BACKGROUND AND CONTEXT TO
LEICESTERSHIRE COUNTY COUNCIL’S
PROPOSALS FOR 2015/16 SCHOOL FUNDING
Background
1.
Following a consultation by the Department for Education (DfE) in March on
’Fairer Schools Funding for 2015-16’ it was confirmed on 17 July that
Leicestershire would be one of 69 local authorities that will receive a share of
£390m to increase the Schools Block Unit of Funding (SBUF) in 2015/16.
2.
The announcement made by the DfE refers to Leicestershire receiving an
additional £242 per pupil, however this is reduced to £240 per pupil following an
increase in the funding retained by the DfE for funding the carbon reduction
commitment for schools. It is estimated that Dedicated Schools Grant will
increase by £20.48m
3.
Additional funding is allocated to local authorities identified by the DfE as
needing additional funding to deliver their newly established minimum funding
levels for a number of pupil factors within their school funding formulae. There
is no expectation or requirement for local authorities to use those levels of
funding within their school funding formula.
4.
The distribution of funding for individual school is significantly affected by pupil
characteristics. Modelling identifies that to deliver a £240 increase in per pupil
funding so that all schools and academies receive at least this increase would
cost in the region of £130.8m, £110.32m in excess of the additional funding
allocation.
5.
The Leicestershire Schools Forum supported the local authorities approach for
the distribution of the additional funding for primary and secondary schools and
academies, at its meeting on 16 June 2014, the report can be accessed at:
http://politics.leics.gov.uk/ieListDocuments.aspx?CId=1018&MId=4118&Ver=4
6.
The approach has been to deliver an increase to all school providers and that
special schools, schools with SEN units and early years providers, although no
increase is given for these areas, should all benefit from additional funding.
7.
Analysis of the 2014/15 Leicestershire school funding formula identified two
areas where funding levels were out of line with those in similar authorities, the
level of funding provided to primary schools through the Age Weighted Pupil
Unit (AWPU) was low and that the level of funding targeted at low prior
attainment was also below that in other authorities. The first call on the
additional 2015/16 funding is to redress this position.
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8.
The local authority established a School Funding Task and Finish Group
consisting of headteachers, governors, members of the Schools Forum and
school business managers to challenge the local authorities perspective and
engage schools in developing the proposals for 2015/16. The Task and Finish
Group have concluded that the proposals present the best overall option for all
educational providers in Leicestershire.
9.
The local authority would formally like to express its thanks to the members of
the Task and Finish Group who met over the school summer break to
undertake this work given the extremely short timescale set by the DfE to
deliver the 2015/16 school funding formula.
10. The proposals increase the funding for primary schools by an average 7.9%,
secondary schools by 3.6% and also increase the basic rate paid to early years
providers by 3.6%, this is all funded from the additional £20.48m. Funding for
special schools and schools with special needs units will also increase by an
average 3.6%, this will be funded from a contingency held within the budgets
for high needs provision.
11. The proposals will be presented to the County Council’s Cabinet on 14 October
for decision, the local authority is required to submit its proposals for 2015/16
school funding to the Education Funding Agency (EFA) for validation against
the School and Early Years Finance (England) Regulations by 31 October.
What Does this Mean For Leicestershire?
12. Despite messages from the DfE that school funding reform is delivering a
simpler school funding system, school funding remains complex and technical
in nature. In summary Dedicated Schools Grant (DSG) is allocated to local
authorities in three ‘Blocks’ of funding;
a)
Schools Block – this block funds delegated school budgets and budgets
that are prescribed in the School and Early Years Finance (England)
Regulations as held centrally by the local authority on behalf of schools
such as premature retirement for school based staff and school copyright
licences. Appendix 1 sets out the school funding system and the changes
in the distribution methodology for 2015/16 in more detail.
b)
High Needs Block – this funds special schools, special needs units within
maintained schools ,top up funding for SEN in mainstream schools and
academies and all other special needs providers.
c)
Early Years Block – This block funds the free entitlement to early years
education for disadvantaged 2 year olds and the early years offer for 3
and 4 year olds.
13. The additional funding relates to the Schools Block only. This changes the
relative funding position of Leicestershire from 3rd lowest funded in 2014/15 to
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11th lowest funded local authority for the Schools Block Unit of Funding (SBUF)
in 2015/16.
14. The DfE have stated that they will review the allocation methodology for the
High Needs and Early Years Blocks, they have not however given any
indication of when that will be. Funding rates in these blocks will be unchanged
for 2015/16.
15. In terms of school funding and the allocation of the Schools Block there are
three distinct stages;
Stage 1 -
Local authorities receive Schools Block DSG on a per pupil basis
for all pupils on the roll of all maintained schools and academies
in Leicestershire.
