Download A More Progressive Formula?

Fairer Funding for Schools?
by Martin Johnson
Research Fellow, IPPR
Institute for Public Policy Research
30-32 Southampton Street London WC2E 7RA
tel 0207 470 6100 fax 0207 470 6111
[email protected]
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Fairer Funding for Schools?
by Martin Johnson
Research Fellow, IPPR
Contents
Foreword
2
Introduction
2
The Fair Funding Formula
4
The Data
5
Results
6
A More Progressive Formula?
6
Do Grants Make the Difference?
7
Is Policy Change Needed?
8
The Policy Tool
9
Inside the School
10
Conclusion
11
References
12
About the Author
12
About ippr
12
1
Foreword
The seminar for which this paper was prepared is one in the ippr series ‘Learning Policy’.
This rolling programme allows the ippr Education Team to make rapid response to pressing
education issues through scrutinising the impact of current and recent education policy
initiatives and practices. Further details can be found at www.ippr.org/education. The
seminar was funded by the National Association of Schoolmasters Union of Women
Teachers, and we are grateful for their support.
The author would like to thank the DfES Analytical Services Section in Darlington,
especially David Collinge and Joanne Luke, for their help in making available and clarifying
the data used in the paper. Thanks also to Tom Rahilly, intern at ippr, for his work in
preparing and presenting the data.
Introduction
This paper is concerned with one specific and limited issue about school funding. It does
not deal with questions of quantum, avoiding the debate about the adequacy of the
national funding settlement for 2003-04, and not contributing directly to the consideration
of the next Comprehensive Spending Review.
The paper deals with the distribution of funds to schools. The distribution has two stages.
The first is the allocations made by the Government. Most of this is by grant to local
education authorities, Education Formula Spending Share (EFSS), but with a substantial
element by way of grants direct to schools. The second stage is the distribution from LEAs
to individual schools by means of a formula circumscribed by national fair funding
regulations.
The first stage is traditionally the more politically sensitive, since variations in allocations
to LEAs result in highly publicised differences in funding levels between schools in
different parts of the country. The variations are caused mainly by the application of
factors for Additional Educational Needs and Area Cost Adjustment to the EFSS. This
geographical variation is not the subject of this paper.
An earlier ippr paper (Johnson, 2003) reviewed the first stage from a limited and specific
perspective. How far is the distribution formula progressive? To what extent are pupils
from disadvantaged backgrounds funded more generously? The discussion focussed on the
mechanism for determining the Additional Educational Needs (AEN) element within the
schools block of the EFSS.
It found that the methodology for establishing the value of the AEN unit used for the first
time in the 2003-04 settlement was an advance on previous practice, being grounded in
research about the real costs of meeting AEN. However, taking the Schools Block alone,
the allocation for AEN within the basic together with the top up for deprivation in England
overall amounted to just 11.8% of schools block funding (fig.1). This is a smaller
percentage than for EFSS in total because the local authority block within the new system
is highly weighted for deprivation. Overall, the introduction of a new formula resulted in
very little change in the weighting for AEN. Nevertheless, the formula at national level has
a degree of progression.
