1. School Funding Reform 16 th and 19 th July 2012 – Handout 1 Page 1

2. Page 2 Presentation to Swindon Headteachers and Governors “School Funding Reform” 16 th and 19 th July 2012 Steve Haley, Head of Finance - Education & Innovation Paddy Bradley, Head of Commissioning – Economy & Attainment Page 2

3. Presentation Outline 1) Overview to current school funding (SH) 2) Background to the school funding reform programme (SH) 3) DfE requirements from 2013/14 and options for local decisions (PB) (Please ask questions at the end of each section or at any time) Page 3

4. Summary of Handouts 1. This power point presentation 2. Schedule of current mainstream and special school sector funding (3 rd July Schools Forum Annex 4 & 5) 3. Charts showing current funding allocated to mainstream settings for deprivation, SEN, EAL and lump sum fixed costs 4. Summary of IDACI scores for each school 5. Summary of mainstream formula consultation issues Page 4

5. Part 1 – Overview to current school funding Page 5

6. Abbreviations DfE – Department for Education EFA – Education Funding Agency (was YPLA) DSG – Dedicated Schools Grant GUF – Guaranteed Unit of Funding SF – Standards Fund EOTAS – Education other than at school PRU – Pupil Referral Unit PLASC – Pupil Level Annual School Census AWPU – Age Weighted Pupil Unit LA – Local Authorities ESS – Education Support Service PBST – Primary Behaviour Support Team ISB – Individual School Budget AEN – Additional Educational Needs SEN – Special Educational Needs PVI – Private, Voluntary and Independent FNE – Free Nursery Entitlement LAC – Looked After Children CFR – Consistent Financial Reporting EYSFF – Early Years Single Funding Formula FSM – Free School Meals IMD – Index of Multiple Deprivation IDACI – Income Deprivation Affecting Children index Page 6

7. Current School Funding Arrangements Revenue funding for schools and academies is allocated to each LA via the DSG (Dedicated Schools Grant) Each LA has a unique GUF (Guaranteed Unit of Funding) per pupil Each January there is a census of age 3 to 16 pupils in early years, schools, academies and alternative provision DSG = pupils x the GUF Page 7

8. Current School Funding Arrangements For 2012/13 Swindon’s DSG is 29,852 pupils @ £4,696.48 = £140.2m The LA is retaining £18m for central services and £122m is distributed (i.e. delegated) across schools and academies in accordance with factors in the local fair funding formula The LA consults with the Schools Forum each year on the value retained for central services and on changes to the local formula Page 8

9. Current DSG Funding Rates City of London (highest)£9,372.60 National average£5,082.53 South West Region average£4,773.96 Swindon (25 th lowest)£4,696.48 Leicestershire (lowest)£4,428.70 DfE acknowledge the current system is unfair – but to maintain stability changes are to be considered after the next election If Swindon was funded at the national average we would receive an extra £11.5m (8.2% DSG increase) to share across early years settings, schools and academies Page 9

10. SF agreed - 2012/13 Retained Budget Early Years Single Funding Formula – paid to Swindon schools and PVI Providers each term £7.5m Out of Borough School fees – paid to Independent and OLA schools throughout the year £3.1m Set up costs and trigger funding – paid to Swindon Schools (including new Croft Academy) to reflect pupil increases after January £1.4m Special Education Needs funding – paid to Swindon Schools and Academies during the year £1.5m Schools in Challenging Circumstances, Redundancies and Equal Pay – paid to / for Swindon schools during the year £0.6m Provision of LA services – EOTAS, Tuition Service, Portage, Speech & Language, Admissions, FSM admin. etc. £2.3m Share of Corporate overheads relating to DSG services - Legal, Finance, HR.£0.9m Provision for Converter Academy Funding Clawback£0.7m Total Retained Budget 2012/13 (£14.3m is paid out in year to settings)£18.0m 10

11. SF agreed - 2012/13 Formula Allocations Forum agrees factors in the local formula – mainstream schools; Pupil Led Funding Standard AWPU factors for different key stage pupils (more pupils = more cash) Factors for Deprivation, Special Needs, English as an Additional Language (higher needs = more cash) Site Specific funding Variable Flat rate funding to reflect overall size of school Funding to match rate bills and PFI affordability costs Specific funding for Borough wide facilities -Special Resource Provision, Education Support Services, BME project Page 11

