1. Schools Forum School Funding and Finance December 2014

2. Contents Financial Context –Corporate –Children’s Services Children’s Services – Statutory Responsibilities –Funding sources and regulations School Funding Formula Schools Forum responsibilities Schools delegated responsibilities Financial challenges

3. 2014/15 Gross Expenditure - £1.9bn

4. 2014/15 Funding Sources – including schools

5. 2014/15 Funding Sources – excluding schools

6. County Councils' Formula Grant Per Head Upper Tier Funding Per Head 2014/15

8. Transforming the Council - Savings

9. Children’s Services – Savings (Non-schools) 2010/11 - £4.8m in-year 2011/12 - £18.8m (incl £3.5m pressures) (8% plus passported grant reductions) 2012/13 - £10.4m (8% balance) 2013/14 - £2.3m (2%) 2014/15 - £6.3m (EIG reduction) 2015/16 - £19.3m (12%) By 2017 - £20.5m (14.5%)

10. 10 2009/102010/11¹2011/12²2012/13³2013/14³2014/15³ Schools£796.8m£805.2m£812.6m£821.1m£851.8m£882.9m Non- Schools£164.5m£169.5m£172.9m£166.6m£160.9m£162.4m ¹ 2010/11 – Extended schools re-classified from schools to non schools £3.5m. NB In-year ABG reduction of £4.9m (non schools) ² 2011/12 – Net Adjustment of grants reclassification - £19.9m from schools to non-schools. £15.3m pressure non-schools. Schools ‘headroom’ £7.9m ³ Schools figures for 2012/13, 2013/14, 2014/15 include academy recoupment - £107.6m, £145.5m, £157.3m respectively Schools and Non Schools Budgets 2009/10 – 2014/15

11. 11 Schools 2014/15 Original Budget £000 Dedicated Schools Grant (DSG) Early Years Block High Needs block Schools block 60,659 88,985 700,233 848,888 Less funding for Academies(157,276) Sub-total691,612 Less items managed by Policy and Resources(6,684) Pupil Premium Grant39,406 Music Grant1,283 Total schools budget managed by Children’s Services 725,817

12. 12 Children’s Services Budget 2014/15 Cash Limit £000 Forecast Outturn Period 7 £000 Variance £000 / % Schools735,878732,791(3,087) 0.4% Non-schools166,399172,3465,947 (3.6%) Total902,277905,1372,860 0.3%

13. 13 Children’s Services Capital Capital programme Role of the local authority to strategically plan capital investment 3 year programme (2014/15 to 2016/17) £238m (over 40 projects) –8,000 new primary school places across Hampshire –New designed schools – 2 storeys, reduced floor area, constructing in batches Priority areas : –maintenance of existing buildings –Education centres –Special Education Needs –Children’s Homes –Infant Free School Meals

14. 14 Children’s Services Capital Devolved formula capital (DFC) DfE grant – calculation set nationally DFC is calculated for all maintained mainstream nursery, primary and secondary schools, special schools, pupil referral units (PRUs), academies, sixth form colleges and non- maintained special schools Paid to schools for local capital projects £3.4m in 2014/15

15. Children’s Services – Statutory responsibilities Director of Children’s Services –Children Act 2004 –performance of local authority functions relating to the education and social care of children and young people. –ensuring that effective systems are in place for discharging these functions, including where a local authority has commissioned any services from another provider rather than delivering them itself. –leadership, strategy and effectiveness of local authority children’s services. –securing the provision of services which address the needs of all children and young people, including the most disadvantaged and vulnerable, and their families and carers.

16. LA statutory services to schools Defined in regulations, includes: –School improvement –Access to education e.g. place planning, admissions –home to school transport (including SEN) –education psychology, identification and assessment of children with high needs –Making and monitoring of statements –commissioning and monitoring of high needs provision –prosecution of parents for non-attendance –education other than at school including virtual school –Strategic management e.g. role of the DCS, budget preparation, financial assurance, internal audit etc. –Data linkage between LA and schools

17. Regulations The School and Early Years Finance (England) Regulations Children Act 2004 Assorted Education Acts School Standards and Framework Act 1998 Education and Inspections Act 2006 Apprenticeships, Skills, Children and Learning Act 2009

18. How schools are funded Spend only permitted in line with Schools and Early Years Finance Regulations Funded through: –Dedicated schools grant –Additional funding to schools through the Pupil Premium and other specific grants

