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ITEM EX11 - ANNEX

EXECUTIVE – 6 FEBRUARY 2001

FUNDING OF ATTACHED NURSERY SCHOOLS

Reviewing the Funding of Attached Nursery Schools

A Introduction – What are attached Nursery Schools?

1. There are currently six attached nursery schools in Oxfordshire:

Ambrosden, Five Acres Nursery School

Bicester, Longfields Nursery School

Kidlington, Edward Feild Nursery School

Kidlington, West Kidlington Nursery School

Thame, John Hampden Nursery School

Wheatley Nursery School

2. In day-to-day organisational terms, attached nursery schools are almost identical to nursery classes. The main differences are in the areas of legal status, governance and funding. They are as follows:

Aspect	Nursery Classes	Attached Nursery Schools
Legal Status	Are an integral part of the main primary or special school in which they are located.	Are legally distinct from the primary or special school in which they are located.
Governance	The primary/special school governors are responsible for the nursery class as an integral part of the school.	Have their own separate governing body
Inspection	OFSTED inspects nursery classes along with the rest of the primary/special school	Have their own separately scheduled OFSTED inspections
Headship	The head of the host primary/school is responsible for the nursery class.	The head of the host primary/school is also designated as the Head of the attached nursery school and receives an additional responsibility allowance for this from the LEA.
Budget	Nursery School budgets are formula-driven and delegated to the governors of the school. Governors can vire sums into and out of the nursery budget.	Budgets for attached nursery schools are calculated to cover the actual costs of staffing and resources and are centrally controlled by the LEA. Attached Nursery Schools also have access to certain central LEA Budgets (eg for supply cover, large equipment, furniture, etc.)
Extra Government Funding	Because they are part of the main school, they do not automatically qualify for additional sums of money from central government.	As separate schools in their own right, they qualify automatically for additional government funds (See Section C below).

3. The six attached nursery schools also differ significantly from the 8 free-standing nursery schools in the County. The free-standing nursery schools have their own separate headteacher, premises and caretaking and cleaning staff. They also cater for more children in a session – typically for 40 to 60 children at a time, as opposed to a maximum of 26 children a session in an attached nursery school.
4. The attached nursery schools were all established in the late 1980s and early 1990s. The two main reasons for establishing attached nursery schools on the above model were:

• Speed and convenience –The law currently allows LEAs to establish new nursery schools without publishing statutory notices (however, the recently published Education Bill 2001, contains proposals that will change this). On the other hand, LEAs have always been required to publish statutory proposals to establish a new nursery class.

• Protection of the nursery ‘interest’ – In the early period of nursery expansion in Oxfordshire, County Councillors were keen that nursery schools should have their own separate funding and governing body and that they should be able to maintain their own distinctive identity.

5. Since the early 1990’s, no new attached nursery schools have been created. Indeed, in the period since then, a number of nursery schools have asked the LEA to initiate the process that will allow them to change their legal status to nursery class and to amalgamate with their host primary school. They include: Bicester, Glory Farm (1992); Carterton, Edith Moorhouse (1993); Witney County Primary (1995); Banbury, William Morris (1997) and Henley, Valley Road (1998). More recently, Wantage Nursery School has become a nursery class within the newly opened Wantage Primary School. Consultations have also recently been taking place in Bicester to enable Longfields Nursery School to become an integral part of a 3-11 primary school with Longfields Community Primary School.

B Reasons for the current review

6. The current review of the funding of these schools arises from the Best Value review of Early Years and Childcare provision, which was reported to Committee in February 2001. The Review identified considerable potential for both efficiency gains and efficiency savings within the County’s attached nursery schools.
7. In its analysis of pupil numbers at attached nursery schools, the Review team noted a consistent tendency for these nursery schools to under-recruit in relation to their overall capacity:

Total Capacity of the 6 attached Nursery Schools (half time places)	Total Numbers (half-time equivalent)			Average numbers (hte)*	Average Under-Recruitment (1999 – 2001)
	Jan 1999	Jan 2000	Jan 2001
312 (6x52 places)	261	271	245	259	53
* For individual schools the average number of places occupied over the three year period varies between 35 (Wheatley) to 52 (West Kidlington)

8. Because these six schools are resourced as if they were at full capacity, the consistent under-recruitment over a three-year period represents the equivalent of a whole nursery class of under-used capacity. This in turn represents a notional "overfunding" on these 6 schools of some £50,000 per annum on average over the three years.
9. As a result of these findings, the Review recommended that steps should be taken to introduce pupil-led funding for the attached nursery schools from April 2002.
10. Since the completion of the Best Value Review, discussions have been taking place with the heads and governors of the six attached nursery schools to explore how the introduction of pupil-led funding might be achieved in practice. In the course of these discussions, officers have addressed a number of relevant topics with the heads and governors of the schools concerned. These include:

• The approach to admissions and the ways in which the schools can use the County’s nursery admissions policy in order to fill any empty places. It is understood that as a result the schools have significantly increased their numbers on roll in January 2002.

