Agenda item

a)    Joint Report of the Corporate Director Resources and the Interim Corporate Director of Children and Young People’s Services

b)    Presentation by Finance Manager Education Services

The Committee considered the joint report of the Corporate Director Resources and the Interim Corporate Director of Children and Young Peoples Services that provided the Committee with an overview of the Government’s proposals for a National Formula for School Funding, which was published on 14 December 2016 and is subject to consultation (for copy of report, see file of minutes).

Members received a presentation from the Head of Financial and Human Resources Services that focused on the following:-

·       The Context of School Funding Reforms

·       Early Years Block

·       High Needs Block

·       Schools Block

·       Next Steps

The Government had consulted on the Early Years Block and all nursery schools were now funded at the same universal rate and would be protected until 2019/2020 with any proposals for change occurring in the next parliament.

The universal changes implemented had not been too bad for County Durham nursery provision which had received £3.1 million for the Early Years Block.

The Head of Financial and Human Resources Services continued to advise members on the High Needs Block funding which is currently out for consultation. Funding for high needs is largely based on historic allocations dating back to 2012/13 and the government intends to replace this with a national funding formula from April 2018, which will take account of relative need, measured by factors including deprivation and disability.

Stage 1 of the consultation made proposals on factors for use in the National Funding Formula, these had now been agreed and the second stage of the consultation was proposing the relative weighting to be applied to each of the factors that would determine funding allocations from 2018/19.

The majority of funding would continue to be distributed to local authorities and the formula would be based on population aged 2-18; low attainment; health and disability; deprivation and basic per pupil entitlement. Durham County Council has got all these factors in place currently.

Calculations using the new proposed formula would lead to Durham County Council receiving £1.3 million more funding. This would suggest that historically County Durham had been underfunded in High Needs. There was transitional protection, however the actual impact in 2018/19 was still uncertain at this stage.

The Government was proposing that mainstream funding for both primary and secondary schools were done through the proposed National Funding Formula (NFF) from 2019/2020. However, 2018/2019 would be a transitional year, there would be a NFF in place, but it would be used to determine overall School Block allocations to each local authority. Therefore the Council would still need to determine a local formula in 2018/19.

Stage one of the consultation considered the 13 factors to be included in the NFF and these had been confirmed as:

•         Basic per pupil funding;

•         Additional Needs Funding

•         School Led Funding; and

•         Area Cost Adjustment

These factors are nationally driven and the Local Authority has no control.

Stage 2 of the consultation focused on the relative weightings applied to factors and directing more funding on pupil led factors. The Government was proposing a basic per pupil funding of 72.5% this would increase funding in County Durham which was currently 70%. Additional needs funding includes deprivation – 9.3% (this is currently 12% in County Durham); low prior attainment - 7.5% (this is currently 2% in County Durham) therefore the weightings equal out overall.

School led funding included a lump sum of 7.1%; sparsity – 0.08%; Premises 1.8% and growth 0.5%. There were significant reductions in the lump sums schools will receive. County Durham has many small rural schools and the sparsity element does not compensate for the reduction in the lump sum. Area cost adjustment does not apply outside of South East England.

There would be transitional protection arrangements that provide per pupil increases up to 3% in 2018/19 and 2.5% 2019/20. A local formula would be used in 2018/19 this is a soft formula and a national formula in 2019/20 known as a hard formula. However, the Government had asked local authorities to move to a soft formula after 2019/20 to help them to introduce the changes. The Council’s Cabinet and School Forum would be asked for a decision in relation to this question.

The same formula would be applied to academies and maintained schools, there were currently working groups from the Schools Forum forming the response to the consultation.

The consultation responses to High Needs and Schools National Formula consultation are due by 22 March 2017.

Councillor Gunn referred to the impact the new formula would have on nurseries which could result in potential closures as they would no longer be financially viable.

The Head of Financial and Human Resources Services responded that if the government removed the protection it could cause severe financial difficulties and they would need to look at other models.

Councillor Hall indicated that some organisations had started charging differently for meals and asked were maintained schools funded differently to Private, Voluntary and Independent schools. The Head of Financial and Human Resources Services responded that under the new formula all schools were funded the same.

Councillor Stradling asked if Committee Members could be provided with a copy of the proposals which would be sent to schools. Members were advised that this would be sent electronically to all Members of the Committee.

Councillor Gunn sought clarification if there would be an advantage for the authority if they moved to a soft funding formula and how labour costs would affect schools in the North East as free schools and academies could set their own pay rates. There were a number of Members who were on governing bodies who could encourage schools to respond to the consultation, if information was provided to all county councillors.

The Head of Financial and Human Resources Services responded that the government had indicated that the national formula was about being fair and transparent and they encouraged authorities to move to the soft formula. The local formula had been built up over a number of years and moving to the soft formula from a hard formula would bring forward the turbulence. The needs of schools can change year on year therefore we have to look at the least worst option causing the least amount of turbulence. There were opposing views as some schools would get more funding under the national formula but there was over half that would have a reduction under the national formula.

Schools would have their own views as any adjustments could benefit a school but disadvantage another.

Members discussed the viability of new small schools and the implications for current small schools and how the new funding would have a major impact on them.

The Head of Financial and Human Resources Services advised Members that the rurality/sparsity factor would feature in Durham County Council’s response to the consultation.

The Chairman sought clarification if the state of school buildings was factored into the new formula. The Head of Financial and Human Resources Services responded that this funding was separate.

Councillor Nicholls asked about attracting teachers to work in rural schools and if the area cost adjuster was not considered in these instances and was advised that the cost adjuster could not be used and was only applicable to schools in the South East of England.

Councillor Gunn referred to the report and that faith schools would lose some funding and was the Diocese aware of this. The Head of Financial and Human Resources Services responded that the Diocese was aware of this and under the new formula they would lose money due to the size of the school and pupil needs.

Mrs Swift who is a Head Teacher of a school referred to the impact of the reductions and a £8,000 reduction could result in the loss of a Teaching Assistant and there was little that could do done without it having an impact on the school.

The Head of Financial and Human Resources Services advised that schools would not welcome the soft funding if they would lose; it was only schools that benefitted from the national formula who would welcome this.

The Chairman thanked The Head of Financial and Human Resources Services for a very informative presentation and asked if he could come back to a future meeting following the consultation results.

Resolved: That the report be noted.