When the lump sum element of schools funding is discussed, the question of funding inefficiencies always arises, usually in the context of the need to avoid a large lump sum as this funds inefficiencies in small schools. Of course if the lump sum were very large, this might be the case. However, what is often less well recognised is the flip side to this argument: a lump sum that is too small funds inefficiencies in large schools. If the funding in the primary sector is fixed, then saving obtained by reducing lump sum from any given nominal value is redistributed through age-weighted pupil units (AWPU). Thus an artificially low lump sum results in an artificially high AWPU value and vice versa. The impact can be seen in the simple plot below (click to zoom in).
It is therefore absolutely critical that the lump sum element of our new funding formula correctly reflects the fixed cost of running a school and that it is neither underestimated nor overestimated. The current lump sum only forms “a contribution to the unavoidable fixed costs of running a school”. It will be the job of the SGRG over the coming month to ensure that this changes to “an accurate reflection of the unavoidable fixed costs of running a school” as small school subsidy ceases to exist.