An Overview of Funding and Finance for Schools Forum MembersPresented by David Bradshaw and David Dilling

Thursday 25 September 2008 2 to 4pm

Origin of presentation

• Last of set of three to brief Schools Forum members and so points out issues that are relevant to the Forum

• Since most attending today have not attended previous sessions, a few slides are from the previous two presentations

Objectives of the Briefing SessionThe activity will :-• look at the Individual Schools Budget and how it is

allocated to individual schools through the Schools Funding Formula

• consider the issues that schools have in setting a budget including Special Education Needs (SEN), Additional Education Needs (AEN) and 3 year budgets.

• consider the various systems and information that are available at both local and national levels with regard to ensuring schools operate their finances effectively and efficiently.

• consider the role of the Schools Forum as it relates to reviewing and changing the distribution of funding and the finance systems

Discussions

• There are no specific activities but I have indicated on several of the slides specific issues related to that topic and it may be an opportunity to discuss these before we move on.

• Obviously if you have questions/ comments at other times then please raise them at the time.

Slides from the last sessionThe next few slides are based on ones used in the previous session and provide a link with this session.

How is education funded?

• Since 2006/2007 the DCSF has allocated funding through the Dedicated Schools Grant (DSG) and part of whole council funding

• DSG is calculated by= number of children x £/child

• Number of children includes PVIs, SEN out borough, PRUs etc

• DSG is fixed and is unaffected by any Council decisions

• DSG is split into two parts

What is Contained Within Each Block?• Individual Schools Budget (ISB)

– Delegated funding– Additional Education Needs– Statements

• Centrally Retained– School Specific Contingencies– 14-16 Practical Learning Options– SEN (Independent placements, inter authority recoupment, etc)– Pupil Referral Units (PRU’s)– Education out of school/Behaviour Support– Early Years/Private Voluntary Providers– Admissions– Grants such as School Development Grant, and other Standards

Fund– Capital Expenditure from Revenue– Prudential Borrowing Costs

Dedicated School Grant

Schools

Early Yrs

out of sch

SEN

Central Expenditure Limit (CEL)

• A calculation to ensure that the central part does not increase at a faster rate than the ISB

• Not a simple calculation and affected by changes in funding by DCSF

• Schools Forum can agree to breaches of limit

Minimum Funding Guarantee (MFG)

• Introduced in conjunction with the CEL• Designed to guarantee a certain level of funding to all

Schools in terms of delegated funding.• Increases in funding based on pupil numbers• MFG set nationally

– 2004/05 4%– 2005/06 5% Primary, 4% Secondary– 2006/07 4% Primary, 3.4% Secondary– 2007/08 3.7%– 2008/09, 2009/2010 and 2010/2011 all 2.1% ie below

expected inflation.

• Not all of funding attracts MFG, but the majority of it does

Funding for the Future–What Happens Next?

• DCSF will do another step change for 2011/2012• Changes happening towards a Children’s Service?• Will we get Combined Budgets?• Dedicated Children’s Grant rather than the DSG?• More interaction of Schools Forum with other

partners such as PCT, Health services, Social Services, etc?

• Changes in 14 to 19?• Whatever happens, funding is likely to change for

2011/2012 onwards from what it looks like now• Need to be proactive with any consultation processes

with the DCSF

New SlidesThe presentation is split into 2 main sections- Where does a school get its money from?- What measures are in place to ensure schools spend effectively

The issues arising for the Schools Forum are indicatedat various places

Information from Teachernet

• Guidance for LA and Schools Forums

• Updated information around funding includes a number of papers over the last few months re the 3 years 2008/2009 to 2010/2011

• Calculators for some grantsapplicable for 2007/2008

• Guidance for Finance Standards FMSiS

Where does a school get its money?

School Income

• Delegated funding through formula that is governed by DCSF legislation

• Various grants- School Standards Grant (SSG)- Devolved Formula Capital- The Standards Fund- ?? (DCSF always seem to introduce new grants)

• School led income- lettings, bank interest, sponsorship etc

Primary School income

Delegated inc LSC and SSG

AEN including SEN

Other Standards Fund

Other Government grants

Generated by school

Secondary School Income

Delegated inc LSC and SSG

AEN including SEN

Other Standards Fund

Other Government grants

Generated by school

What is the aim of the formula?