2
0
1: 803
2: 855
3: 800
4: 877
5: 860
6: 836
7: 356
8: 872
9: 334
10: 802
11: 857
12: 885
13: 875
14: 816
15: 332
16: 937
17: 830
18: 811
19: 835
20: 916
21: 359
22: 866
23: 865
24: 891
25: 351
26: 358
27: 928
28: 933
29: 935
30: 893
31: 873
32: 384
33: 815
34: 929
35: 878
36: 392
37: 837
38: 850
39: 869
40: 909
41: 925
42: 888
43: 884
44: 372
45: 813
46: 357
47: 908
48: 841
49: 350
50: 343
51: 880
52: 926
53: 383
54: 370
55: 381
56: 879
57: 342
58: 335
59: 894
60: 808
61: 840
62: 938
63: 890
64: 382
65: 373
66: 390
67: 825
68: 861
69: 820
70: 394
71: 931
72: 831
73: 371
74: 812
75: 807
76: 801
77: 887
78: 344
79: 353
80: 805
81: 867
82: 331
83: 874
84: 881
85: 886
86: 936
87: 393
88: 845
89: 354
90: 868
91: 876
92: 333
93: 355
94: 826
95: 919
96: 318
97: 336
98: 882
99: 380
100: 311
101: 851
102: 314
103: 305
104: 870
105: 810
106: 889
107: 391
108: 921
109: 846
110: 303
111: 852
112: 319
113: 806
114: 856
115: 883
116: 330
117: 892
118: 821
119: 312
120: 310
121: 302
122: 317
123: 341
124: 315
125: 340
126: 306
127: 352
128: 308
129: 301
130: 313
131: 871
132: 307
133: 320
134: 304
135: 212
136: 316
137: 309
138: 203
139: 213
140: 209
141: 205
142: 202
143: 210
144: 206
145: 204
146: 208
147: 207
148: 211
England
SSA Components in per pupil terms (£)
5.7
6.1
0.8
4.1
minimum
AEN in basic
dep top up
sparsity
ACA
83.3
Figure 1: Percentage distribution of Schools Block, 2003-04: ACA as separate factor
Source: IPPR
Figure 2 shows moderate progression under the SSA system operating in 2001-02. Only at
the highest levels of funding does the curve become steep. The beneficiaries of this slope
are almost entirely some inner London boroughs, benefiting from a combination of Area
Cost Adjustment and AEN factors (though it is worth noting that the abolition of ACA and
its redistribution within the remaining formula elements would produce little change in
the curve).
Chart 3: SSA Components in per pupil terms (£)
Primary, 2001-2002
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
Pupils (educated in an authority)
Resident pupils
Ranked LEAs
AEN
ACA
FSM
Sparsity
Figure 2: Primary SSA per pupil, 2001-02
Source: Education SSA: current methodology and distribution ESFG 22, DfES
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On the other hand, the paper showed that other interpretations of the research
underpinning the AEN unit value could have produced significantly higher allocations to
AEN. In the most progressive case, no less than 22.4% of the schools block would have
been allocated on the basis of AEN.
A further observation was that work was needed on the progress of funding during the
stage of distribution from LEAs to individual schools, and the extent to which the element
of progression was sustained or otherwise. This paper addresses that issue.
The Fair Funding Formula
The requirement that LEAs distribute funding to their schools by means of a single formula
was introduced in the 1988 Education Reform Act. It supported the introduction of a quasimarket in two ways. Firstly, the formula was (and still is) required to be ‘simple and
transparent’, so that consumers could be informed. Secondly, by regulating that the
formula be based predominantly on a pupil unit, unweighted except by age, the bums on
seats principle was established – that is, funding follows pupils.
The major features of the regulations have remained unchanged since the introduction of
formula funding. However, there has been a tendency to define more closely the balance
between LEA and school spending, and in so doing to reduce the LEA share. Thus the
formula has become proportionately more important in terms of distributing funds from
LEAs to schools.
However, another feature of the last decade has been the increase in funding of schools
directly by central government. The Standards Fund was introduced as tightly ring-fenced
support for teacher in-service training in government priority areas. It expanded rapidly
with recognition of its potential for direct leverage on school practice, so that in 2002-03
it distributed £3.6 billion (including the local government contribution). The present
government hugely extended the principle through a series of other specific grants. Some
of these have been universal (the School Standards Grant), others open to bid (Specialist
schools), and others targeted, generally at areas of deprivation (EAZs, EiC).
Hence, schools funding has become much more complex. Some resources, notably for SEN
and landlord responsibilities, are in the hands of the LEA, and others often subject to bid
and audit, are central grants. For secondary schools, the LSC is an additional funder,
resourcing post-16 work. However, the formula share remains the largest component: In
2002-03, £17.077 billion was allocated to primary and secondary schools by formula share,
from a total of £20.299 billion including LSC, devolved elements of the Standards Fund,
and the School Standards Grant. In the current year, the reduction in Standards Fund has
led to an proportional increase in the formula share.
