Agenda item

- Prognosis for the DSG blocks

- NFF for Schools – adjusted factor values post-consultation

- Scoping the decisions to be taken for 2018-19 and beyond

Contact Officer: David Gearing

7.1 Prognosis for the Dedicated Schools Grant funding blocks

The Education & Skills Funding Agency (ESFA) has recently provided updated National Funding Formula (NFF) illustrations for schools, academies and local authorities. The Schools NFF factor values are now fixed (see 5.2 below) but the illustrative figures for funding years 2018-19 and 2019-20 are still largely based on October 2016 census data. We won’t find out our actual Schools Block allocation until mid-December. The table below summarises the illustrated draft outcomes for the new NFF-driven funding blocks.

The outcome for the Schools Funding Block has significantly improved from the position illustrated during the Stage 2 consultation in March. Back then the majority of our schools were looking at reductions of 1.5% per pupil in each of the next two funding years. Now all schools and academies, under the reworked NFF calculation, see at least a 0.5% increase in per pupil funding. This translates overall to a 0.59% rise in Schools Block funding for Kirklees in 2018-19 and a 1.07% rise (in comparison to 2017-18) in 2019-20.

Kirklees’ NFF-determined High Needs block funding would increase by over £7m if fully-implemented. This identified level of under-funding is consistent with the pressures we are currently experiencing within our High Needs account (see 4.1 above). The issue for Kirklees is that the annual gain in High Needs funding is limited to just a 3% rise per annum with only the first two years guaranteed within the current spending round.

The new Central Schools Services funding block allocates funds directly to local authorities for the first time from 2018-19. This replaces the system of agreeing central budget retention with Forum on an annual basis. Based on October 2016 pupil numbers Kirklees stands to lose around £230k (about 9.7%) in comparison to 2017-18 once the CSSB is fully implemented (although a rising pupil population will mitigate this position to a degree).

7.2 Schools NFF – adjusted factor values post-consultation

A table was circulated which compared the local 2017-18 formula factors to those illustrated under stage 2 of the NFF consultation in March 2017 and also the final confirmed NFF factors and their values. The changes that have been made following the consultation are…

Base Entitlement (age-weighted pupil unit) – a common theme amongst many consultation responses was the need to increase the amount provided by the base entitlement. The final AWPU values in the national formula each show a modest increase of between 1% and 2% compared to the consultation values. It was noted that all three NFF AWPU values are still lower than Kirklees’ current local values.

Income Deprivation Affecting Children Index (IDACI) – a minor change to the Band C values for both sectors to ensure a continuing step between each IDACI band (the EFA had consulted on an IDACI structure which had Band C and Band D at the same value in both sectors).

New factors: Minimum per pupil value levels for Primary and Secondary schools. The new NFF illustrations include minimum core funding levels per pupil. Core funding is the total of the pupil-led factors plus the lump sum. For 2018-19 the primary minimum per pupil is £3,300 and for secondary £4,600. For middle schools the equivalent figure is £4,167 and for all-through schools £3,842.

In setting their local funding arrangements for the next two years local authorities can also use minimum funding values. An analysis was tabled which showed the core funding per pupil position of each Kirklees mainstream maintained school and academy in 2017-18 in comparison to the 2018-19 minima. The file was arranged in rank order for each school sector running from the highest difference to the minimum to the lowest difference in cash and percentage terms. For primary schools the range was from £4,189 (126.93%) above the minimum to just £107 (3.24%) above. The smaller schools tend to be well above the minimum (because the lump sum is a larger proportion of their core funding) as are those schools which receive significant amounts of support funding (deprivation, low prior attainment and English as an additional language). The schools closest to the minimum levels tend to be larger with relatively low accumulations of additional support funds.

The picture is similar in the secondary schools sector but the range is much more compact, running from £1,469 (31.93%) per pupil above the secondary minimum to just £135 (2.94%) above.

The only school currently below the new minimum benchmark is one of the two Middle academies by minus £14 (-0.34%) per pupil.

7.3 Scoping the decisions to be taken for 2018-19 and beyond

Following the release of the ESFA’s operational guidance in respect of schools funding arrangements for 2018-19 and beyond, the meeting was presented with a draft list of things that need to be considered in shaping the local schools funding arrangements for next funding year.

The approach to modelling options. Although the NFF will determine the bottom-line schools block allocation, local authorities are still able to set their own local funding formula arrangements for the next two funding years. It makes sense to view these two years as transitional steps towards full implementation of the NFF in 2020-21.

Permission to transfer funds out of the Schools Block. The ESFA will allow transfers of up to 0.5% (around £1.4m) out of the Schools Block to other parts of the DSG – most likely to the High Needs block – with the agreement of the Schools Forum. The issue would be referred to the Secretary of State for decision in the event of the Forum and the LA not reaching agreement, also in the case of a proposal exceeding the 0.5% limit. The Council needs to take a position on this. It was clear that Forum would not look favourably upon any attempt to divert the first amount of additional funding which schools have received for a number of years.

Removal of the Looked after children factor from the NFF.  The national total of LAC funding within the Schools Block will be transferred to Pupil Premium funding stream from 2018-19, raising the current LAC Pupil Premium from £1,900 per eligible child to £2,300. The funding will be allocated to the Virtual School in the first instance and schools will be able to make a case to the VS Head Teacher for support funds to be passed on to them to support individual cases. It was requested that all schools be written to setting out the coming changes to the funding arrangements for LAC. A decision needs to be made as to whether to remove the LAC factor in our local formula and how quickly. If it is removed or reduced then the change will have to be moved outside the Minimum Funding Guarantee calculation.

English as an Additional Language factor. Consider matching the NFF method by swapping to data set EAL3 in the local formula rather than the current EAL1 data set. EAL3 counts roughly three times as many children so the amount allocated per pupil would need to reduce commensurately.

Flexibility in setting the Minimum Funding Guarantee. Although the initial NFF calculations use minus 1.5% per pupil as the maximum loss, local arrangements have a new permission to set a MFG at between 0 and minus 1.5%. It is even possible to step outside these parameters to set a positive percentage. Authorities will need to determine their optimal MFG level which will clearly depend upon how their schools generally fare under the NFF changes.

Free School Meals deprivation funding. For the first time from 2018-19 the local funding formula can include both a current FSM factor and an Ever6 FSM factor. This change reflects how the NFF will operate.

Minimum Core Funding per pupil factors. Local formula arrangements can also reflect the new sectoral minima used in the NFF calculation. This adds a further layer of complication to the modelling work and how this factor works alongside the MFG needs to be considered too.

(See 5.2 above for more on the new minimum funding levels).

Disapplication requests for exceptional variations. By the end of November, applications to allocate second year lump sum transition to Oak CE Primary and to adjust the MFG calculation as applicable to Royds Hall (in respect of its evolving balance of primary to secondary pupils) need to be considered by the Forum and sent to the ESFA.

Central School Services Block reductions. Decisions need to be reached on how to scale back expenditure within budgets supported by the new CSSB to match the reduction in available funds.

2018-19 De-delegation decisions from the maintained mainstream schools sectors. The annual round of de-delegation decisions need to be taken.