12. SF agreed - 2012/13 Formula Allocations Forum agreed new funding scheme for special schools Pupil / place led funding New banding system introduced to provide higher funding for higher needs Funding allocated for current pupils and planned September increases Site specific funding Some flat rate funding allocated but greater proportion of funding allocated via banding rates Page 12

13. Revising Formula Allocations Every time any factor or funding rate in the local formula is reviewed this results in reallocations between settings – “winners and losers” LA does not wish to see any school in financial difficulty but appreciates the effect that reduced funding can have For 2012/13 Swindon Forum agreed to change the distribution of former Standards Fund grants which were not previously allocated to all settings – some schools very unhappy despite LA allocating £0.6m in transitional funding Further changes must be implemented in 2013/14 therefore further reallocations of funding across settings is inevitable Page 13

14. SF agreed - 2012/13 Formula Allocations Page 14

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18. Current formula factors and values Explanations of all current mainstream and special school funding factors and values were included in a report to the 3 rd July 2012 Schools Forum and are included at handout 2 Also included at handout 3 are a series of graphs which show the value of funding currently allocated across Swindon settings for areas subject to review These hand outs may be useful reference documents during part 3 of today’s presentation Page 18

19. Part 2 – Background to the school funding reform programme Page 19

20. School Funding Reform Programme Some immediate changes made after the last election -Greater simplification -Reduced schools protection -Frozen DSG funding -New Pupil Premium introduced Interim changes 2013/15 -Further simplification and transparency -Increased delegation National school funding system 2015/16? Page 20

21. DfE Changes so far…Simplification Immediately moved all Standards Fund Grants (£16.8m) into the DSG thereby removing all ring fencing and distribution constraints imposed by the previous government – some grants were distributed to a small number of Swindon schools From 2011/12 all school funding could be distributed in accordance with local decisions but Swindon Schools Forum supported the LA proposal not to implement changes in that year to maintain stability This was addressed in 2012/13 budget setting and all funding is now proportionately allocated across all settings via factors agreed by each Headteacher Association Page 21

22. DfE Changes so far……..Protection As part of the local fair funding arrangements all LAs are required to operate MFG (Minimum Funding Guarantee) which provides a degree of stability to school funding It does not provide protection against falling pupil numbers but for most other areas of funding the local formula must guarantee a degree of protection; -From 2005/06 to 2010/11 the MFG guaranteed that annual per pupil funding would increase by at least 2.1% -From 2011/12 to at least 2014/15 the MFG guarantees that annual per pupil funding will not reduce by more than 1.5% Page 22

23. DfE Changes so far………..Funding All DSG GUF rates have been frozen Although much better than grant settlements for other public services (e.g. Local Government) the “flat cash” settlement for schools is in real terms a cut unless they can absorb the impact of inflation on pay and running costs The table below summarises recent and future DSG GUF increases Year Increase 2006/07 + 6.7%2011/12 0% 2007/08 + 6.5%2012/13 0% 2008/09 + 4.3%2013/14 0% 2009/10 + 3.6%2014/15 0% 2010/11 + 4.1%2015/16 ? Page 23

24. DfE Changes so far………..Funding New Pupil Premium introduced (in addition to DSG) to target extra funding for 3 categories of pupils whose attainment levels are historically lower than other pupils - £625m in 2011/12 rising to £2.5bn in 2014/15 Current funding rates are; -Deprivation element - £600 per pupil who in any of the last 6 years has been registered as eligible for FSM -Extra needs - £250 per Service pupil -Extra needs - £600 per Looked After pupil For 2012/13 Swindon settings are receiving PP funding totalling £3.8m and must be able to demonstrate how this is being used to narrow attainment gaps Page 24

25. Public Sector Funding & Austerity DfE have concluded that there is a flaw in the DSG and that the individual GUF rates paid to LAs need revising Due to the poor health of national public sector finances there is no scope to increase overall school funding within the government’s 2011/15 spending plans The only way low funded LAs DSG rates could be increased is therefore by reducing the funding rates paid to other LAs Despite lobbying (the F40) DfE have decided against any redistributions but will consider this after the next election Will Swindon’s rate increase or is it more likely that other LA rates will reduce? – see Institute of Fiscal Studies extracts Page 25

26. National context - Extract from a study by the Institute of Fiscal Studies Page 26

27. National context - Extract from a study by the Institute of Fiscal Studies Page 27

28. DfE Changes………Interim Changes Coalition government very critical of current school funding arrangements; “The current system is opaque, inconsistent and unfair with huge differences between areas. Some local formulas are so complicated that they take account of over a hundred different elements – many of which have no impact on pupil attainment” “This complexity makes it virtually impossible to understand why a school receives the funding it does” Page 28