Until recently, regulations specified that a minimum of 80% of the formula should be
attributed to pupil numbers. In the interests of simplicity and clarity this factor could be
weighted only for the age of the pupil. Typically, LEAs use this to slightly higher value to
KS1 than KS2, but giving secondary pupils much more value than primary, thus permitting
the continuation of the long-running complaint that primary schools are Cinderellas (West
et al 1999). Premises and site factors, varying according to the estate portfolio of the LEA,
typically make up a large proportion of the remaining formula elements.
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Many authorities introduced a deprivation factor into their formulae. Indeed, when
regulations changed in 2002 only a small minority had not done so. However, it seems
prima facie that the formula as a whole could not significantly weight for deprivation.
To test this assumption, data on three pupil factors which may be related to deprivation
or need was collected at school level, and compared with the formula funding share per
pupil for each school.
The Data
Data on pupil characteristics was extracted from the Pupil Level Annual School Census
(PLASC) for 2002, the latest year available and the year partly coinciding with the
financial year to which financial data applies. All maintained primary and secondary
schools in England were included in the dataset, a population of 21,141. Special schools,
nursery schools, other institutions such as pupil referral units and independent schools
were excluded.
The characteristics selected for analysis were as follows.

The proportion of pupils in the school known to be entitled to free school meals (FSM).
Despite the well-rehearsed problems in using this as a measure of poverty, FSM
remains the least bad single measure. It is worth noting that nationally there has been
a tendency to a reduction in its occurrence; it is possible that it has been affected by
the introduction of Working Families Tax Credit which may lead to the loss of FSM
entitlement. For example, there were 5 LEAs with a change in FSM entitlement greater
than 3% between 2001 and 2002.
This characteristic is the main focus of this paper. The following two were selected for
completeness.

The proportion of pupils in the school with special educational needs, both with and
without statements. At the time of PLASC 2002, the new SEN Code of Practice was
being introduced, and this led to a reduction in the number of SEN pupils without
statements compared with 2001.

The proportion of pupils in the school from minority ethnic groups. For PLASC 2002,
schools were permitted to report ethnicity on either 1991 or 2001 Census codes but
96% of pupils were coded on the old codes.
The funding data relates to the budget shares allocated to schools for the year 2002-03. As
discussed later, in this year regulations changed in respect of deprivation factors, and
there was a further change for 2003-04. However, this year was selected because it is the
latest year for which data is available. Section 52 of the School Standards and Framework
Act 1998 requires a standard form of return. The process of collating and confirming
Section 52 returns for 2003-04 submitted to the DfES by each LEA has not yet been
completed by the Department.
The item selected is the actual budget share per pupil, which is the amount allocated to
each school by means of the fair funding formula divided by the number of pupils on roll.
LEA fair funding schemes include methods of adjusting the budget share mid-year to
account for changes in pupil roll, and this is particularly important in schools which
experience high turbulence, but the data is based on the roll number as used for the start
of year budget share calculation, probably derived from the PLASC data.
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Within the data for 2002-03, some LEAs reported schools with anomalously high actual
budget shares and others with a zero actual budget share. Outliers in the actual budget
share were calculated using 99% confidence intervals and removed from the data.
It is worth repeating that this data by no means represents the total funding available to
schools. It excludes central grants of all kinds.
Results
The results are displayed in three scatter diagrams in the Annex.
In 2002-03 primary schools in England received budget shares of between £890 and £3610
per pupil, with a mean of £2250. Secondary schools received between £1663 and £4027
per pupil, with a mean of £2845. However, Figure 3 (Annexe) shows that at school level
there is little correlation between actual budget share and FSM eligibility, the
Government’s preferred single measure of social need. There are slight positive
correlations for both primary and secondary schools, with the correlation greater for
secondary schools, but the correlations are low and may not be statistically significant as
indicated by the low R2 values.
