School Funding Reform Changes 2014/15

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School Funding Reform Changes 2014/15

Schools Forum

Date: 9

th

July 2013

Author: Head of Finance (Education and Innovation) Wards Affected: All

Locality Affected: All Parishes Affected: All

Settings Affected: As the Dedicated Schools Grant is ring-fenced funding provided by the Department for Education to meet the educational needs of early years, school age and all 0 to 25 year old high needs pupils any decisions on how the grant is utilised indirectly affects all settings.

This report specifically affects the mainstream funding of 5 to 16 (school age) pupils and to a lesser extent age 5 to 16 high need pupils in Special Schools and Special Resource Provision.

1. Purpose and Reasons

1.1 The purpose of this report is primarily to advise Schools Forum Members on what school funding reform changes affecting mainstream settings are required for 2014/15 arising from the Department for Education (DfE) 4th

June 2013

announcement. Further work is required to fully understand the position for high needs settings as, although the general principles appear to remain unchanged, next year’s funding levels have not been quantified and there are some detailed changes to implement. Further guidance is due to be released by the DfE on this matter.

1.2 This report sets out the areas of funding which the LA is already committed to reviewing and also those areas which we are required by DfE to review for 2014/15. Some changes must be implemented whilst others are optional and proposed consultation plans covering mainstream and pre 16 high need settings are included in this report. A key requirement of the reform changes is that all settings must be consulted regarding changes that affect them. The LA cannot therefore limit its consultation to the Schools Forum but will continue to report the outcomes of consultation events to the Forum and seek the views of Forum Members as has been SBC practise in recent years.

1.3 The report also seeks Schools Forum support to seek Minimum Funding Guarantee (MFG) exemptions for some specific areas of funding when setting 2014/15 budgets.

2. Recommendations

2.1 Under the Swindon Borough Council (SBC) scheme of delegation decisions relating to the local school funding formula are made by the Director of Children Services subject to consultation with the Schools Forum. As in previous years

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School Funding Reform Changes 2014/15

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the LA intends to seek Schools Forum support for all such decisions and the Forum is recommended to:

• Agree to the establishment of a reception uplift factor to be used when calculating 2014/15 school funding allocations

• Comment on and support the LA’s aim of implementing a more

universal banding/funding scheme for all specialist pre 16 settings and to review the consultation plan at Appendix 3.

• Note that: -

o _{whilst 2014/15 DSG funding rates have been confirmed for early}

years and mainstream schools the value of the high needs block and therefore the overall DSG settlement cannot be quantified at this stage

o for modelling purposes the LA will initially assume existing

mainstream funding values will continue in 2014/15

• With due consideration as to whether stability in 2014-15 school

funding may be more important than improved fairness, provide initial views on: -

o The establishment of a sparsity factor o _{Changes to the secondary lump sum factor} o Introducing a new Looked After Children factor o Not introducing an optional split site factor

o Changes to the secondary low prior attainment factor o _{Not introducing an optional pupil mobility factor} o Not introducing a temporary falling rolls factor

o Not amending English as an Additional Language (EAL),

Deprivation, NNDR and PFI Affordability Gap Funding

o Introducing an exceptional premises factor

o The proposed mainstream consultation programme

• Agree that the following items should, subject to Education Funding Agency (EFA) approval, be exempt from the MFG calculations in 2014/15:-

o The one off boost to primary BPPE funding

o _{The reduction in Behavioural and Emotional Support Difficulties}

(BESD) premium funding 3. Detail

3.1 At the 5th

March 2013 Schools Forum all final decisions were made relating to the use of Swindon’s 2013/14 DSG allocation including how delegated funds would be distributed across Swindon Schools, Converter Academies and Early Years Providers. This reflected a number of changes which were required to meet the

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School Funding Reform Changes 2014/15

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initial “first step” requirements of the DfE’s school funding reform programme. Although these changes were confirmed by the EFA as being in compliance with the new school finance regulations the LA was committed to reviewing some areas of funding in 2014/15 and an update on these areas is included below. Schools Forum is also asked to support the LA’s request for some specific

elements of 2013/14 to be exempt from the 2014/15 MFG protection calculations to avoid funding being permanently locked in to school allocations.

3.2 On 4th

June 2013 DfE announced the results of their 14th

February 2013 consultation together with an indication of 2014/15 DSG levels and detailed operational guidance for LAs on the areas that must and/or could be reviewed in determining 2014/15 local formula allocations. No changes are required for early years as the single funding formula for all providers remains applicable. Similarly no significant changes appear to be required for pre-16 high needs funding as the basic “place plus funding” model will continue although the LA is committed to improving top up values. The position regarding post-16 high needs funding was also not clarified in the 4th

June 2013 announcement and remains very unclear as reported elsewhere on today’s agenda.

3.3 This latest announcement stated that the changes implemented in 2013/14 represented a radical first step towards a new national funding formula for schools but had produced some unintended consequences which the new guidance was keen to overcome. The LA’s initial view is that these changes will effectively allow us to reinstate some of the flexibilities which were available prior to the 2013/14 review such as the protection of small schools and the setting of different lump sum values for primary and secondary settings. Whilst this is potentially a positive move it is however important to recognise that a lot of the changes made in 2013/14 could effectively be reversed in 2014/15 and this turbulence is considered unhelpful for individual schools and academies in preparing meaningful medium term (i.e. three year) financial plans.

