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Budget Briefings 2016-17 Funding Settlement and the Future Jonathan Lewis – Assistant Director – Learning, Skills and Education Bob Seaman – Group Accountant – LGSS Finance Cathryn Walker – Schools Team Manager – LGSS Finance Welcome • • • • • Public Sector Funding Prospects Fair Funding? 2016/17 Settlement Arriving at your 2016/17 budget allocation 2017/18 – what is going to happen? Help you understand current arrangements to allow you to respond to future funding consultation. • LGSS Supported School – Detailed Budget Briefings 7 Ways to make a financial presentation interesting 1. Communicate the story behind the data 2. Follow the 10-20-30 rule – 10 slides, 20 minutes, 30 POINT FONT 3. Hide your notes and use bullet points 4. Make it picture perfect 5. Arrange for discussion 6. Open and close - Letting your audience know what to expect 7. Make you personality shine through Ready to hear about schools funding? Future for Education Funding Funding Schools in an Era of Austerity Professor Tony Jonathan Lewis – Travers – London Northamptonshire School of School of Reality Economics GDP Growth to 2018 The UK and ‘austerity’ • 2008-09 to 2010-11 saw a very deep recession • Public spending was largely protected till 2011-12, so the deficit rose sharply • Pressure to cut the deficit since 2010-11 • Deficit reduction achieved by spending reductions and tax increases in an 80:20 ratio • This pattern will continue for some years to come… Taxation and public expenditure as % of GDP Education within Total Managed Expenditure • Education (particularly schools) spending rose sharply between 2000-01 and 2009-10 • Some slow-down in the latter part of the last government’s terms of office • Further reduction since 2010-11, though this would have probably happened even if the 2010 general election result had been different • Other parts of TME less protected, inc schools’ capital You promised 10 slides but you haven’t finished? Only a few more slides to go Can such a squeeze be delivered? • ‘Unprotected’ spending faces a continuing sharp squeeze, till probably 2020-21 or even beyond • The big question for education and schools is how far the government can protect them when the NHS and welfare (pensions) require more resources? • This will become harder…. • Spending review in the summer of 2015 to cover 2016-17 to 2019-20? • Schools may not be as well protected as in 2010-11 to 2015-16 The Future • UK economy now growing, though some uncertainty remains • Massive pressure on ‘unprotected’ budgets – till 2020s • Local government, police, fire, Home office, Justice, BIS and civil service to be squeezed much further • The NHS will almost certainly have to be given additional resources • Pensions boost welfare spending • Schools would be wise to plan for smaller overall cash/real spending increases from 2016-17 to 2019-20 than those seen from 2010-11 to 2015-16 Impact of Schools Funding Reforms • Efforts to move towards a ‘national funding formula’ have been made more difficult because unless there is a large year-to-year increase in schools’ resources, any reform means redistribution which leads to ‘losers’ • School funding changes each year seek to deliver two conflicting objectives: – Change to the system and more ‘fairness’ – No/minimal losses for individual schools Evolution of Schools Funding • LMS – Local Management of School – prior ultimate control for LA • Standard Spending Assessments (SSAs) become Formula Spending Shares. Education SSA becomes Education Formula Spending Share (EFSS); • EFSS is made up of the Schools Formula Spending Share and the LEA Formula Spending Share. • Delegation rates • It was down to Local Authorities how much to fund Some gave more, some gave less. 2005/2006 decisions locked into funding as the DSG came in to address the funding crisis. Background and History • Prior to 2006/07 – – Level of Schools Budgets decided by LA members – competed with highways, adult social care etc. – School Standards Grant – ‘Gordon Brown’ – money in the control of the Headteacher! – Schools budget funded through a mixture of council tax and central grant (RSG). Government operated a formula for recommended schools funding. – Schools funding caught up with wider changes in local government funding – Schools Funding Crisis of 2003-04 – local authorities not passing on money – led to increased disclosure and enforcement of funding increases… Dedicated Schools Grant – Calculating the DSG Ringfenced Grant for ‘School’s funding based upon funding per pupils using the baseline Funding Model 2005-06 budget was transferred into DSG – including council tax contribution. +/- Change in Pupil Numbers * Fixed Increase per Pupil in funding + Ministerial priorities funding / Divided by Forecast Pupil