School Funding Formula | Consultation

Update and Consultation – Schools Funding 2027/2028

1. Introduction

The Authority is launching this consultation to gather schools' views on the implementation of the Schools Funding Formula for the 2027/28 funding year. The consultation covers key aspects of the formula, including how school budget costs can be balanced against the funding available.

Responses to the consultation will be shared with schools forum members to inform discussions and decision-making at future meetings.

The consultation includes proposed changes to Special Educational Needs & Disability (SEND) funding allocated directly to schools and a planned change in use of the block transfer, and we would encourage all schools and trusts to review and participate in the consultation.

The consultation will run from 04 September to 30 September 2026.

2. Context

Local authorities are required to submit an annual schools funding formula to the Department for Education (DfE), setting out the funding methodology agreed with the schools forum and the resulting budget allocations for both maintained schools and academies.

School budget allocations are calculated using the DfE’s National Funding Formula (NFF), which applies funding factors and rates prescribed by the DfE and updated annually. The NFF also incorporates minimum per-pupil funding levels and a minimum funding guarantee, ensuring that schools are protected from reductions below established funding thresholds.

Local authorities and their schools forum continue to have limited discretion over the final implementation of the formula, including:

• Funding rates - Local authorities are currently considered compliant if they set funding rates for each factor plus or minus 2.5% from the published NFF rates. Cornwall mirrors NFF rates except where alternative arrangements are set out.
• Minimum Funding Guarantee (MFG) - The MFG is used to protect the amount of funding schools receive per pupil compared to the previous year. The range is set by the DfE and is determined by the overall uplift in schools funding nationally. In the past the DfE have allowed a negative MFG although Cornwall’s preferred option has been to set at 0% to ensure schools do not see per pupil budget reductions year on year.
• Capping and Scaling of budgets - These mechanisms are used to balance the overall cost of school budgets to the available grant. The cap on per pupil increases is also referred to as the ‘gains ceiling’.
• Exceptional circumstances - These are non-standard factors that local authorities are required to apply to the DfE to use.
• Block transfers - Local authorities have limited ability to move funding between Dedicated Schools Grant (DSG) blocks with the appropriate schools forum approval.

3. Operational Guidance

The DfE have not yet released the 2027/28 funding regulations or DSG funding settlement, noting this is ‘now due in the autumn’. As such it should be noted that the content of this consultation is subject to the final published grant regulations.

This also requires financial implications to be based on the current funding year – schools should note figures provided in the consultation are not final and will be subject to change.

It is expected, in line with previous years, that any grants paid to schools outside of the funding formula will be mainstreamed in the NFF for 2027/28.

The DfE have announced that from April 2027, employer contribution rates for the Teachers’ Pension Scheme will decrease from 28.6% to 17.6%. The funding reduction in respect of pensions will be incorporated into the schools NFF and the equivalent local authority funding formulae from the start of the financial year 2027 to 2028. This will be done by reducing the factor values for the basic per pupil entitlements, the lump sum and Free School Meals Ever 6 (FSM6).

While not confirmed, it is expected that the authority will need to submit a compliant schools funding formula for 2027/28 to the DfE in January 2027.

4. National Funding Formula

Local SEND Inclusion Formula

The DfE has launched a consultation, seeking views on proposals to increase the amount of SEND funding that mainstream schools receive directly through their core budgets, rather than relying as heavily on local authority high needs funding. Responses are due by 18 September 2026.

The consultation forms part of the wider SEND reform programme. The DfE believes schools should be better able to provide support earlier and more flexibly for children with SEND, rather than depending on formal funding applications and assessments before additional support can be funded.

The DfE acknowledges that the £6,000 threshold that schools are expected to fund from their own budgets has not increased since 2013, despite being based on cost assumptions from 2009. By increasing this threshold, schools would have greater autonomy to intervene earlier and could see a reduction in the administration and delays associated with applying for top-up funding for pupils whose support costs exceed £6,000.

To fund this change, the local authority would need to transfer an element of its High Needs Block into school budgets. This funding would be allocated to schools through a new SEND inclusion factor, likely using existing NFF proxy indicators of SEND need. At this stage, the DfE has not specified a revised threshold or an acceptable range, instead seeking feedback from local authorities to help shape the final proposals. The DfE does note that the current £6,000 threshold has fallen by around 50% in real terms; therefore, addressing this could imply a threshold of up to £12,000. However, this remains speculative and is not currently a formal proposal.

