1. An Overview of Funding and Finance for Schools Forum Members Presented by David Bradshaw and David Dilling Thursday 25 September 2008 2 to 4pm

2. Origin of presentation Last of set of three to brief Schools Forum members and so points out issues that are relevant to the Forum Since most attending today have not attended previous sessions, a few slides are from the previous two presentations

3. Objectives of the Briefing Session The activity will :- look at the Individual Schools Budget and how it is allocated to individual schools through the Schools Funding Formula consider the issues that schools have in setting a budget including Special Education Needs (SEN), Additional Education Needs (AEN) and 3 year budgets. consider the various systems and information that are available at both local and national levels with regard to ensuring schools operate their finances effectively and efficiently. consider the role of the Schools Forum as it relates to reviewing and changing the distribution of funding and the finance systems

4. Discussions There are no specific activities but I have indicated on several of the slides specific issues related to that topic and it may be an opportunity to discuss these before we move on. Obviously if you have questions/ comments at other times then please raise them at the time.

5. Slides from the last session The next few slides are based on ones used in the previous session and provide a link with this session.

6. How is education funded? Since 2006/2007 the DCSF has allocated funding through the Dedicated Schools Grant (DSG) and part of whole council funding DSG is calculated by = number of children x £/child Number of children includes PVIs, SEN out borough, PRUs etc DSG is fixed and is unaffected by any Council decisions DSG is split into two parts

7. What is Contained Within Each Block? Individual Schools Budget (ISB) –Delegated funding –Additional Education Needs –Statements Centrally Retained –School Specific Contingencies –14-16 Practical Learning Options –SEN (Independent placements, inter authority recoupment, etc) –Pupil Referral Units (PRU’s) –Education out of school/Behaviour Support –Early Years/Private Voluntary Providers –Admissions –Grants such as School Development Grant, and other Standards Fund –Capital Expenditure from Revenue –Prudential Borrowing Costs

8. Dedicated School Grant

9. Central Expenditure Limit (CEL) A calculation to ensure that the central part does not increase at a faster rate than the ISB Not a simple calculation and affected by changes in funding by DCSF Schools Forum can agree to breaches of limit

10. Minimum Funding Guarantee (MFG) Introduced in conjunction with the CEL Designed to guarantee a certain level of funding to all Schools in terms of delegated funding. Increases in funding based on pupil numbers MFG set nationally –2004/05 4% –2005/06 5% Primary, 4% Secondary –2006/07 4% Primary, 3.4% Secondary –2007/08 3.7% –2008/09, 2009/2010 and 2010/2011 all 2.1% ie below expected inflation. Not all of funding attracts MFG, but the majority of it does

11. Funding for the Future–What Happens Next? DCSF will do another step change for 2011/2012 Changes happening towards a Children’s Service? Will we get Combined Budgets? Dedicated Children’s Grant rather than the DSG? More interaction of Schools Forum with other partners such as PCT, Health services, Social Services, etc? Changes in 14 to 19? Whatever happens, funding is likely to change for 2011/2012 onwards from what it looks like now Need to be proactive with any consultation processes with the DCSF

12. New Slides The presentation is split into 2 main sections - Where does a school get its money from? - What measures are in place to ensure schools spend effectively The issues arising for the Schools Forum are indicated at various places

13. Information from Teachernet Guidance for LA and Schools Forums Updated information around funding includes a number of papers over the last few months re the 3 years 2008/2009 to 2010/2011Updated information around funding Calculators for some grants applicable for 2007/2008Calculators for some grants Guidance for Finance Standards FMSiS

14. Where does a school get its money?

15. School Income Delegated funding through formula that is governed by DCSF legislation Various grants - School Standards Grant (SSG) - Devolved Formula Capital - The Standards Fund - ?? ( DCSF always seem to introduce new grants ) School led income - lettings, bank interest, sponsorship etc

18. What is the aim of the formula? To provide a school with a fair share of the available resources so that it can address the needs of the pupils The DCSF specifically require the formula to stand by itself and not be influenced by other grants It is not intended that the formula should dictate how the school spends the formula funding, it is delegated!

