ࡱ>  o>bjbj .eeo6 fffffzzzz>lzeXWWWWWWW$GZ\r Xf XffXffWWjQUw쨖Q:R2W5X0eXRk]k]dUU,k]fU X XeXk] ,: School Funding Consultation 2018-19 Summary The focus of this consultation is the School Block i.e. that part of the Dedicated School Grant which covers Reception to Year 11 provision in maintained schools (including academies) and Free Schools. There is, in effect, a 2 stage funding process i.e. The 1st stage is how the DfE determines the total School block allocation for each Local Authority The 2nd stage is how LAs allocate their notified School block allocation to individual schools in their area The DfE have announced implementation of a National Funding Formula (NFF) for Reception to Year 11 provision. This will calculate each schools budget share using a nationally set formula that will be applied across all local authorities. As such it will replace the local Fair Funding formula currently used by each Local Authority. The DfE will actually use the NFF for both stages of the funding process. The timeframe set out by the DfE will see implementation of the NFF for the 1st stage process, immediately from 2018/19. However application of the NFF for the 2nd stage process will be subject to a minimum 2 year transition period (the soft approach) i.e. 2018/19 and 2019/20 during which LAs can decide (in consultation with their Schools and School Forum) how to allocate the block total to individual schools i.e. whether to use the NFF to generate individual school budgets for their schools or continue with a local funding formula for those 2 years only or indeed a mixture of the two. The following extract is taken from the DfE Policy document: It remains our long-term intention that schools budgets should be set on the basis of a single, national formula (a hard national funding formula). But we recognise that this represents a significant change, and the importance of stability for schools was a consistent theme during both stages of the consultation. So, as confirmed to parliament in July, in 2018-19 and 2019-20 the schools formula will be a so called soft approach The main purpose of this consultation is to seek your views on whether should, for the second stage of the funding process, implement the NFF immediately from 2018/19 or temporarily continue with a local funding formula. The deadline for responses is 30th November 2017. Please note that changes have also been announced on: High Needs whereby the DfE will fund Local Authorities through the use of a formula, rather than operating a cash limit approach. In addition there will be a change in how schools with resource bases will receive their funding from 2018/19, partly through the reception to year 11 formula (pupil led elements) and the balance from the High Needs block. With the exception of resource bases there is no change to the way schools and other providers will receive high needs funding. We will of course engage with schools and providers where any local changes and local formula development is undertaken on High Needs. The same applies to Early Years, except in this case the Early Years National Funding Formula was implemented in 2017/18. A new Central School Services block which will hold all eligible historic, ongoing and statutory commitments. These have until now been held in the Schools block but will from 2018/19 be accounted for in this new block. They will be subject to School Forum approval. Context 2.1 Funding of the National Changes You will have seen reference to an additional 1.3 billion being invested into core funding for schools and high needs nationally across the next 2 years. More specifically the announcements have referred to a 0.5% minimum increase per pupil in 2018/19 and a further 0.5% increase in 2019/20. This needs to be treated with caution as the following section will make clear. 2.2 The relevance and application of the 0.5% nationally quoted per pupil minimum increase The DfE have calculated a 2018/19 notional budget for each Primary and Secondary school using the NFF. In doing so they have used October 2016 pupil numbers and other pupil data on Free School Meals, low prior attainment etc. If the resulting notional budget resulted in an increase of less than 0.5% per pupil (compared to the actual adjusted school budget share for 2017/18) the formula allocation was increased up to a 0.5%.increase per pupil. The 0.5% can in effect be viewed as a National Minimum Funding Guarantee Conversely, if application of the NFF formula resulted in an increase of more than 3% per pupil a reduction (cap) has been applied to restrict the maximum increase to 3% per pupil. The DfE have published the notional allocations together with the underlying methodology and calculations and indeed these budgets will as a minimum show a 0.5% per pupil increase in 2018/19 and a further 0.5% in 2019/20. The reason for the DfE calculating individual notional school allocations, is so that they can be aggregated to arrive at the total School Block allocation for each LA. It is then up to each LA to decide (during the transition period only) on the formula they use in 2018/19 to generate actual school budget shares i.e. NFF or local formula. Whichever formula we use - we will do so using the latest pupil data from the October 2017 census and the latest DfE data sets on pupil characteristics (i.e. free school meals etc.) which we expect in December 2017. In using the latest pupil numbers and data sets the cost of funding schools in 2018/19 could end up being in excess of the notified school block allocation (which is based on historic information) because of potential changes in pupil deprivation, low prior attainment, change in growth pupil numbers etc. To remedy this, the DfE have restricted the maximum local MFG protection that LAs can apply to their formula (whether NFF or not) to Nil i.e. 100% protection so that as a minimum a school will have the same per pupil funding as 2017/18. This will then leave some funding within the total school block to fund changes in pupil characteristics. The minimum MFG LAs can apply will continue to be minus 1.5% In summary your final 2018/19 school budget share which we will issue in February 2018 will only be the same as that issued by the DfE in September 2017 if all the following apply: BCC uses the NFF Pupil numbers are unchanged in all BCC schools The profile of pupil characteristics is the same as 2017/18 in all BCC schools A MFG of plus 0.5% is applied The DfE after issuing all the technical and operational guidance have now announced that LAs can apply to seek a local MFG in excess of Nil and up to plus 0.5% i.e. allowing for a minimum per pupil increase of 0.5% compared to the 2017/18 adjusted baseline. This will only be of benefit to LAs that have the funding in their School block to afford this we are unable to determine if will be in this