• To provide a school with a fair share of the available resources so that it can address the needs of the pupils

• The DCSF specifically require the formula to stand by itself and not be influenced by other grants

• It is not intended that the formula should dictate how the school spends the formula funding, it is delegated!

An Ideal Formula – How do you think it should be characterised?

The Ideal Formula?

simple

transparent

address needs

responsive to changes in need

The Ideal Formula

simple Will it address the different needs?

transparent Will it address the different needs?

address needs Will have to have varied factors

responsive to changes in need

Will need to change as the data changes

Delegated Funding Formula 2008/2009

• Three main funding strands- Basic is the largest and funds the basic needs of schools/pupils- Additional Educational Needs (AEN) funds a proportion of pupils who need additional support- Highcost funds those pupils who have more extreme needs (statements)

Primary Delegated funding

Basic AWPU+LSC

Basic other

AEN FSM

AEN

AEN extra

Highcost individuals

Highcost formula

Highcost resource bases

odds

Secondary Delegated Funding

Basic AWPU+LSC

Basic other

AEN FSM

AEN

AEN extra

Highcost individuals

Highcost formula

Highcost resource bases

odds

Basic Funding• Age Weighted Pupil Units (AWPU)• Fixed including small school• Floor and site area

Issues/questions- more/less on AWPU? - increase/decrease proportion on basic?- Smaller schools have a greater proportion of the fixed and floor/site factors so less economic

Additional Educational Needs (AEN)

• Free School Meals (FSM) for meals• The bulk of the funding through these indicators

- Free School Meals- Index of Multiple Deprivation (Acorn FFT)- School Action Plus- Pupil mobility- Prior Attainment

• Issues- which indicators are best to be used?- is funding going to the right pupils/schools?- Deprivation Review and 4 AEN types

The DCSF “definitions”– Learning Needs Associated with English as an

Additional Language (EAL): costs tend to be associated with pastoral needs, agency liaison and teaching English;

– Learning Needs related to particular identified Special Educational Needs (SEN) such as autistic spectrum disorders (ASD), dyslexia, dyspraxia, attention deficit / hyperactivity disorder, speech and language difficulties, sensory impairment and physical disabilities: costs tend to be associated with teaching assistants, SENCos and teaching ;

– Other learning needs that could not be associated with either EAL, a particular identified SEN or social needs: provision focused on attainment issues (additional teaching assistants) and emotional and behavioural needs; and

– Social Need, particularly focused on meeting behavioural needs.

Current factors in 2008/2009 formula but split into the 4 DCSF AEN types

AEN

SEN EALSocial Need

(Deprivation)

Other needs on attainment and

emotional behavioural needs

School Action +EAL

moderated by FSM

FSMIMD

mobility

Prior attainment?Low

High?Ethnicity??

DCSF Deprivation review

• Part of national government strategy

• Now quantified so that we now know how well the DCSF considers we are addressing deprivation

Authority Number Year LA deprivation %

Croydon 306 2007/08 Primary & Nursery eligible FSM 21.0%Secondary eligible FSM 18.4%

Region Other Authority measure (optional)London

Attainment : % pupils achieving L5 at KS3 in 2006 LA FSMLA

GapLA Non

FSMRegion FSM Gap

Region non FSM

England FSM Gap

England non FSM

English 55% 22% 22% 77% 57% 21% 78% 50% 27% 77%Maths 59% 18% 21% 78% 60% 19% 80% 56% 25% 81%

Science 52% 22% 25% 74% 51% 23% 74% 48% 29% 77%

Total DSG196,967,000 % Value % Value

14.63% 28,814,005 10.55% 20,772,700

Funded AEN Deprivation

LA FSM - Eng Non FSM Gap

The Deprivation Return to DCSF

Formula factor   £ total delegated   permissable % £ allowable   permissable % £ allowable

                 

