New funding formula: a fairer portion of not enough

14/12/2016

The government has set out details of a new national funding formula, to try and overhaul the way schools are funded. At the moment, pupils living just streets away from each other can have significant variation in the amount of money spent on their education.

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Emma Knights, Chief Executive of the National Governors’ Association, said: “While this development is welcome news – especially for the underfunded regions of the country - the biggest concern for governing boards (responsible for overseeing the financial performance of schools) right now is budget cuts.

“Austerity budgets will have a detrimental effect on the welfare and education of young people in England. More and more governors and trustees are being kept awake at night by the close and terrible fact of having to cut staff and increase class sizes.

“The National Governors’ Association has always supported the need for, and aims of, a new national funding formula. We have written to the secretary of state for education and the chancellor of the exchequer about the overall size of the schools’ budget and the delays to the introduction of a new national funding formula. We hope to see it implemented as soon as possible, but as far as budgets go we are now in the trenches. The new formula may mean pupils get a fairer portion but it will be a fairer portion of not enough.

“The education of our young people is fundamental to the future prosperity of the country. We urge the government, on behalf of governors and trustees, to make additional money available for 2017-18.”

Government proposals for the new formula:

  • Changes will be introduced from 2018-19 when the Department for Education uses the new methodology to calculate funding for Local Authorities (LAs)  
  • 2018-19 would be a transitional year with LAs continuing to calculate funding for schools through their local formula
  • In 2019-20 the National Funding Formula will be implemented with all mainstream schools being funded directly by the Department for Education (DfE) using a single national formula
  • According to DfE illustrative figures (and based on data from 2016-17) 10,740 (54% of schools) would gain and 3,379 schools would see increases to their budgets of more than 5%
  • 9,128 (46% of schools) would get less money than they currently do
  • In addition, a ‘floor’ will be introduced to cap overall losses as a result of the introduction of the formula to minus 3% per pupil
  • There would also be a 3% per-pupil ‘gains’ cap on schools set to have increased funding from 2018-19, reducing to 2.5 per cent in 2019-20
  • The formula would include an ‘enhanced sparsity factor’, that is, additional funding to support ‘small and remote’ schools
  • Following the first stage of the consultation the DfE has decided to include a mobility factor, that is, financial provision for pupils arriving mid-term
  • LAs’ ongoing role will be funded via a central school services block – this will be done via a formula allocation based on a per pupil amount and a deprivation amount
  • The pupil premium, service premium and early years pupil premium are unaffected by these proposals and will continue to operate.

On Tuesday, the National Audit Office (NAO) outlined its concerns about school finances by saying the Department for Education (DfE) was failing to manage the financial situation faced by schools around the country. The NAO stated that this was putting pupil’s educational outcomes, as well as schools’ financial sustainability, at risk. The NAO also confirmed that schools were facing a real terms cut in funding over the course of this parliament and that more than 60% of academies had spent more than they received in income in 2014/15. Despite this, the DfE still expects schools to make £3.0 billion (8.0%) worth of cuts by 2019-20. It believes schools can do this without affecting educational outcomes.

The second part of the national funding formula consultation is now open and will close on 22 March 2017, with a final decision made before summer. Over 6,000 people, including headteachers, teachers, governors, school business managers, parents and representative groups responded to the first part of the consultation. Do you have something to say about this issue? We want to hear from you. Email gillian.allcroft@nga.org.uk 

What does this mean for your school? Click here and then download the database, 'Impact on proposed schools'

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