Earlier this year, I was speaking with some new headteachers about their experiences of their first year in post, and although there were lots of issues raised – from Ofsted and accountability, to staffing and managing strikes – one of the things they found most baffling was the funding system. Getting your head around “DFC”, “SCA” and “GAG” funding sometimes requires a degree in itself.
Let’s be honest, most people who trained to be teachers are interested in teaching and learning, not school finances!
Funding streams
Most state-funded schools in England are funded through two main funding pots – revenue funding and capital funding. So far, so good.
Revenue funding is used to pay for the day-to-day running costs of a school, such as staff pay, energy bills and teaching materials, whereas capital funding is a separate pot of money used to pay for new school buildings and major improvements to the school estate.
Most of this funding is derived from the numbers of pupils in your school – the per-pupil rate – but the exact amount of funding differs between primary and secondary schools. And, of course, there is a minimum funding guarantee.
And then there are notional budgets, like those for SEND, and payments for Pupil Premium and free school meal entitlements (more later).
Suddenly the waters begin to look less clear.
Lags and delays
The academic year runs from September to August, but schools are not funded for this year, yet. Instead, the funding that is received is based on pupil numbers from the October census the previous year.
So, the schools that the headteachers I spoke with had inherited were following a budget that they themselves had not set, based on figures for children some of whom were no longer even at the school.
This lagged funding is not flexible or reactive enough to be able to meet the needs of our schools – especially those with highly variable numbers of pupils or which support Gypsy, Roma and Traveller communities.
In addition, it is impossible to plan in winter for a staff wage increase that is not announced until late in summer. Sometimes these rises are funded, but usually not, and when salary uplifts are agreed there is a need to make back payments because the implementation date has passed.
Also did you know that if your school is still part of the local authority, then your funding is received at a different time of year to academies? And this is a particular issue when you start a financial year as a local authority school but transition to an academy part way through. And if this academy trust runs their finances on an academic year model, there is even further lag!
Further funding pots
There are some other funding pots, such as Pupil Premium funding and money for universal infant school meals, and high-needs funding that covers specialist SEND, or the “sparsity factor” covering remote and more rural schools, and split-site funding.
These funds may be applied for or received at different times. Some are received relatively quickly once agreed, whereas others are lagged in a similar way to the main DSG (Dedicated Schools Grant).
One of the headteachers I spoke with inherited a school where it was discovered after the October census that in the case of a previously looked-after child, no application had been made for Pupil Premium grant funding, meaning the school will not receive any additional funding until September 2024 – two years after the discovery – while continuing all the while to provide for the needs of the child in their care.
Crystal ball-gazing
Of course, receiving the funding is just one part of the story. Even though we have only just begun the new academic year, the calendar year end is fast approaching, with the financial year end hot on its heels.
Budget preparation for next year will already be underway in the majority of schools. And since schools are not allowed a deficit budget, choices have to be made to determine how much things will cost in the future.
This crystal-ball gazing needs to include the outcome of any energy bill increases, staff wage uplifts and other resource costs – which over the past 12 months have been sizeable. The energy bills in some schools have risen by 300%, which is not something anyone in education could have foreseen.
In most schools, staffing will account for between 70-80% of outgoings and, as budgets get tighter, it is often the obvious place to look to make savings.
We know that the lack of government funding for support staff pay uplifts, and only partial funding for teacher pay rises puts additional strain on budgets, with schools not replacing staff who leave or employing an increasing number of early career teachers.
The new national funding formula (NFF) was announced just prior to the summer break (DfE, 2023). In particular it continues the transition to a direct funding formula model for local authority schools, with approximately two-thirds of all local authorities now following the NFF allocations.
Meanwhile, more and more MATs are “GAG pooling”, meaning that they withhold General Annual Grant funding from one academy in their trust to pass it on to another…
Put all of this together, and we have a system that is rapidly becoming unworkable and confusing.
Helen Osgood is national officer for education and early years with Community Union.
Further information & resources
- DfE: Policy paper: National funding formula for schools and high needs, July 2023: https://tinyurl.com/45ud2kcd