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ITEM CA7
CABINET
– 7 FEBRUARY 2006
FAIR FUNDING
FORMULA IN SCHOOLS – 2006/07 REVIEW
Report by
Director for Children, Young People & Families
Background
- Under regulations
drawn up under the Schools Standards and Framework Act 1998, we must
consult with all schools on proposed changes to the Fair Funding Formula.
This consultation must be in good time for the start of the new financial
year and any changes agreed by the Cabinet. Additionally, following
the Education Act 2002 we also have to consult the Schools Forum on
all financial matters concerning the ‘Schools Budget’.
- Formula review
has become a more complex area over the past two years due to the introduction
of the Minimum Funding Guarantee (MGF). For 2004/05 and 2005/06 the
guarantee was set at a relatively high level which gave us little headroom
to make formula changes in the context of the overall settlement for
the Schools Budget. The same constraint applies with the introduction
of the Dedicated Schools Grant (DSG) for 2006/07.
- The provisional
local government finance settlement was very much as expected for the
Dedicated Schools Grant. There is a 6.8% per pupil increase over the
2005/06 baseline. The Minimum Funding Guarantee has been set at 4.0%
for primary schools and 3.4% for secondary and special schools. It is
anticipated that sufficient headroom does exist to make the changes
outlined below. However, this cannot be said with 100% certainty until
the data from the January PLASC (Pupil Level Annual Schools Census)
is available and the formula run. The most volatile area of the formula
impacting on the MFG is the Special Needs (SN) Index which is derived
from PLASC.
Areas
of Change Under Consideration for 2006/07
- There are three
elements to the Review for 2006/07. Firstly, there are a number of areas
brought forward by schools and officers which were considered by the
Schools Forum on 14 September 2005. Secondly, there are issues brought
about by the changes to the Financing Regulations drafted in November
2005 and set also as a result of specific funding announced in the provisional
settlement in December 2005. These concern a single pupil count and
allocations for Personalised Learning. Thirdly, arrangements for place
led funding for nursery schools and 75% protection for pupil numbers
in nursery classes from 2004/05 were for two years only. The Executive
in January 2004 asked that these arrangements be reconsidered at this
time.
Areas
considered by Schools Forum
- Ten areas were
initially identified for consideration by the schools forum, of these
it is proposed, following consultation with Cabinet Members, that issues
in respect of Federation, Pupil Mobility and Junior Schools should not
be taken further. The outcome of the forum’s consideration of the remaining
seven issues is set out below. School’s response to this consultation
are summarised in Annex I (download
as .doc file).
Statementing
- This has been
a major piece of work led by Simon Adams, Senior Education for Special
Education Needs and subject to a separate consultation and reporting
process. Cabinet considered arrangements for 2006/07 at its meeting
on 20 December 2005.
Social
Deprivation
- Regulations directed
local authorities to have a Social Deprivation factor in their formulas
for the first time in 2003/04 to target funding towards schools providing
remission of fees for pupils in low income families to go on field trips.
Oxfordshire put £100,000 in its formula at that time and allocated it
through the SN Index. There had nevertheless been funding within the
overall Individual Schools Budget to cover remission of such fees.
- Thinking on social
deprivation funding has changed in the relatively short period of time
since, the focus now being on addressing funding pressures generally
in the more deprived areas of the County, and away from the narrow remission
of fees approach. The Ofsted LEA Inspection in 2004 criticised Oxfordshire
for allocating a relatively small sum to this factor in the formula
and spreading it thinly across all schools.
- There are a small
number of schools across the County where issues of multiple deprivation
put great pressure on their resources. They require additional Teaching
Assistant capacity beyond that provided by individual pupil SEN Support
and have insufficient capacity to manage the greater demands on time
for leadership and management. These schools typically have high turnover
of senior posts and are often seen as underperforming. Indeed, they
constitute the majority of Oxfordshire schools which have been categorised
as having serious weakness or being in Special Measures.
