Schools receive funding based on their local authority’s (LA) school budget funding formula. This formula is calculated within the quantum of the dedicated school grant (DSG) allocated to the LA. Rural LAs receive less DSG per pupil in comparison to LAs in urban areas.
Currently the DSG is based on historical LA allocations with rural school funding allocations being less favourable than those of inner cities. This is mainly due to the historical factors that make up how the DSG is calculated for each LA, with rural areas such as Poole and Wokingham receiving far less than cities such as Birmingham and Salford. It should be noted that the per pupil DSG allocated to LAs has remained more or less the same for a number of years.
The funding weighting for each area remains undecided.
Change to funding requirements
Central government recently consulted on a move to a national funding formula (NFF) through which the inequality in distribution of per pupil school funding is to be addressed. The new formula plans to assign funds according to four key areas – per-pupil funding, additional needs, school costs and geographical costs – however, the funding weighting for each area remains undecided.
Initially this new formula was planned to begin in April 2017; however this has been delayed until April 2018. It’s important that you, as an SBM, have your say – the Stage 2 consultation ends on March 22 and can be accessed on the DfE’s website.
Discussions suggest the new NFF will address the funding inconsistency
Impact on inner-city schools
The National Association of Headteachers (NAHT) has said that the introduction of the NFF will affect inner city schools due to the new national formula addressing the current disparity between rural and inner city LAs.
Currently annual funding changes are largely protected by the minimum funding guarantee (MFG)
The current formula allows for local factors which can support schools with local needs – for example, an additional factor to support the cost of a greater number of pupils where English is a second language. Discussions suggest the new NFF will address the funding inconsistency across the LAs and this means inner city schools are likely to see a decrease in funding whilst rural areas will see an increase.
Looking to the future
Currently annual funding changes are largely protected by the minimum funding guarantee (MFG) which ensures that schools cannot lose more than 1.5% per pupil funding per annum – this will remain in place.
However, while a lack of clarity remains, the Stage 2 consultation released in December suggests that there are turbulent times ahead for many schools and this is creating difficulties as schools attempt to plan for the next financial year.
Schools should set in place medium term financial plans which will support them in identifying financial pinch points
As we await the outcome of the Stage 2 consultation most inner city schools worry that the NFF will work in favour of rural schools by accommodating the closure of the funding gap between rural and urban LAs. Our recommendation for schools facing financial challenges is to plan according to the worst-case scenario and consider where potential savings can be made – be it back-office efficiencies or curriculum and staffing changes. To do this, schools should set in place medium term financial plans which will support them in identifying financial pinch points and enabling informed decision-making.