Stage 2 -
A number of budgets, subject to school finance regulations and
Schools Forum approval, are held to meet school generated
expenditure. The remaining funding is delegated to schools.
Stage 3 -
Local authorities agree a formula to distribute the total delegated
budget to maintained schools and academies.
This process is described in more detail in Appendix 1.
What are the Proposals for Allocating the Additional Funding?
16. The local authority has developed the proposals following an analysis of the
2014/15 funding rates published by the DfE and specifically by comparing those
rates with those set by similar authorities. The 2015/16 School Funding Task
Group has provided robust and constructive challenge on the proposals and
assisted the local authority in proposing options that provide the best outcome
for Leicestershire schools.
17. The proposals are a basis for distributing the additional funding to schools and
early years providers only. In formulating the proposals no account has been
taken on any changes in the underlying cost base, nationally this has not been
reflected in funding levels as a result of the austerity measures introduced by
the current government, nor it is expected to be reflected in the 2015/16
Dedicated Schools Grant settlement.
18. Data on 2014/15 school funding formulae from all authorities identified that
compared to similar authorities two area of funding were out of line with the
comparators, to address that position the following changes for 2015/16 are
proposed. It should be noted that all primary and secondary schools receive
funding via the AWPU and low prior attainment factors;
a)
Increase primary AWPU by 7%
This will bring the proportion of funding allocated in Leicestershire for
2015/16 in line with that recorded across similar authorities for 2014/15.
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Differences may still be present in 2015/16 as a result of local decisions
on the 2015/16 school formula in other authorities.
b)
Increase the low prior attainment rate by 100%
This will bring the proportion of funding allocated in Leicestershire for
2015/16 in line with that recorded across similar authorities for 2014/15.
Differences may still be present in 2015/16 as a result of local decisions
on the 2015/16 school formula in other authorities
c)
Increase primary, KS3, KS4 AWPU by an estimated 1.5%
This will be an overall increase in school funding for all schools subject to
the application of the Minimum Funding Guarantee (MFG) and any
changes in school data. This is discussed in a later section of this
document.
d)
Increase the ceiling for schools gaining funding to 15%
The ceiling was introduced nationally in 2013/14 to ensure that the
changes arising from the first phase of movement towards a national
funding guarantee in 2013/14 were affordable at local authority level. This
is further discussed in a later section of this document.
19. The proposed funding rates for 2015/16 are;
Age Weighted Pupil Unit (AWPU)
2014/15
£
KS1/2
KS3
KS4
2015/16
£
2,515.44
3,570.63
4,262.83
2,731.89
3,624.19
4,326.77
Increase
£
216.45
53.56
63.87
Low Prior attainment
2014/15
£
KS1/2
KS3
KS4
2015/16
£
358.01
473.79
473.79
716.02
947.58
947.58
Increase
£
358.01
473.79
473.79
What Does This Mean for my School?
20. The impact of the additional funding will be individual for each school. Within
the school funding formula all schools attract the same unit of funding for a
number of pupil characteristics;
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


Age Weighted Pupil Unit (AWPU) for each pupil on roll, different rates
are attached to KS1/2, KS3 and KS4 pupils
Pupils eligible for deprivation funding allocated through IDACI and free
school meals
Pupils eligible for low prior attainment funding
Secondary schools may have funding for more than one Key Stage i.e. 10+
pupils attract the KS1/2 AWPU level and 11-16 schools will receive both KS3
and KS4 funding. Additionally the percentage of pupils attracting funding units
for deprivation and low prior attainment is unique to each school. Just as the
average per pupil funding varies between schools, so will the level of additional
funding attracted by each school under these proposals.
21. A number of factors are not based on pupil characteristics and also affect the
overall level of average per pupil funding. These are not affected by the
proposals for additional funding but are important in articulating why there are
variations in per pupil funding at school level;
 Lump sum where all schools receive the same rate irrespective of school
size
 Rent, payable to some schools only
 Rates, individual rateable values apply to each school. Academies and
voluntary controlled schools receive 80% discount on rates as a result of
their charitable status.
The latter two factors are the only factors within the funding formula which fund
schools at actual cost and therefore also impact upon the average per pupil
funding level.
22. MFG affects funding levels for individual schools. Over recent years this has
served to ensure that where there have been changes in the school funding
system that a schools budget does not decrease by more than 1.5% per pupil.
MFG has moderated turbulence in schools budgets created by;
 Changes in the pupil characteristics identified above.
 Changes in grant funding such as the cessation of the Standards Fund
and the transfer of that funding into the school funding formula.
 Changes introduced in the structure and nature of school funding
nationally i.e. the move to a national fair funding formula in 2013/14.