- The discussion
with the Schools Forum explored two options to offer enhanced financial
support to those schools with issues of multiple deprivation. The first
was to divert funding from Age Weighted Pupil Unit (AWPU) resources
into the SN Index. Each 0.25% increase in the SN Index from its current
level of a 6.75% uplift on AWPU funding would require £380k. This approach
had only a marginal impact on those schools in need and created a large
number of winners and losers. The second approach was to utilise the
existing £100k and target it to a smaller number of schools, say only
to those schools with an individual SN Index of 12% or greater and also
add in the first £200k of any headroom.
- Further discussion
on the issue took place outside ahead of consultation with all schools
in November. 30% of the SN Index is based on factors which measure socio
economic deprivation. It would, therefore, be more appropriate to target
resources using this element of the index. Given the relatively small
amount of funding potentially available the targeted number of schools
would need to be small for there to be any impact. If the cut off were
the 4 secondary and 12 primary schools with the highest index of socio
economic deprivation, the secondary schools would receive between £15k
and £43k and the primary schools between £7k and £21k. 10 of the 12
primary schools currently identified are also in the lowest 30 schools
for percentage L4+ attainment at Key Stage 2 for both English and Mathematics.
- There was an unusually
low response to the consultation with schools: less than 10% responded.
Nevertheless 90% of those who responded agreed that the £100k currently
allocated through the SN Index should be allocated through a specific
socio economic deprivation factor and targeted to the 12 primary schools
and 4 secondary schools with the greatest need. Additionally 90% of
schools supported the proposal that the first £200k of headroom for
2006/07 and 2007/08 should be added to the factor. The Schools Forum
on 7 December 2005, supported this proposal. The consultation questionnaire
results can be found in Annex 1 (download
as .doc file).
- More recently
the DfES and the Treasury have published their much awaited joint Review
of Deprivation Funding for Schools. The key issues from the review are
being pulled together in a short paper for future circulation. This
is an area which will need to be revisited for future formula review.
It could be argued that the above proposals do not go far enough.
New Schools
- It was very evident
from the distribution of the Targeted Transitional Grant for both 2004/05
and 2005/06 that funding on new schools warrants some examination. However,
given the extensive list of areas for review and that there are no new
schools proposed in the near future, it was agreed that this piece of
work be put on hold.
- There is an element
of new school funding that is more pressing though and needs addressing
at this time. The SEN Index is dependent on data for three years which
is not, naturally, available for new schools. It is proposed that in
the first year of operation the weighted average of the partnership
or 6.75% (the average SN Index for the County), whichever is the greater,
be used and that in subsequent years the single or two year data would
be uplifted appropriately. 100% of schools responding to the consultation
supported the proposal and the Schools Forum is also in favour.
School
Farm Factor
- There was a funded
school farm factor in Oxfordshire’s formula up until 1992/93. At that
time the factor funded the balance of expenditure after income from
sales, for both Burford and the Warriner Schools, who received £23,200
and £25,600 respectively.
- Warriner has lobbied
for the past two years that this factor be reintroduced but on a new
basis. A sum of £50k is sought to subsidise the running of a number
of agriculturally related courses, which could be available to pupils
from other schools. These courses would support one group for NVQ Level
1 Horticulture, NVQ Level 2 Agriculture, AS and A2 Level Agriculture,
Skills for Working Life and NVQ Level 1 qualifications for pupils ‘at
risk’ and the expansion of GCSE Rural Studies. These would all be subsidised
at 60% at a cost of £37,000. A further £13,000 would enable a new visitor
centre to be completed and further upgrading of farm teaching accommodation.
- 53% of schools
agreed that the factor should be reinstated, but only 30% that £50,000
is an appropriate sum. Two schools commented that the £13k capital element
should be a one off. It could of course be funded from the school’s
own Devolved Formula Capital allocation. The Schools Forum noted that
this factor had been identified as a relatively low priority response
to the questionnaire by schools. However, assuming sufficient headroom
exists an annual sum of £37k will be recommended.
