1. School Budget Planning Framework 2014/2015 David May Strategic Finance Manager Karen Atkins Principal Finance Officer

2. Budget Planning Framework School Funding Settlement –Funding Blocks –MFG –Pupil Premium –Education Services Grant School Funding Reform –Schools Block –Early Years –High Needs Block Schools Funding Formula Timeframe

3. School Funding Settlement School Funding Settlement announced on 18 th December 2013 New funding arrangements were introduced from April 2013 for all schools and academies. Continuation of the “spend-plus” methodology for 2014/2015 First stage of introducing a national funding formula in the next spending review period.

4. Dedicated Schools Grant - Funding Blocks 2013/2014 DSG2014/2015 DSG Dedicated Schools Grant Pupil No’s GUF 2013 / 2014 Total Pupil No’s GUF 2014 / 2015 Total ££m£ Early Years2,5205,11616.0342,4475,11617.035 Schools Block35,0734,536159.14534,8044,536157.548 High Needs Block 21.172 22.569 Total37,593 196.35137,251 197.152

5. Dedicated Schools Grant - Schools Block 2013/142014/15Change Cash Increase Pupil Numbers 35,07334,804(269) Guaranteed Unit of Funding £4,535.95 0.000 Total 159.091157.870(1.221)-0.93% NQT Funding 0.0540.053(0.001) CRC Reduction (0.375) Total 159.145157.548(1.441)-0.90%

6. Dedicated Schools Grant - Schools Block Key Issues Changes in Pupil Numbers –Primary+ 371 –Secondary- 682 –Decrease- 311 No protection for falling rolls CRC reduction is greater than the 2013/14 budget

7. School Funding Settlement – Minimum Funding Guarantee (MFG) The Minimum Funding Guarantee for schools will continue to reduce turbulence as new local formulas are introduced. The guarantee is set at minus 1.5% per pupil for 2013-14 and 2014-15. The level for subsequent years will be announced when spending plans for that period have been decided. This means that: No school will see more than a 1.5% per pupil reduction in 2014/2015 budgets (excluding sixth form funding) compared to 2013/2014 and before the Pupil Premium is added

8. Pupil Premium 2014/2015 Pupil Premium rates for disadvantaged pupils are: –Primary£1,300 –Secondary £935 –Looked after Children£1,900 * –Service Children £300 * Looked after for one day or more, and including children who have been adopted from care or leave care under a special guardianship or residence order – now referred to as “Pupil Premium Plus” Seeking clarification as to when increase will apply

9. Pupil Premium 2014/2015 Pupil Premium is calculated using the January 2014 school census data, final allocations will not be confirmed until Summer 2014 The Pupil Premium is only paid to those children registered to claim free school meals. DfE will hold schools accountable by: –New measures to be captured in performance tables –Requiring schools to publish online how they have used the Pupil Premium Indicative allocations will be calculated by the Local Authority and distributed to schools along with School Budgets in February.

10. Education Services Grant (ESG) New grant introduced in 2013/14 The ESG is allocated to local authorities and academies on a simple per-pupil basis according to the number of pupils for whom they are responsible. The funding for the ESG came from a transfer from local government of £1.04 billion in 2013-14. Sunderland’s reduction in funding was £5.4m. Transitional protection for academies will apply in 2013/14 and 2014/15. Local Authority ESG allocation is revised quarterly to reflect Schools converting to Academies. Final ESG allocations for academies will be issued by 31 st March 2014 along with confirmation of the academy’s 2014/15 General Annual Grant.