FSM Provision   2,603,130   100% 2,603,130   100% 2,603,130

FSM Provision other AEN   2,331,880   100% 2,331,880   100% 2,331,880

SEN FSM   1,140,346   100% 1,140,346   100% 1,140,346

Social Deprivation   3,442,032   100% 3,442,032   100% 3,442,032

Looked After Children   -   100% -   100% -

SEN by deprivation factor   1,585,275   100% 1,585,275   100% 1,585,275

SEN by Prior Attainment   1,531,788   100% 1,531,788   75% 1,148,841

SEN by NOR for School Action       0% -   0% -

AEN by EAL   1,670,832   100% 1,670,832   0% -

SEN by School Action +   995,616   0% -   0% -

SEN individual statements   608,698     0%       0%  

SEN resource bases in schools   945,092     0%       0%  

Learning Support Units   -   100% -   100% -

Personalised Learning G & T   188,472   100% 188,472   0% -

Personalised Learning Falling Behind   1,735,812   100% 1,735,812   75% 1,301,859

PLearning Deprived access to extended Schools       100% -   100% -

High Turnover   1,155,816   100% 1,155,816   5% 57,791

S52 1.4.2 FSM Eligibility   -   100% -   100% -

S52 1.3.2 Behaviour Support Service   -   19% -   19% -

SEN AWPU   523,781     0%       0%  

LINE TO BE DELETED                    

LINE TO BE DELETED                    

AWPU re AHs as per DCSF table   1,931,406   100% 1,931,406   100% 1,931,406

AEN prior attainment   1,304,287   100% 1,304,287   75% 978,216

TOTAL                 20,621,075       16,520,775

                           

% of funding allocated for deprived pupils directed towards deprived pupils       72%       80%

DCSF Deprivation review• Part of national government strategy • Now quantified so that we now know how

well the DCSF considers we are addressing deprivation

• How do we increase deprivation funding?- allocate extra to deprivation factor- introduce a Looked After Children factor

• How can we get the right split between the 4 AEN types?

• Are all indicators as accurate as others?

Some issues around indicators

Indicator Advantage Disadvantage

FSM Easy to process

Is it uniformly identified?

IMD Identifies need but is it educational?

School Action Plus

If identified then need greater

Determined by school

Prior Attainment

If low then need greater

Affected by school

Highcost funding

• This is related to statemented pupils- funded for actual hours above threshold- by formula for most of the funding using AWPU, FSM, Prior Attainment and IMD

• Also pupils in resource bases but only primary until now

• Issues- an area which has been high in comment re perceived underfunding and Other Local Authority pupils- lack of resource bases for secondary pupils

Minimum Funding Guarantee

• This was introduced by the DfES to ensure that there was not excessive turbulence at school level following the difficult 2003/2004 year

• The methodology has stayed virtually the same but things have moved on and so there are some schools that had been over protected.

• The Schools Forum was able to adjust the calculation for up to 20% of schools to address anomalies that have arisen and that action was taken for 2007/2008 allowing for several £100k to be released to the main formula and similarly in 2008/2009.

Major Issues for the Schools Forum• Need to ensure that the formula addresses the needs

of pupils/schools and in particular the DCSF Deprivation Review requirements without being distracted by other short term grant funding or additional private income.

• Support the need for schools to be able to predict funding for 3 years ahead

• There is an increase in groups of schools being collectively responsible for various things

• Supporting children with Special Educational Needs• The DCSF proposals for April 2011 and following

Issues re supporting SEN in schools

The main issue is that schools are funded for elements of SEN but not all schools accept their responsibility to take a share of these pupils. Eg Accepting pupils with statements or those with other needs.

Some possible considerations• Set up more resource bases especially

secondary• DCSF is promoting clusters of schools to take

on the responsibility for all children in an area• Out borough placements are very expensive

and we need to make better use of in borough provision

Issues re supporting SEN in schoolsThe main issue is that schools are funded for elements

of SEN but not all schools accept their responsibility to take a share of these pupils. Eg Accepting pupils with statements

Some possible considerations• Set up more resource bases especially secondary• DfES is promoting clusters of schools to take on the

responsibility for all children in an area• Out borough placements are very expensive and we

need to make better use of in borough provision• But most of all promoting understanding in all schools

(heads, governors, SENCOs etc) that any excessive claims for more resources comes from one fixed pot for all aspects of education.

