Decision details

Item 6a – 2016/17 Budget – Schools budget and funding formula

Ian Harrison (IH) introduced the paper published in advance, summarising the main points which dealt with the Barnet schools funding formula and arrangements for SEN and alternative provision (AP).  He recapped the general funding principles and the limitations imposed by the minimum funding guarantee (MFG) capping system.  Early years is not covered since it was felt better to wait until the government reports on the results of its consultation on the funding  of provision for 3 and 4 year olds and delivery of 30 hours childcare for working parents.

The funding formula for mainstream schools and academies is required to be reviewed each year.  As part of this Barnet looked at schools struggling financially to see if they could be helped by a change in the formula but  there seems to be no way to help all or even most of these schools because the Minimum Funding Guarantee and the cap on gains mean only some schools struggling financially can be helped and even then others might be worse off.  The overriding considerations are that the overall funding cannot increase as the government has frozen the funding rate per pupil, and that any increase must be sustainable over the coming years when pressures on the growth fund will increase.  Three options have been proposed for consultation with all schools:

1.       No change in the formula

2.       A change in the capping method to allow schools to retain 20% of the value of gains

3.       An increase in the AWPU of £10 and capping to retain 15% of gains.

The council wishes to hear schools views on the proposals and is open to other ideas which could be modelled.

Carol Beckman (CB) further explained the effect of the MFG and capping system within which we must work, using the schematic diagrams below.

This chart illustrates the variation between schools’ funding per pupil before 2013/14 (red dotted line) and afterwards when a new formula had to be introduced under new government principles (blue solid line).  Schools below the minimum funding guarantee (-1½% -lower orange line parallel with the dotted line) receive top-up funding (green shading).  Schools gaining more than +½% (green line parallel and above the dotted line) lose all funding above that (red shaded area).  Schools fall into 5 categories as below. 

In 2015/16, 8 schools neither gained nor lost, 15 gained but were not capped (blue) and 20 lost but were not topped up (green).  28 schools lost but were protected by the minimum funding guarantee (purple), the highest top-up of which was over £950K.  43 schools gained but were capped (red), the highest cap being nearly £400K.

It is not possible to improve the position of the schools on the MFG unless they are very near the threshold.  These schools are on a downward trend in funding per pupil year on year, but it will take very many years before they reach the ‘correct’ funding level.  Schools on the cap are gaining a small amount per year but will remain capped for a long time.  However Options 2 and 3 as proposed would help some of these schools, especially those capped at a very high level.  Schools in the middle will experience small gains or losses depending on the option applied.

Members of the Forum then discussed the proposals.

Nigel Taylor (NT) queried whether pupils in schools subject to the cap could complain on grounds of the morality of withholding money.  IH replied that this would be an issue for the DfE which sets the regulations.

Kate Webster (KW) suggested that some schools are now being double funded because they are protected by the MFG because they formerly had high standards funds grants, and are now receiving substantial grants through the Pupil Premium, and in these cases would it be possible to redress the balance.  IH said the MFG prevents this.

Keith Nason (KN) wondered if the amount a school is capped could be recorded and the school compensated in future years.  CB said there was no provision in the regulations for this at present.

Simon Horne (SH) who had attended the working group earlier in the week praised the published paper and said that it was clear that current funding is based on historical levels and the council is trying to be as fair as possible to all schools.  However for secondary schools the external pressures such as increasing oncosts and pay awards and reducing 6^th form funding are causing problems.

Elizabeth Pearson (EP) (another member of the working group) noted that of the 15 or more possible scenarios that had been modelled, most cost a lot more money which the council simply does not have.

KW queried why the academies might not receive the amount shown in the illustrations.  IH explained that the amount recouped for academies from Barnet, may be different from what is paid by the Education Funding Agency (EFA) to the academy, depending on the individual funding agreement.

KW agreed with SH’s comments about the effect of external pressures and said she was concerned that a national funding formula would disadvantage London schools.  She asked whether Barnet will be lobbying the government to increase funding, as MPs in Hertfordshire are doing.  She asked Barnet councillors and MPs to make it clear that Barnet, with historically high outcomes for children, cannot be expected to continue to deliver the same level of achievement without additional resources.  This would mean that the key factor of good and outstanding schools attracting people to live in Barnet would be undermined.

Gilbert Knight (GK) queried whether 6^th forms will shortly become unviable, and KW said that initially the breadth of offer is likely to reduce because minority subjects with small group sizes will be uneconomic.  She also felt that too many new 6^th form places were being opened when there are not the students to fill them, although she recognised that a 6^th form makes teacher recruitment easier.

Marc Lewis (ML) commented that he believed that the government wants schools to spend up their reserves.  A recent poll of 70 academies suggested that 50% expect to be in deficit next year and 90% in 4 years’ time.  However most have reserves to draw on to balance their budgets.  He also felt that the government wants to force collaboration between 6^th forms, but that there are barriers to collaboration in Barnet, because we have so many good and outstanding schools.    Finally he noted that the government is pressuring academies into Multi Academy Trusts (MATs) with the aim of there being no standalone academies by 2020.  The aim is to achieve financial economies with a flatter management structure as well as shared IT and back office services.  Keith Nason (KN) backed this up by mentioning the government’s power to close schools.

IH said that among maintained schools, total balances were down by £2m and he expected them to be lower at the end of 15/16.  ML commented some schools are looking to draw more on parental donations.

SH said he felt the papers provided to the Schools Forum and the exemplifications were clear and did not need change.  Nigel Taylor (NT) asked about the procedure for consultation, and the meeting was told that councillors will comment at the Children, Education, Libraries and Safeguarding (CELS) committee meeting next week.  They could either decide to consult on one option or recommend consultation on the three options with all schools during September and October.  The result of the consultation would be given to the Schools Forum in October and a final decision made by the council by 31^st October when we have to report our provisional formula to the EFA.   Anonymising data in the consultation would not be appropriate, particularly given the information is already in the public domain.

The meeting voted unanimously to recommend that the council consult schools on the three options (13 members, no abstentions).

Item 6b – 2014/15 End of year maintained school balances

IH introduced the annual report on balances held by all the LA maintained schools as at 31 March 2015.  Last year he had written to those with particularly high figures and some of these have now reduced.  He proposes to write again to those which had a balance of over 20% of budget share in March 2015 or have had over 15% for 3 years. 

There were various questions about schools which have closed due to mergers or converted to academies which showed apparently anomalous figures usually due to the time taken to finally close accounts after the school closed.

GK said it did not show schools holding money for big projects not yet completed.  IH said it would be very difficult to collect this data from all schools.

NT asked when the council last clawed back balances from schools.  NA said this had never happened because, when there was a clawback clause in the Scheme for Financing Schools, no school when investigated qualified for a clawback.  The clawback clause has now been removed.

The meeting voted unanimously in favour of IH writing to schools with high balances as suggested. (13 members, no abstentions).