position until the October Census information is available. BCC will however, apply for this flexibility and (if able to) will allocate any additional funding by setting a positive MFG between 0 and +0.5%. Crucially however, unless the DfE agree to individual LA requests for a higher MFG (and the LA can afford it) the default position is a maximum MFG of Nil. National Funding Formula The NFF is made up of 14 formula factors which are listed in Appendix 1 with their unit values (Column A). For comparison the unit factors applied against the formula factors BCC used in its local formula for 2017/18 are also shown in Column B. Key points to note about the NFF: Unit values are set by the DfE and apply across all LAs The data sets that feed each factor will be provided by the DfE (as they are with our local formula) Premises factors will be set at the same amount as in 2017/18 (except for PFI). LAC will no longer be a factor (but we could continue using it in our local formula for 2 years) An Area Cost Adjustment has been introduced to recognise the different costs of employees across the country. Minimum level of per pupil funding for primary and secondary schools. The purpose of this factor is to allow local authorities to provide amounts up to the minimum per pupil funding levels for primary and secondary schools. Continued Application of the Local Formula for 2018/19 and 2019/20 Appendix 2 is an extract from the DfEs Operational Guidance and sets out the factors available to LAs if they wish to continue with a local formula for the transition period. Obviously many of them cross over into the NFF, the only difference being each LA: can decide which factor it wants to employ over and above the compulsory factors can decide (within limits) the unit values to be used The above is subject to consultation with schools and School forum. Benefits of Adopting NFF from 2018/19 to allocate School Budget Shares Avoids having a dual approach of NFF for stage 1 and a different formula for stage 2 otherwise this will be a constant source of confusion & challenge. The NFF (subject to legislation) will potentially apply from 2020/21 for stage 2. Minimise potential transition and financial turbulence by avoiding a cliff edge situation when moving from a local formula with its factors and different values to the NFF in 2020/21 The only concern for the authority on applying the NFF is the Rates formula factor (part of Premises) and the DfEs constraint of restricting the amount to 2017/18 levels. This is highly unrealistic given rates are subject to annual increases and other changes such as revaluations. These concerns were part of our feedback during the consultation phases but to no avail. Leaving rates at 2017/18 values could expose BCC to having to pick up the bill for any increases in 2018/19. For this reason if the NFF is adopted from 2018/19 to allocate school budget shares, BCC would reserve the right to amend the rates value (ONLY) to account for any projected changes. BCC would only be able to do this in the transition phase but will use the period to (in line with other LAs) make further representations to the DfE before the NFF stage 2 is applied nationally. Benefits of maintaining a Local Formula for the Transition Period The only real benefit is one of maintaining continuity and temporarily minimising financial turbulence although the adoption of a Nil MFG rate in will at the very least ensure the funding per pupil is the same as 2017/18. The current MFG rate is minus 1.5% which allows for per pupil funding to reduce year on year by up to 1.5%. Modelling Scenarios 7.1 Macro Position Appendix 3 sets out ےs existing local fair funding formula applied in 2017/18 and the actual amounts allocated. For comparison purposes it sets out (in the shaded columns) what the position would have been if the NFF had been applied in 2017/18. The following table highlights key differences: NFF Formula FactorPercentage that would have been allocated if NFF had been used in 2017/18 %Actual percentage allocated using BCC local formula %AWPU64.570.1Deprivation14.411.9Low Prior attainment7.4 (although actual cash allocated is lower due to lower unit values)5.4EAL2.210.24Lump Sum 110,000150,000LAC00.1 7.2 Individual School Modelling Please note that all modelling is based on 2017/18 data sets and as such the modelled Options 1 and 2 in Appendix 4 is based purely on, no change between 2017/18 and 2018/19. Column (a) sets out the 2017/18 actual notified allocation after application of MFG or cap but before any de delegation Column (b) and (c) set out 2 baseline adjustments in order to arrive at the correct starting position for each school i.e.: Column (b) is recognition of the fact that under the NFF, LAC is no longer a factor and therefore your 2017/18 LAC allocations have been removed to facilitate a like for like comparison. Column (c) is increasing your 2017/18 starting position to recognise that from 2018/19 pupils in resource bases will counted as part of the census numbers for the schools block and therefore you will receive part funding for these pupils through your reception to year 11 formula - the balance of the resource base funding will still be funded separately from the High Needs block i.e. 6,000 The DfE trailed these changes in the consultations last year. Column (d) is your adjusted 2017/18 starting point Column (e) is the budget you would have received in 2017/18 through the NFF without any protection i.e. MFG. Columns (f) and (g) outline the impact of Option 1 which is continuing to apply the BCC local formula (including the LAC factor) but with 100% MFG protection i.e. no loss of funding on a per pupil basis from 2017/18 to 2018/19. Columns (h) and (i) outline the impact of Option 2 i.e. applying the NFF with again 100% MFG protection on a per pupil basis. It in addition allows schools to receive any gains generated by the NFF subject to the 3% per pupil cap Consultation Questions Do you agree that BCC should apply the NFF (Option 2) with the only caveat being rates (as per section 5) for allocating school budget shares from 2018/19. Do you agree that if it is affordable the current MFG rate of minus 1.5% should be replaced by a rate of Nil which will ensure that there is no reduction in per pupil from 2017/18 (based on the adjusted starting position) to 2018/19 Do you agree that if the DfE were to grant our application -and it is affordable- we should adopt a positive MFG rate between 0 and plus 0.5%. Consultation Responses How to respond A consultation form is attached as Appendix 5. This form should be completed and emailed to  HYPERLINK "mailto:fairfunding@birmingham.gov.uk" fairfunding@birmingham.gov.uk Due to the short consultation period only responses emailed to the above mailbox will be accepted. 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