Today was the 2nd SGRG meeting. As agreed at the last meeting, we were presented with papers at today’s meeting with tables illustrating how each Essex school would be affected by setting the lump sum to £100k, £125k, or £150k.
Unfortunately, things are not straight forward, due to the interaction of two changes mandated by the DfE: the change to the new formula structure, and the way that the MFG works. The DfE is proposing to change the MFG so that lump sums are excluded from the MFG calculation in a similar way to that we currently exclude rates.
In theory this makes perfect sense: only protect by MFG those elements of the funding formula that vary with pupil numbers, adding back in the lump sum afterwards. This way small schools that shrink in pupil numbers won’t see their lump sum protection shrink too, and those small schools which grow in pupil numbers won’t see disproportionate gains from that growth. Sounds sensible?
The problem comes with authorities who – up to this point – have woefully inadequate lump sum values. If we, in Essex, simultaneously move from a £77k primary lump sum to a £150k lump sum (say) the year the MFG regulations change, then under the proposed system £77k will be deducted from the 2012/13 budget before subtracting the 1.5% MFG level, and then £150k will be added back on. The net result will be a boost to the school much larger than we expect.
Now remember: this is not just small schools, it’s all schools. The LA have modelled this, and under a £150k lump sum, *every* primary school in Essex will end up on MFG, and some £65m of a total primary budget of £405m would be spent on MFG.
Members of the SGRG were not happy – quite reasonably so – with this essentially artificial level of MFG.
The decision was taken to write to the DfE requesting that the MFG operate in a different manner: either allowing us to maintain the current way of calculating MFG for this transition year or allowing us to discount the new lump sum value rather than the old lump sum value when calculating MFG. I am supportive of this move.
In the mean time, we must prepare for the possibility that the DfE does not allow this to happen. In this case, there will unfortunately be a tradeoff between giving small schools what they deserve in the long term and avoiding funding disruption in the short term. This should not be the case.
To the credit of the SGRG chair, he has requested that we initially take a principled look at the data without the MFG complication.
The LA have therefore been asked to produce the following data for the next meeting:
- A model assuming no minimum funding guarantee payouts, i.e. all the £65m referred to above is rolled into per pupil funding, to provide a better indication of the long-term position of the schools.
- A model assuming the DfE agrees to our proposal on MFG calculation.
- A comparison of both models to the 2012/13 budget share of each school in Essex.
- Extension of the existing data to a lump sum value of £80k and £90k in addition to the already-modelled values of £100k, £125k and £150k. I am not supportive of a lump sum below £100k, for reasons I discuss in a previous post and I will elaborate upon soon.
- Ordering of the data by number of pupils, so we can clearly see the impact on different sizes of schools.