary pupil above the threshold and £1,250 per mobile secondary pupil above the threshold]. An analysis was circulated to show the allocations that would have applied using the October 2018 data set. A total of 31 primary allocations totalling around £105k would have resulted with just 3 secondary allocations totalling £37k.

The Forum was asked to come to a view on whether Kirklees’ funding arrangements for 2020-21 should include the new Pupil Mobility factor. Looking at the list of eligible schools and the allocations illustrated some members tried to look for reasons why schools had high pupil mobility – many of the schools listed serve relatively disadvantaged communities and there were also a number of small primary schools present where it wouldn’t take much pupil movement to breach the 6% threshold. Transfers in of permanently excluded pupils may also be a relevant factor. It was suggested also that late registrations caused by slow admissions processes might be having some influence. It was also pointed out that the picture is likely to change year-by-year as lots of different factors can influence a school’s mobility.

b)   Disapplication requests for 2020-21 to the Secretary of State

A formal disapplication request has to be submitted to the Secretary of State for Education in cases where the normal application of the funding formula method would produce an anomalous or unjustified result for a school or schools. The next window for disapplication requests closes on Wednesday 20th November, with responses back from the Department in time for the January funding submission deadline. Currently there is a need to submit three disapplication requests in respect of 2020-21 funding allocations and the Forum was provided with copies of the associated request forms:

1)    Royds Hall Community School – Luck Lane provision

2)    Almondbury Community School – closure of secondary provision August 2020

3)    Ashbrow Primary School – phasing out of identified over-funding

Royds Hall Community School – the latest in a series of disapplication requests aimed at preventing the annual expansion in the number of primary-age children attending the Luck Lane provision as another year group goes live being over-protected at a secondary pupil rate via the Minimum Funding Guarantee calculation. The ESFA has supplied each year an Excel file to complete which adjusts the MFG baseline for the changing balance of primary and secondary pupils at the school.

Almondbury Community School – the School’s age range will alter from 1/9/20 to remove the secondary years. Permission is sought to deduct the secondary pupils showing in the October 2019 data set with effect from 31/8/20. The intention then is to also adjust from 1/9/20 the pupil numbers used in the funding formula for the three schools expected to be significantly affected by transfers in of Almondbury’s current pupils in Years 7, 8, 9 and 10. Parents of these pupils have been asked to express one preference for a choice of new school for their child, choosing between King James’s School, Netherhall Learning Campus High School and Newsome High School. The estimated number of pupil transfers between Almondbury and these three schools will be added into each school’s data set numbers with effect from 1/9/20.

Ashbrow Primary School – last year officers carried out an investigation into the underlying cause for this school’s persistent exceptional reserve balance. The source of the matter was traced back to the merger of two separate schools, Ashbrow I & N and Ashbrow Junior, at a point before the ESFA had brought into effect the mechanism to adjust a merged school’s budget going forward to phase out one of the lump sum amounts. Ashbrow Primary School had never been subject to that adjustment and that, combined with rapid growth in pupil numbers since the merger, had contributed to significant over-funding in comparison to other primary schools. Officers tracked through what the funding outcomes for the school would have been had their budget been adjusted in the way that subsequent school mergers have been treated. Forum backed a request last year to begin to move the School’s funding baseline back to a level which corrects the overfunding but to do this over a period of time to provide the School with the necessary space to adjust its spending pattern against a staged and predictable series of funding adjustments. A four-year timescale was adopted and a first adjustment was made to the School’s baseline in the 2019-20 allocation. Permission is now being sought to make a similar adjustment to the School’s baseline used within the 2020-21 allocation to take the next step in bringing the School’s funding back into line. The head teacher continues to be kept apprised of developments and officers will work with the school to support them through the process of matching expenditure plans to the reducing levels of funding.

c)    Central Schools Services Block expenditure 2020-21 (all schools)

For decision by the 29th November meeting.

d)   De-delegation arrangements 2020-21 (maintained mainstream schools only)

For decision by the 29th November meeting.