Figure 4 (Annexe) shows the same budget data in relation to the proportion of pupils in
the school with special educational needs. This is also a factor used to build the AEN item
in the national funding formula. Again there are small positive correlations, but in this
case the distribution is even more flat than for FSM eligibility. As described earlier, this
category combines pupils both with and without statements, and in most cases schools will
receive additional resources to support the implementation of statements which are not
included here. However this is both a marginal addition which may well be in the form of
the direct provision of staff, and also irrelevant to the question of the degree of
progression within the formula.
Figure 5 (Annexe) shows the same budget data and the distribution of pupils from ethnic
minorities as defined above. It is not suggested that ethnicity in itself is an indicator of
need, and the latest evidence on achievement by ethnic group shows complex patterns,
with some ethnic minorities being England’s highest achievers, and others being the
lowest. The property of speaking English as an Additional Language attracts a funding
bonus within the national formula, but there is some evidence that EAL speakers are doing
better than others.
In the light of that complexity, this figure is included for completeness. It shows very little
relationship between the level of funding received by schools, especially primary schools,
and the proportion of pupils from ethnic minorities.
A More Progressive Formula?
Figures 3 and 4 show quite clearly that although there is a range of per pupil formula
funding in England’s schools, variations are not well connected to levels either of poverty
or of special education needs. Does this matter? The question needs to be addressed in a
number of ways.
Mechanisms for progressive funding, that is for directing additional resources at pupils
with greater social and educational need, would be irrelevant if there were no connection
between levels of spending and achievement. Unfortunately, there are large
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methodological problems in testing that hypothesis, and although some economists of
education have attempted to confirm a lack of connection (for example, Hanushek 1998)
the proposition remains counter-intuitive. West et al (2001) showed at LEA level a small
but statistically significant positive correlation between spending and the proportion of
pupils achieving at least five A*-C grades at GCSE, having controlled for poverty, but
accepted that no causal link had been established.
This paper does not address the question of whether spending on schools should be
increased. It does not deal with the debate on whether spending on other services, for
example direct interventions on poverty through the tax and benefit system, would be a
more effective form of public spending in terms of raising achievement. It takes for
granted the quantum allocated to maintained schools, and asks whether it should be
distributed differently. If West et al are right, poor pupils should be funded at a higher
level.
There would also be no necessity for a local funding formula to differentiate for social
need if all local schools had rolls which were proportional to the local population. While
the debate about pupil segregation led by Gorard (e.g. Gorard 2003) sometimes
emphasises trends in segregation rates, the overall picture is of a socially segregated
school population; nationally, since 1990 the segregation rate has varied between 30% and
35%. Rates differ widely from LEA to LEA, and depend largely on geography, but in general
schools within an LEA do not take equal shares of pupils with AEN, including those with
social deprivation.
Another way to look at the question is to return to the national funding formula, the EFSS.
During the review of the formula, PricewaterhouseCooper undertook research which
suggested that 20.1% of pupils (excluding pupils with certain very high-cost needs) have
English as an additional language and/or other social needs which incur additional costs
(PwC 2002). The mean cost, including a figure for some needs currently unmet, was £1780
per pupil at 2001 prices. The research was broadly accepted, and became the basis for the
Government’s calculation of the AEN element in the schools block, re-calculated at £1300
for the 2003-04 settlement. To put it another way, the Government believes that the
mean additional costs of meeting pupils’ additional educational needs, including those
arising from social need, amount to around half as much again as the mean per pupil
formula funding to schools, and this is reflected in the proportion (11.8%) of the Schools
Block allocated on the basis of AEN. Presumably, if this were reflected at school level, the
mean allocation at secondary level (£2845 in 02-03) would have been around £3885 per
pupil with AEN and £2585 for others.
Do Grants Make the Difference?
However, this line of argument might be putting too much pressure on the fair funding
formula. As mentioned earlier, current practice is to attempt to meet additional need by
targeting additional grants, partly in recognition of the difficulty in constructing formulae
which can fairly reflect the needs of schools at the extremes of circumstances. In
determining the AEN unit in for the EFSS, the Government makes a reduction in respect of
grant funding which is allocated on the basis of AEN factors (£662 million in 02-03).
