School Funding Formula | Consultation

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1. Introduction

The Local Authority is required to consult on all proposed changes to the funding formula.

This consultation should be read in conjunction with the Schools Forum papers to be discussed on 10th December 2021.

2. Context

During the 2012/2013 financial year the Secretary of State for Education proposed a review of the funding mechanisms employed to allocate resources to schools. This review has led to the adoption of a standard template funding formula mechanism that is largely the same across the country (referred to here after as the National Funding Formula (NFF)).

The Cornwall Schools Forum have previously agreed to a transitional arrangement whereby the existing formula rates used by Cornwall to fund schools were moved over a 3 year period to match those in the NFF. This culminated in full adoption of the NFF rates, with the exception of the Mobility Factor, for the 2020/21 financial year.

While the introduction of the NFF has started the process to move local authority funding formula to the same methodology across the country, one of the other key issues that needed to be addressed was the disparity in funding levels between regions.

For the 2020/2021 financial year the ESFA sought to begin the levelling up process, whereby regions with low funding levels would see increases in funding in an effort to reduce the gap between the highest funded LAs and the lowest. This has already seen above inflation increases of £17.398m in 2020/21 & £12.992m in 2021/22 (excluding the transfer in to the DSG of the Teachers Pay and Pension grants).

It is still the ESFA’s intention to assume responsibility for running the NFF without reference to local input, referred to as the “Hard” NFF, although the exact date this will happen is still unknown.

3. Schools Block

The provisional DSG settlement for 2022/23, excluding growth, includes an increase £9.936m over 2021/22. This has been calculated based on the existing pupil data sets and will be updated in December based on the October 21 census numbers.

The impact for individual schools will vary depending on their particular funding history and transition to the NFF funding model. Schools whose funding has been subject to capping in recent years should see further gains towards full adoption of the NFF funding rates, while schools not subject to capping will see a minimum increase of 2% on their 2021/22 base rate per pupil (subject to the responses to this consultation and Schools Forum agreement).

School allocations may also be impacted by the introduction of the new distance taper which forms part of the Sparsity factor. This allows schools outside of the current mileage parameters to receive a reduced allocation based on their proximity to the nearest school. This is an optional factor and will be raised later in this report alongside further adjustments schools may wish to consider ahead of the “Hard” NFF being implemented.

The NFF funding rates for 2022/23 are shown in table 1.

Table 1. Funding Rates By Factor

National Funding Formula

Factor

Actual

Provisional Rates

2021/2022

2022/2023

AWPU : Primary

£3,123

£3,217

AWPU : Secondary KS3

£4,404

£4,536

AWPU : Secondary KS4

£4,963

£5,112


Current FSM top up : Primary

£460

£470

Current FSM top up : Secondary

£460

£470

FSM 6 : Primary

£575

£590

FSM 6 : Secondary

£840

£865

IDACI Band F: Primary

£215

£220

IDACI Band F: Secondary

£310

£320

IDACI Band E: Primary

£260

£270

IDACI Band E: Secondary

£415

£425

IDACI Band D: Primary

£410

£420

IDACI Band D: Secondary

£580

£595

IDACI Band C: Primary

£445

£460

IDACI Band C: Secondary

£630

£650

IDACI Band B: Primary

£475

£490

IDACI Band B: Secondary

£680

£700

IDACI Band A: Primary

£620

£620

IDACI Band A: Secondary

£865

£890


Low Prior Attainment: Primary

£1,095

£1,130

Low Prior Attainment: Secondary

£1,660

£1,710


EAL : Primary

£550

£565

EAL : Secondary

£1,485

£1,530


Lump Sum : Primary

£117,800

£121,300

Lump Sum : Secondary

£117,800

£121,300


Sparsity : Primary

£45,000

£55,000

Sparsity : Secondary

£70,000

£80,000


4. High Needs Block

As schools will be aware Cornwall has historically been one of the lowest funded authorities for High Needs Block (HNB) funding. This continues and in the 2021/22 financial year we rank 144th out of 150 authorities, the lowest per pupil funded authority in the south-west and when compared to our statistical neighbours.

HNB deficits are a national challenge. Despite our low funding level Cornwall had managed to avoid reporting a deficit position in its HNB block until the end of 2019/20 through a combination of prudent budgeting, reserves and support from schools in the form of block transfers.

As with schools funding the HNB has seen significant increases in recent years. Cornwall received the maximum 17% increase in 2020/21, a further 12% increase in 2021/22 and our provisional allocation for 2022/23 is again capped at the maximum 11%. While these have been welcome increases, they have not kept pace with the growing demand across high needs budgets and as such the forecast deficit is expected to increase by £3.36m to £8.814m by the end of 2021/22.

