School Budget Planning Framework 2014/2015

David May Strategic Finance Manager Karen AtkinsPrincipal Finance Officer

Budget Planning Framework

• School Funding Settlement– Funding Blocks– MFG– Pupil Premium– Education Services Grant

• School Funding Reform– Schools Block– Early Years – High Needs Block

• Schools Funding Formula

• Timeframe

School Funding Settlement

• School Funding Settlement announced on 18th December 2013

• New funding arrangements were introduced from April 2013 for all schools and academies.

• Continuation of the “spend-plus” methodology for 2014/2015

• First stage of introducing a national funding formula in the next spending review period.

Dedicated Schools Grant - Funding Blocks

  2013/2014 DSG 2014/2015 DSG

Dedicated Schools Grant Pupil

No’s

GUF 2013 / 2014

Total Pupil No’s

GUF 2014 / 2015

Total

  £ £m £ £m

Early Years 2,520 5,116 16.034 2,447 5,116 17.035

Schools Block 35,073 4,536 159.145 34,804 4,536 157.548

High Needs Block     21.172   22.569

Total 37,593   196.351 37,251   197.152

Dedicated Schools Grant - Schools Block

2013/14 2014/15 ChangeCash

Increase

Pupil Numbers 35,073 34,804 (269)Guaranteed Unit of Funding £4,535.95 £4,535.95 0.000

Total 159.091 157.870 (1.221) -0.93%

NQT Funding 0.054 0.053 (0.001)

CRC Reduction   (0.375) (0.375)  

Total 159.145 157.548 (1.441) -0.90%

Dedicated Schools Grant - Schools Block

Key Issues•Changes in Pupil Numbers

– Primary + 371– Secondary - 682– Decrease - 311

•No protection for falling rolls•CRC reduction is greater than the 2013/14 budget

School Funding Settlement – Minimum Funding Guarantee (MFG)

• The Minimum Funding Guarantee for schools will continue to reduce turbulence as new local formulas are introduced.

• The guarantee is set at minus 1.5% per pupil for 2013-14 and 2014-15. The level for subsequent years will be announced when spending plans for that period have been decided.

This means that:• No school will see more than a 1.5% per pupil reduction in

2014/2015 budgets (excluding sixth form funding) compared to 2013/2014 and before the Pupil Premium is added

Pupil Premium 2014/2015

• Pupil Premium rates for disadvantaged pupils are: – Primary £1,300– Secondary £935– Looked after Children £1,900 *– Service Children £300

* Looked after for one day or more, and including children who have been adopted from care or leave care under a special guardianship or residence order – now referred to as “Pupil Premium Plus”

Seeking clarification as to when increase will apply

Pupil Premium 2014/2015

• Pupil Premium is calculated using the January 2014 school census data, final allocations will not be confirmed until Summer 2014

• The Pupil Premium is only paid to those children registered to claim free school meals.

• DfE will hold schools accountable by:– New measures to be captured in performance tables– Requiring schools to publish online how they have used the

Pupil Premium

• Indicative allocations will be calculated by the Local Authority and distributed to schools along with School Budgets in February.

Education Services Grant (ESG)

• New grant introduced in 2013/14• The ESG is allocated to local authorities and academies on a

simple per-pupil basis according to the number of pupils for whom they are responsible.

• The funding for the ESG came from a transfer from local government of £1.04 billion in 2013-14. Sunderland’s reduction in funding was £5.4m.

• Transitional protection for academies will apply in 2013/14 and 2014/15.

• Local Authority ESG allocation is revised quarterly to reflect Schools converting to Academies.

• Final ESG allocations for academies will be issued by 31st March 2014 along with confirmation of the academy’s 2014/15 General Annual Grant.

Education Services Grant

Statutory Functions

Statutory Duties

2013/14

Statutory Duties

2014/15

Local Authority £15 £116 £113

Academies N/a  £150 £140

Special Academies N/a £637.50 £595

Alternative Provision Academies N/a  £562.50 £525

For special schools and alternative provisions, multipliers of 4.25 and 3.75 will be applied respectively (£424 and £481). ESG allocations will be calculated using 2013-14 planned places.