3.4 Furthermore, whilst the DfE remains committed to introducing a new national formula for both the redistribution of DSG across LAs and the allocation of individual school budgets, the timeline for these changes remains unclear other than both are expected to take place during the next Government Spending Review period i.e. from 2015/16 at the earliest. This means that any locally agreed changes made in 2014/15 could well be reversed within the next few years and the LA is keen to avoid being responsible for a system that repeatedly produces different annual winners and losers as the same overall level of funding is marginally redistributed. All changes must be made after a consultation

process with those settings which are directly affected and the LA will be keen to consider whether stability is more important than temporary changes which, whilst potentially more fairer, may not be sustainable.

3.5 The scope of the mainstream funding changes required / allowed by DfE in 2014/15 is described below together with a draft consultation plan. As the LA

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School Funding Reform Changes 2014/15

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July 2013

must submit its proposed 2014/15 local funding formula for mainstream schools to the EFA by the end of October 2013 (subject to refinement of values and resubmission to EFA by the 21st

January 2014) the consultation with schools (via Headteacher Associations) must be finalised by the end of September to enable Schools Forum to review the position at its 8th

October 2013 meeting.

3.6 Attached as Appendix 1 is a summary of the current mainstream funding factors and values which, following consultation, were used to determine 2013/14 funding allocations.

Local Reform Issues to Address in 2014/15

a) Funding for Deferred Reception Admissions – Mainstream primary settings 3.7 Until 2013/14 the DSG funding allocated to LAs in each financial year was based

on information arising from the preceding January school census (PLASC) date. Individual funding allocations to schools and academies from the local formula were also based on January PLASC data but under the school funding reform programme, all delegated mainstream funding is now based on the preceding October.

3.8 It was recognised in the build up to the 2013/14 budget setting process that some primary settings may be detrimentally affected by this change. Although children who are due to start school for the first time are offered places in the September, parents of children who are not of statutory school age have the right to defer the entry of their child until the term after their 5th

birthday. This must however be agreed with the school concerned in advance of their start date. This means that a school may need to reserve a place for a pupil who may not actually be in school on the October PLASC date which means that they will not qualify for any pupil based funding in the following year.

3.9 On a national level DfE make a minor adjustment to the DSG for those LAs which experienced deferred entries in the previous year and for 2013/14 SBC received school block DSG for 30 extra pupils. The LA recognises that schools

experiencing deferred entries should not be detrimentally affected in terms of their annual funding and from 2014/15 onwards proposes to create a “reception uplift factor” which is allowable under the new school finance regulations. This would provide additional funding in 2014/15 to those settings where their January 2013 reception pupil numbers were higher than their October 2012 reception pupil numbers. An estimate of the impact on individual settings is attached at Appendix 2 to this report and shows that this would allocate extra funding of £101,991 to 18 schools.

Schools Forum is asked to agree to the establishment of a reception uplift factor to be used when calculating 2014/15 school funding allocations.

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b) Minimum Funding Guarantee Exemptions – Primary BPPE Funding

3.10 When setting the 2013/14 local formula funding rates Schools Forum members may recall that a permanent increase was made to boost Low Prior Attainment funding from £359 to £702 per eligible pupil as SBC rates were well below South West regional averages. The cost of this increase was £1.5m and funding was provided from headroom in the DSG created by permanent reductions to the retained budget. This level of funding should therefore be secure in 2014/15. 3.11 In addition, the Forum also agreed to boost primary BPPE rates in 2013/14 from

£2,590 to £2,645 as SBC funding was marginally below South West Regional rates. The cost of this increase was £0.9m and funding was provided by using approximately 50% of the projected one-off surplus DSG which the LA estimated would be carried forward at the end of 2012/13. Use of the remaining 50% one-off funding in 2014/15 would be subject to a benchmarking exercise aimed at smoothing out funding differences between SBC rates and potential national funding rates.

3.12 Whether the LA and Schools Forum will choose to repeat the boost to primary BPPE rates in 2014/15 remains to be seen and it is possible that other factors may be considered more appropriate. To avoid this one off funding being locked in to the MFG calculations the LA will therefore, as a precaution, need to secure EFA approval for this to be exempted from 2014/15 primary sector MFG

calculations.

Schools Forum is asked to agree to the LA seeking approval to exclude the one off boost to primary BPPE funding from the 2014/15 MFG calculation. c) Universal High Needs Top ups – Pre 16 Special School and Special Resource

Provision Pupils

3.13 For Special Schools the move to place plus funding in 2013/14 was relatively straightforward as the LA had implemented a pupil led banding/funding system in 2012/13 and the DfE’s new requirement was to a large extent met by simply splitting existing special school band funding between “place” and “top up” values. Pupils in the 6 special schools are all currently funded from one set of band and top up values although a BESD supplement, initially adding 30% to protect Nylands and St Luke’s was agreed by ASSSH which is to be phased out after 3 years.