The provisional HNB settlement for 2022/23 has been uplifted by £6.655m to £64.585m. This is another significant increase but taken in isolation it is not expected to cover the forecast pressures around EHC plans, Alternative Provision and Post 16 SEN costs. Schools should be assured that actions are being implemented in these areas with a focus on challenging spend, reviewing commissioning arrangements and developing revised pricing models with providers. These are not instant fixes however and it will take time for changes to work through and help alleviate the deficit.

The HNB deficit, and the work being undertaken to manage the demands which drive it, are standing items on the Schools Forum agenda.

5. Early Years

The ESFA will not confirm Early Years Block allocations until December however the council have committed to passing on any increases to providers.

6. Central School Services Block

The Central Schools Services Block (CSSB) covers funding allocated to LAs to carry out central functions on behalf of pupils in state-funded maintained schools and academies. LAs’ CSSB is split into funding for historic commitments and funding for ongoing responsibilities.

The CSSB Block allocation for 2022/2023 is £3.429m. This is a reduction on 2021/22 of £210k due to the 20% year on year reduction the ESFA are making to the historic element of the CSSB. This is marginally offset by the increase to per pupil rates for ongoing responsibilities in 2022/23 however this still leaves a pressure in this area as the historic costs of the CSSB are not reducing at the same rate as the budget.

The CSSB budgets for 2021/22 are supported by a £0.322m transfer from the Schools Block.

7. Block Transfers

The ESFA allows a maximum transfer of 0.5% from the schools’ block. This transfer can support multiple activities spread across the other funding blocks.

A block transfer would not impact on the funding rates as detailed in Table 1 or any school with funding protected by either the Minimum Funding Guarantee or the Minimum Per Pupil Funding protection. It would, however, impact on the Gains Ceiling rate applied. This would reduce the rate at which schools moved up toward the National Funding Formula.

8. Schools Funding Formula Changes

Sparsity Factor

Sparsity is currently an optional factor and allocates funding to small schools where the road distance to the next alternative school is above a set threshold - 2 miles for primary and 3 miles for secondary (it should be noted that Cornwall has previously opted to set the threshold for Secondary schools at 5 miles). Funding is allocated via a lump sum.

Local authorities have the option of tapering school allocations based on the average year group size or fixing allocations at the full lump sum value.

New for 2022/23 is the distance threshold taper which allows LAs to allocate a reduced amount of funding to schools that are close to, but sit just outside, the current distance thresholds. These have been set at 1.6 miles for primary and 2.4 miles for secondary. We are not able to change these – the distance taper is either on or off.

A decision is required at Schools Forum on whether we use the new distance taper. The following options are based on the census numbers from the 2021/22 formula process and the provisional 2022/23 Schools Block grant. These will be updated for the final APT submission.

Option 1 – Current position (£2.905m)

Cornwall currently allocates funding to schools where the distance to the nearest primary school exceeds 3 miles for primary and 5 miles for secondary. No year group size taper is used so all schools meeting the distance thresholds receive the full lump sum amounts – for 2022/23 these have been set in the NFF at £55k for primary and £80k for secondary (this is a £10k increase for both phases from the 2021/22 rates). The distance taper was not available for the 2021/22 formula submission.

If the current criteria were to be applied for 2022/23 this would result in allocations as summarised below:

Table 2. Sparsity allocations – No distance taper. Fixed lump sum.


No. Eligible Schools

Percentage of schools

Total Allocated £

Average Grant £

Min Grant £

Max Grant £

Primary

47

20.1%

2,585,000

55,000

55,000

55,000

Secondary

4

12.9%

320,000

80,000

80,000

80,000

Option 2 – Distance taper on (£4.035m)

This option includes moving secondary schools to the 3-mile threshold in the NFF and turning on the new distance taper. The year group taper remains ‘fixed’ meaning schools exceeding the 2 & 3 mile distances will continue to receive the full lump sum. Schools that become eligible due to the distance taper receive a reduced allocation calculated on their proximity to the nearest school.

This allocates funding to a further 33 schools including 3 secondary schools previously excluded due to the 5 mile threshold. There is no increase within the DSG to cover this so the additional cost of £1.13m would be met by adjusting the gains ceiling, effectively reducing funding allocations for 30 schools when compared to option 1.

Table 3. Sparsity allocations - Distance taper on. Fixed lump sum.