There is a large number of grants, which are more or less specific in their uses, and many
are only indirectly pupil related, for example the new Leadership Incentive Grant, or the
reimbursement of staff costs such as the upper pay spine. The School Standards Grant is
not tied, but is a flat-rate sum varying only by size of school. The largest single area of
grant made on the basis of AEN data is the Excellence in Cities programme, to which the
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Government allocated £200 million in 2002-03. There are two considerations relative to
the purpose of this paper.
Firstly, the targeting is not always clearly related to need, since it is directed to an entire
urban area. For example, every school in inner London is included, regardless of the social
composition of its intake. There must also be some doubt as to the targeting of some of
the strands of the EiC initiative, such as the gifted and talented, and the city learning
centres, which may benefit the less needy disproportionately.
Secondly, in considering how redistributive education funding might be, it is necessary to
put this programme in perspective. While EiC was allocated £200 million, this is 1% of the
funding for primary and secondary schools allocated by means of formulae.
Is Policy Change Needed?
English schools, then, have a somewhat segregated pupil composition, but very little
variation in funding in recognition of it. Grants aimed at increasing differentiation
constitute a small proportion of funding and may not always be well-targeted. Yet in
terms of policy, shifting the balance of funding to schools is always controversial, and as
we have seen in 2003 not without dangers even in a period of increasing quantum, when it
ought to be possible to eliminate losers from the winners and losers balance. The
arrangements for 2004-05 have been made to prevent real-terms losers (see below), but
are likely to result in few schools being significant real-terms winners. If, as is being
indicated, the 2004 Spending Review results in a slowdown or stop in the real terms rise in
spending on education and some other public services, further changes to the funding
system might well become even more difficult to manage. What considerations might
make such inconvenience worthwhile?
As the PISA study (OECD 2001) undergoes ever more detailed analysis, some characteristics
of the performance of English pupils attract more attention. It shows that of the twelve
countries achieving above average literacy standards, England is in a group of three which
has above the average range of achievement. Its upper quartile are the highest achievers
in the world, but the lowest quartile was only ninth. The ‘long tail of underachievement’
is often described as a key target of policy. The important question is not whether our tail
is longer than others, but whether such a tail is acceptable.
Quite apart from equity arguments or views about workforce needs, it could be argued
that current national achievement targets are unattainable unless the lowest achieving
quartile makes disproportionate progress. There is some evidence that primary schools
now focus heavily on the group in the 75th to 85th percentiles of performance during year
six, precisely the group which must achieve level four if the key stage two target is to be
met. Yet the implied writing-off of 15 per cent of eleven year olds should be unacceptable
on social justice grounds.
Another finding of PISA was the comparatively close link in England between educational
achievement and social class. Given the comparatively high rate of child poverty, and
growing income inequality, this link seems very likely to be stubborn. This factor may
argue for further expenditure on full employment and fiscal anti-poverty measures, as
well as early years provision such as Sure Start, rather than further expansion of school
spending, but it also lends weight to the idea that education spending would be more
equitable if it were more progressive at school level. Notwithstanding the lack of a
demonstrated link between resource increments and higher achievement, it is difficult to
8
imagine a focus on low-achieving pupils without additional expenditure being directed at
them.
Another argument for progression is that it would intervene in the schools quasi-market,
by introducing some incentive for schools to take and keep lower achieving pupils. The
present leverage on schools encourages them to enrol the best prior achievement profile
possible, and although Gorard shows that the introduction of the market has not worsened
segregation, there remain too many secondary schools with a pupil mix which in itself
inhibits achievement. A financial incentive to enrol pupils with deprivation or other
additional educational need would be some counter-balance to this market pressure, its
weight of course dependent on the value of the premium.