29. DfE Changes………Interim Changes Aiming to introduce a national funding formula for schools after next election which will ensure “children in similar circumstances living in different parts of the country will attract funding on the same basis” Interim changes imposed on LAs for 2013/15 to; -Retain less funding & delegate more of the DSG -Amend mainstream local formulas within a much narrower range of factors and constraints -Introduce “place plus” funding for High Needs & Alternative Provision settings Page 29

30. Changes Required – DSG DSG will be received by LAs in 3 separate blocks which initially will not be ring fenced Schools Block – value will be based on the October (not January) census High Needs Block – value will initially be based on levels of planned spending in 2012/13 Early Years Block – value will be revised after each term based on actual take up (At present we receive funding for 90% of three year olds even though take up is only 84% - DSG will therefore reduce unless take up increases) Page 30

31. Changes Required – Central Services DfE require LAs to delegate more funding to schools; Some funding cannot be retained – we have already delegated all these items e.g. Insurance, Threshold pay grant Funding can be retained (de-delegation) if the value is agreed by phases/groups (Primary, Secondary, Special, Academies) of the Schools Forum e.g. Pupil growth, FSM eligibility, schools in challenging circumstances, support for minority ethnic pupils, Admissions, redundancy costs, equal pay For Admissions and redundancy costs the value retained in future years is capped at 2012/13 levels (NB - the LA anticipates reducing central retentions by £1m next year - SICC £300k and Schools LACSEG £700k) Page 31

32. Changes required – Early Years Settings Minor changes required to Early Years Single Funding Formulas to ensure deprivation funding is allocated based on a measure of the pupils at each setting and not the location of the setting From 2013/14 funding for nursery education for disadvantaged 2 year olds is moving to the DSG to bring all early years funding together - at present 2 year old funding is provided to LAs within the Early Intervention Grant (NB – the LA is currently developing a strategy to expand early years provision across the Borough to meet rising demand) Page 32

33. Changes required - Mainstream Settings Significant changes required as formulas must be simplified and the maximum number of factors used to distribute funding is reducing from 37 to 10 Page 33

34. Changes required – High Needs Settings Major changes required to all High Needs settings via introduction of “Place Plus” Special schools and Special Resource Provision £10,000 per planned place as agreed by the EFA based on local and national demand information Plus locally determined “top up funding” from LAs for placements made (this is also payable to pupils in mainstream settings) Actual occupancy will determine financial viability (NB - LA can still centrally fund Borough wide provision e.g. ESS, PBST and CAMHS) Page 34

35. Changes required – Alternative Provision Alternative Provision settings (Pupil Referral Units) £8,000 per planned place as agreed by the EFA based on local and national demand information Plus locally determined “top up funding” from LAs and Schools and Academies for placements made Actual occupancy will determine financial viability (NB – These services are not currently formula funded but from April will need to operate within formula based delegated budgets) Page 35

36. Changes required – EFA The Education Funding Agency will have an oversight role which is described as; -A right to send an observer to Schools Forums -Reviewing each LAs formula to ensure compliance with DfE requirements -Monitoring the impact of funding changes on different types of schools One positive consequence of the interim changes is that Academy funding will be more closely linked to LA formulas From 2013/14 EFA will base Academy funding on the LAs 2013/14 formula - there is currently a 17 month time delay Page 36

37. Changes required – Schools Forums Amended Schools Forum regulations proposed. Key issues are; Meetings must be public and all agendas and minutes made available (SBC is compliant) School membership must be broadly proportionate to pupil numbers (SBC is compliant but will annually review) PRU’s and Academies to be recognised as separate groups LA attendance restricted to Cabinet Member, Director of Children Services and technical advisers presenting reports (SBC is compliant) Only schools & PVI members can vote on funding issues (excl. Diocese, Trade Union, BME and 14-19 Partnership members) Page 37

38. LA Decisions & Schools Forum Consultation Changing nature of school funding discussions; 1997/98 to 2005/06 Standards Fund ring-fenced grants introduced providing funds for specific government initiatives 2006/07 to 2010/11 above inflationary DSG increases including extra funds for ministerial priorities Relatively high levels of MFG protection @ + 2.1% Forum consulted on distribution of additional funding 2011/12 to 2014/15 DSG frozen, former ring-fencing arrangements ceases, constraints introduced on local formula and MFG protection reduced to – 1.5% Forum consulted on re-distribution of existing funding Page 38

