Agenda item

Claire White introduced the report, which aimed to set out changes to the calculation of the Dedicated Schools Grant (DSG) in 2018/19, and the implications of the changes on the Schools Budget.

Over the last two years the Government had carried out two consultations of their proposals to School and High Needs Funding. The second stage closed on 22^nd March 2017 and the results were published in September 2017. The Government had announced the funding arrangements for 2018/19 and following consultations there were a number of changes to the way the DSG would be calculated for 2018/19.

Claire White reported that there would be a new funding block called the Central Schools Services Block. There was a new formula to calculate the funding allocation for the Schools Block, Central Schools Services Block and High Needs Block. A new formula for calculating the Early Years Block had been introduced in April 2017. Claire White confirmed that rules around moving funding between the blocks had changed.

The actual allocations for 2018/19 would be announced by the Government in mid December however, the allocations for Early Years and High Needs would be provisional and the budgets for these blocks would need to be set using estimates.

Claire White reported that the largest changes would take place within the Schools Block. A ‘soft’ formula would be used for the next two financial years and in 2020 it was anticipated that this would become a ‘hard’ formula with minimal local discretion.

Claire White explained how the Schools Block funding for 2018/19 would be calculated. West Berkshire could expect to receive an additional 1.3% or £1.3m.

Claire White explained that in determining the local authority funding allocation each school would be allocated as a minimum a 0.5% per pupil increase against a baseline, and there would be a 3% per pupil funding cap. Claire White confirmed that the baseline was the 2017/18 formula allocation plus formula funding for the pupil numbers in resource units added back in. Schools with resource units would therefore see a reduction in place funding from £10k to £6k. 

For primary schools, the minimum per pupil funding level in 2018/19 was set at £3,300, and for secondary schools £4,600. All West Berkshire schools would be above this level. There had been some confusion when these amounts were announced as it was presumed by some schools that this would be the basic entitlement.

The allocations for each school were added up and divided by the October 2016 pupil numbers, which produced a Primary Unit of Funding (PUF) and Secondary Unit of Funding (SUF). The final funding allocation would be the October 2017 pupil numbers multiplied by the PUF and SUF.

Regarding growth funding, Claire White reported that the DSG allocation was equal to the 2017/18 local authority budget and would exclude any funding carried forward. The level of funding required would need to be considered when the new school opened in September 2019.

Claire White explained that adjustments would be taking place against the national funding formula, whilst the ‘soft’ formula was in place. The Government had not yet determined how these would work under a ‘hard’ formula.

The Local Authority, in consultation with the Schools’ Forum, would set aside funding required for the growth fund 2018/19. The balance would then be distributed to schools through the formula, by setting the formula funding rates, a minimum funding guarantee and a funding cap on gains. The methods for distributing the funding would need to go out to consultation with all schools and be agreed by the Schools’ Forum in December 2017 and then approved by the Council’s Executive in January 2018.

Through agreement by the Schools’ Forum and subject to consultation with schools up to 0.5% of the total schools block funding could be transferred to the other funding blocks. Approval from the Secretary of State was required for any transfers above this limit or if approval was not received from the Schools’ Forum.

Positively, if pupil numbers and characteristics remained relatively unchanged, West Berkshire would gain from the National Funding Formula by 1.3% (£1.3m) however, the final allocation would be determined by the October 2017 census. Claire White added that whilst there had been concerns that under the new formula half of schools would lose funding, positively more than half of schools would now gain funding whilst the others  would now retain funding.

Claire White explained that it would be impossible for the national formula rates to be replicated in West Berkshire and set out the reasons for this to the Schools’ Forum. The highest the minimum funding guarantee could be set at was 0% because the Department for Education had felt that there might be perverse gains and losses. The additional 0.5% had to be allocated to schools through the formula factors. However, an application could be made to the Secretary of State for Education to increase the minimum funding guarantee up to 0.5% if the Schools’ Forum agreed.

The funding rates (SUF and PUF) had been determined using the October 2016 census data, whereas actual allocation to schools used the October 2017 census. This would create a surplus of shortfall to be adjusted for.

Claire White further explained that business rates were based on historical amounts and there would be an increase the following year. Growth and falling rolls funding were also based on historical amounts and if the estimated requirement for 2018/19 was greater, this would need to be funded.

Claire White concluded that if there was a significant shortfall in high needs funding, then up to 0.5% could be transferred from the schools block allocation.

Claire White concluded that there would be another report later on the agenda, which would provide further details of the proposals for the schools’ formula.

Paul Dick referred to paragraph 5.7 of the report, which detailed an option involving transferring DSG funding from the Early Years and High Needs block in order to balance the Central Services Block. Paul Dick felt that this was an unlikely option as the High Needs Block in particular had historically seen an overspend. Claire White stated that the picture was currently unclear regarding  expenditure in the High Needs Block, and efficiency savings were being sought in central services. A further report would be brought to the Schools’ Forum meeting in December 2017 when more information would be available on this area.

Claire White stated that under the new formula for allocating High Needs funding, West Berkshire would receive less than the current High Needs Block allocation. Positively however, all local authorities would gain a minimum of 0.5% over their baseline.

The table under paragraph 7.7 of the report showed the impact of the new funding for High Needs. In March 2017, it had been agreed that the deficit incurred in 2016/17 would be repaid over a three year period and at this point it had been assumed that there would be a deficit of £75,900 for 2018/19. However, taking into account funding changes it was now anticipated that there would be a surplus of £131,190.  Claire White added the caveat that the High Needs Block was particularly unpredictable.

Reverend Mark Bennett asked how the surplus within the High Needs Block would be prioritised to ensure the outcomes of pupils were taken into account. Ian Pearson stated that firstly they would need to ensure the statutory responsibilities for pupils were being met. There would need to be a longer more strategic view taken on the pressures across the system, concerning need and pupil numbers overtime. The results from a recent survey with parents would also need to be taken into account, which asked them for their views on the services they received. Planned places were an emerging problem that required focus, as the number of planned places was capped and the only option was to move planned places between settings.

Paul Dick stated that he had experienced problems with the survey and was still awaiting a revised version. Ian Pearson confirmed that he would follow this up with Paul Dick outside of the meeting.

RESOLVED that the Schools’ Forum noted the changes, the timetable, and decisions that would be required in the setting of the 2018/19 Schools’ Budget.