• The transitional measures that need to be put in place to enable the schools concerned to adjust more easily to new formula-driven budgets.

• The delegation of budgets to the schools themselves and the support that heads and governors would require for this from the LEA.

• The establishment of a single combined governing body for the nursery and the primary school.

11. These discussions have resulted in a set of proposals which have now been fully aired with heads and governors of the five schools most directly concerned. Two of the five schools concerned have expressed strong reservations about the proposals. One other has supported them. The proposals are set out in the next section.

C. Proposals for the funding of Attached Nursery Schools (2002 – 2004)

12. Although organisationally very similar to nursery classes, Attached Nursery Schools are able to call on a much wider range of funding, as the following table shows:

Current sources of funding for nursery classes and schools Nursery Classes The formula-driven budget based on nursery pupil numbers recorded in the January pupil count. – Maximum sum in 2001/02: £49,946. Attached Nursery Schools Historic costs of staffing, including extra allowance for headteacher – Average cost in 2001/02 - £56,757. Capitation Allowance - Average cost in 2001/02: £1,583. Access to central LEA funds for supply cover, furniture and equipment etc – Average cost likely to be in the region of £1000 per school in 2001/02. Access to various devolved sums from central government, including Standards Funds, School Standards Grant, Devolved Capital Funding - Average total devolved funding in 2001/02: £27,502.

13. With the above factors in mind, officers are convinced that there is scope within the current resourcing of attached nursery schools for both efficiency gains and for some efficiency savings. These can be implemented in two phases, with Phase One starting in April 2002 and Phase Two following on in April 2003. Officers recognise that the implementation of the proposals set out below must be sensitive to the potential impact on children and front-line staff as well as on the organisation of the schools as a whole. For that reason it is strongly recommended that the proposals should be phased in over a two year period.
14. For 2002/03, it is proposed that:

• A formula funding approach based on that which the LEA currently uses for nursery classes is introduced to resource the staffing, capitation and equipment needs of the attached nursery schools.

• In the first year (2002/03), the formula should be based on a maximum of 26 children per session multiplied by the nursery/rising-five unit of resource (£1921 per annum in 2001/02).

• In addition, there should be a "small schools" allowance of £4,000 for each school to cover other fixed costs such as supply cover and the additional salary increments of the headteacher.

• Any costs over and above this level must be met by the schools themselves from their government grant funding (excluding the devolved capital grant). The schools will be no longer able to access any central funds from the LEA to meet their normal day-to-day running costs.

• Preparations are made to delegate the funding of these schools to headteachers and governing bodies in 2003/04. This will involve some one-off setting up costs and consideration of the ongoing support needs of the schools concerned particularly for IT and administrative support.

15. For 2003/04 it is proposed that:

• the formula funding of each school should be calculated 5/12 on pupil numbers in the January preceding the financial year and 7/12 for pupil numbers in the subsequent January.
• The "small schools" allowance should remain in place for a second year.
• The school’s formula budget should be delegated to the governing body and the LEA’s financial regulations should be formally amended to allow headteachers and governors to vire sums into and out of the nursery school budget.
• The operation of the new funding arrangements should be reviewed in autumn 2003 so that proposals for any further developments can be made in good time for the start of the following financial year. Particular attention should be given at this stage to the continuation of the small schools allowance for these schools in 2004/05 and beyond.

16. For 2004/05 and beyond it is proposed that the funding of these schools is kept under regular review and that, if necessary, action taken to support the schools in the unlikely event that there should be any significant reduction in the level of direct government grant.
17. These proposals are likely to yield savings estimated at £50,000 in 2002/03 and beyond. About half of these savings will come about as a result of the proposed reduction in the level of operation of Wheatley Nursery School from full-time to half time. It is proposed that these savings are used to fund other high priority items in education policy and budget plans, particularly proposals that are deemed essential to the implementation of the first year action plan of the County’s Education Development Plan in 2002-03.