3.14 For mainstream schools with Special Resource Provisions the transition to place plus funding was much more difficult as these settings had originally been set up on the basis of funding being provided to cover staffing and other costs with subsequent annual adjustments to recognise changes in place numbers. Prior to 2013/14 each SRP effectively received a unique level of funding per place and although place plus was implemented in 2013/14 this required the LA to establish an unwieldy number of 10 ranges of top up values in order to avoid year on year

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School Funding Reform Changes 2014/15

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funding changes. (This was necessary as specialist settings would have been eligible for MFG protection if funding per pupil reduced significantly).

3.15 The current position is that whilst Special School pupils and SRP pupils are all banded different models are used. For SRP’s, unlike special schools, the top up values payable, although identical for similar settings, are still partly historic. For example band A top up funding rates vary from £27,160 for pupils with sensory difficulties attending the Redoaks SRP to £7,780 for pupils with speech, language and communication difficulties attending the Commonweal SRP. These figures are not quoted to imply that there is any under or over funding at either setting only to illustrate that the funding system is unclear. For SRPs we have 10 different band A values and furthermore there is no link to the Special School bandings and funding values.

3.16 For SEN pupils in non-SRP mainstream settings a different funding methodology is operating whereby individual settings submit requests to the SENRAP panel for additional funding to meet identified needs above £10,000 per year. As these cases are more individual the LA does not aim to base funding for these pupils on a universal banding model although this may be possible in future years. The LA would also like to consider using a banding system in future years to

determine post 16 funding although the level of funding allocated for these pupils is currently very different and proving problematic.

3.17 From 2014/15 the LA intends to implement a universal banding system which provides appropriate levels of funding across all specialist settings. This does not mean that every setting will necessarily receive the same level of funding per pupil but a simpler more transparent funding system needs to be established so that any differences in per pupil funding are appropriate and clearly understood. To help achieve the new funding model the LA issued 2013/14 funding

allocations and proformas to capture 3 year spending plans from all Special Schools and SRPs in February. These are due to be received by the end of June and will be reviewed by a task group chaired by Gill Ilic (Commissioner for

Education) made up of Special School and SRP representatives supported by the Finance Team. Updates will be provided to the January and October Schools Forum meetings prior to 2014/15 top up rates being agreed.

3.18 As reported elsewhere on today’s agenda (see 2013/14 budget update) despite funding being allocated in accordance with consultation documents, a number of specialist settings do not currently feel that they are receiving sufficient funding and, with a continued cash freeze envisaged on the overall DSG, it is important that any perceived shortfalls are fully understood. Unless corresponding

reductions in the funding of other high need settings are identified to provide additional funding, allocations to early years, schools and post 16 providers would need to be reduced. All costs will need to be robustly challenged and some settings will be asked to describe how provision is organised and some site visits are envisaged. Specialist settings will be eligible for MFG protection in the

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School Funding Reform Changes 2014/15

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same way as mainstream schools. An outline consultation plan is attached at Appendix 3 (to follow)

Schools Forum is asked to comment on and support the LA’s aim of implementing a more universal banding/funding scheme for all specialist pre 16 settings and to review the draft consultation plan at Appendix 3. d) Minimum Funding Guarantee Exemptions - Special School BESD Premium 3.19 As mentioned above when the LA implemented a band based funding model for

special schools in 2012/13 the level of funding per pupil allocated to both Nylands and St Luke’s was higher than the other special schools. During consultations with ASSSH it was agreed that this was unfair but should be phased out over three years to give these settings time to reduce their cost bases. A BESD premium, initially at 30% above the basic band values was established in 2012/13, reducing to 20% in 2013/14 and 10% in 2014/15. The introduction of “place plus” meant that the phased reductions could only be applied to the top up element and funding rates were set in 2013/14 to produce the same overall reduction in funding as was originally envisaged.

3.20 For 2014/15 the third and final year of BESD premium funding will apply and indicative rates showing BESD premiums reducing by 50% next year and to be harmonised with other special schools in 2015/16, are shown in the table below:

Table 1 - Current and indicative 2014/16 Special School Top Up Band Values Banding 2013/14 _Actual 2014/15 _Indicative _Indicative2015/16 Band 1 with BESD Premium £22,021 £18,489 _£14,950

Band 1 £14,950 £14,950

Band 2 with BESD Premium £19,072 £16,264 _£13,455

Band 2 £13,455 £13,455

Band 3 £5,875 £5,875

Band 4 £2,467 £2,467

3.21 After taking account of the fixed £10,000 place funding the impact of the

indicative 2014/15 and 2015/16 top up rates will be to reduce BESD funding per pupil by 10% in each of the next two years. Clearly the above top up values may change as a new universal banding system is implemented but BESD premiums will be phased out as originally agreed. For 2014/15 in order to ensure funding is not locked into the two BESD special schools via the MFG protection scheme

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the LA will seek to exclude the reduction in top up value from the MFG calculation.

Schools Forum is asked to agree to the LA seeking approval to exclude the reduction in BESD premium funding from 2014/15 MFG calculations.