39. Part 3 – Options for local decisions Page 39

40. Consultation Programme For 2013/14 a number of decisions will need to be made and the LA will be formally consulting with each setting As in previous years, the LA will seek to make recommendations in line with the consensus view of Headteacher Associations - although final decisions will be made by the Director of Children Services A consultation questionnaire will be issued to each setting on 3 rd September requesting returns to the LA by 30 th September – Governors may wish to meet during September on this Feedback from this week’s events will be used to model options which will be reported to the 26 th & 27 th September Headteacher Associations and 9 th October Schools Forum Page 40

41. Consultation Programme For High Needs settings the only issues for local consideration are the number of places required in each setting and the value of top up funding that is affordable – work is underway on both these areas For Mainstream Settings the areas requiring local decisions will be presented over the following slides and the LA is keen to gain initial views from Headteachers and Governors At the end of the presentation we will be keen to receive the views of Headteachers & Governors Page 41

42. Funding Reform – DfE Principles DfE are aiming for a funding formula which is much more pupil led and less reflective of school characteristics as they believe this will promote choice and raise quality. They express concerns that as schools have historically been funded through various grant schemes or because they offered different types of facilities or teaching staff, some settings offer a rich and varied curriculum whilst others only offer the basics. By ensuring that more funding follows pupils they envisage that those schools which attract pupils (either because of their curriculum or ethos or quality of teaching) will also attract the funding they need, thereby leading to pupils having greater choice over better schools. Page 42

43. Mainstream Funding – Options The table below shows the allowed mainstream funding factors Page 43 A) Basic per pupil amount – options! Mandatory B) Deprivation – options! C) Looked After Children – not used? Optional D) Low cost high incidence SEN – options! E) English as an additional Language – options! F) Lump sum – options! G) Split sites – OK no changes? H) Rates & PFI contracts – OK no changes? I) Pupil Mobility – not used?

44. Mainstream Factors no longer allowed Very few existing SBC factors are not allowed by DFE in the new formula from 2013/14; Abatement (£105k) – provided to fund loss of LA interest arising from ISB & PP instalments being paid out in advance of grant receipts - move to pupil values Small schools allowance (£259k) – extra flat rate funding paid to schools with less than 140 pupils – linked to lump sums Deprivation FSM taken (£1.334m) – funding allocated to meet estimated cost of meals taken - linked to general deprivation Recent delegations (£730k) – funding transferred fro the retained budget in 2011/12 (maternity, primary and secondary strategy etc.) – move to pupil values Page 44

45. Principles to retain stability – new factors? It is important to recognise that DfE are seeking steps towards standardisation and simplification across all local formulas and that only 2 factors are mandatory. The LA does not currently allocate funding for LAC’s or for Pupil Mobility and, although this is optional; -This has been available for many years but not used in Swindon and would create an avoidable extra complication if it was introduced now -If either factor were to be introduced funding would have to be reduced in another area of the formula Q1 - Do you agree that the LA should not introduce these optional funding factors? Page 45

46. Principles to retain stability–existing factors? Although allocation methodologies and funding values need revising the LA currently allocates funding in the following optional areas; Low cost high incidence SEN English as an Additional Language Flat rate Lump sums Q2 - Do you agree that the LA should retain these factors? Page 46

47. Principles to retain stability–existing factors? The LA currently provides funding for the following factors which are allowed to continue unchanged but are optional areas; Split sites – additional funding allocated where a public highway crosses through school premises NNDR – funding is allocated each year to match each settings rate bill PFI – funding is allocated each year to match each settings rate bill Q3 - Do you agree that the LA should retain these factors? Page 47

48. Mainstream Factors requiring local decisions If all existing factors that are allowed are retained, decisions will need to be taken on the following -A) Secondary pupil funding -B) Deprivation -D) Low cost high incidence SEN -E) English as an Additional Language -F) Lump sum allowances Hand out 5 summarises the options which are described on the following slides. Page 48

49. A) Basic Per Pupil Amounts? (Mandatory) Primary pupil values must al be the same but for secondary pupils options are ; One rate for all age groups Separate funding rates for KS3 and KS4 LA view is that higher rate funding should be paid for KS4 pupils (as is current practice) to recognise costs associated with examinations Q1 – should one or two funding rates be set for secondary age pupils? Page 49