19. Dedicated Schools Grant Ring-fenced grant that consists of 3 notional blocks: –Schools –Early Years –High Needs Funding can be: –Delegated (funding directly to schools through the formula) –De-delegated ( funding passed back from schools to be held centrally) –Centrally held (funding top sliced from DSG before the formula is allocated)

20. Pupil premium 2015/16 PrimarySecondary Ever 6 FSM£1,320 (+£20 incr from 2014/15) £935 Service Family (Ever 4)£300 Looked after children (LAC) £1,900 Post Looked after children (Post LAC) £1,900 Early Years – 53p per hour, £300 per child (New in April 2015) Additional grant passported directly to schools to raise the attainment of disadvantaged pupils and close the gap between them and their peers.

21. 21 Education Services Grant Un-ringfenced grant paid to local authorities and academies Includes school improvement, therapy/health, statutory and regulatory services, education welfare, asset management etc Nationally set rates for schools and academies Recognises local authority retained responsibilities for academy pupils (educ welfare, asset mgt, stat/reg duties) Protection for academy budgets

22. 22 Education Services Grant Per pupil allocations for LA and Academies : –2014/15 = £113 –2015/16 = £87 PRUs x 3.75, Special x 4.25 Academies protection set to reduce over time LA retained responsibilities - £15 per pupil Total funding 2014/15 - £18.6m

23. Education Services Grant DfE recognises: Significant limitations with data Different interpretations of Section 251 guidance Time lag (budget/spend) No separation of retained duties from spend on maintained schools Reporting errors Arguably the analysis is a means to an end in justifying a significant grant reduction 23

24. How the funding flow works

25. 25 School Funding Formula Fundamental reform implemented April 2013 Pupil driven budgets – DfE aim to maximise delegation to schools 80% of funding must be allocated via the pupil-led factors Sets formula for all schools and academies in LA area 14 allowable factors in schools block Principles established and agreed with Schools Forum –Protection of small schools through lump sum –Minimise turbulence in funding –Cost of protection for changes to individual schools budgets met through reduction in funding to schools gaining from the changes –Distribution of overall funds between the primary, secondary and special phases to remain unchanged –The total amounts allocated overall to each factor remain broadly in line with those in the current formula Extensive modelling and consultations with schools

26. School funding Funding is allocated and published to each school by a “budget share”. Funding to individual schools is calculated based on allowable factors set by the DfE Values and factors used locally determined and agreed with Schools Forum The schools budget share allocation is available by 28 February. Protection for reductions in pupil level funding through Minimum Funding Guarantee (MFG)

27. Budget share factors Compulsory HampshireIOW 1.Age Weighted Pupil Unit 2.Deprivation/IDACI Optional pupil-led factors 3.Prior attainment 4.Looked after children 5.English as an additional language 6.Pupil mobility Optional other 7.Sparsity 8.Lump sum 9.Split site costs. 10.Rates 11.Private Finance initiative (PFI) n/an/a 12.London fringen/an/a 13.Post 16 14.Exceptional premises factor

28. Budget share allocations Hampshire schools and academies School TypeNumber of Schools (maintained) Number of schools (academy) Number of Pupils (Oct 13) Total Budget Shares 2014/15 £m Nursery3-169£1,643 Primary4151298,943£377,537 Secondary403065,296£311,384 Special2332,484 (places)£32,201 Education centres61524£8,150 Total48746167,416£730,915

29. De-delegation options 2014/15 Allocated through the formula but de-delegated back for maintained mainstream schools : Hampshire IOW –Contingencies –behaviour support services –Support to under performing ethnic groups –free school meals eligibility –insurance –museum and library services –licences and subscriptions –staff costs (trade union, public duties).

30. Centrally held 2014/15 Central services (no increase in expenditure from 2013/14) –Admissions –Servicing of schools forum Centrally retained (no increase in expenditure from 2013/14 and no new commitments) –CERA –Combined budgets –Termination of employment costs –Prudential borrowing –SEN transport Centrally retained (retained before allocating formula) –Growth fund (Infant Class Size, growing schools, falling rolls) –Fees for independent schools for non-SEN pupils

31. Current policies Limited local discretion through agreed policies: Growth fund –Growing schools –Infant class size –Falling rolls –Temporary classrooms Contingency 3% Cap on statemented spend Split site