23. The final factor affecting funding for individual schools is the ceiling. This was
established under 2013/14 school funding reform to ensure the increased cost
of MFG as a result of the structural changes in school funding could be
delivered within available funding levels. It allows local authorities to set a
ceiling on the percentage increase in per pupil funding in order to fund the
increased cost of MFG. It is adjusted as a result of changes in the level of MFG,
as MFG decreases the ceiling increases. Simply it allows schools to benefit
from funding or formula changes whilst MFG protects those with excessive
decreases.
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24. An illustration of how differences in pupil in school characteristics is shown in
the following table. This clearly demonstrates that whilst units of funding are
equal for all schools, with the exception of funding for rent and rates, there is a
wide range of variables that affect an individual school budgets. The significant
difference in the average per pupil funding for the primary schools is the impact
of a higher per pupil allocation from the fixed lump sum of £150,000 that arises
from a smaller number on roll.
Impact of Pupil and School Characteristics on School Funding
School
NOR
AWPU
Rate
% on Roll Attracting Funding
Units For
% Budget Allocated
by
IDACI
FSM
Prior
Attainment
Non
Pupil
Factors
Minimum
Funding
Guarantee
Average
per Pupil
Funding
Primary A
57
KS1/2
0%
7%
24%
46%
8%
£5,789
Primary B
44
KS1/2
11%
7%
26%
54%
3%
£6,432
Primary C
22
KS1/2
10%
5%
13%
65%
11%
£10,676
Secondary
A
642
KS1/2 23%
KS3 77%
25%
10%
31%
7%
0%
£4,001
Secondary
B
622
KS3 14%
KS4 86%
1%
5%
17%
8%
11%
£4,809
Secondary
C
1,123
KS4
16%
6%
20%
5%
0%
£4,649
Source;
Leicestershire S251 Budget Statements 2014/15
The Impact of the Minimum Funding Guarantee on School Funding Changes
25. MFG is set nationally and effectively overrides the locally adopted school
funding formula in some instances and guarantees that school funding does not
reduce by more than 1.5% per pupil for 2014/15 and for 2015/16. Local
authorities may request changes to its calculation basis in exceptional
circumstances, such as moderating the impact of age range changes in
Leicestershire arising from the increased AWPU rate at KS4 and one off
protection funding which was approved by the Secretary of State. The national
rate cannot be adjusted, the Secretary of State will not approve a change in
methodology that affects all schools.
26. MFG has been in place for a number of years, it has since inception moderated
a range of significant changes in the school funding system. For an individual
school it is not possible to identify any one specific funding change driving their
MFG allocation.
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27. The level of turbulence from any changes in school funding affects the level at
which it moderates any adverse impact on school funding, this can be
illustrated by the cost of MFG over the last 3 years;
 2012/13
£1.5m
 2013/14
£4.3m
 2014/15
£3.3m
The increase in 2013/14 was the result of the implementation of national school
funding reform where for example small school protection was no longer
allowable but replaced by a lump sum of equal value to all schools, MFG
moderated the impact on school funding as funding decreased the funding
formula. The decrease in 2014/15 is a result of more stability in the school
funding system.
28. Modelling identifies that without additional funding it will take an estimated 20
years at the 2014/15 funding and MFG rates level of funding for Leicestershire
schools to be removed from MFG, the additional funding reduces that timescale
to 15 years.
29. The proposed increased funding rates will deliver increased formula allocations
for all Leicestershire schools and academies. For schools who receive less
additional funding than MFG from the increased formula rates schools budgets
will not increase. Current modelling suggest that 23 Leicestershire schools will
remain on MFG in 2015/16 and will see no cash increase from their 2014/15
budget. However without the additional funding, these schools would see a
budget reduction of 1.5% per pupil in 2015/16 as the MFG protection decreases
year on year. Whilst schools will not either see any decrease as a result of
MFG application in 2015/16, the rates allocation is not affected by MFG so any
reduction in rates funding will reduce the cash budget.
30. The revised funding values reduce the funding allocated by MFG from £3.3m in
2014/15 to an estimated £0.76m in 2015/16. This funding is redistributed within
the funding formula and does not decrease the quantum of the total delegated
school budget.
31. A simplified representation of how MFG works is shown in the following
diagram;
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MFG - Simplified Illustration
2014/15
School Budget based on 2013 school census data
Pupils
2015/16
School Budget based on 2014 school census data
300,000
100
Pupils
2014/15 Budget per pupil
3,000
250,000
a
100
2014/15 Budget per pupil
2,500
The nationally set Minimum Funding Guarantee (MFG) requires that no school must lose more funding than 1.5% per pupil so overrides the formula as follows;
2014/15 Funding per pupil
Maximum Decrease in per pupil funding
2015/16 Unit of funding must not be less than
3,000
-1.5%
2,955
2015/16 Budget must be
2,955
Pupils 100
100
Required 2015/16 Budget
295,500
b
But is
250,000
a
So Minimum Funding Guarantee Increases budget by;
Formula Budget
MFG
Total Budget
250,000
45,500
45,500
a
b
295,500
Additional Funding increases budget to
275,000
Minimum Funding remains at
295,500
Minimum Funding reduces to
20,500
c
c
No cash increase to school budget;
Formula Budget
MFG
Total Budget
275,000
20,500
295,500
Reduction in MFG Funding:
MFG prior to additional funding
MFG post additional funding
MFG Reduction
45,500 b
20,500 d
(25,000)
MFG reduction is redistributed in funding formula
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d
c
32. The published model allows schools to see the estimated impact of the
additional funding which is available on the Leicestershire County Council
website on the following link;
The modelling restates schools 2014/15 formula budgets for the new funding
rates to give the estimated 2015/16 position and reflects the increased
funding units and their impact on MFG.