Indicative 2014/15 DSG Funding Levels 3.22 The 4th

June announcement confirmed that per pupil funding rates for early years (£3,888.06) and schools block (£4,102.23) funding would remain unchanged in 2014/15 meaning that funding per pupil remains frozen at 2010/11 levels. As an area with a growing population our funding will increase based on the school and early years census information but in real terms the value of funding per pupil is gradually being eroded after taking account of cost inflation. The basis by which the LA’s High Needs Block funding will be calculated in 2014/15 remains unclear. Given the continuing demand pressures relating to increasing high needs pupil and student numbers this is a significant risk for the DSG, particularly in respect of post 16 provision.

3.23 The DfE is clear that whilst the DSG funding allocations are made up of three separate blocks it is for LAs and their Schools Forums to make strategic decisions about the distribution of funds to best meet the needs of their areas taking account of demographic and other pressures. In practice, this means that if insufficient high needs funding is provided, cuts will be required to early years and mainstream funding. The Schools forum will be asked to agree final funding allocations at the January 2014 and March 2014 Schools Forum meetings which may require the transfer of funding across the DSG blocks (Despite this

uncertainty DfE have advised that LAs must, during consultations, provide indications of how all settings would be affected by changes to funding factors. The LA will therefore base all mainstream modelling on current funding rates with a caveat that these are indicative only and could change if for example funding needs to be diverted from schools to high needs in 2014/15.

Schools Forum is asked to note that -

- whilst 2014/15 DSG funding rates have been confirmed for early years and mainstream schools the value of the high needs block and therefore the overall DSG settlement cannot be quantified at this stage.

- for modelling purposes the LA will initially assume existing mainstream funding values will continue in 2014/15.

National Reform Issues to Address in 2014/15 – Mainstream

3.24 After the radical changes to limit the range of funding factors that could be used by LAs in determining mainstream school funding allocations in 2013/14, the scope of the changes required by DfE in 2014/15 are relatively minor although

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the resulting longer term financial impact on individual settings may not be. Attached at Appendix 4 is a summary of all the options available for local determination which are described below.

3.25 To avoid the unintended consequences of the 2013/14 formula changes relating to mainstream funding a number of flexibilities are available for 2014/15 as

summarised below together with the LA’s initial thoughts on their implications and merits. The DfE announcement states that they expect that significant amounts of MFG protection will be payable in 2014/15 and that, with a freeze in DSG funding rates, it will be necessary for gains to be capped or scaled back. There is one change to the regulations in that funding cannot be capped or scaled for schools which have opened in the last seven years but have not reached their full number of year groups. For Swindon all schools and converter academies are currently receiving pupils at all age groups although Croft Primary School, which opened in September 2012 for Reception only will fill up year on year until open in all year groups in September 2018. As Croft is a sponsored academy funded outside Swindon’s DSG the LA will not be involved in their capping or scaling calculations.

3.26 For individual mainstream schools and academies MFG protection must be provided to ensure no setting loses more than 1.5% per pupil and similar

protection must be afforded for specialist settings. Any reductions in early years and post 16 funding are however excluded from this calculation. The DfE

advises that MFG protection will continue beyond 2014/15 but the level will be determined after the Governments Comprehensive Spending Review has been assessed.

New Optional Sparsity Factor – DfE prescribed maximum eligibility with locally determined fixed or variable values

3.27 This is the only new factor that can be used and is aimed at supporting

necessary small schools mainly in rural areas. Where a sparsity factor is used up to £100,000 per school can be allocated by effectively top slicing the DSG to provide an extra subsidy to ensure small schools remain financially sustainable. The factor can be a flat annual rate or could taper to provide individual schools with higher funding for fewer pupils in the same way as the LA’s previous small schools’ protection scheme operated.

3.28 The DfE will predetermine which schools are eligible for sparsity funding based on them meeting both of the following criteria;

A) Pupil numbers must be lower than 150 (primary) or 600 (secondary)

• Based on October 2012 pupils this would cover 4 Swindon primary settings - Bishopstone (35 pupils), Colebrook infants (136 pupils), Oliver Tomkins Infants (141 pupils) and South Marston (107 pupils)

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• A further 13 primary settings had between 151 and 200 pupils and would not qualify for any sparsity factor funding

B) The Average distance from home post codes of pupils in school to their next nearest school must exceed 2 miles “as the crow flies” for primary schools or 3 miles for secondary schools.

• The LA’s assessment is that all 4 primary settings with fewer than 150 pupils would not automatically qualify (Chiseldon is the only primary school recognised as meeting the distance criteria but their pupils exceed 150. Similarly Warneford meet the distance criteria but exceed the pupil threshold. Bishopstone and South Marston primary schools could qualify if the LA sought to amend the criteria to recognise safe walking distances, which in both cases exceeds 2 miles. LAs can narrow the eligibility criteria by reducing the pupil number threshold and/or increasing the distance criteria but they cannot widen the scope of eligibility above the DfE model described above other than to request safe walking distance to be

considered.