No. Eligible Schools

Percentage of schools

Total Allocated £

Average Grant £

Min Grant £

Max Grant £

Primary

77

32.9%

3,474,995

45,130

692

55,000

Secondary

7

22.6%

560,000

80,000

80,000

80,000

Option 3 – Distance taper on. Year group taper set to the NFF (£2.961m)

As with option 2 the distance taper would be turned on allowing more schools to benefit however these allocations, and those to schools meeting the existing NFF 2 & 3 mile thresholds, will in many cases be tapered back based on the average size of the year group.

The cost of this option is on par with the current model, and this is due to the number of schools no longer receiving the full lump sum. Compared with options 1 & 2 there are 26 fewer schools (23 primary & 3 secondary) receiving the full allocation.

Table 4. Sparsity allocations – Distance taper on. Year ground ‘NFF’ taper on


No. Eligible Schools

Percentage of schools

Total Allocated £

Average Grant £

Min Grant £

Max Grant £

Primary

77

32.9%

2,799,384

36,356

692

55,000

Secondary

6

19.4%

161,333

26,889

8,000

80,000

While the ESFA have yet to confirm exactly how the Sparsity factor will work under the “Hard” NFF it seems reasonable to assume they will include the new distance taper and switch schools to the NFF year group taper.

Option 3 therefore represents the most likely criteria the ESFA will use following the introduction of the “Hard” NFF.

Mobility

This is currently an optional factor and has not been used by Cornwall to date.

The Mobility factor allocates additional funding to schools where the proportion of pupils joining the school in the last 3 years outside of the ‘typical’ October census exceeds the 6% threshold set by the ESFA.

Schools meeting this criteria receive £925 (primary) & £1,330 (secondary) for each pupil above the 6% threshold.

Turning this factor on would generate an additional £230k of funding for schools as shown in table 1 below which would be paid for by reducing the maximum amount schools can gain when compared with the 21/22 base:

Table1. Impact of including the Mobility Factor in 2022/23


Number of eligible schools

Percentage of schools

Total Grant £

Average grant £

Min Grant £

Max Grant £

Primary

78

33.3%

217,147

2,783

37

14,764

Secondary

2

6.5%

12,940

6,470

4,960

7,980

This factor favours schools with smaller pupil populations which is why it has not been used previously (small schools being the main beneficiary from the transition to the NFF over recent years).

The actual amount individual schools will benefit by will depend on what level the capping is set at in the final funding formula.

As this factor is still optional, we are not required to use it, however it will impact on schools once the “Hard” NFF is implemented.

1. Introduction

The Local Authority is required to consult on all proposed changes to the funding formula.

This consultation should be read in conjunction with the Schools Forum papers to be discussed on 10th December 2021.

2. Context

During the 2012/2013 financial year the Secretary of State for Education proposed a review of the funding mechanisms employed to allocate resources to schools. This review has led to the adoption of a standard template funding formula mechanism that is largely the same across the country (referred to here after as the National Funding Formula (NFF)).

The Cornwall Schools Forum have previously agreed to a transitional arrangement whereby the existing formula rates used by Cornwall to fund schools were moved over a 3 year period to match those in the NFF. This culminated in full adoption of the NFF rates, with the exception of the Mobility Factor, for the 2020/21 financial year.

While the introduction of the NFF has started the process to move local authority funding formula to the same methodology across the country, one of the other key issues that needed to be addressed was the disparity in funding levels between regions.

For the 2020/2021 financial year the ESFA sought to begin the levelling up process, whereby regions with low funding levels would see increases in funding in an effort to reduce the gap between the highest funded LAs and the lowest. This has already seen above inflation increases of £17.398m in 2020/21 & £12.992m in 2021/22 (excluding the transfer in to the DSG of the Teachers Pay and Pension grants).

It is still the ESFA’s intention to assume responsibility for running the NFF without reference to local input, referred to as the “Hard” NFF, although the exact date this will happen is still unknown.

3. Schools Block

The provisional DSG settlement for 2022/23, excluding growth, includes an increase £9.936m over 2021/22. This has been calculated based on the existing pupil data sets and will be updated in December based on the October 21 census numbers.

The impact for individual schools will vary depending on their particular funding history and transition to the NFF funding model. Schools whose funding has been subject to capping in recent years should see further gains towards full adoption of the NFF funding rates, while schools not subject to capping will see a minimum increase of 2% on their 2021/22 base rate per pupil (subject to the responses to this consultation and Schools Forum agreement).

School allocations may also be impacted by the introduction of the new distance taper which forms part of the Sparsity factor. This allows schools outside of the current mileage parameters to receive a reduced allocation based on their proximity to the nearest school. This is an optional factor and will be raised later in this report alongside further adjustments schools may wish to consider ahead of the “Hard” NFF being implemented.

The NFF funding rates for 2022/23 are shown in table 1.