Numbers = £ Per Pupil Funding Multiplier Is Schools Funding Fair? Authority Amount (£) per Pupil Rank City of London 8,587.04 1 Tower Hamlets 6,982.07 2 Ealing 5,298.27 19 Waltham Forest 5,230.19 20 Leicester 4,697.11 50 Peterborough 4,574.53 66 Northumberland 4,544.73 72 Norfolk 4,510.79 83 Bedford Borough 4,500.21 86 Northamptonshire 4,321.16 123 Buckinghamshire 4,303.10 128 Central Bedfordshire 4,294.39 133 Cambridgeshire 4,257.07 137 Leicestershire 4,238.28 142 How much less do we get and what does it mean? Our pupil teacher ratio at 17.7:1 is above the East Midland average of 17.5:1, the England average of 17.1:1. Inner and outer London run at 15.1:1 and 16.9:1 respectively. Authority / Area Amount per Pupil (SBUF) Northamptonshire £4,321.16 East Midlands £4,442.24 London £5,448.31 England £4,636.42 If Northamptonshire was at the England average, we would receive £315 more per pupil. A 2FE school would receive £132k extra. A 6FE Secondary would receive £382k more. Northants would get £32m more. If Northamptonshire was at the London average, we would receive £1,127 more per pupil. A 2FE school would receive £473k extra. A 6FE Secondary would receive £1m more. Northants would get £113m more!!!!!!! How am I doing? Ready for next bit… Government Announcements • 2016-17 settlement – ‘positive’ for schools. Schools protected in real terms. Increases in line with inflation. Funding calculated at a totality as being enough to fund 1% pay increase. • DSG cash freeze – 16/17 allocation in line with GDP deflator. GDP Deflator In most systems of national accounts the GDP deflator measures the ratio of nominal (or current-price) GDP to the real (or chain volume) measure of GDP. The formula used to calculate the deflator is: The nominal GDP of a given year is computed using that year's prices, while the real GDP of that year is computed using the base year's prices. The formula implies that dividing the nominal GDP by the GDP deflator and multiplying it by 100 will give the real GDP, hence "deflating" the nominal GDP into a real measure. The difference between the deflator and a price index like the Consumer price index (CPI) is often relatively small. Government Announcements • 2016-17 settlement – ‘positive’ for schools. Schools protected in real terms. Increases in line with inflation. Funding calculated at a totality as being enough to fund 1% pay increase. • DSG cash freeze – 16/17 allocation in line with GDP deflator. • ‘Settlement’ doesn’t mean there wont be pressure. • Apprenticeship levy to apply to all public bodies over £3m £15k minimum (from 17/18). • Support in delivering £1bn of savings through procurement • Deprivation nationally has declined through IDACI measure – reduction in pupil premium… F40 – Fair Funding for Northants • NCC have joined the f40 group of the lowest funded authorities. This lobby group is meeting with the Government including on the possible funding changes to be made for 2017-18. • f40 currently has 40 member authorities representing 2,817,857 pupils (35.9% of the total in England) in 9,002 schools (41%). • The Group has the support of MPs, councillors, education directors, governors, head teachers, parents and teaching union representatives. Schools Forum The Forum acts in a consultative role for: – changes to the local funding formula (the local authority makes decision) – proposed changes to the operation of the minimum funding guarantee – changes to or new contracts affecting schools (eg school meals) – arrangements for pupils with SEND , in pupil referral units and in early years The Forum decides: – how much funding may be retained by the local authority within the dedicated schools grant (eg for providing an admissions service or providing additional funding for growing schools) – any proposed carry forward of deficits on central spend – proposals to de-delegate funding from maintained primary and secondary schools (eg for staff supply cover, insurance, behaviour support) – Changes to the scheme of financial management 6th Form Funding, Pupils Premium and Education Services Grant are not within Schools Forum remit Forum Composition Member Category Members Current %* Primary Maintained 9 35% Secondary Maintained 1 3% Academy 12 62% Special School 1 - 1 AP/PRU 1 - Nursery 1 - Non-school 4 - •Church of England Diocese •Roman Catholic Diocese •PVI Providers •Colleges * % of pupils in each category, excluding special, AP/PRU and Nursery How do I get my funding allocation? Northamptonshire DSG 2016/17 £521m Early Years Pupil Premium, £0.56m, 0% High Needs block (net deducations), £52.79m, 10% Other, £0.15m 2 year old funding, £3.93m, 1% 3 & 4 year old funding , £28.42m, 5% Schools Block, £435.05m, 84% School Pupil Premium allocations are not within School Forum remit. 