19. An Ideal Formula – How do you think it should be characterised?

20. The Ideal Formula? simple transparent address needs responsive to changes in need

21. The Ideal Formula simpleWill it address the different needs? transparentWill it address the different needs? address needsWill have to have varied factors responsive to changes in need Will need to change as the data changes

22. Delegated Funding Formula 2008/2009 Three main funding strands - Basic is the largest and funds the basic needs of schools/pupils - Additional Educational Needs (AEN) funds a proportion of pupils who need additional support - Highcost funds those pupils who have more extreme needs (statements)

25. Basic Funding Age Weighted Pupil Units (AWPU) Fixed including small school Floor and site area Issues/questions - more/less on AWPU? - increase/decrease proportion on basic? - Smaller schools have a greater proportion of the fixed and floor/site factors so less economic

26. Additional Educational Needs (AEN) Free School Meals (FSM) for meals The bulk of the funding through these indicators - Free School Meals - Index of Multiple Deprivation (Acorn FFT) - School Action Plus - Pupil mobility - Prior Attainment Issues - which indicators are best to be used? - is funding going to the right pupils/schools? - Deprivation Review and 4 AEN typesDeprivation Review

27. The DCSF “definitions” –Learning Needs Associated with English as an Additional Language (EAL): costs tend to be associated with pastoral needs, agency liaison and teaching English; –Learning Needs related to particular identified Special Educational Needs (SEN) such as autistic spectrum disorders (ASD), dyslexia, dyspraxia, attention deficit / hyperactivity disorder, speech and language difficulties, sensory impairment and physical disabilities: costs tend to be associated with teaching assistants, SENCos and teaching ; –Other learning needs that could not be associated with either EAL, a particular identified SEN or social needs: provision focused on attainment issues (additional teaching assistants) and emotional and behavioural needs; and –Social Need, particularly focused on meeting behavioural needs.

28. Current factors in 2008/2009 formula but split into the 4 DCSF AEN types AEN SEN School Action + EAL moderated by FSM Social Need (Deprivation) FSM IMD mobility Other needs on attainment and emotional behavioural needs Prior attainment? Low High? Ethnicity??

29. DCSF Deprivation review Part of national government strategy Now quantified so that we now know how well the DCSF considers we are addressing deprivation

30. The Deprivation Return to DCSF

31. Formula factor £ total delegated permissable %£ allowable permissable %£ allowable FSM Provision 2,603,130 100% 2,603,130 100% 2,603,130 FSM Provision other AEN 2,331,880 100% 2,331,880 100% 2,331,880 SEN FSM 1,140,346 100% 1,140,346 100% 1,140,346 Social Deprivation 3,442,032 100% 3,442,032 100% 3,442,032 Looked After Children - 100% - - SEN by deprivation factor 1,585,275 100% 1,585,275 100% 1,585,275 SEN by Prior Attainment 1,531,788 100% 1,531,788 75% 1,148,841 SEN by NOR for School Action 0% - - AEN by EAL 1,670,832 100% 1,670,832 0% - SEN by School Action + 995,616 0% - - SEN individual statements 608,698 0% SEN resource bases in schools 945,092 0% Learning Support Units - 100% - - Personalised Learning G & T 188,472 100% 188,472 0% - Personalised Learning Falling Behind 1,735,812 100% 1,735,812 75% 1,301,859 PLearning Deprived access to extended Schools 100% - - High Turnover 1,155,816 100% 1,155,816 5% 57,791 S52 1.4.2 FSM Eligibility - 100% - - S52 1.3.2 Behaviour Support Service - 19% - - SEN AWPU 523,781 0% LINE TO BE DELETED AWPU re AHs as per DCSF table 1,931,406 100% 1,931,406 100% 1,931,406 AEN prior attainment 1,304,287 100% 1,304,287 75% 978,216 TOTAL 20,621,075 16,520,775 % of funding allocated for deprived pupils directed towards deprived pupils 72% 80%

32. DCSF Deprivation review Part of national government strategy Now quantified so that we now know how well the DCSF considers we are addressing deprivation How do we increase deprivation funding? - allocate extra to deprivation factor - introduce a Looked After Children factor How can we get the right split between the 4 AEN types? Are all indicators as accurate as others?

34. Some issues around indicators IndicatorAdvantageDisadvantage FSMEasy to process Is it uniformly identified? IMDIdentifies needbut is it educational? School Action Plus If identified then need greater Determined by school Prior Attainment If low then need greater Affected by school

35. Highcost funding This is related to statemented pupils - funded for actual hours above threshold - by formula for most of the funding using AWPU, FSM, Prior Attainment and IMD Also pupils in resource bases but only primary until now Issues - an area which has been high in comment re perceived underfunding and Other Local Authority pupils - lack of resource bases for secondary pupils

36. Minimum Funding Guarantee This was introduced by the DfES to ensure that there was not excessive turbulence at school level following the difficult 2003/2004 year The methodology has stayed virtually the same but things have moved on and so there are some schools that had been over protected. The Schools Forum was able to adjust the calculation for up to 20% of schools to address anomalies that have arisen and that action was taken for 2007/2008 allowing for several £100k to be released to the main formula and similarly in 2008/2009.