Table 1. Funding Rates By Factor

National Funding Formula

Factor

Actual

Provisional Rates

2021/2022

2022/2023

AWPU : Primary

£3,123

£3,217

AWPU : Secondary KS3

£4,404

£4,536

AWPU : Secondary KS4

£4,963

£5,112


Current FSM top up : Primary

£460

£470

Current FSM top up : Secondary

£460

£470

FSM 6 : Primary

£575

£590

FSM 6 : Secondary

£840

£865

IDACI Band F: Primary

£215

£220

IDACI Band F: Secondary

£310

£320

IDACI Band E: Primary

£260

£270

IDACI Band E: Secondary

£415

£425

IDACI Band D: Primary

£410

£420

IDACI Band D: Secondary

£580

£595

IDACI Band C: Primary

£445

£460

IDACI Band C: Secondary

£630

£650

IDACI Band B: Primary

£475

£490

IDACI Band B: Secondary

£680

£700

IDACI Band A: Primary

£620

£620

IDACI Band A: Secondary

£865

£890


Low Prior Attainment: Primary

£1,095

£1,130

Low Prior Attainment: Secondary

£1,660

£1,710


EAL : Primary

£550

£565

EAL : Secondary

£1,485

£1,530


Lump Sum : Primary

£117,800

£121,300

Lump Sum : Secondary

£117,800

£121,300


Sparsity : Primary

£45,000

£55,000

Sparsity : Secondary

£70,000

£80,000


4. High Needs Block

As schools will be aware Cornwall has historically been one of the lowest funded authorities for High Needs Block (HNB) funding. This continues and in the 2021/22 financial year we rank 144th out of 150 authorities, the lowest per pupil funded authority in the south-west and when compared to our statistical neighbours.

HNB deficits are a national challenge. Despite our low funding level Cornwall had managed to avoid reporting a deficit position in its HNB block until the end of 2019/20 through a combination of prudent budgeting, reserves and support from schools in the form of block transfers.

As with schools funding the HNB has seen significant increases in recent years. Cornwall received the maximum 17% increase in 2020/21, a further 12% increase in 2021/22 and our provisional allocation for 2022/23 is again capped at the maximum 11%. While these have been welcome increases, they have not kept pace with the growing demand across high needs budgets and as such the forecast deficit is expected to increase by £3.36m to £8.814m by the end of 2021/22.

The provisional HNB settlement for 2022/23 has been uplifted by £6.655m to £64.585m. This is another significant increase but taken in isolation it is not expected to cover the forecast pressures around EHC plans, Alternative Provision and Post 16 SEN costs. Schools should be assured that actions are being implemented in these areas with a focus on challenging spend, reviewing commissioning arrangements and developing revised pricing models with providers. These are not instant fixes however and it will take time for changes to work through and help alleviate the deficit.

The HNB deficit, and the work being undertaken to manage the demands which drive it, are standing items on the Schools Forum agenda.

5. Early Years

The ESFA will not confirm Early Years Block allocations until December however the council have committed to passing on any increases to providers.

6. Central School Services Block

The Central Schools Services Block (CSSB) covers funding allocated to LAs to carry out central functions on behalf of pupils in state-funded maintained schools and academies. LAs’ CSSB is split into funding for historic commitments and funding for ongoing responsibilities.

The CSSB Block allocation for 2022/2023 is £3.429m. This is a reduction on 2021/22 of £210k due to the 20% year on year reduction the ESFA are making to the historic element of the CSSB. This is marginally offset by the increase to per pupil rates for ongoing responsibilities in 2022/23 however this still leaves a pressure in this area as the historic costs of the CSSB are not reducing at the same rate as the budget.

The CSSB budgets for 2021/22 are supported by a £0.322m transfer from the Schools Block.

7. Block Transfers

The ESFA allows a maximum transfer of 0.5% from the schools’ block. This transfer can support multiple activities spread across the other funding blocks.

A block transfer would not impact on the funding rates as detailed in Table 1 or any school with funding protected by either the Minimum Funding Guarantee or the Minimum Per Pupil Funding protection. It would, however, impact on the Gains Ceiling rate applied. This would reduce the rate at which schools moved up toward the National Funding Formula.

8. Schools Funding Formula Changes

Sparsity Factor

Sparsity is currently an optional factor and allocates funding to small schools where the road distance to the next alternative school is above a set threshold - 2 miles for primary and 3 miles for secondary (it should be noted that Cornwall has previously opted to set the threshold for Secondary schools at 5 miles). Funding is allocated via a lump sum.

Local authorities have the option of tapering school allocations based on the average year group size or fixing allocations at the full lump sum value.