2016-17 Settlement High Needs Block – Allocation of Increase Other High Needs Pressures Schools Budget – Pupil Numbers Increases Changes in school pupil numbers between the Schools October 2014 and October 2015 censuses 2015/16 (October 2014 census) 2016/17 (October 2015 census) 104.0 117.5 13.5 Primary 61,458.5 63,346.0 1,887.5 Secondary 37,550.5 37,625.5 75.0 SEN Units/Resource Provision (420.0) (420.0) 0 Total 98,693 100,669 1,976 Reception Uplift 1,976 pupils £4,321.16 Change £8,539k Headlines • Overall the DSG Schools block funding has increased by £8.54m Schools Block DSG Schools Block DSG Increase 2015-16 2016-17 £426.51m £435.05m £8.54m The central schools block pressures this needs to fund are: • Total ‘deductions’ for Pupil Growth and Copyright are £81k • Pupil Growth £75k (Dec 15 Forum) • Copyright £6k increase from 2015-16 copyright budget • Increase applied to schools funding formula £8.46million Headlines – ‘headroom’ • Changes in school pupil numbers between the Schools October 2014 and October 2015 censuses Description Primary Secondary Total Increase (Pupils) (A) Average cost per pupil (excl lump sum)(£) (B) Difference (to £4,321.16 DSG) per pupil (£) (C) Total (£) (A * C) (D) 1,901 3,261.70 1,059.46 2,014,038 75 4,867.09 (545.93) (40,945) 1,976 1,973,093 Note Subject to the implications of the national funding formula proposals for 2017-18 onwards there may be a need to model at what point (higher Secondary pupil number increases than Primary) no headroom would be generated because the cost of secondary pupils in the formula is greater than the grant received per pupil. Instead this would create a cost pressure upon the schools block DSG. Estimated Pupil Number Changes Estimated numbers (Excl 6th form) Primary Secondary Total 15-16 academic year (October 15)* 63,346 37,625 100,971 16-17 academic year (October 16)** 64,440 38,054 102,494 17-18 academic year (October 17)** 65,026 39,054 104,080 18-19 academic year (October 18)** 65,031 40,318 105,349 19-20 academic year (October 19)** 64,818 41,767 106,585 1,472 (2.3% total) 4,142 (11% total, 2.75% p.a.) 5,614 (5.6% total, 1.4% p.a.) Total estimated movement over 4 years Notes Excludes the impact of housing developments and in-county migration *DSG numbers **Estimates Demographic Pressures Pupil numbers in Northamptonshire schools by year group - Mainstream 10000 9500 9000 8500 8000 7500 7000 Number of pupils Our Funding Formula 2016-17 Factors (continuing from last year) Description Description Basic per pupil entitlement (AWPU) Allocation per pupil as at the Oct 15 count with different rates for primary and pupils in KS3 and KS4 Deprivation (based on ever 6 FSM numbers) FSM ever 6 has been used as there was a higher correlation with pre 2013-14 deprivation funding per school (v IDACI) Private Finance Initiative Split site Rates Lump sum Specific to the 44 schools in the Northampton PFI scheme & Caroline Chisholm Additional funding allocated in accordance with the published rates and criteria School business rate charges A core/base £125k lump sum plus one off funding. 2016-17 is the last year of this one-off funding. Factors not used in 2015-16 and NOT proposed for 2016-17 Description Reasons (see previous forum papers for more details) Prior Attainment In respect of primary schools the use of EYFS is considered not to target the correct schools and concern exists on this data set changing nationally in the future. Looked After Children This would be allocated by numbers at only one particular point of time i.e. not necessarily reflecting current school need Education as an Additional Lang (EAL) This would be allocated by numbers at one particular point of time i.e. not reflecting current school need. Pupils language skills improve over time and not all EAL pupils need additional support. The above have been debated and their non inclusion agreed annually. The majority of the discussion and analysis took place in the original planning for the new schools funding arrangements – 16 October 2012 forum – agenda item 5. Factors not used in 2015-16 and NOT proposed for 2016-17 Description Mobility Reasons (see previous forum papers for more details) Only if above 10% mobility can eligible schools be funded. Significant problems with EFA data sets provided on this element. (e.g. conversion to academy = 100% mobility) 21st January 2014 forum (agenda item 5) Sparsity Only impacts on few schools i.e. not all small schools 21st January 2014 forum (agenda item 5) 2016-17 School Funding Formula £323.2m • Basic Pupil Entitlement (AWPU) (74.7%) £58.4m • Deprivation (Ever 6 FSM) (13.5%) £43.1m • Lump Sum (includes £5.5m one-off funding) (9.9%) £0.5m • Split Sites (0.1%) £3.8m • Rates (0.9%) £2m • Private Finance Initiative Funding (0.5%) £430.9m • Schools Block Formula Total pre MFG / Cap £1.7m • Minimum Funding Guarantee