1. The National Funding Formula
Tom Goldman
Department for Education
October 2017

2. National Fair Funding Conference
Thursday 19th October, 2017

3. Introduction
Why reform at all?
Why adopt this formula?
What comes next?

4. A (very) potted history - 1
1988 Local Management of Schools
Delegated budgets, local formula, LA sets budget
Passporting, Standards Fund, School Standards Grant
Increased pressure on LA to pass funding increases through to schools’ budget
Increased funding paid as specific grant
2003 Reform on Education SSA
“Funding crisis”
2006 Dedicated Schools Grant
Funding ring-fenced to education, distribution by Spend plus
2011 Specific grants into DSG, Pupil Premium
2013 Limits on local formulae factors, 3 blocks in DSG
2015 Minimum Funding Levels

5. A (very) potted history - 2
Trends:
Increased focus on the individual school
School-by-school comparisons, increasing uniformity
Much better (more?) data available
Tension between stability and change
Tension between simplicity and accuracy

6. Why reform at all? - 1 Reform is disruptive and resource-intensive
So what has driven the need for reform?
Fairness
Identical schools would get different funding
Identical LAs would get different funding
We cannot explain why school X gets £X and school Y gets £Y
We can explain why school X gets £X; and why school Y gets £Y; but not both together
So: we cannot justify the current system or distribution
Inexplicable differences are cannot be justified – even if they are justifiable

7. Why reform at all? - 2 So what has driven the need for reform?
Allocative efficiency
However efficient individual schools may be, the system will be inefficient if funding isn’t directed to need
An even greater priority when budgets are tight
Unresponsive to change
Beyond total pupils numbers, at best ad hoc, one-off adjustments
Promoting equality of opportunity / social mobility?
Balanced by the importance of stability
Protections and transition, rather than stasis
(How) will it improve pupil outcomes?

8. Why adopt this formula? - 1
A school-level calculation
School-to-school comparability
Looking to a hard formula
A ring-fenced Schools Block
Greater certainty, greater transparency
DfE taking responsibility for the schools: high needs balance; but some local flexibility
A funding floor for stability
Clearly a political priority…

9. Why adopt this formula? - 2
A funding floor for stability
Clearly a political priority…
“While we will make funding fairer over the course of the parliament, we will make sure that no school has its budget cut as a result of the new formula”
Conservative
“We will introduce a fairer National Funding System with a protection for all schools, so that no school loses money per pupil in cash terms”
Liberal Democrat
“We will introduce a fairer funding formula that leaves no school worse off”
Labour
Impacts on standards in schools which lose?
Funding based on pupil and school characteristics, and school funding history
2.5ppt differential, per year, between NFF gains cap and NFF funding floor (and more for the lowest funded)

10. Why adopt this formula? - 3
Starting from 150 local authorities’ collected experience
Our factor values’ starting point was local formulae
And 26,000+ consultation responses
We can continue to explore why authorities are setting different formula, to inform NFF development
Protection of additional needs
Protecting the quantum, including “hidden” deprivation spending
But reconsidering the balance and making wide coverage uniform
Recognising limitations of proxy measures

11. What comes next? - 1 Areas for immediate on-going work
Premises; PFI
Growth
Mobility
Preparations for a hard formula
Timing?
The next Spending Review
The formula has to distribute 100% of the available funding

12. What comes next? - 2
Not “introducing the NFF”; now “continuous improvement”
Not one-off, grand public consultation, and
Not set in aspic, storing up new problems for the future
Now issue-by-issue consideration of incremental change
But NFF v2.0?
High Needs
Schools?

13. Conclusion NFF documentation
Executive Summary, Policy Document national-funding-formula-for-schools-and-high-needs
Illustrative Tables, Technical Notes national-funding-formula-tables-for-schools-and-high-needs
Detailed school-by-school calculations via COLLECT
NFF consultation is over, but still keen to continue to learn from local experience
For immediate on-going work; in preparation for future reform
DfE sessions today:
National Funding Formula for Schools
operational issues
High Needs
Not NFF: Efficiency, Pupil Premium