There is no doubt that the easy way for a school to reach its targets is to attract a
favoured intake. For those schools which have behaved in that way, the advantages of a
favoured intake would outweigh the disadvantages of missing additional funding, or even a
financial penalty. The incentive to change would need to be significant. One possibility
would be to use a formula in which the AEN weighting itself increased with increases in
rates of AEN.
In addition, additional targeted funding would enable schools to make suitable provision
for deprived pupils. There is some evidence from an unsegregated LEA that there is a
positive correlation between value-added performance and levels of qualified staff.
Johnson (1999) argued that the most disadvantaged should be funded at a rate five times
the standard; Prof. Harry Brighouse recently suggested a factor of two or three; as seen
above, it might be inferred that the DfES considers a 50% premium acceptable. It is
beyond the scope of this paper to describe the range of additional provision which might
be made with additional funding, and as accepted above it would be virtually impossible
to show the impact on overall achievement of any single provision, but there is no
shortage of ideas about how to use such funding, most of which involve additional staffing
of various kinds.
At the same time, if we assume no real terms increase in school funding, the introduction
of greater progression would introduce another round of winners and losers. This would
present political difficulties, not least because losing schools would be those with a more
advantaged pupil profile whose parents could be expected to organise dissent. It is
impossible to predict the effect of such a change on the performance of these schools, but
it is not clear that it would lead to a deterioration. However, there is a clear argument in
social justice terms for more progressive per pupil funding which would be embraced by a
centre-left government.
The Policy Tool
The construction of an LEA air funding formula must be undertaken according to The
Financing of Maintained Schools (England) Regulations, which are annually refined.
Currently, most attention is being given to the Government’s decision to alter the
regulations to provide that every school in England is guaranteed a minimum per pupil
funding increase, for 2004-05 at 4%. This has considerable implications. Firstly, it is likely
to be an override factor which prevents other changes to a formula which would produce
losers. Secondly, it is likely to further flatten differentials between schools within an
authority by forcing the creaming of the best funded to support the floor allocation.
Indeed, in a letter to CEOs this summer, the DfES asked ‘How superfluous will the fair
funding formula be for next year – i.e. will every school simply see more or less the same
increase and the fair funding formula will be largely redundant?’ (DfES 2003).
9
It is unclear that this mechanism in itself will prevent a repetition of the funding difficulty
in 2003-04, which is largely due to miscalculation of the combination of cost pressures,
especially wage drift. On the other hand, it marginalises local powers to influence funding
allocation and embeds current funding however inequitable. It is ironic that this change
prevents developments which had been enabled by more positive regulation changes over
the past two years, putting in place the tool for making fair funding formulae much more
progressive.
Firstly, the longstanding lower limit of 80% on the pupil-led element in the formula was
reduced to 75%, in order to give more space for deprivation factors, as well as other
factors such as school meals which were being delegated. More radically however, in the
current regulations, for the first time a provision has been introduced (Reg.14(2)) to
require social deprivation incidence to be taken into account. Most significantly of all, this
deprivation factor may be counted as a pupil-led element, effectively removing any limit
on its weighting. Although it is too early to know, it seems unlikely that this change has
made a major difference to formulae as yet, but the potential is enormous – or would have
been but for the introduction of a per pupil guarantee.
But for that, a more progressive funding system for schools could thus be introduced very
simply. LEAs which are so inclined could introduce large changes in the formula, so that
deprived pupils were funded at 1.5x, 2x, or even 5x the standard pupil unit, and an
administratively simple regulation change could change this permission into a
requirement.
Inside the School
Radical changes in LEA formulae as proposed above would produce winners and losers
within the LEAs. They would be necessary in order to direct additional education resources
to the most needy pupils, but they would not be sufficient. The allocation of resources
within schools is the third stage of the process of distribution, and the stage about which
little is known. Leaving aside resources specified in individual pupils’ SEN statements,
there is no evidence that schools currently devote the funds derived from AEN factors on
meeting AEN. In a sense, they are under no obligation to do so; regulations allow unlimited
virement by schools of their LEA budget shares.