33. For academies the budget shown in the model is that they would have received
if they were a maintained school for the financial year April – March. This
calculation is provided to the EFA as the basis for the budget for the academic
year.
34. It should be noted that the model is based upon the October 2013 school
census, actual budgets will be based on the October 2014 census and the
variations in pupil and school characteristics identified in paragraphs 20 - 23 will
see resultant changes in 2015/16 budgets.
Will the 2015/16 Budgets shown Within the Formula Model Change?
35. There may be changes to the units of funding as a result of the consultation
exercise, the decision of the County Council’s Cabinet and potentially the
outcome of the validation check by the EFA.
36. The increased rates are based on October 2013 school census data and the
final formula is required to be based on the October 2014 school census data,
any changes in the underlying data will affect the cost of the proposals. This
may be the result of increased costs arising from;
 Changes in school rates liability - two elements may be pertinent here,
a number of schools are reporting increases in rateable value which
increases the current and past financial liability which must be funded
in 2015/16.
 Changes in school level pupil data – an increase in the number of
pupils attracting IDACI, free school meals and low prior attainment
funding.
 Age Range Changes – the funding mechanism includes an estimate of
September 2014 pupils with realignment to September actuals. The
2015/16 budget will bear the net cost of any adjustment.
 Studio Schools – 2015/16 will see the incorporation of free schools and
studio schools in local authority funding formulae for the first time. It
has been assumed for all modelling that this will be cash neutral.
37. DSG is a fixed pot of funding with no County Council additional funding, it is
therefore necessary to establish a mechanism for ensuring the budget can be
balanced. It is proposed that this be completed through the overall increase in
the AWPU rate of 1.5%, this rate may either increase or decrease.
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38. For academies the estimated and actual budgets may vary from that shown as
a result of the application of funding protection and other funding adjustments
that may be applied by the EFA.
Age Range Changes in 2015/16
39. The local authority is not proposing any change to the mechanism for funding
schools undertaking or affected by age range changes for 2015/16. The pupil
number count for the year group affected by change will be estimated for both
schools increasing and decreasing in numbers. Funding protection will continue
to be based on 80% of the loss of pupils in year groups affected by change for
the first year of change only.
40. The EFA has confirmed that it is not necessary to seek Secretary of State
approval for this adjustment in 2015/16 as it is unchanged from the proposal
agreed in 2014/15. It is however necessary to seek approval for the exception
to MFG which ensures that schools gaining a higher proportion on KS4 pupils
which are funded at a higher rate than for KS3 and to ensure that the one off
protection funding is not reflected in the school budget the following year. As
this mechanism is also unchanged from that approved for 2014/15 which was
approved by the Secretary of State that approval is needed as for this element
of the adjustment approval is granted only on an annual basis.
What will School Funding for 2016/17 be?
41. There is no indication of the level of school funding past 2015/16. The current
government remains committed to the introduction of a national fair funding
formula but have clearly stated that this will be at a point when the government
has set spending plans over a longer period of time.
42. For medium term planning schools should assume that the 2015/16 funding
rates remain in place.
Where can I get Clarification on anything contained within the Proposals?
43. Email queries should be submitted to;
edfinance@leics.gov.uk
44. Telephone queries should be directed to;
Jenny Lawrence
Tel: 0116 305 6401
or
David Heyes
Tel: 0116 305 7707
45. Please contact your Schools Forum representative if you wish to raise any
comments directly with them, any such comments may inform the debate but
will not be considered as formal consultation feedback.
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What Happens Next?
46. The timeline for approval of the changes is;
Consultation opens
Schools Forum meeting to consider
the consultation
Consultation closes
Schools Forum considers the
consultation response and determines
any comment / recommendation they
wish the County Council Cabinet to
consider in making a decision on
2015/16 school funding
County Council Cabinet decision
Local authority to submit 2015/16
school funding proposals to the EFA
1 September
5 September
17 September
18 September
14 October
31 October
How do I Respond to the Consultation?
47. All consultation responses should be emailed to;
edfinance@leics.gov.uk
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