Threshold
Grants
- From 1 April 2005
a number of former grants for pay progression and leadership were combined
into a single specific formula grant - Threshold and Performance Pay
for which we receive a cash allocation at the start of the year. Following
consultation with the Schools Forum in April it was agreed to allocate
the available funds based on payroll headcounts at the start of April,
September and January. The main shortcoming of this approach is that
schools do not know their total funding until late in the year.
- The DfES consultation
on school funding from 2006/07 canvassed a number of options as to how
the mainstreaming of this grant could be handled at school level when
it is subsumed within the DSG, including:
- allocating
through the formula;
- continuing
to identify teachers’ pay grant separately;
- identify
teachers’ pay grant separately initially but phase out over time;
- allow authorities
to decide the best approach in consultation with the Schools Forum.
- Ministers decided
to follow option (iv) which effectively meant that we needed to consult
the Forum over (i) to (iii) during the Autumn.
- 90% of funding
for teachers is currently through the formula including responsibility-led
management points (to be replaced by Teaching & Learning Responsibilities).
It should be possible to fairly distribute the £8.1m for Threshold and
Pay Grant using a combination of fixed cost and AWPU factors. The grant
does not currently meet the full costs of Upper Pay Spine 2 (UPS2),
UPS3 and leadership – the shortfall of £1.4m is already met from school
budget shares. DfES would argue that some of the shortfall has been
mitigated by the freezing of management allowances.
- The allocation
of this £8.1m grant to schools during 2005/06 has not proved to be totally
satisfactory as we have sought to move forward from the overly bureaucratic
DfES arrangements formerly in place. Schools currently receive funding
based on their actions for this area of pay which is in stark contrast
to the general approach of Fair Funding. There were initially counts
of staff at the various points of progression in April, September and
January but additional arrangements have been included to address backdating
of progression.
- Schools were given
a choice of the four options: allocate through the formula using a combination
of fixed and pupil led factors; allocate through the formula using a
specific factor; combine with the existing arrangements; and move from
existing arrangements to allocation through the formula on a phased
basis. 52% of schools responding wished to stay with the existing arrangements,
with 48% wishing for the money to be put through the formula either
for 2006/07 or on a phased basis. Officer preference is to put the funding
through the formula with the Forum preference to retain the existing
arrangements.
- There are two
broad options if the money is to be routed through the Formula, either
using a combination of fixed cost and AWPU funding or using a specific
factor very recently permitted through the Financing Regulations. We
have modelled a number of different approaches using fixed cost and
AWPU and these have all proved unsatisfactory with winners and losers
in the primary sector in excess of £10k and in the secondary sector
in excess of £40k. There appears to be no clear relationship between
schools size or staffing structure and the number of teachers progressing
through the upper pay scales
- There are benefits
in terms of financial planning and management in being able to allocate
all funding when the budget shares are issued in March. The January
PLASC drives the majority of funding. It is worth considering allocating
to the whole of the funding for pay progression as a specific factor
in the Formula by way of a headcount of teachers in January each year.
There would only be some minor winners or losers using such an approach
and, in any case, any losers would be picked up through the MFG. 2005/06
allocations of pay grant would be used as part of the school’s baseline
for the calculation.
- The recommendation
is to go ahead with the specific factor albeit that the Schools Forum
7 December expressed a desire to continue with the current arrangements.
Their vote on the issue was close: 4 to 3 in favour of the current arrangements
after the Chair’s casting vote. A number of the members of the Forum
had abstained.
11–16
Versus 11–18 Funding
- From April 2003
funding of schools’ sixth forms transferred to the Leaning & Skills
Council (LSC). The new allocations to schools with sixth forms were
£1.8m greater than the allocations previously distributed through the
LEA. Whilst funding to 11-16 did not reduce in real terms they nevertheless
felt disadvantaged, and continue to do so. This has not been a common
position across the rest of the country as most authorities had funded
post 16 provision at a lower AWPU than the 11–16 AWPU.