3.29 When small schools protection was withdrawn, the DfE’s view at that time was that this should, through necessity, prompt small schools to seek opportunities to reduce/share staffing and other operating costs by amalgamating or federating with other schools. Recent experience suggests that schools may be reluctant to pursue this preferring to retain their independence even if faced with long term reductions in MFG protection.

3.30 To remain sustainable without reducing costs smaller schools will need to be subsidised by other schools and the LA’s initial view is that a sparsity factor should be implemented, which would be tapered to provide a lower subsidy as pupil numbers reached 150. Under the previous local scheme funding was allocated for schools within 3 bands – less than 75 pupils, 76 to 91 pupils and 91 to 140 pupils and annual values ranged from £24,000 to £105,000. Under the new DfE model this would need to be simplified so that a school with 75 pupils received 50% of the locally determined maximum sparsity factor value whilst a school with 30 pupils would receive 80% of the sparsity factor value etc.

Schools Forum members are asked for their initial views on the creation of a new sparsity factor.

Sector Lump Sums – Optional factor with a maximum value

3.31 The LA can choose to have different lump sums next year for primary and secondary schools up to a maximum annual value of £175,000. Where two schools amalgamate the new school will receive 85% of the total lump sums of the predecessor schools for the next full year.

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3.32 For 2013/14 Schools Forum members will recall that a lump sum value of

£106,700 was determined for Swindon based on a notional estimate of the costs of a Headteacher, bursar and other fixed costs. (The DfE has not specified the scope of what the lump sum is supposed to cover but now recognise that the fixed costs of primary and secondary schools are different).

3.33 Under the previous local formula all secondary settings received approximately £250,000 per year whilst primary settings received values varying from £60,000 to £94,000 depending on their pupil numbers. When the single lump sum value was introduced Schools Forum agreed the LA’s approach that sector funding totals would be retained i.e. the overall saving to the local formula of reducing secondary lump sum values was recycled as an increase to secondary Basic Per Pupil Entitlement funding.

3.34 For 2014/15 the LA’s initial view is that:

• The existing lump sum value of £106,700 should be retained and applied to all primary settings

• The lump sum value for secondary schools should be increased from

£106,700 to the maximum £175,000 allowed but that the additional cost to the local formula of this, estimated at £683,000 is met by reducing the secondary BPPE rates accordingly. This will marginally benefit schools with falling rolls as they will lose a lower amount of pupil based funding.

Schools Forum members are asked for their initial views on the establishment of separate sector lump sums.

Looked After Children Factor – Optional factor, DfE prescribed eligibility with locally determined single value

3.35 The LA did not establish this as an optional factor in 2013/14 on the basis that the Pupil Premium already generated additional funding (currently £900) for these pupils. If such a factor were to be introduced next year, funding must be allocated for any child who was in care for at least one day during the period specified by DfE which for 2014/15 funding is as at 31st

March 2013 (based on the LA’s SSDA903 return mapped to schools using the January school census). Approximately 116 Swindon pupils would be eligible for this funding which would have to be created by reducing an existing factor value.

Whilst is it important to note that the number of LAC pupils is relatively small, attainment for pupils at both KS2 and 4 is well below that for non –LAC pupils. Attainment and progress has shown some improvement over 3 years at KS4 but both have declined at KS2 during the same period. To further support improving outcomes for this particularly vulnerable group of students it is the LA’s view is that an optional factor for LAC should be introduced in 2014/15 at a value of £400

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per pupil. Based on current eligible LAC students this cost approximately £46,400 per year

Schools Forum members are asked for their initial views on the establishment of a Looked after Children funding factor.

Optional Split Site Factor

3.36 The LA does not intend to introduce a split site factor as this was debated and dismissed during the last consultation.

Schools Forum members are asked for their initial views on the establishment of an optional split site funding factor.

Low Prior Attainment Factor – Optional factor, DfE prescribed eligibility with locally determined single or sector values

3.37 The LA did use this optional factor in 2013/14 and currently allocates £701.57 per eligible pupil. For 2014/15 eligibility for primary age pupils will be based on those pupils not achieving a good level of development within the new Early Years Foundation Stage Profile and those achieving fewer than 78 or 73 points under the old profile (SBC decided on 78). Pupils in October 2013 will have been assessed under the new profile introduced in September 2012 whilst other pupils’ assessment will still be measured via the old profile.

3.38 The main change for 2014/15 is that for secondary age pupils eligibility is

extended to include those pupils which at Key Stage 2 did not achieve level 4 in English or Maths whereas currently eligibility is only based on pupils who did not achieve level 4 in both subjects. From 2013 the DFE will not be calculating an overall level for English but outcomes for grammar, punctuation, spelling, and reading will be reported separately. Initial estimates are that an additional 1,462 pupils will become eligible for this funding at an annual additional cost at current rates (£701.57) of £1,025,695.

3.39 The LA’s view is that this factor should be retained in 2014/15 but that it would be unaffordable to retain the same funding value and further work needs to be done on this potentially significant item.

Schools Forum members are asked to note the increased eligibility for secondary sector pupils, confirm the retention of this factor and for their initial views on the value that should be paid to each sector.