11. Education Services Grant Statutory Functions Statutory Duties 2013/14 Statutory Duties 2014/15 Local Authority£15£116£113 AcademiesN/a £150£140 Special AcademiesN/a£637.50£595 Alternative Provision AcademiesN/a £562.50£525 For special schools and alternative provisions, multipliers of 4.25 and 3.75 will be applied respectively (£424 and £481). ESG allocations will be calculated using 2013-14 planned places. Transitional protections for academies will be removed from the system over a limited period of time so that the rates for local authorities and academies are brought together

12. School Funding Reform 2013-15 - Overview From 2013/2014 a simple, more consistent and transparent funding system was introduced that –ensures as much funding reaches schools as possible; –provides equivalent and consistent funding between maintained schools and Academies; and –supports the needs of pupils. Simplification of local formulae is a major change to how school budgets are calculated and the first substantive step towards a national funding formula Key priority that the schools budgets are driven more by pupil in the schools and their needs than by other factors Funding can only be distributed based on 13 factors and using data provided by the DfE - No flexibility;

13. School Funding Reform– Allowable factors Funding can only be distributed based on 13 factors, 9 of which apply to Sunderland: 1. A basic per-pupil entitlement; 2. Deprivation measured by FSM and/or IDACI; 3. Prior Attainment 4. Looked after children; 5. English as an additional language (EAL) for 3 years only; 6. A standard lump sum for each school up to £200k; 7. Rates; 8. Private finance initiative (PFI) contracts; and, 9. Exceptional Circumstance for Amalgamated Schools

14. Schools & Early Years Finance Regulations Legislative framework that brings together all the changes in the School Funding Reform Local Funding Formula must be compliant with the Finance Regulations School Forum approval required for central schools and early years block items Education Funding Agency validate local funding formula to ensure compliance

15. Reconciliation of Schools Block Allocation Total Indicative Schools Block DSG157,870,596 CRC Reduction(375,277) NQT Funding52,751 Revised157,548,070 Add Transfer from High Needs Block:1,918,097 Less Transfer to Early Years Block(249,573) Revised Schools Block159,216,594 Centrally Retained Schools Block Funded Services: (654,302) Total Individual Schools Budget158,562,292

16. Transfer from the High Needs Block Work was undertaken as part of 2013/14 to determine the impact of changes to the way statements are funded from within the schools block and high needs block. Existing statements were examined to quantify the value of top up required within the High Needs Block and the funding to be transferred from the High Needs Block into the Schools funding to contribute to the first £6,000 to be paid by schools £1,918,097 is to be transferred to the schools block.

17. Central Services retained by the LA 2013/20142014/2015 School Admissions£203,676£164,000 Growth Fund£0£100,660 Schools Forum£44,642 Termination of employment costs£245,000 Carbon Reduction£320,000£0 Licences£100,000 Total£913,318£654,302

18. Central Services retained by the LA School Admissions –Review of School Admissions arrangements –Significant increase in number of Online Applications –Reduction in cost as a result School Growth Fund –LA - needs to ensure sufficiency of school places –Local authorities may centrally retain funding to create a growth fund to support schools which are required to provide extra places in order to meet basic need within the authority –Growth fund will only be available if agreed by the LA and based on specific criteria

19. Central Services retained by the LA Termination of employment costs –Ongoing historic commitment agreed by the Schools Forum of £245,000 –Local Authority responsible for redundancy costs for maintained schools. –A business case will be required from each school that will require the approval of the Strategic Finance Manager Carbon reduction commitment –No longer applies to Schools & Academies –Cost Neutral to the Exchequer therefore reduced from DSG

20. Central Services retained by the LA A single national licence has been agreed with the following agencies to be managed by the DfE for all state-funded schools in England: Copyright Licensing Agency (CLA) Music Publishers Association (MPA) Newspaper Licensing Authority (NLA) Education Recording Agency (ERA) Motion Picture Licensing Company (MPLC), and Filmbank Distributors Ltd. (for the PVSL) These arrangements will cover recoupment Academies as well as maintained schools, and the LA will hold this money centrally rather than include it in school budgets.