- There is little
that can be done to redress the balance. We have targeted some growth
to KS3 in recent years which has enhanced the 11–16 funding but this
has also been to the benefit of 11–18 schools. One possible solution
is to increase the fixed cost factor for 11–16 schools by transferring
funding from the fixed cost factor for 11–18 schools. There is, however,
no clear logic behind such an approach.
- The LSC allocations
include the full cost of delivering the curriculum and to this extent
fixed costs are double counted. The fixed costs are clawed back from
the budget share allocations for 11–18 schools. The percentage of clawback
has been kept at the original 2003/04 level.
- It is appropriate
to recalculate the clawback percentage and redistribute to KS3 AWPUs,
the area identified by the Needs Led Funding exercise three years ago
as most in need of additional resource.
- Over the past
three years, whilst the overall secondary population has fallen back
there has been growth in sixth form numbers. The clawback percentage
should be recalculated and updated annually. For 2005/06, £600k would
have been available for redistribution.
Special
Schools
- It is the view
of all Special Schools, stated by the Oxfordshire Association of Special
School Heads (OASSH), that overall funding available in the Special
School Individual Schools Budget (ISB) is insufficient. There is also
a view that the total pot is not distributed fairly amongst the 14 Special
Schools. It is also argued that with the increased integration of pupils
with Special Educational Needs into mainstream that Special Schools
are now supporting pupils with higher relative needs.
- Over the summer
data was collected on Special Schools at all of our comparator authorities
(with the exception of West Berkshire where comparison is not valid
because of the small numbers of schools supporting a wide range of children
and Dorset where there was distortion due to a high level of boarded
places).
- At the time of
the discussions with the Schools Forum Officers were still examining
the categorisation of the schools and validating the available data.
This task is now complete.
- Our Special Schools
have been categorised as being: Severe Learning Difficulty (SLD), Emotional
and Behavioural Difficulty (EBD), Moderate Learning Difficulty (MLD)
and Physical Difficulty (PD). These four categories would replace the
existing bands: 3, 4 and 5. The Hospital banding will remain as present.
- Our funding for
schools was then compared against the same categorisation for schools
in our statistical neighbours. We were below average in two areas, MLD
and SLD. To bring our funding up to the same level would require in
the order of £400 to £500 additional per pupil in our MLD schools and
in the order of £300 to £400 in our SLD schools. It should be possible
to meet the cost of this increased funding from a combination of sums
currently held in the Special School Contingency and to a lesser extent
the annual review of Special School planned places. There may be a small
call on available headroom.
Further
Consultation in Respect of Changes to the Finance Regulations and Funding
for Personalised Learning Included in the Provisions Settlement
- The draft Finance
Regulations were published in October. There were a number of issues
which affect the formula but is was too late to consider these as part
of the main formula consultation. The key concern is the imposition
of a single count which has an impact on our compensation/clawback arrangements
and early years and Key Stage 1 funding.
Compensation/Clawback
- We have had these
arrangements in place for four years and the compensation/clawback in
respect of 2005/06 numbers will be honoured for 2006/07. The clawback
arrangements have put pressure on schools with the need to take immediate
action when pupil numbers fall away. The marginally declining population
of Oxfordshire schools wasn’t a feature when this change was made to
the formula.
- We had operated
a retrospective growth factor previously, with abnormal growth in the
September of greater than 2% triggering a retrospective adjustment in
the following financial year. This trigger which had originally been
3% rarely came into operation. In any case, this approach would not
be feasible under the new single count regulations. It is, therefore,
proposed that no alternative to compensation/clawback be put in place
at this time. There will be operational benefits to schools with the
withdrawal of clawback.
Early
Years/KS1
- The single count
has an impact on three areas of early years and KS1 funding: Foundation
Stage Units (Nursery Classes), F1 pupils in Foundation Stage (reception)
and Infant Class Size Funding.
