Schools Block Transfer – Schools Consultation 2025/26

Introduction

The school funding regulations allow local authorities to transfer up to 0.5% of their schools block Dedicated Schools Grant (DSG) to support budgets in other areas in agreement with their schools forum. Any movement of funds from the schools block must be agreed with schools forum on an annual basis.

This consultation will set out the authorities' proposal to transfer 0.5% for 2025/26. Feedback will be provided to schools forum members to inform decision making at the meeting on the 4 of October

Schools should note that at the time of writing, the Department for Education (DfE) has not published details of local authority DSG funding settlements or the accompanying grant conditions for 2025/26. As such, this consultation is based on the current years funding and the proposals set out are subject to any revised guidance issued for 2025/26.

Background

Each year, local authorities receive DSG funding to cover school budgets, high needs, early years, and central services for schools. These grants are ring-fenced, meaning their use is restricted by regulations set by the DfE.

Schools are funded through the National Funding Formula (NFF), which is based on a series of pupil-related factors, with values determined by the DfE. Schools forum previously agreed to transition to the NFF over a three-year period, completing this transition in 2020/21. This was in preparation for the DfE assuming responsibility for funding schools directly. However, the government has repeatedly delayed the introduction of a hard NFF and it is now expected by 2027/28.

Cornwall’s funding allocation for schools does not fully cover the costs of implementing the NFF. As a result, any reductions to the formula to ensure budgets are within the available quantum, are applied through the gains ceiling rather than by altering the factor values within the NFF. The gains ceiling limits the per-pupil increase schools can receive compared to the previous year, mainly affecting schools that have not yet fully transitioned to the NFF.

It is important to note that while the gains ceiling adjusts some schools' notional allocations, this is not a reduction of previous year's funding. These schools will still see the largest per-pupil increases, with a 3.11% rise in 2024/25 compared to the 1.59% average for schools already funded at NFF rates. Therefore, the gains ceiling is considered an equitable approach to managing funding, as it ensures that as few schools as possible are funded at the minimum funding guarantee level, while still allowing schools to transition to the NFF at an increased rate.

Schools will be aware that local authorities across the country are grappling with rising demand for high needs services, with Cornwall also impacted by our high needs funding settlement being among the lowest in the nation ranking 142nd out of 151 authorities.

In Cornwall, the number of children and young people with an Education, Health, and Care Plan (EHCP) is projected to reach 4,659 by March 2025, marking a nearly 50% increase since March 2021. This surge has contributed to a current DSG deficit of £22.9 million, which is expected to rise to £110 million by 2028/29.

The forecast includes £10 million in savings from the mitigations implemented through our Delivering Better Value (DBV) programme which aims to reduce the number of new EHCPs and prevent some from escalating to higher levels of provision. It is a requirement of the DBV programme that local authorities work with their schools forum to achieve the maximum block transfer to support efforts to reduce the deficit.

In the event schools forum do not vote for one or more of the proposals, the authority has the option, where it can evidence a wider financial impact on schools and the LA, of appealing the decision to the Secretary of State.

Proposed Block Transfer

The local authority is proposing a 0.5% block transfer from schools for 2025/26. Based on the current year, this would total £2.030m and be split across the budgets set out below in Table 1. We hope to have updated 2025/26 figures by the 4 October 2024 to present to schools forum. Any increase in the transfer amount (up to 0.5%) will be directed to the high needs protection budget.

Table 1. Proposed Block Transfers

High Needs Protection Formula - £1.710m

For several years, the authority has operated a non-statutory funding mechanism to support schools with a higher-than-average number of pupils with an EHCP. The formula allocates an additional £6,000 for each full-time equivalent (FTE) pupil with an EHCP, based on the percentage of such pupils in the school population. This formula was introduced in part to address the disconnect between the SEND funding schools receive as part of their budget share (referred to as the notional SEN budget), based on proxy factors like prior attainment and Free School Meals and the actual costs schools incur in supporting pupils with special educational needs.

Using the block transfer to fund this protection mechanism helps equalise resources for SEND to some degree by directing additional funding to schools with the highest percentage of EHCP related costs. The current budget for the high needs protection formula is £1.7 million, which is fully allocated to mainstream schools only. Based on the initial summer term calculation, £1.122m (66%) will be allocated to primary schools with the balance, £0.578m (34%), supporting the secondary sector.

Central Services Schools Block (CSSB)

The proposed transfer to the CSSB would be maintained at the current 24/25 level and covers the following budgets:

Music Hub £0.134m - The Cornwall Music Education Hub administers funding on behalf of Schools’ Forum to provide a subsidy scheme for instrumental and vocal lessons as well as instrument hire and ensemble membership.

Cornwall Association of Secondary Heads (CASH) £0.026m - Funding contributes towards the running of the association for the benefit of all secondary schools.

Cornwall Association of Primary Heads (CAPH) £0.054m - as above for primary schools.

Inclusion Support £0.108m - The Inclusion Support Fund was introduced in 2017 with the aim of reducing exclusions through a combination of additional funding, advice, guidance, and support. The use of the funding to develop, consolidate and embed creative school interventions is believed to be fundamental in reducing exclusions.

In the event any of the CSSB transfers are not agreed, schools would need to accept responsibility for the continuation of the activities or lose the service provided.

Impact on Schools

As noted above, schools forum has previously agreed that the gains ceiling be employed to balance school budgets to the available funding. This means any transfer of funds out of the schools block to support other budget areas will necessarily reduce the uplift in per pupil funding for some schools. The below table provides a high-level summary of the impact on the primary and secondary sectors (based on the 0.5% transfer):

Table 2. Impact on school funding

The deadline for completing the survey below is 2 October 2024.