Requirement (0.4%) (£0m) • Funding Cap removed £432.6m • Schools Block Formula Total post MFG / Cap Consultation on Funding 2016-17 – Feedback from Schools • All schools responded that they felt under pressure because of: 1. Cost pressures; and 2. Poorer educational performance relative to national and other comparisons. • Secondary schools stated that they also feel under pressure because of cuts in other funding including 6th form grant. • Academies feel under pressure because of cuts to the Education Services Grant (ESG). • Primary schools have felt they are underfunded relative to secondary schools compared to other local authority areas – the available data would support this. *both reflect national not local decisions. Budget Consultation • Autumn 2015 - Covered 5 areas: – Retaining existing factors - agreed – Split Sites – changes individually agreed with 2 schools (see guidance) – AP funding – review of AP funding – ongoing and current pressures funded through carryforwards. – Capping or reducing deprivation funding – Relative funding between primary and secondary Deprivation • The information published as part of the 2016-17 schools formula consultation and presented to Forum showed that Northants rates of deprivation funding in both the Primary and Secondary sectors were high compared to other authorities and significantly above national averages. • Both were in the upper quartile nationally for deprivation funding. • Based on this and feedback from the consultation capping of the funding for deprivation in each sector was supported for 2016-17. Changes to Deprivation • Without the capping of deprivation funding there would have been additional deprivation cost of £0.9m (£0.66m primary, £0.19m secondary and £0.06m all-through ). • The deprivation funding has been maintained at the 2015-16 sector totals of Primary £30.6 million and Secondary £27.7 million. • Only relatively small deprivation funding rate reductions have taken place in each sector for 2016-17 : – Primary from £2,416.03 to £2,362.56 Reduction £53.47 (2.2%) – Secondary from £3,318.22 to £3,293.19. Reduction £25.03 (0.75%) Primary/Secondary funding ratio • The overall Primary/Secondary rate across all local authorities is 1:1.28 • The 2015-16 ratio for NCC is 1:1.335 Response to Consultation Extracts from 11 November 2015 letter from the Director of Children, Families and Education to Northants schools: • Additional DSG schools block funding will be applied towards moving to a primary to secondary funding ratio of 1:1.30 this where possible • If there is any ‘headroom’ available when the final DSG Schools block funding is applied to the 2016-17 schools formula we will target this at Primary schools in order to move towards the 1:1.30 ratio. Primary/Secondary Funding Ratio • The overall Primary/Secondary rate across all local authorities is 1:1.28 • The 2015-16 ratio for NCC is 1:1.335 • The 2016-17 ratio (excluding one-off), before applying any headroom to AWPU values, is 1:1.344 • The impact of increasing the Primary AWPU rate means the year on year movement in Primary:Secondary base ratio (excluding one off funding) is: – 1:1.329 in 2016-17 – Primary AWPU funding increased by 1.45% / £38.65 per pupil Nearly there….Other Issues Capping • Previously agreed that winners in any funding will mitigate the losers. • The MFG (-1.5% per pupil) is set nationally. The cap rate, limiting increases to fund the costs of MFG, is set by each LA and for 201516 was 8.17% increase. • If this was continued in 2016-17 the cost would reduce from £1,173k to £133k. This means 11 Primary schools would receive between £1k and £27k less than they should do if solely the funding formula was applied. • Given the reduced capping cost and major impact for a few of these schools the cap rate for 2016-17 is set at 100% meaning these 11 Primary schools receive their full funding formula allocation. MFG – Minimum Funding Guarantee • Total 2015-16 £1.83 million (19 schools, 17 Prim, 2 Sec) • Total 2016-17 £1.71 million (31 Schools) • Primary £1.36 million (27 schools) • Secondary £0.35 million (4 schools) • Includes 1 Secondary and 5 Primary schools with MFG protection of greater than £50k in 2016-17. All 6 schools have received MFG protection for at least the last 3 years (i.e. 2013-14 onwards) • If the national funding formula significantly changes the national MFG rate from the existing -1.5% this could potentially impact negatively on the 31 schools and any others impacted on by any formula changes. • Additional One Off Allocation • One off funding is being allocated in 2016-17 as follows • NOTE THIS IS THE FINAL YEAR Primary Secondary £3.4m £2.0m £13,400 £50,000 Addition to the lump sum value per school (£15k 15-16) Addition to the lump sum value per school (maximum) as 15-16 No allocation through