Transitional protections for academies will be removed from the system over a limited period of time so that the rates for local authorities and academies are brought together

School Funding Reform 2013-15 - Overview

• From 2013/2014 a simple, more consistent and transparent funding system was introduced that– ensures as much funding reaches schools as possible;– provides equivalent and consistent funding between maintained

schools and Academies; and– supports the needs of pupils.

• Simplification of local formulae is a major change to how school budgets are calculated and the first substantive step towards a national funding formula

• Key priority that the schools budgets are driven more by pupil in the schools and their needs than by other factors

• Funding can only be distributed based on 13 factors and using data provided by the DfE - No flexibility;

School Funding Reform– Allowable factors

Funding can only be distributed based on 13 factors, 9 of which apply to Sunderland:

1. A basic per-pupil entitlement;

2. Deprivation measured by FSM and/or IDACI;

3. Prior Attainment

4. Looked after children;

5. English as an additional language (EAL) for 3 years only;

6. A standard lump sum for each school up to £200k;

7. Rates;

8. Private finance initiative (PFI) contracts; and,

9. Exceptional Circumstance for Amalgamated Schools

Schools & Early Years Finance Regulations

• Legislative framework that brings together all the changes in the School Funding Reform

• Local Funding Formula must be compliant with the Finance Regulations

• School Forum approval required for central schools and early years block items

• Education Funding Agency validate local funding formula to ensure compliance

Reconciliation of Schools Block Allocation

Total Indicative Schools Block DSG 157,870,596

CRC Reduction (375,277)

NQT Funding 52,751

Revised 157,548,070

Add Transfer from High Needs Block: 1,918,097

Less Transfer to Early Years Block (249,573)

Revised Schools Block 159,216,594

Centrally Retained Schools Block Funded Services:

(654,302)

Total Individual Schools Budget 158,562,292

Transfer from the High Needs Block

• Work was undertaken as part of 2013/14 to determine the impact of changes to the way statements are funded from within the schools block and high needs block.

• Existing statements were examined to quantify the value of top up required within the High Needs Block and the funding to be transferred from the High Needs Block into the Schools funding to contribute to the first £6,000 to be paid by schools

• £1,918,097 is to be transferred to the schools block.

Central Services retained by the LA

2013/2014 2014/2015

School Admissions £203,676 £164,000

Growth Fund £0 £100,660

Schools Forum £44,642 £44,642

Termination of employment costs £245,000 £245,000

Carbon Reduction £320,000 £0

Licences £100,000 £100,000

Total £913,318 £654,302

Central Services retained by the LA

• School Admissions – Review of School Admissions arrangements– Significant increase in number of Online Applications– Reduction in cost as a result

• School Growth Fund – LA - needs to ensure sufficiency of school places– Local authorities may centrally retain funding to create a

growth fund to support schools which are required to provide extra places in order to meet basic need within the authority

– Growth fund will only be available if agreed by the LA and based on specific criteria

Central Services retained by the LA

• Termination of employment costs – Ongoing historic commitment agreed by the Schools Forum

of £245,000– Local Authority responsible for redundancy costs for

maintained schools. – A business case will be required from each school that will

require the approval of the Strategic Finance Manager

• Carbon reduction commitment– No longer applies to Schools & Academies– Cost Neutral to the Exchequer therefore reduced from DSG

Central Services retained by the LA

A single national licence has been agreed with the following agencies to be managed by the DfE for all state-funded schools in England: •Copyright Licensing Agency (CLA) •Music Publishers Association (MPA) •Newspaper Licensing Authority (NLA) •Education Recording Agency (ERA) •Motion Picture Licensing Company (MPLC), and •Filmbank Distributors Ltd. (for the PVSL)

These arrangements will cover recoupment Academies as well as maintained schools, and the LA will hold this money centrally rather than include it in school budgets.