Dedicated School Grant

Schools

Early Yrs

out of sch

SEN

Primary School income

Delegated inc LSC and SSG

AEN including SEN

Other Standards Fund

Other Government grants

Generated by school

How do schools cope with changes in funding?

• Since 2003/2004 most schools have had to restructure in order to balance their budget

• Since then funding has increased again above inflation but so have the demands, the latter including personalisation

• In 2006/2007 many schools DID have another effective drop compared to other schools and they have had to cope but 2007/2008 some of this was returned.

Schools and AEN/SEN

• consider the issues that schools have in setting a budget including Special Education Needs (SEN), Additional Education Needs (AEN) and 3 year budgets. [From initial objectives]

• We have addressed some of this but:• Obviously schools would like more resources but

where this is limited (as with the DSG) the Schools Forum needs to be in the lead of supporting schools understanding of why they need to manage within the resources available.

• They also need to ensure the various splits/formula are fair to all children, this including in the future the Private, Voluntary and Independent early years providers.

Other Changes from April 2009

• Funding 14 to 16 Diplomas• Similar funding for all Early Years children in

all settings including nursery classes and schools. Consultation very soon

• Also LAC, new classes, vertical grouping, secondary resource bases being consulted on soon

• Reduction and reallocation of balances is still on the DCSF agenda if there is no reduction. Note 5% and 8% represent the threshold before it is considered excessive and not the target or average.

More Provocative Statements!

• If the funding is to be distributed fairly then the Schools Forum needs to be prepared to make the necessary decisions to redistribute the funding.

• However, the difficult part is determining what is the fair distribution and not so much on the ability of the school to cope!

• All schools can adjust their budget so that they can work within a fair budget although for some it will take a couple of years to achieve.

Any Other Questions or Issues related to the funding of children either through schools or individually?

Finance ArrangementsThis section will look at the areas that define how schools should manage their finances and the Schools Forum role.

And is much shorter!

Finance Arrangements

• Schools Forum now has the responsibility to agree changes to the Scheme for Financing Schools.

• The Scheme is an overarching document that describes how schools operate their finances in the context of the LA and DCSF requirements.

• The DCSF will probably continue to advise about changes needed

The Scheme areas• Introduction• Financial controls• Instalments of budget share; banking arrangements• The treatment of surpluses and deficit balances arising

in relation to budget shares• Income• The charging of school budget shares• Taxation• The provision of services and facilities by the Authority• PFI clauses• Insurance• Miscellaneous• GM Schools• Responsibility for repairs and maintenance• Community Facilities

Issues that relate to the Scheme

• At present there are none outstanding although some changes will need to be agreed shortly

But there may be in the future.A previous example is recovery of excess

balances The issue is that the Schools Forum

needs to think of the whole community of children in Croydon and not just selected schools.

Financial Management Standard in Schools

• This is now compulsory for all schools as Internal Audit are now using it as the basis for all internal audits of schools.

• No real issue but Schools Forum and LA need to have confidence that schools are operating their finances efficiently and effectively otherwise the collective role can be affected if one or more of the schools requires extra support.

Local Arrangements

• CYPL Finance (schools) co-ordinate the funding and monitoring

• Also co-ordinate VAT claims, Construction Industry Scheme

• Schools provide LA with - budget plans- quarterly returns- end of year return- bank reconciliations (if requested)

Any questions?

The End

Croydon Schools – the figures

Cash Terms ISB Central Total£m £m £m

2005/06 150.7 24.3 175.02006/07 161.2 25.2 186.42007/08(Est) 171.7 26.9 198.6

ISB Central Total% % %

2005/06 n/a n/a n/a2006/07 6.96 3.70 6.502007/08(Est) 6.50 6.50 6.50

• In pupil number terms the increase was 7.3% in 2006/07 and will be 7.2% in 2007/08. As pupil numbers fall the percentage fall in cash terms

• Croydon has benefited from an injection of specific funding into the DSG including funding to bring Croydon back up to the old Schools FSS threshold

• Not all Schools will be guaranteed levels of 6.5% increases in 2007/08. This depends on amongst other things pupil numbers and targeted grant allocations