21. Reconciliation of Early Years Block Pupils Unit of FundingTotal Early Years2,4475116.0412,518,950 Funding for 2 year olds from lower income households4,516,000 Revised17,034,950 Transfer from Schools Block249,573 Total Early Years Block17,284,523

22. Early Years Funding Block - Provisional 2014/15 3 & 4 Year old Offer£10.807m 2 Year Old Offer£4.516m Commissioned Childcare£1.278m Childcare Team & Locality Based Working£0.683m Total£17.284m

23. Early Years Block – Next Steps Awaiting results of January census to complete indicative budgets for issue in February 2014 Funding will include where relevant estimated allocations for 2 year old based on a funding rate per pupil per hour of £4.84 Funding is responsive to In Year adjustment to reflect change in pupil numbers June 14 - Early Years Block Updated by DfE for January 2014 Early Years pupil numbers April 15 - Early Years Block Updated by DfE for January 2015 Early Years pupil numbers (7/12 adj – Sept 14 – Mar 15) EYSFF review 2014 to be implemented from April 15

24. EYSFF Review Current formula is no longer affordable Current formula reflects previous funding streams and initiatives to develop the market Funding needs to follow the child not the setting Needs to be responsive to changes in participation Is it to simple to have a Flat Rate + Deprivation Consultation Period 20 th January – 28 th February Report to Schools Forum 27 th March Implementation September 2014 or April 2015

25. Reconciliation of High Needs Block Total Indicative High Needs Block £ 22.569m Less Transfer to Schools Block:£1.918m Revised High Needs Block Total £ 20.651m

26. High Needs Block LA submission 23 rd December 2013 EFA to confirm High Need Block Allocation for 2014- 15 by 31 st March 2014 Place numbers and budget estimates for top ups to be completed based on latest number and cost of high need pupils and students. Updates will be provided at each meeting of the Schools Forum

27. DSG - Summary Turbulence and Risk with the new System Brought Forward 2012/2013 Underspend of £0.320m 2013/14 – Key Issues – 3&4 year old and HNB 2014/15 – Key Risks – 3&4 year old and HNB Need to use any Unused DSG from 2012/13 and 2013/14 to manage the risk

28. Free school lunch for every child in infant school Headline information released New Money confirmed Need the detail to understand funding implications What value to be received per Meal Potential financial implication Impact and implication will defer based on the individual profile of each school

29. Workforce Transformation Project Briefing sessions being held 16 th – 21 st January Involves the –Implement of new pay and grading structures –Review of Terms and Conditions All Council employees except Teachers Equal Pay Claims Ensure that moving forward all are “fit for purpose” Potential financial impact at individual school level

30. Schools Funding Formula 2014/2015 Impact Analysis Karen Atkins – Principal Finance Officer

31. Sunderland Formula Return Factor Description Funding Rate Pupil Units Factor Funding Summary Total Proportion of ISB (PRE MFG) Percentage applied for Notional SEN

32. Key Aspects of Return Total ISB £158.562m Funding for Schools Block before MFG £157.659m MFG requirement is £1.206m with £0.303 funded via scaling back all gains above 4.27% Additional lump sum for amalgamated schools (14) Pupil Led factors represent 88.56% Primary Secondary Ratio is 1:1.29 Funding distributed via the basic entitlement factor is 77.14% In addition £0.101m Growth Fund yet to be allocated

33. Schools & Academies Formula Factors Funding Factor Status 2013-14 basis of allocation 2014-14 basis of allocation Funding Rates for 2014-15 Funding Rates for 2013-14

34. Formula Analysis & Comparison 2013/14 to 2014/15 Factor Pupil Data Comparison –Oct 12 data used in 2013-14 budgets –Oct 12 data updated for the new 2014/2015 datasets –Oct 13 data published in Dec 2013 –Variation between Oct 13 and Dec 13 Data Funding 2013/14 & 2014/15 Percentage of ISB allocated to the factor