Foundation
Stage Units (Nursery Classes)
- Foundation Stage
Units are currently funded based on three counts in January, April and
September. There is also protection in place at 75% of the designated
places. This protection which was put in place at the time of the introduction
of the single point of admission comes to an end at 31 March 2006.
- There are three
groups of children in Foundation Stage Units: F2s and F3s, F1s of non
school age and F1s of school age. The table below summarises numbers
for each at the three points across the year for 2004/05, a number of
the F1 pupils are in reception classes. At a high level the use of the
January PLASC is appropriate being close to the average pupil numbers
for both F2s and F3s and F1s of non school age. A concession in the
regulations would also enable us to use the Summer 2005 numbers for
F1s of school age. Further analysis, however, identifies a great deal
of variation at individual school level. 9 of the 68 Foundation Stage
Units would lose out between £8k and £12k under such an approach.
|
|
Summer
2004
|
Autumn
2004
|
Spring
2005
|
Average
|
|
F2
and F3
|
2,377
|
1,001
|
1,706
|
1,694
|
|
F1
Non School Age
|
2,549
|
4,729
|
3,531
|
3,603
|
|
F1
School Age
|
3,801
|
-
|
2,159
|
1,986
|
- We have contacted
a number of local authorities to establish how they intend meeting the
requirements of the new regulations to distribute Foundation Stage Unit
funding. To date none have identified a workable solution.
- Under the existing
regulations it is possible to fund Foundation Stage Units (F2 and F3
year groups) on a per class or place basis rather than per pupil. Consideration
of these approaches is necessary, given the constraints of a single
count.
- Funding by class
would be an expensive option and would require an additional £428k over
the £105k currently allocated to deliver the 75% protection. In the
current year 11% of places in the Foundation Stage Units were not filled
and it does feel inequitable to put forward proposals which would actually
fund them. There is, however, a statutory duty to provide places for
3 and 4 year olds and too harsh a financial regime would work against
this objective as well as militate against improvements in quality that
have been achieved for early learning over the past two years. Recent
well documented research demonstrates that investing in quality in the
foundation stage impacts on standards and provides potential savings
to KS3, KS4 and beyond. This has been the primary purpose for implementing
the changes to the admission policy and raising standards of staffing
and accommodation.
- A more equitable
and affordable option would be to fund on a per place basis with a floor
in place to ensure sufficiency of places across the County. Early years
officers would need to agree F2 and F3 planned places for each of our
Foundation Stage Units taking into account uptake for the past two years.
Annex 2 (download as .doc file)
sets out draft designated numbers and provisional places for F2s and
F3s in each of our Foundation Stage Units. This would cost in order
of £200k over and above the current year’s budget.
F1 Foundation
Stage (Reception) Pupils
- The funding has
previously been on the basis of in year counts. Since there is a concession
to allow us to use summer numbers from the preceding year, it is proposed
that we will use both the January PLASC and the preceding summer term
count. This gives very little variation against the previous approach.
Infant
Class Size Funding
- Funding for this
element of the formula is currently based on the January PLASC for the
first five months of the year and a September count for the remaining
seven months. When this factor was first introduced it had been a very
close call whether it was to be based on one or two counts. The move
to a single count will, as do all formula changes, lead to some winners
and losers. The greatest losers will receive reduced funding in the
order of £6k.
Personalised
Learning
- Funding for Personalised
Learning was announced in the White Paper, Higher Standards, Better
Schools for All. Nationally the resources have been targeted in
particular to support children who have fallen behind, the largest increases
going to authorities with low prior attainment and high deprivation.
The DfES expect the £0.937m Primary and £1.144m for KS3 to be allocated
through the formula taking into account prior attainment and relative
levels of deprivation subject to the provisions of the Financing Regulations.
- The new Ofsted
inspection framework does take Contextualised Value Added into account.
However, where absolute standards of attainment are low it is difficult
for schools to influence Ofsted categorisation.