32. High Needs top-up funding Paid to schools and academies by LA Statement top-up funding in excess of £6,000 (12.7 hour of LSA support) 3% Cap on statemented spend Hampshire pupils in Other local authority schools – paid at OLA rate OLA pupils in Hampshire schools – school invoice OLA

33. Special schools, Resourced provisions, Education centres Place plus model introduced April 2013 Agreed Place numbers (APN) at the beginning of the year – fixed element £10,000 (national rate) Top-up funding set locally Top-up funding follows the pupil in real time Top-up funding based on need and characteristics of the pupil Allocations made termly Academies paid monthly for cash flow OLA top up SLA

34. SEN funding matrix

35. Early Years funding Providers funded via the Early years Single Funding formula (EYSFF) 3 and 4 year olds Hampshire IOW Base rate £3.81 £3.60 Additional supplements : –Flexibility –Quality –Deprivation Additional payments for - LAC - SEN 2 year olds –Funding from Department for Education - £5.07 per hour –No additional supplements – already includes an element of deprivation –Additional payments for SEN –Rate paid to provider £5.07 £4.90

36. Schools Forum responsibilities Membership –Representatives from maintained and academy schools together make up at least two thirds of the membership –School Members will be headteachers (or their representative) and governors – local authority discretion on proportionality (50/50) –Representatives from early years, 16-19 and the diocese –Local authority can appoint if no election or tie (schools, academies, 16-19)

37. Schools Forum responsibilities Governance –National guidance requires: 4 meetings per annum – minimum Must be public meetings Speaking rights limited Quoracy (Two fifths of total membership, allowing for vacancies) –Local terms of reference provides: Terms of office Process for electing chair (cannot be elected member or council officer) DfE role –Approval of MFG exclusions –Adjudication where Schools Forum does not agree LA proposals

38. Schools Forum responsibilities Generally a consultative role but some decision making powers: FunctionRole of Forum Formula changeMust be consulted ContractsGives a view High Needs and Early Years financial matters Gives a view De-delegationPrimary and secondary maintained school members will decide for their phase Central spendDecides Changes to the Scheme of Financial Management Approves

39. Schools delegated responsibilities Headteachers and governors have maximum freedom to determine spending priorities. Schools are responsible for producing their own budgets within the total resources available and monitor the income and expenditure against those budgets. The budget share should not be seen as dictating the amounts that schools can spend on individual headings except for rates/rents.

40. Schools financial controls Controls apply only to maintained schools Scheme for Financing Schools –DfE statutory guidance states what the scheme must, should or may include –financial relationship between the local authority and maintained schools –Agreed at schools forum following consultation with all schools Internal audit –Part of Corporate Resources –provide quality internal services to schools –Most school reviews are risk assessed as low –Mainly focus on thematic or cross-cutting review – outcomes communicated –Any school assessed other than low risk will have an ad-hoc visit

41. Schools financial controls (cont) Schools financial value standard (SFVS) –Mandatory self evaluation questionnaire driven by DfE –Governors have formal responsibility for financial mgmt of their school –23 annual questions governors must discuss with headteachers and senior staff –Completed and submitted to the local authority by 31 March each year

42. School expenditure 2013/14 EXPENDITURE£m% Teaching Staff 343,60349.4 Non Teaching Staff 172,98224.9 Supplies & Services 90,62913.0 Premises 52,0037.5 Support Services 32,1574.6 Transport 2,2250.3 Third Party Payments 2,1820.3 Total695,781100

43. Financial challenges National funding formula. Academies and free schools DSG flat cash / inflationary pressures Changes in demographics –Impact of falling number on roll –Growth in primary pupil numbers Cuts to local authority funding Early Years – increasing take-up of 2 year old entitlement High Needs – increased statements, INMSS

44. Acronyms ABG – Area Based Grant AP – Alternative Provision AWPU – Age Weighted Pupil Unit DFC – Devolved Formula Capital DfE – Department for Education DSG – Dedicated Schools Grant EAL – English as an Additional Language EFA – Education Funding Agency EIG – Early Intervention Grant ESG – Education Services Grant EYSFF – Early Years Single Funding Formula EMTAS - Ethnic Minority and Traveller Achievement Service FSM – Free School Meals HCC – Hampshire County Council IDACI – Income Deprivation Affecting Children Index INMSS – Independent, Non-Maintained Special Schools LA – Local Authority LAC – Looked After Children LSA – Learning Support Assistant MFG – Minimum Funding Guarantee PRU – Pupil Referral Unit (Education Centre) SEN – Special Educational Needs