35. Factor Comparison 2013/14 & 2014/15 Factor 2013-14 £m% ISB 2014-15 £m% ISB Variation +/(-) £m Basic Entitlement£122.5 76.6 £121.5 76.7 (£1.0) Deprivation£14.3 8.9 £14.4 9.1 £0.1 Looked After Children£0.1 0.1 £0.1 0.1 £0.0 EAL£0.7 0.4 £0.8 0.5 £0.1 Prior Attainment£2.5 1.6 £2.8 1.7 £0.3 Mobility£0.2 0.1 £0.0 0.0 (£0.2) Lump Sums£14.9 9.3 £14.7 9.3 (£0.2) Rates£3.0 1.9 £2.5 1.6 (£0.5) PFI£0.6 0.4 £0.7 0.4 £0.1 MFG£1.2 0.8 £1.0 0.6 (£0.2) Exceptional Circumstances£0.0 0.0 £0.1 0.8 £0.1

36. Formula Data - Comparison Chart

37. Prior Attainment Factor Primary –2013/14 based on those pupils with 73 units or less on the EYFSP –The primary indicator changed for 2014-15 and be based on those pupils who failed to achieve a good level of development. The new dataset will apply for the cohort of pupils in the 2013 assessments as a proportion of the total number of Y1 pupils. –For older year groups the 2013-14 previous data measure will apply as a proportion of the remaining pupils in Y2-6 Secondary –Indicator is be based on those pupils not achieving level 4 in English or Maths at KS2. In 2013/2014 the indicator was based on English and Maths Analysis provided of the differences in funding and data between 2013/14 and 2015/16

38. PFI Factor Proposals to change the method used to calculate the lump sum and to seek EFA approval to exclude the PFI factor from the calculation of a school or academies MFG SF agreed to proposed change in method of calculating the lump sum. This has resulted in an increase of £0.118m in the PFI factor from £0.568m to £0.687m in cash terms. EFA has given approval for the increase in the lump sum to be excluded from the calculation of the MFG. This only applies where a school is in MFG and where the lump sum increase has arisen as a result of falling rolls.

39. MFG Calculation 2013/2014 School Budget Share less: –Lump Sum 2013/14 –Rates 2013/14 –Equals MFG School Budget Share –Divide by 2013/14 pupils numbers –Equals MFG funding per pupil 2014/2015 Schools Budget Share less: –Lump Sum 2014/15 –Rates 2014/15 –Approved MFG Exceptions 2014/15 –Divide by 2014/15 pupil numbers –Equals MFG funding per pupil Percentage change in MFG funding per pupil less 1.5% = MFG adjustment value (%) MFG Funding = MFG Adjustment Value x 2013/14 funding per pupil x 2014/15 pupil numbers

40. Summary Report Pupil Numbers have been adjusted for high need places 2014/15 formula as published MFG Adjustment +ve = protection (-ve) = capping Change in budget will reflect decreases in rates budgets for schools that have converted to an academy and now attract 80% mandatory relief % change is based on cash change between 2013/14 and 2014/2015 Impact without MFG Protection No of SchoolsGain / (Loss)% Gain / (Loss) Analysis - Primary Maximum Gain62214,65919.6% Maximum Loss19(112,859)(13.3%) Analysis - Secondary Maximum Gain14,5830.1% Maximum Loss16(628,714)(16.1%)

41. School Funding Reform 2013-15 - Timetable Jan 21 st Jan 23 rd LAs submit final pro-forma to EFA School Funding Briefing Sessions W/c Feb 24 th School Funding Statements issued to schools Mar 27 th School Forum Meeting to discuss Early Years Consultation

42. Summary Understanding –Hopefully this has increased understanding and knowledge of the impact of the funding system –However it is complex and whilst we try to simplify it will always come back to the detail Confidence –Open and transparent approach allows you to have confidence in the process

43. Contact Details David May: 0191 561-1826 –E-mail: David.May@sunderland.gov.ukDavid.May@sunderland.gov.uk Karen Atkins: 0191 561-1412 –E-mail: Karen.Atkins@sunderland.gov.ukKaren.Atkins@sunderland.gov.uk Annette Parr: 07768507410 –E-mail: Annette.Parr@sunderland.gov.ukAnnette.Parr@sunderland.gov.uk