School Funding Formula and how the Dedicated Schools

Grant (DSG) is allocated

Ian Hamilton, School Budgets & PVI Manager

Overview and IntroductionThe aim of today is to broaden your understanding on how DSG funding is allocated to schools

DSG funding is initially allocated by the Education Funding Agency (EFA) to the Local Authority (LA) and then the LA allocates it to schools

DSG funding is allocated in two ways -through formula factors or named pupil funding (high needs), the latter we are not covering today

DSG funding allocated to schools through formula factors is known as the schools block

Both LAs and Schools are funded on the October census count for the financial year April to March

For an Academy the count date is the same (October Census) but financial year is September to August

Overview and Introduction -continued

EFA notify the LAs of its DSG in December - this is based on the total number of pupils aged 5 to 16 years, recorded on the October census (includes all academies and free schools in the LA)

Kent’s DSG per pupil is £4,363 – This is LA specific and the national funding range is £4,151 to £7,007, the mean average is £4,612

Flat Cash DSG - The DSG has been frozen since 2010-11(5 years to date), the governments intention is to continua flat cash for the duration of the parliament, another 5 years

The DSG received from the EFA is then allocated using a local formula, funding targeted at the pupil need within the school

There are 14 allowable factors determined by the EFA, therefore LAs have some local discretion, emphasis of funding is pupil led

Overview and Introduction -continued

Schools’ Funding Forum (SFF) and Members determine the factors to be used in the formula

LAs submit school budget calculation to EFA around the 20 January – this is checked by the EFA and early in February LAs receive confirmation that the calculation complies with finance regulations

EFA take back funding for academies and free schools (recoupment)

Schools budgets issued on the last working day of February for the period April to March.

Factors used to distribute DSG funding in Kent’s local formula

Funding is for the period April to March and in general is based on the October census count

The number of funded pupils will be the number of pupils on roll at the October census less any pupils in a Specialist Resource Provision (SRP)

Important to note it is a formula that targets funding and it is at the schools discretion how this funding is best utilised. The school has a responsibility to achieve the best outcome for its cohort of pupils

Factor 1 (Basic Entitlement) Age Weighted Pupil Unit (AWPU) – Mandatory factor

77.3% of DSG is allocated through this factor.

What is funding targeted at – general running costs of the school, Headteacher, classroom teacher etc. Long history of how this factor has been built up- examples include an element for teachers pay grant and premises.

Indicator - Number of pupils on roll taken from the October census

Rate

Primary – Year R to Year 6 - £2,740

Secondary KS3 – Year 7 to Year 9 - £3,807

Secondary KS4 – Year 10 to Year 11 - £4,173

Year R uplift.

Increase in Year R pupils between October and January census.

Calculation for funding year 2015-16 – Pupils Year R – 2014 January census less pupils Year R 2013 October census- always one year behind

Factor 2 – Deprivation – Mandatory factor

LAs may choose to use free school meals (FSM) and/or the Income Deprivation Affecting Children Index (IDACI). Free school meals can be measured either at the previous October census or “ever 6” – the number of pupils entitled to free meals at any time in the last 6 years – but not both. Kent use FSM (October census) and IDACI

FSM

1.09% of DSG is allocated through this factor

What is funding targeted at – if a pupil is eligible for a FSM the school has a statutory requirement to provide a meal for that pupil, this factor is a contribution towards the cost of the FSM

Indicator - Number of FSM pupils on roll taken from the October census.

Rates

Primary – £359 per pupil

Secondary - £334 per pupil

 

Factor 2 – Deprivation (continued)

IDACI

4.09% of DSG is allocated through this factor

It is a notional SEN factor

What is funding targeted at – Primarily social need and Special Education Needs (SEN)

Indicator – IDACI score based on pupils post code. Each pupil will be placed in one of the six funded bands, band six being the most deprived. The number of pupils in each band will then be shown as a % of the number of pupils on roll at the October census.

Rates

Band1 Band 2 Band 3 Band 4 Band 5 Band 6

Primary £415 £435 £468 £515 £566 £708

Secondary £447 £469 £504 £554 £610 £763

Factor 3 – Looked after Children (LAC)- Optional factor

0.08% of DSG is allocated through this factor

It is a notional SEN factor

What is funding targeted at – LAC

Indicator – No. of LAC children at 31 March recorded on LA SSDA903 return. This data is then mapped to the number of pupils on roll at January census. The % is then multiplied by the number of pupils on roll at the October census

Rate

Primary and Secondary - £525 per pupil

Factor 4 English as Additional Language (EAL) – Optional factor

1.45% of DSG is allocated through this factor

It is a notional SEN factor

What is funding targeted at – Children where English is not their first language. The aim is to target the funding in the early stages of education for the first three years. LA can target for 1,2 or 3 years

Indicator – No. of children recorded on the October census where English is not their first language

Rate

Primary – £885 per pupil

Secondary - £3,344 per pupil

Factor 6 Low cost high incidence SEN – Optional factor

4.40 % of DSG is allocated through this factor

It is a notional SEN factor

What is funding targeted at – for children with low level SEN, the rational is that in general pupils with SEN have low Prior Attainment (PA) scores