Pupil Mobility Factor - Optional factor, DfE prescribed maximum eligibility with locally determined values

3.40 The LA did not use this optional factor in 2013/14 as it was not considered a significant issue for Swindon. If such a factor were to be introduced next year,

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funding must be allocated when the number of “mobile” pupils exceeds 10% as determined by DfE. This is calculated using the school start date for each pupil from the October census and any funding must be allocated if the number of pupils in the last three academic years which did not start in August or

September exceeds 10%. Schools with up to 10% mobility would not be eligible and only funding and a school with 15% mobility could only attract additional funding for 5% of its pupils.

3.41 The LA’s initial view is that an optional factor for mobility should not be introduced in 2014/15.

Schools Forum members are asked for their initial views on the introduction of a pupil mobility factor.

Basic Entitlement Funding Levels – Mandatory factor with DfE prescribed minimum sector values in 2014/15

3.42 The requirement to fund all primary age pupils at the same rate and for one or two factors (KS3 and KS4) to be used for secondary age pupils remains unchanged from 2013/14. Although DfE have not prescribed a ratio between primary and secondary funding this is to be expected in future years and they have set minimum BPPE values for 2014/15 which are shown below together with Swindon’s current rates:

DfE Minimum Values

2014/15 SBC Actual Values 2013/14 Primary – KS1 and KS 2 £2,000.00 £2,644.65 Secondary – KS3 £3,000.00 £3,661.07

Secondary – K4 £3,000.00 £4,467.08

Schools Forum members are asked to note that SBC’s current levels of BPPE funding comfortably exceeds the DfE minimum requirement. Pupil Based Funding Levels – DfE prescribed %ages

3.43 DfE have also introduced a new condition which requires at least 80% of

delegated mainstream funding to be distributed by pupil led factors in 2014/15. SBC’s position is summarised below:

Primary Secondary Pupil Led Funding (BPPE, FSM, LPA, EAL etc.) £55.000m £45.331m

% Pupil Led 87.4% 95.0%.

School Led Funding (Lump sum, NNDR etc.) £7.921m £2.387m Total Delegated Funding £62.921m £47.718m

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Schools Forum Members are asked to note that SBC’s current formula comfortably exceeds the DfE minimum requirement to allocate at least 80% of funding based on pupils.

Temporary Falling Rolls Fund – Optional factor. Locally determined scheme and values but DfE defined eligibility

3.44 Under the new guidance the LA may, by top slicing the DSG, create a centrally retained fund to cover temporary falling rolls in advance of a population bulge where there is clear evidence that it is likely that rolls will rise again. As with the existing pupil growth fund, the Schools Forum must, after consultation, approve the criteria and funding methodology attached to any such falling rolls fund which would also have to be validated by the EFA. DfE are clear that the falling rolls fund must not be used to support unpopular or failing schools and a summary of the requirements of any such fund are as follows;

• The fund should be restricted to population increases expected in 2 to 3 years in necessary schools which are classed by OFSTED as good or outstanding.

• Surplus capacity must exceed a locally determined pupil number or % of published admission numbers and local planning data must demonstrate that a defined proportion of the surplus places will be required within 2 or 3 years.

• Funding can be allocated as a value per vacant place or as a lump sum calculated to meet specified costs and differences are permitted between phases.

• Funding should only be provided where existing funding available to a school will not support provision of an appropriate curriculum for the existing cohort and/or the school will need to make redundancies in order to contain spending within its formula budget.

3.45 Forum members will be aware that there has been an overall fall in secondary age pupils across the Borough whilst significant additional primary places

continue to be required. The LA’s estimate of secondary pupil numbers over the next few years is summarised below. This shows an increase from October 2016 although the extent to which demand could be met by free schools, the

University Technical College and FE Colleges admitting age 14 -16 pupils is difficult to determine.

Estimated mainstream pupils as at Primary Secondary

October 2012 17,683 10,853

October 2013 18,204 10,625

October 2014 18,697 10,468

October 2015 19,299 10,386

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School Funding Reform Changes 2014/15

Schools Forum

Date: 9

th

July 2013

3.46 The LA’s initial view is that the establishment of a factor will not be required in 2014/15 and that the operation of a temporary falling rolls funds will create significant complexity and may require significant “ghost pupil” funding to be unnecessary allocated to certain schools to the detriment of the overall DSG and therefore all other education providers in Swindon. Furthermore the LA has no involvement or role in monitoring the financial position of an Academy after conversion and could not effectively judge whether reasonable steps had been taken to reduce costs in line with pupil reductions as opportunities presented themselves.

3.47 Creating such a fund would appear to be a step away from a simple, transparent, pupil led funding model and the LA feels that any setting which experiences a temporary fall in rolls should be able to remain sustainable via a combination of reducing operating costs and managing their balances. The LA’s initial view is that a temporary falling rolls fund should not be introduced in 2014/15.

Schools Forum members are asked for their initial views on the introduction of an optional temporary falling rolls fund.

