Funding blog: A fairer funding formula for all?

Sharon O’Brien of EBM Consultancy, and a school business manager for over 12 years both in the Primary and Secondary sector, discusses the proposed fairer funding policy, whether they will bring fairer funding for all and what SBMs need to be considering now.

If you have ever attempted to unpick and understand the formula used by local authorities to fund schools, you will have no doubt been left just as confused and confounded as you were when you started! Research suggests it was calculated on a ‘spend plus’ basis dating back to 2006-2007. This has led to the allocation of funding to schools being based on a formula that is too historic and outdated to meet the needs of any pupils in our schools today.
For many years now there have been numerous consultations held with regards to reforming school funding and although some major and important changes have taken place over the years they have all fallen short of introducing a national funding formula.
Hence, school leaders are still waiting for the government to implement a system for funding schools that is fairer, more consistent and easier to understand.
The government has now started the process of beginning to develop a new national funding formula by launching two initial consultations on the future of school funding and the funding of high needs provision.

So what are the issues that need addressing and what are the government proposing?

Primarily, the government has to tackle the inequities with the current funding system that had led to disadvantaged pupils in one neighbourhood receiving half as much funding as pupils in another neighbourhood. Therefore, they are proposing to alter the mechanism in which schools are currently funded based on the funding blocks below;

Factors that would be excluded from the formula funding are Public Mobility, Sixth Form and Look-after Children. The government suggests that some of these factors could be better met via other funding streams.
It has also proposed the retention of pupil premium, pupil premium plus and service grants separate from the above blocks.
Further proposals are for schools to receive their funding directly and not via their local authorities with the exception of their high needs funding.
Funding for high needs is a complex subject and could be an article in itself but basically the government proposes to develop a high needs national formula that local authorities will be responsible for the distribution of.
The proposal to exclude Pupil Mobility is a concern for some school leaders who can see this creating an enormous challenge for those schools that experience a high rate of pupil turnover.
It goes without saying that changes as major as those being proposed cannot happen overnight and so a two-year transition period, whereby the local authority will continue to distribute funding to schools using their existing formula funding, has been put forward. It is envisaged that all schools will be funded by the new formula for funding by 2019-2020.

Will the proposals bring a fairer funding formula for all?

Although, a fairer funding formula is welcomed by all school leaders there will inevitably be winners and losers, although a cap will be introduced.
Local authorities in London which have some of the best funded school in England have expressed concerns with regards to the government’s proposals. It has been suggested that there should be a ‘levelling up’ of funding to match that of London schools that have produced some of the country’s best results.
It is feared if funding is just ‘redistributed’ across the whole system as opposed to investment of new money then pupils and school results will suffer in these areas.
There are still more details to emerge yet on how these changes will impact on funding at school level and it won’t be possible to model how this will look for schools until a decision has been made on what weight and value will be given to each formula factor.

So how do you manage all this change if you’re a school business Manager or have responsibility for managing the budget?

Be prepared! Read as many articles and attend as many conferences as possible to ensure that you, the leadership team and the governors fully understand the potential impact these changes will have on your school and its finances.
All schools should be ensuring that their schools are as cost effective and efficient as possible. Are you getting value for money from your staffing which is your most expensive resource? Are you delivering a cost effective curriculum?
Most importantly, don’t wait until the revised funding arrangement is introduced in April 2017, start planning and preparing for it now.