ITEM NO.
REPORT OF THE LEAD MEMBER FOR EDUCATION
TO LIFELONG LEARNING AND LEISURE SCRUTINY COMMITTEE
ON
Subject:
RECOMMENDATIONS:
Members are requested to: - note the contents of this report
EXECUTIVE SUMMARY: This report details the changes to education funding, which will be implemented from April 2003.
BACKGROUND DOCUMENTS: Various guidance letters from the DfeS and RSG announcement
CONTACT OFFICER: Robert McIntyre
WARD(S) TO WHICH REPORT RELATES:
KEY COUNCIL POLICIES:
All
DETAILS: Continued overleaf
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REPORT DETAILS
1.
PURPOSE OF THE REPORT
1.1 BACKGROUND
Education finance has for a number of years been governed by the RSG settlement and the requirement for Local Authorities to passport the annual increase in SSA to schools. Schools budgets have also been supported by the Standards fund and Standards grant which have increasingly become more important to schools. In addition Local Authorities have been required to attain targets for the proportion of their budgets which is delegated to schools, this has led to an increasing number of services being delegated to schools. From April 2003 the methodology for the calculation of RSG is undergoing a fundamental change and the DfeS is also changing the regulations effecting how schools and LEA`s relate.
2.1The old SSA sub blocks have been replaced by new sub blocks for schools, high cost pupils and
LEA central expenditure. It is important to note that the definition of the schools sub block includes a number of services, which are not delegatable to schools. Within these new sub blocks the government has also created a new sub block for youth and community education to emphasise the importance that central government attaches to this area.
2.2 The DfeS have indicated that they will expect the new youth and community education sub block to be allocated to these areas of expenditure and have stated " local decisions about youth service budgets must ensure increased investment in every authority's youth service ". In order to ensure that Local Authorities meet the government's intentions the Secretary of state has retained powers to intervene where a local authority fails to provide a sufficient youth service budget.
2.3 Local Authorities will be required to notify the secretary of state by the end of January each year of the size of its schools budget. If the secretary of state is of the opinion that a local authority has set a schools budget which is insufficient then he has retained powers to intervene and determine the size of the budget.
2.4 The government has also taken the opportunity to transfer various grants into mainstream RSG and have announced that further grants will be mainstreamed in future years. For 2003/04 the grants which have been incorporated into the RSG are-

Nursery grant

Infant class size grant

School Improvement grant

Social Inclusion

NQT Induction
These grants were previously distributed on a targeted basis but in future will be distributed on a formula basis via the RSG. The changes to the RSG formula have resulted in the City Council being a marginal loser and therefor it will lose by the transfer of these grants into the formula. In addition to the overall loss by the transfer of grants to RSG the transfer of the Nursery grant will in future years create differential funding regimes between authorities.

2.5 The DfeS has indicated that LEA`s are required to have a deprivation factor within their school`s funding formula, Salford already complies with this requirement. Following the changes to the RSG formula and the standards fund authorities will be able to introduce new factors into the formula for ethnicity and NQT`s additional costs.
3.
CHANGES IN LEA/SCHOOLS RELATIONSHIPS
3.1All LEA`s are required to establish a school's forum which will have the status of an advisory body in discussions on education finance. The Authority will be required to consult the forum on a variety of issues including the overall level of education funding, the level of expenditure on SEN and changes to the schools funding formula. This forum will comprise representatives of
Headteachers, governors, the city council and other interested parties. Within Salford the forum will have a total representation of 17 of which 13 will be school representatives.
3.2 LEA`s have been given new powers in respect of surplus balances held by schools, they will be allowed to change their schemes of delegation so that from April 2004 they could (under specified circumstances) recover excess balances for distribution to other schools.
3.3 The DfeS has requested that LEA`s provide schools with indicative budgets for 2004/5 and
2005/6 based on the national increases in the Education Formula Spend and states that it is unable to provide firm estimates of EFSS increases for future years for each authority. It will therefore be for each authority to estimate the level of this increase they will receive in order for them to give budget figures. This could be a source of confusion unless school`s are fully educated in the complexities of the RSG funding formula.
4 CONCLUSIONS
4.1 Members are requested to note that the proposed changes will impact in this and future years on the amount of funding available for schools via the RSG settlement.