Notional SEN Funding – Mandatory Factor, DfE prescribed value, but locally determined make up of funding

3.48 All LAs are required from 2014/15 to ensure they have delegated at least enough funding for mainstream schools to meet the first £6,000 of additional costs for their high need pupils. Where additional funding is allocated to schools with disproportionate numbers of high needs pupils, the EFA will be required to validate the methodology used.

Schools Forum members are advised that the LA met the delegation

requirement in 2013/14 and expects the methodology used to be approved by the EFA.

Areas which could be reviewed but changes are not required by DfE

3.49 In establishing the 2013/14 formula Schools Forum members may recall that steps were taken to harmonise funding rates between sectors with corresponding increases or decreases to BPPE rates to broadly maintain overall sector funding totals. In the interests of stability the LA is seeking to maintain the existing formula in 2014/15 unless DfE require factors to be reviewed (these are detailed above) or there is an overwhelming local reason which would clearly increase the fairness of funding allocations.

3.50 Summarised below are those factors which are currently in use and the flexibilities available which the LA is not proposing to review in 2014/15:

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School Funding Reform Changes 2014/15

Schools Forum

Date: 9

th

July 2013

Factor – per pupil unless otherwise stated Primary £ Secondary £

EAL (1,2 & 3yrs) 574.11 574.11

EAL Flexibility allowed

• Could reduce eligibility to 1 or 2 years

• Could have a different amount or different amounts per sector

• Could cease altogether as optional factor

IDACI Band 1 – 40% is notional SEN 434.00 434.00

IDACI Band 2– 40% is notional SEN 529.00 529.00

IDACI Band 6– 40% is notional SEN 1,215.00 1,215.00

IDACI Flexibility allowed

• Could set new band values which could be different per sector

• Could cease altogether and use FSM/FSM6 for all deprivation funding

FSM Ever 6 – 40% is notional SEN 865.86 865.86

FSM Flexibility allowed

• Could move from FSM6 to FSM (current)

• Could set new values which could be different per sector

• Could cease altogether and use IDACI for all deprivation funding

NNDR (Business Rates) - per school Actual cost Actual Cost

NNDR Flexibility allowed

• Could cease altogether as optional factor

NB a minor change is being introduced from 2014/15 whereby all settings must be funded based on the LA’s estimate of actual costs – any adjustments due to revaluations etc. must be made in the next funding period. This process is line with the process applied to Swindon schools where all settings are funded based upon the LA’s latest estimate. Actual rates are confirmed in February and paid in April. Schools are charged in line with the estimated value included within their formula allocation. Any differences between estimated and actual rate charges are managed centrally. School allocations are updated in the following funding period.

PFI Affordability Gap funding – per school Actual cost Actual Cost

PFI Affordability Gap Flexibility allowed

• Could cease altogether as optional factor but would have to create a matching

centrally retained budget which would marginally reduce any top up charges paid by other LA pupils for placements at Swindon Special Schools

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School Funding Reform Changes 2014/15

Schools Forum

Date: 9

th

July 2013

Schools Forum members are asked to agree that the above factors will remain unchanged in 2014/15 other than if there is any scope to apply inflationary increases from DSG.

Exceptional Premises Factor – Optional Factor

3.51 Although Swindon did not introduce an exceptional premises factor in 2013/14 a number of LAs did obtain DfE approval to recognise and provide additional funding where the nature of a school’s premises resulted in them facing exceptional high costs. This typically included school premises which were rented, listed buildings or where a school had a farm which was included as part of its education provision. Any such costs had to equate to more than 1% of the schools budget and affected fewer than 5% of an LA’s schools/academies. More relevant to Swindon is that funding could also be allocated where a school has to hire PE facilities or has joint use of leisure facilities. This is the case for

Highworth Warneford, Dorcan and Commonweal academies.

3.52 Although the costs levied to these settings have historically been relatively low (the annual charges are currently £12,000, £45,000 and £14,000) the cuts to local government funding have required all Leisure and Culture subsidies to be reviewed. To qualify as being eligible for exceptional premises funding annual costs would have to exceed 1% or £40,000 to £50,000 per academy. The LA’s initial view is that a new exceptional premises factor should be considered for introduction in 2014/15 although it is unlikely that any Swindon setting would become eligible for funding in that year. Furthermore as these settings do not have the operating costs of maintaining their own facilities the LA would seek DfE approval to fund 50% of any rental costs.

Schools Forum members are asked for their initial views on the introduction of an optional exceptional premises funding factor.

Equal Treatment

3.53 When constructing formulas LAs must take into account the characteristics of all maintained schools and academies in their area including non-recoupment academies and free schools. For SBC this means Swindon Academy (Former Penhill primary and all secondary provision) and all Croft Academy pupils must be considered even though these pupils are funded outside the scope of

Swindon’s DSG.

3.54 In practise the only issue identified for Swindon, as reported elsewhere on today’s agenda, is that despite receiving DfE confirmation that this would not be the case, it would appear that the LA must include Croft pupils in its pupil growth (trigger funding) calculations and make in year allocations from Swindon’s DSG.

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School Funding Reform Changes 2014/15

Schools Forum

Date: 9

th

July 2013

Schools Forum members are asked to note that pupil growth must be

provided to all settings where this is required to meet basic need for places even where settings are funded entirely outside the LA’s DSG.