Indicator

Primary – October census – taken from Early Years Foundation Stage Profile (EYFSP) - No. of children in Year groups 1 & 2 identified as not achieving the expected level of development and No. of children in Year groups 3 to 6 who have a point score of below 78

Secondary – October census – No. of pupils not reaching level 4 at KS2 in either Maths or English

Rate

Primary – £749 per pupil

Secondary - £863 per pupil

Factor 7 Lump Sum– Optional factor

8.18 % of DSG is allocated through this factor

Part of lump sum is notional SEN (Primary £6,235 and Secondary £5,580)

What is funding targeted at – Primarily included for small primary schools in the recognition that there are some core cost that relate to all schools

Indicator – One lump per school no matter how many pupils

Rate - Primary and Secondary - £120,000 per school

Factor 9 – London Fringe –Optional factor

0.20 % of DSG is allocated through this factor

What is funding targeted at - The purpose of this factor is to support schools which have to pay higher teacher salaries because they are in the London fringe area

 

Indicator – Only applies to schools in Dartford and Sevenoaks

 

Rate - 1.56 % times factors 1 to 7

Factor 11 Non-domestic rates (NDR) – Optional factor

1.30 % of DSG is allocated through this factor

What is funding targeted at – Actual cost of NDR

Indicator – actual cost

Factor 12 Private Finance Initiative (PFI) – Optional factor

1.00 % of DSG is allocated through this factor

What is funding targeted at – Additional cost of PFI contract attributed to school that is above the normal contribution made by a school for premises related activities

Indicator – actual cost of contract

Notional SEN

Factor 2 – IDACI

Factor 3 – LAC

Factor 4 – EAL

Factor 6 – Low cost high incidence SEN – PA

Factor 7 – Part of the Lump sum (Primary £6,235 and Secondary £5,580)

Definition – Funding targeted at low level SEN pupils

Minimum Funding Guarantee (MFG)

Why do we have a MFG?

To provide schools with a level of stability from year to year.

Since 2011-12 the MFG has been set at minus 1.5% or at 98.5 % of the previous years funding

Important to note, not based on the total budget from the previous year, but on average pupil funding less exempt items (lump sum and NDR).

MFG - continued

Funding

A 2014/15 Formula Budget £587,443

Less

B 2014-15 NDR £8,917

C 2014-15 Lump Sum £121,876

D SEN Baseline Adjustment £10,525

E Total exempt items £141,318 (B+C+D)

F MFG Baseline £446,126 (A-E)

G October 2013 Pupil Numbers 127

H MFG per pupil £3,513 (F/G)

I 1.5% of MFG per pupil £53 (H x 1.5%)

J MFG per pupil less 1.5% £3,460 (H-I)

K October 2014 Pupil Numbers 145

L MFG Excluding Exempt Items £501,716 (K x J)

MFG - continued

Plus

M 2014-15 NDR £9,121

N 2014-15 Lump Sum £121,876

O Total exempt items £130,997 (M+N)

P MFG £632,713 (L+O)

Q Formula budget 2015-16 £610,000

R Schools will receive greater MFG or Formula £632,713 Greater P or Q

S MFG £22,713 (R - Q)

T Final Allocation £632,713 R

Estimating future years funding

We use the MFG to estimate future years funding

Why do we use the MFG and why not use a different method for calculating the funding ?

Reasons why we use MFG

For many years we have only been given a one year funding settlement, therefore can not say with certainty what the future holds

No increase to DSG so unlikely to see material increase to funding

Any changes would likely be subject to the MFG

It is a simple methodology to understand and is prudent

Estimating future years funding -continued

When estimating future years income we need to understand what the MFG is telling us

This is best done at a school level, as business managers have local knowledge and need to understand the application of the MFG

When should a school apply the MFG and when should the school not apply the MFG?

This is best demonstrated using a set of examples

Example A

Example 1 – MFG or Formula ?

Year 1

A Formula £900,000

B MFG £100,000

C Total Budget £1,000,000

Year 2 - estimate

E MFG Budget X 98.5% £985,000 (C X 98.5 %)

F Formula Year 2 £900,000

G MFG £85,000

H £985,000Greater E or F

Example B

Example 2 – MFG or formula

Year 1

A Formula £1,000,000

B MFG £0

C Total Budget £1,000,000

Year 2 - estimate

E MFG Budget X 98.5% £985,000 (C X 98.5 %)

F Formula Year 2 £1,000,000

G MFG

H £1,000,000 Greater E or F

Example C

Example 3 – MFG or formula

Year 1

A Formula excluding EAL £950,000

B EAL (final 3rd year) £50,000

C MFG £0

D Total Budget £1,000,000

Year 2 - estimate

E MFG Budget X 98.5% £985,000 (C X 98.5 %)

F Formula Year 2 (no EAL funding) £950,000

G MFG £35,000

H £985,000Greater E or F

Any Questions