Reconciliation of Early Years Block

PupilsUnit of

Funding Total

Early Years 2,447 5116.04 12,518,950Funding for 2 year olds from lower income households 4,516,000

Revised 17,034,950

Transfer from Schools Block 249,573

Total Early Years Block 17,284,523

Early Years Funding Block - Provisional

2014/15

3 & 4 Year old Offer £10.807m

2 Year Old Offer £4.516m

Commissioned Childcare £1.278m

Childcare Team & Locality Based Working £0.683m

Total £17.284m

Early Years Block – Next Steps

• Awaiting results of January census to complete indicative budgets for issue in February 2014

• Funding will include where relevant estimated allocations for 2 year old based on a funding rate per pupil per hour of £4.84

• Funding is responsive to In Year adjustment to reflect change in pupil numbers

• June 14 - Early Years Block Updated by DfE for January 2014 Early Years pupil numbers

• April 15 - Early Years Block Updated by DfE for January 2015 Early Years pupil numbers (7/12 adj – Sept 14 – Mar 15)

• EYSFF review 2014 to be implemented from April 15

EYSFF Review

• Current formula is no longer affordable• Current formula reflects previous funding streams

and initiatives to develop the market• Funding needs to follow the child not the setting• Needs to be responsive to changes in participation• Is it to simple to have a Flat Rate + Deprivation• Consultation Period 20th January – 28th February• Report to Schools Forum 27th March• Implementation September 2014 or April 2015

Reconciliation of High Needs Block

Total Indicative High Needs Block £22.569m

Less Transfer to Schools Block: £1.918m

Revised High Needs Block Total £20.651m

High Needs Block

• LA submission 23rd December 2013• EFA to confirm High Need Block Allocation for 2014-

15 by 31st March 2014• Place numbers and budget estimates for top ups to

be completed based on latest number and cost of high need pupils and students.

• Updates will be provided at each meeting of the Schools Forum

DSG - Summary

• Turbulence and Risk with the new System• Brought Forward 2012/2013 Underspend of £0.320m• 2013/14 – Key Issues – 3&4 year old and HNB• 2014/15 – Key Risks – 3&4 year old and HNB• Need to use any Unused DSG from 2012/13 and

2013/14 to manage the risk

Free school lunch for every child in infant school

• Headline information released• New Money confirmed• Need the detail to understand funding implications• What value to be received per Meal• Potential financial implication• Impact and implication will defer based on the

individual profile of each school

Workforce Transformation Project

• Briefing sessions being held 16th – 21st January• Involves the

– Implement of new pay and grading structures– Review of Terms and Conditions

• All Council employees except Teachers• Equal Pay Claims• Ensure that moving forward all are “fit for purpose”• Potential financial impact at individual school level

Schools Funding Formula2014/2015

Impact Analysis

Karen Atkins – Principal Finance Officer

Sunderland Formula Return

• Factor• Description• Funding Rate• Pupil Units• Factor Funding• Summary Total• Proportion of ISB (PRE MFG)• Percentage applied for Notional SEN

Key Aspects of Return

• Total ISB £158.562m • Funding for Schools Block before MFG £157.659m• MFG requirement is £1.206m with £0.303 funded via

scaling back all gains above 4.27% • Additional lump sum for amalgamated schools (14)• Pupil Led factors represent 88.56% • Primary Secondary Ratio is 1:1.29• Funding distributed via the basic entitlement factor is

77.14%• In addition £0.101m Growth Fund yet to be allocated

Schools & Academies Formula Factors

• Funding Factor• Status• 2013-14 basis of allocation• 2014-14 basis of allocation• Funding Rates for 2014-15• Funding Rates for 2013-14

Formula Analysis & Comparison 2013/14 to 2014/15

• Factor• Pupil Data Comparison

– Oct 12 data used in 2013-14 budgets– Oct 12 data updated for the new 2014/2015 datasets– Oct 13 data published in Dec 2013– Variation between Oct 13 and Dec 13 Data

• Funding 2013/14 & 2014/15• Percentage of ISB allocated to the factor

Factor Comparison 2013/14 & 2014/15

Factor2013-14

£m % ISB2014-15

£m % ISB

Variation +/(-)£m

Basic Entitlement £122.5 76.6 £121.5 76.7 (£1.0)

