Essex Small Schools

Essex Schools Funding Formula Review

Archive for the month “June, 2014”

Probably No Funding Formula Changes for 15/16

The group had a meeting scheduled today, but over the last few days emails have been arriving from group members to say they cannot make it. The meeting has therefore been cancelled, and we have received an email from the LA stating that:

The Authority has been considering the effects on schools of the proposals and believes there is insufficient time to implement any significant changes for 2015/16.

So it looks like there will be no major changes this year after all. This decision will be made by Schools Forum when they meet next week. Mr Stupples-Whyley will be raising the following proposals at schools forum

1.    To agree a consultation with schools on increasing the value funded for free school meals in line with the value paid for universal free school meals;
2.    To agree the remit of the Finance Review Group; and
3.    To review the membership of the group to ensure there is appropriate representation for each sector.

The proposed remit is:

to undertake a review of the whole Formula for Funding Schools and also for a review of Special School Funding.

This sounds all perfectly reasonable, and I have been assured that the intention of (3) is to extend the existing group membership (presumably to ensure representation from special schools).

We will then be meeting from Autumn 2014 to begin a review of 16/17 funding at a more leisurely pace. Thanks to everyone who has commented on the initial proposals for 15/16.

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Initial Thoughts on Formula 15/16

In my last post, I described the models sent to members of the funding group by ECC.

Here I outline my initial views on changes to be considered for 15/16. As always, I would welcome feedback via comments on this blog or to me by email.

I think the basic principles underlying change this year should be:

  1. Any change to the funding formula should have a clear, evidenced, motivation – it should be about fixing a problem. This is particularly the case given that we may still be heading towards a national funding formula from 16/17. It does not make sense to significantly change the Essex formula one year before a national change as yet to be determined.
  2. No change should be made to lump sum values. Lump sums are estimated on a principled basis, namely the nominal fixed cost of running a school, independent of pupil numbers. AWPU, on the other hand, is not calculated on a principled basis – it is simply “what is left” once the other factors are removed from the funding pot. Thus, if there is a valid reason to increase funding in one area (e.g. in secondary low cost high incidence SEN), it should come from a redistribution of the AWPU rather than from lump sum. Also from a pragmatic perspective it does not make sense to fund an increased secondary SEN pot through lump sum: total lump sum expenditure in secondaries in Essex is £11.25m, which accounts for just 3% of the total schools block funding; it is clear that funding any shortfall in one pot from the 3% rather than the remaining 97% is likely to cause significantly more turbulence to schools (in this case the brunt would be borne by the smaller secondaries).
  3. Any change to the IDACI / FSM split for funding deprivation should be delayed by one year, at least in the primary sector. I think this split is an important one for the group to monitor, but the timing is not right to change it this year, as it coincides with the introduction of universal FSM for KS1 pupils. The latter initiative could considerably affect FSM registration data, and so projections based on this year’s FSM registration are likely to be questionable.

I will be pursuing the question of why lump sum has been modelled as the main source of increased SEN funding in the secondary sector when we meet again on Friday. My suspicion is that it may relate to a minimum funding guarantee calculation: it may be that models have been produced on the assumption that the DfE will allow exclusion of the old lump sump value before calculating the MFG level and as a result, reducing lump sum is the only clear way that cuts of more than 1.5% can be made to any one school (several smaller secondaries have been modelled by ECC as potentially losing in the region of 3% under the £100k lump sum option produced by County). However, if I am correct, this is inconsistent with last year’s operational advice to local authorities from the DfE. I have sought a clarification of this point from Mr Stupples-Whyley.

 

 

Models Produced by ECC

Members of the review group have today received the following models generated by ECC (text by Mr Stupples-Whyley). It appears that there may not be a further meeting of the review group due to member availability, and any further discussion might take place by email I will be investigating the models in more detail, and will share my own views here.

I note Mr Stupples-Whyley has also commented that “In presenting these models the Authority is not saying it wants a consultation. It may be as a Group you decide not to make any changes given a national funding formula is expected from 2016/17.”

Primary Schools
The proposals modelled are:

  • Increase the funding rate for free school meals from £2.07 to £2.30 per meal to match the amount set by the DfE for Universal Free School Meals
  • To vary the proportion of funding within deprivation between FSM and IDACI. Modelling has been undertaken for 30:70 (FSM:IDACI), 50:50 and 90:10 based on benchmarking with other local authorities. FSM is shown straight as currently used and FSM6.

Secondary LCHI SEN

  • Firstly this model updates the funding rate for free school meals as above.
  • The funding for LCHI SEN is increased from £914.69 in 2014/15 to £2.098.87 (the rate used in 2013/14). The increase in funding is offset by the Lump Sum, shown in increments of £10,000 down to a Lump Sum of £100,000. However using the 2013/14 rate increases the funding for LCHI SEN by £20.3m so this also significantly impacts on AWPU.

Secondary Deprivation

  • To vary the proportion of funding within deprivation between FSM and IDACI. Modelling has been undertaken for 30:70 (FSM:IDACI), 50:50 and 90:10 based on benchmarking with other local authorities. FSM is shown straight as currently used and FSM6.

Secondary Lump Sum

  •  Models reducing the lump sum in increments of £10,000 without any changes to other factors.