As Ofsted recognised in ‘Getting the Best from Your Budget ‘ (Ofsted, 2000) schools have
responsibility for resource allocation but little guidance on how to do this. It further
reported (Ofsted, 2003) that on the whole LEAs give little support to schools on resource
management or on linking that with their development planning. In the decade since
schools became self-managing, there has been little attention to developing the necessary
skills.
It seems plausible that schools tend to allocate resources on the bases of the targets
imposed on them and the hypothecated funding streams they attract, rather than their
own analyses of objectives and priorities. Insofar as this pressure does currently lead to a
focus on the 75th to 85th percentiles of performance at key stage two, this could be seen as
progressive in effect. However, considerable additional research would be necessary to
discover whether in general at school level resources are allocated proportionately to
social and educational need.
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Conclusion
The funding of schools is always very contentious. The most recent review of the national
funding mechanism was characterised by intense lobbying from all directions. It is
understood that decisions are determined by a balance between lobbies. At the moment,
the contention is heightened by the difficulties of the 2003-04 settlement. Whilst the
Government’s wish to guarantee a cash increase for next year is understandable, it must
not allow the guarantee to reduce the equity of school funding. Clearly, contrary to what
is contended by some lobbyists, social justice is not served by a universal pupil unit, for
public services should be available according to need, and it has been established that the
needs of some pupils are much greater than others. Higher funding for the deprived is also
necessary to permit more focus on reducing the achievement differentials in schools,
particularly amongst the lowest performing quartile.
When school funding lobbyists gather, the voice of the poor is usually unheard. Indeed, as
the Chancellor of the Exchequer remarked recently, it is difficult to raise public concern
about child poverty despite its unhappy extent. This makes it imperative for a centre-left
government to take the initiative in policies which are intended to equalise life-chances,
even when, as in this case, some political bravery would be necessary.
There is no doubt that grants can be used to target funding, but only a small proportion is
allocated on the basis of pupil need. As has been seen in 2003, any attempt to change the
distribution of grants is as problematic politically as changes to formulae. Yet while the
fair funding formula continues to be the predominant resource for schools, it must be used
for redistribution.
As the public service funding belt tightens a notch, and with cost pressures such as wage
drift and staffing implications of the workforce reform agenda remaining, it seems less
likely that formula changes could be introduced without losers. The Government must
grasp the equity nettle confident that whereas the life chances of the advantaged are
unlikely to be diminished by a slight reduction in resources in their schools, the life
chances of the disadvantaged are very likely to be enhanced by an increase in theirs.
Whatever the returns from this spending in terms of greater equality, and however much
more is achieved by anti-poverty measures for example, a Government committed to
equality will address it in each of its public spending programmes.
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References
DfES (2003) To CEOs of LEAs in England at www.dfes.gov.uk/fairfunding/docs/schoolfunding.doc
Gorard S. (2003) School Choice Policies and Social Integration: the Experience of England and Wales
Paper for the ippr conference ‘Social Mobility and Social Justice’ at www.ippr.org/socialmobility
Hanushek E.A. (1998) Conclusions and Controversies About Effectiveness of School Resources
Federal Reserve Bank of New York Economic Policy Review Vol.4 No.1
Johnson M. (1999) Failing School, Failing City John Carpenter
Johnson M. (2003) Schools Budgets - Fair Enough? A Comment on the Review of Education Formula
Spending at www.ippr.org/london
OECD (2001) Knowledge and Skills for Life Paris: OECD