Deprivation £14.3 8.9 £14.4 9.1 £0.1

Looked After Children £0.1 0.1 £0.1 0.1 £0.0

EAL £0.7 0.4 £0.8 0.5 £0.1

Prior Attainment £2.5 1.6 £2.8 1.7 £0.3

Mobility £0.2 0.1 £0.0 0.0 (£0.2)

Lump Sums £14.9 9.3 £14.7 9.3 (£0.2)

Rates £3.0 1.9 £2.5 1.6 (£0.5)

PFI £0.6 0.4 £0.7 0.4 £0.1

MFG £1.2 0.8 £1.0 0.6 (£0.2)

Exceptional Circumstances £0.0 0.0 £0.1 0.8 £0.1

Formula Data - Comparison Chart

Prior Attainment Factor• Primary

– 2013/14 based on those pupils with 73 units or less on the EYFSP

– The primary indicator changed for 2014-15 and be based on those pupils who failed to achieve a good level of development. The new dataset will apply for the cohort of pupils in the 2013 assessments as a proportion of the total number of Y1 pupils.

– For older year groups the 2013-14 previous data measure will apply as a proportion of the remaining pupils in Y2-6

• Secondary– Indicator is be based on those pupils not achieving level 4 in

English or Maths at KS2. In 2013/2014 the indicator was based on English and Maths

• Analysis provided of the differences in funding and data between 2013/14 and 2015/16

PFI Factor

• Proposals to change the method used to calculate the lump sum and to seek EFA approval to exclude the PFI factor from the calculation of a school or academies MFG

• SF agreed to proposed change in method of calculating the lump sum. This has resulted in an increase of £0.118m in the PFI factor from £0.568m to £0.687m in cash terms.

• EFA has given approval for the increase in the lump sum to be excluded from the calculation of the MFG. This only applies where a school is in MFG and where the lump sum increase has arisen as a result of falling rolls.

MFG Calculation• 2013/2014 School Budget Share less:

– Lump Sum 2013/14– Rates 2013/14– Equals MFG School Budget Share – Divide by 2013/14 pupils numbers– Equals MFG funding per pupil

• 2014/2015 Schools Budget Share less:– Lump Sum 2014/15– Rates 2014/15– Approved MFG Exceptions 2014/15– Divide by 2014/15 pupil numbers– Equals MFG funding per pupil

• Percentage change in MFG funding per pupil less 1.5% = MFG adjustment value (%)• MFG Funding = MFG Adjustment Value x 2013/14 funding per pupil x 2014/15 pupil

numbers

Summary Report• Pupil Numbers have been adjusted for high need places• 2014/15 formula as published• MFG Adjustment +ve = protection (-ve) = capping• Change in budget will reflect decreases in rates budgets for

schools that have converted to an academy and now attract 80% mandatory relief

• % change is based on cash change between 2013/14 and 2014/2015

• Impact without MFG ProtectionNo of

Schools Gain / (Loss) % Gain / (Loss)

Analysis - PrimaryMaximum Gain 62 214,659 19.6%Maximum Loss 19 (112,859) (13.3%)

Analysis - SecondaryMaximum Gain 1 4,583 0.1%Maximum Loss 16 (628,714) (16.1%)

School Funding Reform 2013-15 - Timetable

Jan 21st

Jan 23rd

LAs submit final pro-forma to EFA

School Funding Briefing Sessions

W/c Feb 24th

School Funding Statements issued to schools

Mar 27th School Forum Meeting to discussEarly Years Consultation

Summary

• Understanding– Hopefully this has increased understanding and knowledge

of the impact of the funding system– However it is complex and whilst we try to simplify it will

always come back to the detail

• Confidence– Open and transparent approach allows you to have

confidence in the process

Contact Details

• David May: 0191 561-1826– E-mail: David.May@sunderland.gov.uk

• Karen Atkins: 0191 561-1412– E-mail: Karen.Atkins@sunderland.gov.uk

• Annette Parr: 07768507410 – E-mail: Annette.Parr@sunderland.gov.uk