Schools Forum Representation

3.55 A minor change to the Schools Forum regulations will require one member of an institution providing post 16 education (other than a school or academy) to join the Forum whereas previously, this could be a representative of the 14-19 partnership.

Schools Forum is advised that this change does affect SBC as the 4-19 representative position on the Forum is already held by the principals of Swindon and New College on an alternating basis.

Consultation Programme – Mainstream Options

3.56 Although the scope of 2014/15 changes is less than 2013/14 there are still a significant number of issues to consider and the LA is required to consult with all affected schools. The EFA timescales require funding factors and indicative values to be identified by the end of October with final values set by the 21st

January. The LA intends to fulfil the consultation requirements via presentations to Headteacher Associations following a similar programme to last year as summarised below;

Event Date

1) Awareness raising event for all Headteachers and school

governors to provide an overview to the changes required, July/August 2) Presentation consultation to Swindon Association of Primary

Headteachers with indicative modelling of options September? 3) Presentation consultation to Swindon Association of Secondary

Headteachers with indicative modelling of options September? 4) Update report to Schools Forum 8th

October 5) Initial proforma submitted to EFA 31st

October 6) Indicative 2014/15 funding allocations issued for discussion at

a. SAPH

b. SASH November November

7) Update report with indicative 2014/15 funding allocations

reported to Schools Forum 21

st

January 8) Final proforma submitted to EFA 21st

January 9) Final Report to Schools Forum 11th

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School Funding Reform Changes 2014/15

Schools Forum

Date: 9

th

July 2013

Schools Forum members are asked to comment on the proposed mainstream consultation programme.

4. Alternative Options

4.1 The LA has a statutory duty to manage and distribute the Dedicated Schools Grant (DSG) in accordance with prevailing grant conditions and the School Finance Regulations. DfE have prescribed the options available to Local Authorities, some of which are mandatory whilst some are discretionary, but in most cases funding values are to be locally determined. The options available are described throughout this report and will be included in consultations with all schools.

4.2 The LA’s final proposals relating to 2014/15 will be presented to the Schools Forum in January 2014 and will need to be validated by the Education Funding agency to ensure they are in compliance with the new regulations.

5. Implications, Diversity Impact Assessment and Risk Management

Financial and Procurement Implications

5.1 As this is essentially a financial report the implications are explained throughout the document. At this stage the impact of any funding changes on individual early year’s settings, schools, sixth forms, colleges and other providers cannot be determined although schools are protected by the Minimum Funding Guarantee which for 2014/15 prevents annual losses of more than 1.5% per pupil.

5.2 It is important to recognise that no setting is currently financially protected against reduced pupils or students although from 2014/15 the LA has an option to protect good and outstanding schools and academies from temporary falling rolls as described in section 3.

Legal and Human Rights Implications

5.3 There are no legal and human rights implications arising from this report. All Other Implications (including Staff, Sustainability, Health, Rural, Crime and Disorder)

5.4 Although the impact on individual settings cannot be determined at this stage the school funding reform programme is causing a degree of volatility in school finance which may have implications for schools and other providers which are detrimentally affected by the redistribution of funding, As reported elsewhere on today’s agenda, cuts in post 16 high needs funding is directly affecting Further Education providers in 2013/14 and whilst schools will benefit from MFG

protection in future years the actual level of protection beyond 2014/15 is subject to the national Comprehensive Spending Review and may well be lower than the current 1.5% per pupil.

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School Funding Reform Changes 2014/15

Schools Forum

Date: 9

th

July 2013

Links to One Swindon, Strategic Objectives, Plans and Policies

5.5 Utilisation of the DSG has a direct link to two of the Council’s five priorities – “Right skills, right jobs in the right place” and “Make the best use of Swindon’s resources inside and outside the Council”.

Diversity Impact Assessment

5.6 The DfE’s school funding reform programme is aimed at simplifying fair funding and although funding changes at individual settings are inevitable the DfE

believes that the MFG protection scheme for schools will be sufficient to minimise any adverse impacts. The reform programme is clearly aimed at ensuring

funding is targeted at disadvantaged pupils and at pupils with low prior attainment and/or special education needs in order to narrow the attainment gap between these and other pupils.

Risk Management

5.7 The key risks arising from this report are that local decisions relating to school funding could lead to an overspend on the 2014/15 DSG and/or that the EFA could deem that our funding arrangements do not comply with the school finance regulations requiring budgets to be recalculated.

6. Consultees

6.1 The Board Director Resources (Section 151 Officer) and Director of Law and Democratic Services (Monitoring Officer) are consulted in respect of all reports.

7. Background Papers

7.1 Various documents issued by the Department for Education on 4th

June 2013 announcing the 2014/15 school funding reform changes.

8. Appendices

8.1 The following appendices are attached:

• Appendix 1 – Summary of mainstream funding factors and values used to determine 2013/14 delegated budgets.

• Appendix 2 – Indicative impact of funding deferred primary school admissions.

• Appendix 3 – Consultation plan re funding for High Need pupils in specialist settings – to follow.