Are schools on the brink of a financial crisis?

Written by: Suzanne O’Connell | Published:
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The results of the second consultation are out. But the proposed new funding formula is only part of the problem. Suzanne O’Connell looks at how school leaders responded and what some of the key factors are in the plans for the future funding of our schools

Published by the Department for Education (DfE) in September were two documents with important implications for the future of our schools: Analysis of and Response to the Schools National Funding Formula Consultation and The National Funding Formula for Schools and High Needs.

We have now reached the next stage in the government’s plans to change the way in which schools are funded.

Consultation responses could be described as “mixed” at best. In answer to the first question – “In designing our National Funding Formula, we have taken careful steps to balance the principles of fairness and stability.

Do you think we have struck the right balance?” – 93 per cent of respondents answered “no”.

The DfE interpreted this negative response as an indication of schools’ concerns about the overall amount of funding available rather than the details of the new proposals. They could be right.

There is certainly huge concern among headteachers and governing boards about short and long-term funding.
Neil Beeson is finance officer for LEARNERs’ Trust in Sheffield. He told Headteacher Update: “Schools have been faced with tough decisions in recent years. Support staff and resources have been reduced, and in some cases different ages and key stages have been mixed to reduce teacher levels.”

The National Association of Head Teachers (NAHT) is putting its weight behind a campaign to secure a bigger chunk of the Autumn Budget when it is unveiled by the Chancellor on November 22 with the claim that school funding is, in fact, in crisis. Whether all schools are losers or not, there will be some who are set to lose a lot more than others (for more on school funding from the NAHT’s president Anne Lyons, see her commentary for Headteacher Update here).

In answer to most of the questions they were asked in the consultation, it is clear that schools come from very different starting points on how they should be funded. Whether you are a small, rural primary or a large city secondary school means that the impact, and consequently your opinions, are likely to be different.

The National Funding Formula

The new-look formula, which is to be phased in from April 2018, is made up of four building blocks.

  • Block A: Basic per-pupil funding will account for 73 per cent of the schools block. This will be ring-fenced and will attract £2,747 for primary, £3,863 for key stage 3, and £4,386 for key stage 4.
  • Block B: Additional needs factors will be used to allocate 18 per cent of the funding and will incorporate deprivation factors for pupils on free school meals (including Ever6 FSM) and an area-based deprivation factor.
  • Block C: School-led factors represent the remaining nine per cent of the allocation and include a fixed lumped sum of £110,000 for every school.
  • Block D: Area cost adjustment funding will reflect the variation in labour market costs in different regions.
  • Additional needs

One key area of contention in the consultation was whether the weight of funding should be school-led or pupil-led.

The DfE is favouring the heavy use of pupil-led funding, a position that many of our schools are concerned about.

Some respondents indicated that they would prefer more money to be spent on the overall core schools budget rather than pupil-led funding, which includes both basic per-pupil funding and funding for pupils with additional needs.

Some respondents indicated concern that schools with disadvantaged intakes might be funded twice for their vulnerable pupils. Schools perhaps who feel that they already miss out on Pupil Premium money are worried that they are going to receive less from the pupil-led factors too.

However, the DfE is committed to maintaining both the Pupil Premium funding and the additional needs funding and points out that the latter covers a far wider spectrum of need including SEND. Deprivation is only a subset of additional needs. There may well be proxy factors that mean that the same children attract money for different reasons and schools in non-deprived areas are sensitive to the impact this might have on them.

This concern was reflected in the response statistics. Forty-four per cent of respondents wanted to see a lower proportion allocated to additional needs. The government does not agree: “We do not accept that this approach results in ‘double funding’ of deprivation. The sums allocated through the National Funding Formula effectively maintain existing local authority investment in additional needs and have been set with the funding provided through the Pupil Premium in mind.”

Concerns were also raised about the use of Low Prior Attainment (LPA) to allocate funding. Some schools suggested that this could cause problems in the relationships between primary and secondary schools, for example, that improvements in results in primary schools could reduce secondary school allocations. Use of LPA is also vulnerable to changes in national assessments.

However, the DfE is convinced of its importance and an additional £1,050 a year will follow pupils who do not achieve the expected level in the Early Years Foundation Stage Profile and £1,550 a year will be available for secondary schools where pupils do not reach the expected level at the end of key stage 2.

Primary versus secondary

There is no good news for primary schools when it comes to redressing the balance between the two sectors either. The arguments for more funding for the primary sector focus on their importance in relation to early intervention and as the foundation for secondary education. Secondary schools argue for more money for the wider range of facilities they must provide.

However, the DfE prefers to maintain the current differential more or less as it is. Fairer funding it may be billed as but this will not extend to removing the historic differences between the primary and secondary sectors. Primary pupils will attract basic per-pupil funding of £2,747, key stage 3 pupils £3,863, and key stage 4 pupils £4,386.

In a bid to protect schools where pupils do not attract as much funding via additional needs factors, there is an additional factor in the formula, which will provide a minimum per-pupil funding level over the next two years. For secondary schools this will be £4,800 in 2019/20 with a transitional amount of £4,600 in 2018/19, and for primary schools this will be £3,500 in 2019/20 with a transitional amount of £3,300 in 2018/19.

The National Education Union has announced that primary schools are set to be hit harder than secondary schools following the funding changes. The NEU reported that primary pupils will attract five per cent less cash in real terms by 2020 in comparison to four per cent for secondary schools. Both statistics will cause even more concern to those already struggling to make ends meet (see the joint-union funding campaign website: https://schoolcuts.org.uk)

Not enough in the pot

The way schools responded to the consultation is fuelled by their anxiety. The NAHT is campaigning for what they call the “full and fair investment in education” and has submitted a document to the Treasury explaining why school funding is in crisis. It argues that cumulative cost pressures from pay rises, increased pension and National Insurance contributions, and inflation mean that schools are struggling to survive.

The NEU held a lobby of Parliament to show its concerns on October 24. Kevin Courtney, joint general secretary, has argued that there must be new money put into the system rather than taking it from other areas of education. He said the government was “making unrealistic assumptions about ‘efficiency savings’ which hard-pressed schools cannot achieve”.

At the same time, schools are being expected to provide more. Many must now buy-in more services themselves as local authority services have reduced or disappeared. This includes interventions to support vulnerable pupils that were perhaps provided before by health and social care. Many schools are now providing counselling and therapy of one kind and another – all this comes at a cost.

Surveys run by the NAHT have indicated the dire straits that many schools find themselves in. Their autumn 2016 survey suggested that 18 per cent of schools were in deficit, an increase of 10 per cent from the previous survey in autumn 2015. In 2016, 71 per cent of schools reported that they had only balanced their books by making cuts or using reserves. An unsustainable situation.

Even those on the winning side of budget reform will not be celebrating yet: “The caps on how much you gain in one year will be too low to assist the poorly funded schools,” suggests Mr Beeson. “These schools have been battling rising staffing costs and increases in expenditure for a number of years with the same level of funding each year.”

However well-crafted or not this much-needed reform is, it is unlikely to make much difference to the current financial difficulties that schools are facing. It looks like no amount of juggling factors will appease those trying to deliver a higher standard with less.

  • Suzanne O’Connell is a freelance education writer and a former primary school headteacher.

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