Few would argue with the merits of a national funding formula and a fairer distribution of the current quantum.
There have been historic winners and losers in school funding and, while a move to a national formula will address this inequity, the challenge will be how we transition from one funding system to another in which inevitably there will again be winners and losers. The speed of the transition and levels of protection will be central to this debate.
But first we must understand “the science”.
The Dedicated Schools Grant (DSG) is the main source of revenue for state-funded schools in England serving 5 to 16-year-olds. It is currently divided into three un-ringfenced blocks. The largest – the schools block – should cover the core provision for pupils in primary and secondary education.
The allocation is based on historic per-pupil funding with large variations between authorities across the country.
As well as large variations in the average per-pupil funding received by local authorities from government, the onward distribution to schools use local formulae that also vary considerably in terms of the relative importance given to different factors such as deprivation, prior attainment and sparsity.
Inevitably there will again be winners and losers
This approach has resulted in significant inequities across the system, with schools in very similar circumstances and with very similar characteristics being funded very differently. The coalition government attempted to bridge the gap between the lowest and highest funded authorities by introducing a further £390 million into the system towards the end of the last parliament. However, it stopped short of a full national funding formula. Since its election, the Conservative party has pledged to introduce a national funding formula within this parliament – that is, before 2020.
Now, in the first phase of a consultation about how to do this, the Department for Education is focusing on broad principles – in other words, this phase is all about winning hearts and minds. It is also difficult to speculate about the direct impact changes to the formula may have without knowing more detail around the weighting factors that will come in phase two.
The consultation published last Monday provides a steer on the government’s current thinking, though. It shows there will be:
• introduction of a school-level national funding formula where the funding each pupil attracts to their school is determined nationally
• implementation of the formula from 2017/18, allocating funding to local authorities to distribute for the first two years, and then to schools directly from 2019/20
• ring-fencing schools block to be implicit with no latitude to move money out
• review of the future role for Schools Forum
• creation of a new DSG block for local authorities’ ongoing duties
• ensuring stability for schools through the minimum funding guarantee and by providing practical help, including a restructuring fund.
Between 2017 and 2019, local authorities will maintain a role in the distribution of funding. From 2019 that role diminishes and funding will go directly to the school.
The proposals also suggest a ring-fencing of the schools block with a separate block for local authority central services. While protecting the schools block in this way appears a positive move for individual schools, the level at which this is set and the amount destined for the central services block will be vital.
Those presiding over school budgets – school business managers, finance directors, chief financial officers – may want to consider the implications of funding moving directly to their institutions without the intervention of local authorities and a local formula. Speculating on the extent to which you will benefit or lose is near impossible until the details of phase two (expected in May), though understanding whether you are in a low-funded or generously-funded area will perhaps offer some indication of the potential impact to your current funding allocation.
The appetite for expediency in this process will determine the direct impact on schools during this parliament. It is perhaps not unreasonable to suggest that a degree of caution be exercised to ensure minimum turbulence.