New for 2022/23 is the distance threshold taper which allows LAs to allocate a reduced amount of funding to schools that are close to, but sit just outside, the current distance thresholds. These have been set at 1.6 miles for primary and 2.4 miles for secondary. We are not able to change these – the distance taper is either on or off.

A decision is required at Schools Forum on whether we use the new distance taper. The following options are based on the census numbers from the 2021/22 formula process and the provisional 2022/23 Schools Block grant. These will be updated for the final APT submission.

Option 1 – Current position (£2.905m)

Cornwall currently allocates funding to schools where the distance to the nearest primary school exceeds 3 miles for primary and 5 miles for secondary. No year group size taper is used so all schools meeting the distance thresholds receive the full lump sum amounts – for 2022/23 these have been set in the NFF at £55k for primary and £80k for secondary (this is a £10k increase for both phases from the 2021/22 rates). The distance taper was not available for the 2021/22 formula submission.

If the current criteria were to be applied for 2022/23 this would result in allocations as summarised below:

Table 2. Sparsity allocations – No distance taper. Fixed lump sum.


No. Eligible Schools

Percentage of schools

Total Allocated £

Average Grant £

Min Grant £

Max Grant £

Primary

47

20.1%

2,585,000

55,000

55,000

55,000

Secondary

4

12.9%

320,000

80,000

80,000

80,000

Option 2 – Distance taper on (£4.035m)

This option includes moving secondary schools to the 3-mile threshold in the NFF and turning on the new distance taper. The year group taper remains ‘fixed’ meaning schools exceeding the 2 & 3 mile distances will continue to receive the full lump sum. Schools that become eligible due to the distance taper receive a reduced allocation calculated on their proximity to the nearest school.

This allocates funding to a further 33 schools including 3 secondary schools previously excluded due to the 5 mile threshold. There is no increase within the DSG to cover this so the additional cost of £1.13m would be met by adjusting the gains ceiling, effectively reducing funding allocations for 30 schools when compared to option 1.

Table 3. Sparsity allocations - Distance taper on. Fixed lump sum.


No. Eligible Schools

Percentage of schools

Total Allocated £

Average Grant £

Min Grant £

Max Grant £

Primary

77

32.9%

3,474,995

45,130

692

55,000

Secondary

7

22.6%

560,000

80,000

80,000

80,000

Option 3 – Distance taper on. Year group taper set to the NFF (£2.961m)

As with option 2 the distance taper would be turned on allowing more schools to benefit however these allocations, and those to schools meeting the existing NFF 2 & 3 mile thresholds, will in many cases be tapered back based on the average size of the year group.

The cost of this option is on par with the current model, and this is due to the number of schools no longer receiving the full lump sum. Compared with options 1 & 2 there are 26 fewer schools (23 primary & 3 secondary) receiving the full allocation.

Table 4. Sparsity allocations – Distance taper on. Year ground ‘NFF’ taper on


No. Eligible Schools

Percentage of schools

Total Allocated £

Average Grant £

Min Grant £

Max Grant £

Primary

77

32.9%

2,799,384

36,356

692

55,000

Secondary

6

19.4%

161,333

26,889

8,000

80,000

While the ESFA have yet to confirm exactly how the Sparsity factor will work under the “Hard” NFF it seems reasonable to assume they will include the new distance taper and switch schools to the NFF year group taper.

Option 3 therefore represents the most likely criteria the ESFA will use following the introduction of the “Hard” NFF.

Mobility

This is currently an optional factor and has not been used by Cornwall to date.

The Mobility factor allocates additional funding to schools where the proportion of pupils joining the school in the last 3 years outside of the ‘typical’ October census exceeds the 6% threshold set by the ESFA.

Schools meeting this criteria receive £925 (primary) & £1,330 (secondary) for each pupil above the 6% threshold.

Turning this factor on would generate an additional £230k of funding for schools as shown in table 1 below which would be paid for by reducing the maximum amount schools can gain when compared with the 21/22 base:

Table1. Impact of including the Mobility Factor in 2022/23


Number of eligible schools

Percentage of schools

Total Grant £

Average grant £

Min Grant £

Max Grant £

Primary

78

33.3%

217,147

2,783

37

14,764

Secondary

2

6.5%

12,940

6,470

4,960

7,980

This factor favours schools with smaller pupil populations which is why it has not been used previously (small schools being the main beneficiary from the transition to the NFF over recent years).

The actual amount individual schools will benefit by will depend on what level the capping is set at in the final funding formula.

As this factor is still optional, we are not required to use it, however it will impact on schools once the “Hard” NFF is implemented.

Page last updated: 29 Nov 2021, 07:10 PM