50. B) Deprivation (Mandatory) Primary deprivation funding is all currently allocated via IMD (Index of Multiple Deprivation Scores) plus FSM taken (£6.071m = 10.2% of sector funding) Secondary deprivation funding is currently allocated 50% via IMD and 50% via FSM (Free School Meals) plus FSM taken (£3.679m = 7.6% of sector funding) From 2013/14 LAs must use -IDACI (similar measure to IMD) -FSM or FSM ever 6 -A mixture of FSM / FSM ever 6 and IDACI Page 50

51. B) Deprivation (Mandatory) DfE have provided IDACI scores for each setting based on the post codes of their pupils. Levels of pupils deprivation are shown by expressing the % of pupils over 7 bands – it is for the LA to allocate appropriate cash values to each band Page 51 BandIDACI score lower limit IDACI score maximum limit LA to determine values per pupil per band Band 000.2£0 Band 10.20.25£TBC Band 20.250.3£TBC Band 30.30.4£TBC Band 40.40.5£TBC Band 50.50.6£TBC Band 60.61.0£TBC

52. B) Deprivation (Mandatory) If we use FSM data as a basis for allocating deprivation funding we have two options FSM eligibility – current as at latest census Or FSM Ever 6 – this recognises pupils who are currently or have at any time over the last 6 years been eligible for FSM (NB – DfE use FSM ever 6 to allocate Pupil Premium funding and, given that this is not a perfect measure of deprivation, it may be appropriate to use IDACI data in local formula deprivation funding) Page 52

53. B) Deprivation (Mandatory) Q1 – should both sectors be funded on the same basis? Q2 – for primary sector do we replace IMD with IDACI or FSM or a mixture & if a mixture what % of each - 25%, 50%, 75%? Q3 – if we reintroduce FSM in the primary sector do we use FSM or FSM ever 6? Q4 – for secondary sector do we replace the FSM / IMD split with IDACI or FSM or a mixture and if a mixture what % of each 25%, 50% or 75%? Q5 – if we retain FSM in the secondary sector do we use FSM or FSM ever 6? Q6 – Do we retain existing sector totals or allow deprivation funds to transfer across sectors? LA view is that to maintain stability whether IDACI or FSM is used the sector totals should remain the same Your view? See handout XX showing current levels of deprivation funding per setting Page 53

54. D) Low Cost High incidence SEN (Optional) We currently allocate SEN funding via a mixture of prior attainment, EAL pupils and historic Band D SENRAP payments but for 2013/14, if we wish to continue providing this funding we must use prior attainment data provided by DfE; Secondary must be allocated based on KS2 pupils who achieve less than level 4 in English and Maths Primary must be allocated based on Early Years Foundation Stage Profile scores but there are two options Q1 should we fund primary pupils scoring less than 78 points or less than 73 points? Q2 – Do we retain existing sector totals or allow low cost SEN funds to transfer across sectors? Page 54

55. E) English as Additional Language (Optional ) We currently allocate EAL funding pupils for as long as they are identified on the census but from 2013/14 we can only recognise EAL for 1, 2 or a maximum of 3 years Q1 Should we recognise and allocate EAL funding to pupils for their first 1, 2 or 3 years after entering education? We currently fund EAL at £304 (primary) & £89 (secondary) per pupil - from 2013/14 secondary must be at least equal Q2 Should a single rate be applied or higher secondary rate? Q3 Should the rate be £304, £89 or a new average based on existing EAL funding divided by eligible EAL pupils? Q4 Do we retain existing sector totals or allow EAL funds to transfer across sectors? Page 55

56. F) Lump Sum Allowance (Optional) We currently provide variable levels of lump sum funding proportionate to the size of each setting (£69k to £245k) but from 2013/14 only one rate up to £200k can be used for all settings The current average of £106,700 broadly equates to the level of funding the LA believes a small primary school would require to cover a Headteacher’s salary and other fixed costs Q1 Should the lump sum be based on the current average of £106,700 requiring minor adjustments to pupil values or a higher figure up to £200,000? If a higher value is agreed primary pupil values will need to be significantly reduced Page 56

57. End of Presentation Any final questions on school reform issues? Please submit your views on the various mainstream funding issues raised today Consultation documents will be issued to each setting on 3 rd September which will need to be returned to the LA by the 30 th September Headteacher Association meetings are arranged for 26 th and 27 th September to progress these matters which will be reported to the 9 th October Schools Forum Thank you for attending this event Page 57