While there are some clear benefits to this approach, funding allocated through proxy measures of SEND need would not necessarily reflect the actual costs incurred by individual schools. Our review of schools' existing notional SEND budgets suggests that these measures can both overfund and underfund schools, meaning there is a risk that funding allocations may not accurately reflect the level of need within each school. The DfE note additional discretionary funding can be allocated, but this would add further pressures to the authorities high needs block.

If the policy is implemented, it is expected to be optional initially. Local authorities interested in participating will need to submit an expression of interest to participate in 2027/28 after consulting with their schools forum. Applications would need to include the new threshold, total funding being transferred to schools and the mechanism to be used to allocate funding.

Like the existing block transfer arrangements, the DfE would expect schools and schools forum to be consulted on an annual basis, until new legislation is in place in September 2029.

The DfE note that where authorities apply to implement this policy change, they would not expect authorities to also transfer funds out of the schools block to support other high needs budgets.

Block Transfer

Proposals on high needs block transfers are being included in the consultation on the basis schools and local authorities may not wish to pursue the Local SEND Inclusion Formula detailed above.

Current DfE guidance allows local authorities to transfer up to 0.5% of the schools block of DSG to support other DSG blocks, subject to schools forum approval. Schools should note that this reduces the funding available to directly fund schools via the NFF, however £1.9m of this is redirected back to schools to support high needs costs.

For 2026/27 the transfer of £2.237m was agreed to support the following blocks:

• Central Schools Services Block (CSSB) - £0.322
• High Needs Block - £1.915

The CSSB funds budgets that benefit all schools in Cornwall as per the breakdown below:

Table 1. Current Block Transfers

Current High Needs Block Transfer Arrangements

For the current year, the transfer to the high needs block has been used to fund the High Needs Protection (HNP) mechanism. This provides additional financial support to schools with high numbers of pupils with an Education, Health Care Plan (EHCP). This is on the basis these schools will have higher element to costs which may not be covered by funding within their budget share.

The HNP formula allocates an additional £6,000 for each full-time equivalent pupil with an EHCP above the set threshold, based on the percentage of such pupils in the school population. Funding allocated is limited to the £1.915m.

Proposed High Needs Block Transfer Arrangement

As part of the delivery of the Cornwall Local SEND Reform Plan, the partnership is committed to improving inclusion, strengthening earlier intervention, and ensuring the system operates in a financially sustainable way.

In line with the direction of travel set out in the White Paper ‘Every Child Achieving and Thriving’, the NHS 10-year plan and a range of aligned policy and practice changes in social care and education more widely, there is increasing emphasis on locality-based working, shared accountability and schools acting as anchors within their communities.

One of the ideas being considered is whether funding from the block transfer could be re-distributed in a different way. This reflects the wider reform approach of delivering support closer to home, strengthening local capacity, and enabling more consistent access to inclusive provision across Cornwall. This would be based on:

• Allocating the £1.9m to place based school clusters
• Using local data to distribute funding based on population size and complexity of need
• Aligning with the place-based model to support neighbourhood delivery

Clusters would act as local coordinators of support, bringing together available services within their communities. They would have the flexibility to pool resources and commission additional support to address identified local gaps, while continuing to complement Cornwall-wide services and provision.

At this stage the authority is seeking views on whether this is a model schools would like to see developed into a formal proposal for schools forum consideration. If agreed, it is likely that the new process would be put in place from September 2027. To ensure continuity of funding for schools in receipt of support via the high needs protection formula, this funding stream would continue until this point.

Schools and the schools forum may choose not to agree to a transfer of funds or may agree to transfer funding only for specific areas. Where no transfer is agreed, the funding would remain within the schools block and be allocated directly to schools through the NFF. It should be noted that this may affect delivery of the budgets set out in Table 1. The local authority would also have the option to appeal the decision to the Secretary of State if it considered the outcome to be detrimental to schools in Cornwall.

It is noted that there is some cross over between this proposal and the DfE consultation on the local inclusion formula. Schools views on both proposals will be taken into account when the authority considers final recommendations for schools forum.

Capping & Scaling

The distribution of funding across schools is undertaken by the NFF. This is intended to establish a clear, transparent and uniform approach to funding schools nationally.