37. Major Issues for the Schools Forum Need to ensure that the formula addresses the needs of pupils/schools and in particular the DCSF Deprivation Review requirements without being distracted by other short term grant funding or additional private income. Support the need for schools to be able to predict funding for 3 years ahead There is an increase in groups of schools being collectively responsible for various things Supporting children with Special Educational Needs The DCSF proposals for April 2011 and following

38. Issues re supporting SEN in schools The main issue is that schools are funded for elements of SEN but not all schools accept their responsibility to take a share of these pupils. Eg Accepting pupils with statements or those with other needs. Some possible considerations Set up more resource bases especially secondary DCSF is promoting clusters of schools to take on the responsibility for all children in an area Out borough placements are very expensive and we need to make better use of in borough provision

39. Issues re supporting SEN in schools The main issue is that schools are funded for elements of SEN but not all schools accept their responsibility to take a share of these pupils. Eg Accepting pupils with statements Some possible considerations Set up more resource bases especially secondary DfES is promoting clusters of schools to take on the responsibility for all children in an area Out borough placements are very expensive and we need to make better use of in borough provision But most of all promoting understanding in all schools (heads, governors, SENCOs etc) that any excessive claims for more resources comes from one fixed pot for all aspects of education.

40. Dedicated School Grant

42. How do schools cope with changes in funding? Since 2003/2004 most schools have had to restructure in order to balance their budget Since then funding has increased again above inflation but so have the demands, the latter including personalisation In 2006/2007 many schools DID have another effective drop compared to other schools and they have had to cope but 2007/2008 some of this was returned.

43. Schools and AEN/SEN consider the issues that schools have in setting a budget including Special Education Needs (SEN), Additional Education Needs (AEN) and 3 year budgets. [From initial objectives] We have addressed some of this but: Obviously schools would like more resources but where this is limited (as with the DSG) the Schools Forum needs to be in the lead of supporting schools understanding of why they need to manage within the resources available. They also need to ensure the various splits/formula are fair to all children, this including in the future the Private, Voluntary and Independent early years providers.

44. Other Changes from April 2009 Funding 14 to 16 Diplomas Similar funding for all Early Years children in all settings including nursery classes and schools. Consultation very soon Also LAC, new classes, vertical grouping, secondary resource bases being consulted on soon Reduction and reallocation of balances is still on the DCSF agenda if there is no reduction. Note 5% and 8% represent the threshold before it is considered excessive and not the target or average.

45. More Provocative Statements! If the funding is to be distributed fairly then the Schools Forum needs to be prepared to make the necessary decisions to redistribute the funding. However, the difficult part is determining what is the fair distribution and not so much on the ability of the school to cope! All schools can adjust their budget so that they can work within a fair budget although for some it will take a couple of years to achieve.

46. Any Other Questions or Issues related to the funding of children either through schools or individually?

47. Finance Arrangements This section will look at the areas that define how schools should manage their finances and the Schools Forum role. And is much shorter!

48. Finance Arrangements Schools Forum now has the responsibility to agree changes to the Scheme for Financing Schools. The Scheme is an overarching document that describes how schools operate their finances in the context of the LA and DCSF requirements. The DCSF will probably continue to advise about changes needed

49. The Scheme areas Introduction Financial controls Instalments of budget share; banking arrangements The treatment of surpluses and deficit balances arising in relation to budget shares Income The charging of school budget shares Taxation The provision of services and facilities by the Authority PFI clauses Insurance Miscellaneous GM Schools Responsibility for repairs and maintenance Community Facilities

50. Issues that relate to the Scheme At present there are none outstanding although some changes will need to be agreed shortly But there may be in the future. A previous example is recovery of excess balances The issue is that the Schools Forum needs to think of the whole community of children in Croydon and not just selected schools.

51. Financial Management Standard in Schools This is now compulsory for all schools as Internal Audit are now using it as the basis for all internal audits of schools. No real issue but Schools Forum and LA need to have confidence that schools are operating their finances efficiently and effectively otherwise the collective role can be affected if one or more of the schools requires extra support.

52. Local Arrangements CYPL Finance (schools) co-ordinate the funding and monitoring Also co-ordinate VAT claims, Construction Industry Scheme Schools provide LA with - budget plans - quarterly returns - end of year return - bank reconciliations (if requested)

53. Any questions?

54. The End

55. Croydon Schools – the figures Cash TermsISBCentralTotal £m £m £m 2005/06150.724.3175.0 2006/07161.225.2186.4 2007/08(Est)171.726.9198.6 ISBCentralTotal % % % 2005/06n/an/an/a 2006/076.963.706.50 2007/08(Est)6.506.506.50 In pupil number terms the increase was 7.3% in 2006/07 and will be 7.2% in 2007/08. As pupil numbers fall the percentage fall in cash terms Croydon has benefited from an injection of specific funding into the DSG including funding to bring Croydon back up to the old Schools FSS threshold Not all Schools will be guaranteed levels of 6.5% increases in 2007/08. This depends on amongst other things pupil numbers and targeted grant allocations