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School funding reforms

The government is considering its response to two recent consultations, one on school funding as a whole and another focusing specifically on academy funding for the academic year 2012-13. Education lawyers Hannah Bramhall and Katie Michelon consider the proposals and how they will impact on the funding received by schools and academies

Why is the school funding system being reviewed?
The recent initial consultation on school funding reform is the first step in the coalition government's attempts to overhaul the school funding system.

The White Paper The Importance of Teaching highlighted several key problems with the current school funding system.

  • Funds are not distributed fairly or logically. There is a huge variation between the funding per pupil in comparable schools, ranging from £4,000 to over £5,500.
  • The system is not transparent and it is unresponsive - the amount received by schools depends on what they have received in the past, rather than what the pupils need now.
  • Resources are not directed to those who need them most.

Overall, the government's view is that the current funding system is ‘opaque, full of anomalies and unfair' and, as a result, in need of reform.

What are the key characteristics of the new school funding system?
In the school funding consultation document, the government set out the key characteristics of an ideal funding system.

  • It would distribute money in a fair and logical way, ie schools in similar circumstances with similar intakes would receive similar levels of funding. This is designed to remove the wide variations in funding received across maintained schools.
  • It would distribute extra resources to pupils who need them most. This has primarily been implemented following the introduction of the Pupil Premium, which targets extra money at deprived children. The government believes this extra funding will assist schools in providing additional support to these children, helping them to reach their potential.
  • It would be transparent and easy for parents to understand and explain. Parents would be able to see clearly why their child's school is funded at a certain level and how much money is being invested in their child's education. Such transparency would also assist with schools' long-term budgeting forecasts.
  • It would support a diverse range of school provision, and would provide value for money and ensure proper use of public funds. The government believes that the school funding system needs to ensure that this represents good value for money, that funds are directed where they are needed, and that they are spent appropriately.

How does the government intend to implement these changes?
The introduction of the Pupil Premium is the government's first step towards a fair funding system.

In 2011-12 the premium will be set at £430 per disadvantaged child. This is aimed at ensuring that all deprived pupils have the same level of funding for their education, regardless of where they live in the country.

The government also wants to move away from local authority funding for schools and towards a national fair funding formula applied by central government. This funding formula would be applicable to all schools and would remove the local inconsistencies of the current funding system.

The fair funding formula is very much in its infancy, with the consultation paper suggesting various options. However, it seems likely that the system will be based on a basic per pupil amount for all pupils.

Why is there a separate consultation on academy funding?
A consultation on academy funding for the academic year 2012-13 ran alongside the government's wider consultation on school funding.

This consultation was launched to account for the fact that the more radical reforms may not be in place by 2012-13. The government believes there is a strong case for making interim changes to the way academies are funded in advance of changes to the rest of the sector.

Currently, academies receive a General Annual Grant, which is made up of the Local Authority Central Spend Equivalent Grant (LACSEG) and the funding equivalent that would have been provided through the local authority's funding formula. The system seeks to mirror the local school funding formulae, but this is seen as unnecessarily complicated.

Furthermore, as more schools convert to academy status, some local authorities will eventually have no need of a formula for their secondary schools, so there will be no formula to replicate. This is also true of the LACSEG.

What are the proposals for academies?
The government has identified three main options for funding academies in 2012-13.

  1. Roll forward: the government proposes to ensure that per pupil amounts are kept level, rolling forward the per pupil share figures from the previous year. This would make funding more predictable.
  2. A fair funding formula for academies only: this would mean one single formula and a move away from comparable maintained schools. As a result, the government would not be able to meet their current commitment that schools do not gain any financial advantage, or any financial disadvantage, following conversion.
  3. Local authority-based calculations: this would require local authorities to calculate academy budgets using formulae they already hold. Academies would therefore continue to be reliant on local authority formulae and decisions.

When will the proposals come into force?
Both consultations have now closed and it is anticipated that the government will publish its response shortly.

It is likely that any changes to academy funding will be implemented in the academic year 2012-13. However, the more wide-ranging proposals will probably not be in place until 2013-14.