Whilst the NFF has brought greater consistency to the distribution of school funding, there remains a difference between the schools block DSG allocations received by some local authorities and the actual cost of implementing the NFF in full. As a result, local authorities are required to make affordability adjustments to ensure that the funding formula can be delivered within the resources available.

In 2026/27, Cornwall's schools block DSG allocation was insufficient to fully fund the local formula at NFF rates, creating a net funding gap of £4.2m, including the £2.2m block transfer. This negative variance reflects the difference between Cornwall's nationally allocated funding after the block transfer and the cost of implementing the NFF locally.

To manage this shortfall, affordability mechanisms such as the gains cap are applied to limit annual funding increases. Although all school budgets are initially calculated using universal NFF factor values, the affordability adjustment required to close the funding gap is not spread evenly across all schools. Instead, it falls disproportionately on schools that are still moving towards their full NFF entitlement.

For 2026/27, 167 schools (61%) were below their full NFF funding level as a consequence of this shortfall. The impact is particularly evident among small rural primary schools, where gains are constrained by the affordability adjustment and progress towards full NFF funding continues to be slower. A significant contributor within the NFF is the change in sparsity eligibility over recent years which has seen the number of schools eligible for this funding increase. For many of these schools, the additional funding initially allocated through the local formula has not yet materialised in full.

For 2026/27 the authority consulted schools on a change to the mechanism used to balance the cost of funding schools to available grant. This was intended to provide additional financial support to those schools with significant levels of capping applied to their budget.

The below approach was agreed with schools forum in December 2025:

• 0.25% reduction to the primary and secondary per pupil rates to create additional funding to reallocate to schools
• Introducing the scaling factor which scales back losses over the set MFG. The MFG was set at 2.4% and the scale at 83.4%.

These rates were used to ensure that no school saw a reduction of greater that 0.3% compared to the previous method of using the gains ceiling only.

More information on the 2026/27 implementation can be found in the December schools forum report: (Public Pack)Agenda Document for Cornwall Schools Forum, 12/12/2025 10:00

This approach resulted in an additional £0.651m being redistributed to select schools compared with the prior approach of applying the gains ceiling in isolation.

A summary of the impact on the current 2026/27 budgets in Appendix 1 is available to the top right. The changes noted are against the original methodology used to balance school budgets, not a comparison of funding changes between years. No schools saw an overall reduction in their MFG baseline allocation per pupil compared with 2025/26.

Key points to note are:

• 106 Primary schools saw budget increases averaging £6,142. The majority of these were small primary schools with less than 100 pupils
• The maximum gain for any one school was £25,828 (5.7%)
• 144 schools saw budget reductions averaging £4,521
• The largest reduction was £22,853 (0.3%)

Schools should be mindful that this is a redistribution of existing funding rather than the allocation of new resources. There is no additional funding available within the schools block and, as a result, any approach taken to balance the cost of the funding formula against the available budget will inevitably create both winners and losers.

Schools should also consider that the decision made in 2026/27 and already implement will have a lasting impact on their funding position. Any increase, or reduction, in 2026/27 becomes part of a school's per-pupil funding baseline for future years and is therefore protected by the Minimum Funding Guarantee (assuming the MFG continues to be set at 0%). For example, a school that saw £100 increase to their per pupil baseline in 2026/27 will continue to benefit from that regardless of the decision made for 2027/28 and subsequent years.

The consultation asks schools to consider whether continuing with the capping and scaling process introduced for 2026/27 should continue, with simar levels of movement, or if the funding model should revert to the original process of applying the gains ceiling equally to all schools. Should schools not agree to the high needs block transfer for 2027/28, the authority may need to further review the options currently proposed due to the additional funding that would be available for allocation via the NFF.

Exceptional Circumstances Factors

Cornwall uses two exceptional circumstances factors in its funding model. These are funding streams within the NFF that sit outside of the mandatory factors and are agreed by the DfE on a case-by-case basis through the disapplication process. To continue using these factors we require schools forum approval.

• Rents - this factor supports schools with additional rent costs. It is forecast to allocate a total of £110k to five primary schools who can evidence additional rent costs attached to classroom buildings, land, and the use of sports facilities.
• Additional sparsity - allocates a lump sum of £50k to small secondary schools meeting the existing sparsity factor criteria and where the pupil numbers on roll are below 350. There is currently one school receiving funding from this factor and this is expected to continue in 2027/28 (total £50k).