- We consulted earlier
on a social deprivation factor targeting funds to the sixteen schools
in greatest need. In that we would be collecting the data for all schools
it would make sense to use it to allocate the funding for Personalised
Learning. Therefore, it is proposed that the primary money would be
applied to all primary AWPU allocations using the Socio Economic Deprivation
data with the same approach being used for KS3 AWPUs in the Secondary
Sector. For primary and secondary aged pupils in special schools the
additional resources would be applied to the planned place funding.
- There are some
measures of prior attainment, which could also be brought into the formula.
KS1 results (teacher assessments) could be used for primary and KS2
SAT results could be used for secondary, possibly on the basis of the
numbers of young people not achieving Level 4 before entry to secondary
school.
- Schools had until
17 January 2006 to respond to the further consultation on the issues
set out in paragraphs 38 to 53. The analysis of the consultation is
in progress and will be reported to the meeting the recommendations
which follow.
Nursay
Class and Nursary School factors agreed for 2004/05 which were subject
to a two year review
- Two areas of the
Formula were subject to a review after two years of operation: 75% protection
of nursery class pupil numbers due to uncertainty at the time of the
introduction of the single point of admission and the place led funding
of nursery schools as a result of statutory delegation from 1 April
2004.
75% Nursery
Class Protection
- This will cease
and is superseded by the new arrangements set out above which are necessitated
by the revised Finance Regulations.
Place
led Funding of Nursery Schools
- There are 12 LEA
maintained nursery schools in the County, 7 being free standing and
5 being attached to primary schools. The latter share a headteacher
with the primary school but have a separate governing body. The key
arguments for funding these on a place led rather than pupil led basis
are unchanged from the time of delegation. Nursery schools do not have
the flexibility due to their small size to react to any fluctuations
in pupil numbers and would be unlikely to be financially viable if funded
on numbers. In addition, government guidance places nursery schools
at the heart of the development of children’s centres. In Oxfordshire
the free-standing nursery schools continue to face a high level of change
with the expectation of offering year round services to a much wider
age range. The current budgets, therefore, need to remain stable and
secure to ensure effective planning and sustainability.
RECOMMENDATIONS
- The Cabinet is
RECOMMENDED, subject to consideration of outstanding consultation responses
to be reported to the meeting, to agree
(a)
to allocate the current £100k for Social Deprivation using a measure
of socio economic deprivation and target it to the 4 secondary schools
and 12 primary schools having the greatest need.
(b)
to
direct the first £200k of headroom for 2006/07 and 2007/08 to the
Social Deprivation factor.
(c)
to allocate new schools in their first year of operation the SEN Index
at the higher of 6.75% or the partnership average. In subsequent years
the one or two year data should be uplifted appropriately.
(d)
to
reinstate a school farm factor with a value of £37k funded from available
headroom to be updated by inflation annually.
(e)
to
allocate funding for pay grants through the formula based on an annual
headcount of staff at the end of January.
(f)
to
recalculate the Post 16 fixed cost clawback for secondary schools
annually with any resources reallocates to KS3 AWPUs.
(g)
to
bring special school funding into line with our Statistical Neighbours
for 2006/07.
(h)
to
fund F2 and F3 places in nursery classes be on a planned place basis.
(i)
to
fund F1 foundation pupils on a combination of the January PLASC and
the preceding April count.
(j)
to
allocate infant class size funding on the basis of the January PLASC
only.
(k)
to
separately set out funding for Personalised Learning in the formula
and that it be allocated through a combination of socio economic deprivation
and prior attainment data (KS1 teacher assessment for primary and
numbers of pupils not attaining level 4+ at KS2 before entry to secondary
for secondary).
(l) to
continue to fund nursery schools on a place led basis.
KEITH
BARTLEY
Director for
Children, Young People & Families
Background
papers: Consultation responses
Contact
Officer:
Matt Bowmer, Strategic Manager, Finance & Accounting, Children,
Young People & Families Directorate Tel: (01865) 815474
January
2006
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