Ofsted (2000) Getting the Best from your Budget at www.ofsted.gov.uk/publications/docs/499.pdf
Ofsted (2003) School funding: strategies adopted by local education authorities at
www.ofsted.gov.uk/publications/docs/3400.pdf
PwC (2002) Study of Additional Educational Needs – Phase II Final report London DfES
West A., Pennell H., West R. and Travers T. (1999) Financing schools: Are there fairer ways to
distribute government money? Paper presented at the British Educational Research Association
Annual Conference
West A., Pennell H., West R. and Travers T. (2001) Financing school-based education in England:
poverty, examination results, and expenditure Environment and Planning C: Government and Policy
Vol.19
Appendix
Actual Budget Share per Pupil vs Percentage of Pupils Eligible for
FSM
y = 11.824x + 2638.5
R2 = 0.2198
4,500
Actual Budget Share (£)
4,000
3,500
3,000
2,500
2,000
1,500
y = 9.015x + 2079.4
2
R = 0.1333
1,000
500
0
0
10
20
30
40
50
60
70
80
90
100
Pupils eligible for FSM (%)
Primary
Secondary
Figure 3: Actual Budget Share per Pupil vs. Percentage of Pupils Eligible for Free School Meals
Source: Section 52, PLASC
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Actual Budget Share per Pupil vs Percentage of Pupils with SEN
4,500
y = 8.6392x + 2655.5
R 2 = 0.0742
Actual Budget Share (£)
4,000
3,500
3,000
2,500
2,000
1,500
y = 8.9303x + 2037.2
R 2 = 0.0619
1,000
500
0
0
10
20
30
40
50
60
70
80
Pupils with SEN (%)
Primary
Secondary
Figure 4: Actual Budget Share per Pupil vs. Percentage of Pupils with Special Educational Needs
Source: Section 52, PLASC
Actual Budget Share per Pupil vs Percentage of Pupils Classified
as Ethnic Minority
y = 7.1064x + 2743.4
4,500
2
R = 0.1775
Actual Budget Share (£)
4,000
3,500
3,000
2,500
2,000
1,500
y = 4.7632x + 2171.2
1,000
2
R = 0.0723
500
0
0
10
20
30
40
50
60
70
80
90
100
Ethnic Minority Pupils (%)
Primary
Secondary
Figure 5: Actual Budget Share vs. Percentage of Pupils Classified as Ethnic Minority
Source: Section 52, PLASC
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About the Author
Martin Johnson is Research Fellow in Education at the IPPR. He had over thirty years experience as
a teacher, mainly in inner London, specialising in working with secondary pupils with behaviour
difficulties. He is the author of ‘Failing School, Failing City’, an account of teaching in the most
difficult secondary schools. He was also President of the NASUWT in 2000. At IPPR he collaborated
with Joe Hallgarten on the project ‘The Future of the Teaching Profession’, and then undertook a
study of ‘Schooling in London’, including an examination of the national funding mechanism. Martin
is currently supporting the London Development Agency’s Business and Education Advisory Group.
Martin can be contacted at [email protected]
About IPPR
The Institute for Public Policy Research is an independent charity whose purpose is to contribute to
public understanding of social, economic and political questions through research, discussion and
publication. It was established in 1988 by leading figures in the academic, business and trade-union
communities to provide an alternative to the free market think tanks.
IPPR’s research agenda reflects the challenges facing Britain and Europe. Current programmes
cover the areas of economic and industrial policy, Europe, governmental reform, human rights,
defence, social policy, the environment and media issues. IPPR has a strong track record of
innovation in education and training policy. Recent publications include :
Johnson M and Hallgarten J (Eds) (2002) From Victims of Change to Agents of Change : The Future
of the Teaching Profession
Piatt W and Robinson P (2001) Opportunity for Whom ? Options for the funding and structure of FE
and HE
Hartley-Brewer E Learning to Trust and Trusting to Learn : How schools can affect children’s
mental health
Hallgarten J et al (eds) (2001) ICTeachers
Hallgarten J et al (eds) (2001) A Digitally Driven Curriculum
Hallgarten J (2000) Parents Exist OK ! Issues and Visions for Parent-School Relationships
Pearce N & Hallgarten J (eds) (2000)Tomorrow’s Citizens : Critical Debates in Citizenship and
Education
Millns T & Piatt W (eds) Paying for Learning
Mager C, Robinson P et al (2000,IPPR/FEDA) The New Learning Market
For information on IPPR’s current education projects, visit our website at www.ippr.org
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