 

Summary of Impact

  • Primary, Increase funding of free school meals: Increases funding by £43.70 per year for each free school meal. On a standstill position reduces AWPU by £5 per pupil.
  • Primary, Change weighting of deprivation funding between FSM and IDACI: We currently fund at a ratio 23% to 77% in favour of IDACI. A slight movement to 30%:70% or 50%:50% has a favourable impact on fewer schools requiring protection by the minimum funding guarantee. A ratio of 90%:10% increases the number of schools requiring protection by MFG. Any changes will be managed within existing resources.
  • Secondary, Increase funding of free school meals: Increases funding by £43.70 per year for each free school meal. On a standstill position reduces AWPU by £4 per pupil at KS3 and £5 per pupil at KS4.
  • Secondary, Increase unit value of LCHI SEN to 2013/14 value: Requires significant reductions to both Lump Sum and AWPU and therefore would recommend this is not affordable in full. Could increase the pot by any reduction in Lump Sum so there is no impact on AWPU.
  • Secondary, Change weighting of deprivation funding between FSM and IDACI: We currently fund at a ratio 23% to 77% in favour of IDACI. A slight movement to 30%:70% or 50%:50% has a favourable impact on fewer schools requiring protection by the minimum funding guarantee. A ratio of 90%:10% increases the number of schools requiring protection by MFG. Any changes will be managed within existing resources.
  • Secondary, Decrease Lump Sum: Reducing the lump sum up to a reduction of £50,000 has a positive impact upon AWPU and significantly reduces the number of schools requiring protection by the minimum funding guarantee. Most impact will be on smaller schools and although not requiring MFG protection, funding will reduce as £10,000 reduction will be greater than increase in AWPU funding.

 

 

Funding Formula 15/16: First Insights

Mr Stupples-Whyley has circulated a number of scenarios he is planning to bring to the next meeting of the review group. These are:

  • Increase funding for secondary low cost high incidence SEN funded from the Lump Sum
  • Increase funding for secondary low cost high incidence SEN funded from AWPU
  • Decrease secondary lump sum by increments of £10,000

He has also asked for members to suggest further modelling we would like to see.

I am a little concerned over the suggestion of any reduction in lump sum for primaries or for secondaries. As I discussed back in 2012 (see here and others of the same era) it is of critical importance that the lump sum is an accurate reflection of the fixed costs of running a school. If there is a need to redistribute funding in the secondary sector into LCHISEN, then it should naturally come from reduced AWPU rather than lump sum, in my view.

I have asked Mr Stupples-Whyley whether the following additional models could be run:

  • IDACI / FSM balance. It would be useful to see a model of the impact of shifting away from IDACI towards FSM as a driver here, given the published research on better correlation between FSM and deprivation.
  • Last time we discussed LCHISEN for Primaries was before the first cohort came out of the new EYFS Profile. It would be useful to see whether the move from 78 points to GLD has shifted funding significantly between schools.

We also have not had a chance to review the impact of the changes made to EAL funding last year.

I would be delighted to receive feedback from any readers about these points, or further suggestions for modelling people would like to see done.

Falling Roll Fund

The first meeting of the 15/16 review focused entirely on the potential for a new falling roll fund, as ECC reported that the DfE had not yet provided the parameters within which we can determine the 15/16 funding formula.

There was considerable disquiet from all funding group members over the constraint imposed by the DfE on the establishment of a falling roll fund that it can only be provided for Grade 1 and Grade 2 schools. Members were concerned over the introduction of a fund that would redistribute funding away from Grade 3 and Grade 4 schools, arguably most in need. This opposition varied from mild grumbles to an outright opposition to introducing any fund that made this distinction. I asked whether the LA’s Growth Fund could be used instead for the same purpose, as this can be used without regard to OFSTED category, but this was not considered possible.

The Chair argued that there is a distinction between the primary sector, where a falling roll fund may not be needed, and the secondary sector, where one might. I argued against this perspective, suggesting that if the LA establishes such a fund, then it should be accessible to both secondary and primary.

The current proposal on the table is to establish a fund, accessible to schools who have

  • had a falling roll for the last two years of at least x% each year, where x is to be determined but likely to fall in the range 5-10.
  • can demonstrate a likely substantial increase in pupil numbers in the short term

The funding available would be by negotiation with the LA. It seems likely that the LA will work this up into a full proposal with financial modelling to go before the next Schools Forum meeting.

 

Essex Finance Sub Group Recalled

Essex County Council has been in touch to recall the Finance Sub Group (as the ex SGRG is now known) to review the funding formula options for the 2015/16 financial year, as well as to agree the criteria for the establishment of a new “Falling Rolls Fund”, a fund that can be used to bridge the gap in funding experienced by a school with a falling roll when there is an expectation that the roll will increase in the near term.

The first meeting has been called for Wednesday 11th June 2014.

I would therefore be very keen to hear back from schools about:

  1. What is working / not working for you with the current funding formula?
  2. What is your view of the Falling Rolls Fund. (An initial ECC paper on this can be found as Agenda Item 2 at the May meeting of Schools Forum.

Please feel free to leave your comments either by commenting on this blog post or by emailing me: gac1@ic.ac.uk

Best wishes,

George

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