December 2017 saw the launch of the long-awaited second stage consultation into the reform of the school funding system and the proposed introduction of the National Funding Formula (NFF). For some this was the culmination of well over 10 years of campaigning for a fairer funding system.

The argument for a new funding formula has never been about all schools receiving the same amount of funding. It has been about redressing the balance between the best funded and the lowest. When she launched the consultation on 14 December Justine Greening, secretary of state for education, made much of the new formula getting rid of the postcode lottery where children with similar needs attracted different levels of funding depending on where they live. Under the proposals 54% of schools would gain funding and 46% would lose funding.

Those at the bottom never expected, or thought it right, that they would rise to the level of those more disadvantaged areas currently receiving the highest levels of funding, but they certainly didn’t expect to find that some of them were going to be worse off – schools in Cheshire, Oxfordshire and West Sussex among them. Worse off, not just status quo but potentially funded at a lower  level than currently. It certainly doesn’t feel like a fairer formula to them.

The bigger changes will come for mainstream schools with the introduction of the NFF. 2018/19 will be a transitional year when the way in which school funding is divided between local authorities (LAs) will change. This will be calculated by the DfE using NFF methodology, but LAs will still be responsible for distributing the money to schools, possibly still using their existing local formula and weighting. In 2019/20 schools’ delegated budgets will be calculated entirely using the NFF and be distributed to schools directly by the Education Funding Agency.

What does the new formula look like?

The proposed factors are those that LAs are allowed to use now (although not all of them use all the factors available). Following the fi rst-stage consultation the DfE has decided that it will also include a mobility factor. The factors can be broadly be split into two types: pupil-led and school-led. The government’s intention (as with the current system) is that the majority of the money going to schools should be distributed on the basis of pupil numbers. The major factors are listed below.

Pupil factors

A basic per-pupil amount – a set amount for each pupil; secondary pupils will get more than primary.
Deprivation – funding allocated partly on free school meal entitlement (both current and those who have been eligible at any point in the last six years) and partly using six bands in the Income Deprivation Affecting Children Index (IDACI).
Low prior attainment – directs funding to children who did not reach the expected level at the previous stage of education (ie foundation stage for primary pupils and KS2 for secondary).
English as an additional language – for pupils whose first language is other than English.
Mobility – to recognise those pupils who join school part way through the academic year; where at least 10% of the total cohort are mobile.
Sparsity – provides protection for small schools which are remote (ie so that young children do not have to travel miles). Two criteria need to be satisfied: distance (two miles to the next nearest school) and year group threshold.

All the per-pupil funding (not just the basic per-pupil amount) is skewed to secondary pupils.

School-led factors

Rates – on the same basis as currently (£2,712 per primary pupil; £3,797 per KS3 pupil; £4,312 per KS4 pupil).
Split sites – based on current LA expenditure.
Special premises – for truly exceptional cases eg school farms.
Private Finance Initiative (PFI) – schools rebuilt or refurbished under PFI contracts have often been left with legacy annual payments from their budgets – often for substantial sums.

Finally, there are protection mechanisms. There is a finite pot of money and winners and losers have to be ‘managed’. To do this the DfE has introduced ‘capped’ gains. Those that the formula says will get an increase will only get a 3% increase in 2018/19 and 2.5% the following year, even if the formula suggests their increase should be much higher. By then approximately 73% of the 10,740 schools will have achieved their gains from the NFF. The government has said it wants to implement further gains, but it will depend on the next comprehensive spending review.

Schools that are proposed to lose will be protected by a fl oor which says that your budget will never go lower than 3% below the baseline calculated by the DfE (assuming everything else remains equal – ie as with the minimum funding guarantee it won’t save you from falling rolls).

Most of us would probably agree that a time of austerity is not the best time to introduce a new formula. Any redistribution causes turbulence – that’s winners and losers to you and me. This is always a problem and the unhappiness quotient is always likely to trump the happiness quotient. But this is not an ideal world and this change has been put off too many times already.

Those in the currently betterfunded authorities are unhappy at the proposed cuts to their budgets but not nearly as unhappy as those schools in the poorly funded areas for whom the indicative figures show they will also face a cut. They have fewer reserves and absolutely no flesh to cut.

NGA is concerned about the amount of funding available for each and every child before any additions for extra needs. The DfE has determined that the amount going through basic per-pupil funding should be reduced in order to increase the amount flowing through deprivation and lower prior attainment factors. The sparsity factor will apply across the country (whereas not all eligible LAs currently use it). The lump sum amount has been set below the average currently allocated by LAs.

The campaign for a new formula started from the basis that the existing national distribution methodology is ‘unfair’ and does indeed lead to a postcode lottery. The government has attempted to address this issue with the proposed NFF; whether it has got it quite right is debatable. So do make sure you have your say.

But there is also the fundamental question of whether the overall funding pot is big enough – most schools are feeling the pinch. While those proposed to gain under the formula may be happier than those proposed to lose, this is still a fairer share of not enough.

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