the AWPU No allocation through the AWPU (£23 in 15-16) (£30 in15-16) Pupil Growth Fund • Funding to support the establishment of new classes to support growth within the county ahead of pupil numbers being recruited. • Following approval by Schools Forum at the 13th October meeting the employee related elements of the fund have been increased by 5% for 2016-17 (i.e. from April 2016) • These have been reflected in a revised Pupil Growth fund scheme for 2016-17 – available on NCC website • 2016-17 School Budget Guidance Education Services Grant • The rates announced for 2016/17 academic year are : Education Services Grant funding to academies (per pupil aged 2 to 19) 2015/16 £ 2016/17 £ Change Primary and secondary schools 87.00 77.00 (10.00) Special schools 369.75 327.25 (42.50) PRUs 326.25 288.75 (37.70) Note . The reductions are a step towards the saving announced in the November 2015 Spending Review. The academies protection will again be set in tapered bands. https://www.gov.uk/government/publications/education-services-grant-esg-2016-to2017 Pupil Premium Pupil Characteristics 2016/17 Pupils in year groups reception to year 6 recorded as Ever 6 FSM £1,320 Pupils in years 7 to 11 recorded as Ever 6 FSM £935 Looked-after children (LAC) in the care of an English local authority (on completion of a satisfactory PEP) Upto £1,900 Children who have ceased to be looked after by a LA in because of adoption, a special guardianship order, a child arrangements order or a residence order £1,900 Pupils in year groups reception to year 11 recorded as Ever 6 Service Child or in receipt of a child pension from the Ministry of Defence £300 • Rates have been committed to for the duration of Parliament • Unlikely to change qualifying process or criteria. Other Grant Changes • The meal rate for universal infant free school meals (UIFSM) stays at £2.30 for the 2016 to 2017 academic year. • The year 7 catch-up premium continues in 2016 to 2017. • The primary PE and sport premium continues in 2016 to 2017. • Awaiting final guidance and confirmation of rates etc – will be circulated. • Summer schools funding will NOT continue in 2016. Devolved Formula Capital • £4,000 lump sum plus – • Voluntary aided schools, whose lump sum and per pupil rates are 8% higher. • PFI and Modernised Schools may vary Detailed Budgets • Budgets for Primary, Secondary and Special schools are now on the NCC website. Includes formula calculations for academies who should use this to ‘check’/better understand their GAG statements from the EFA. http://www.northamptonshire.gov.uk/en/councilservic es/EducationandLearning/services/schlfin/Pages/Budge t-Information.aspx or http://ow.ly/Z73up School Cost Pressures Overview • The Institute of Fiscal Studies recently stated that over a 5 year period, unless any funding changes were made, schools were likely to experience real terms cuts in spending per pupil of between 9% and 12%. • One-off funding ends in 2016/17 • Schools are experiencing unfunded cost pressures including: 1. 2. 3. 4. Increased Employer contributions to the Teachers pension scheme from April 15 +2.4% (to 16.5%) Teachers and Local Government pay awards General inflation/price increases Employers National Insurance increase of 3.7% (to 13.8%) from April 2016 Deficits • Schools may be projecting a deficit will occur in 2016-17 or at some point over the next 3 years • The LA have a published maintained school deficits policy and schools in these circumstances should refer to this • Deficit budget policy - June 15 • This emphasises the importance of accurate monitoring and projections and liaison. Schools need to work with their financial support team/teams in order to ensure options are identified, agreed and implemented ASAP in order to bring a schools finances back into balance. Early Years Funding • No change in Government DSG funding per early years pupil • Have only £80k from central early years savings to apply to EYSFF in 2016-17 • No formula changes being proposed for 2016-17 • Discretionary 2 year olds EYSFF funding to be continued in 2016-17 • Final EYSFF rates for 2016-17 to be discussed at 15th March Forum meeting and decided by LA before end of March. • Indicative 2016-17 EYSFF budgets for providers will be on website by 31st March Early Years • The Government have stated they will move to a 30 hours entitlement for working parents of 3 and 4 year olds from September 2017. • In order to inform this new national entitlement some authorities are undertaking pilots from September 2016. • Early Years have undertaken events for early years providers to discuss and inform arrangements for this change. • The Government have stated they will increase the average rates of early years DSG funding from 2017 but it is not yet known how this will impact on Northants and its early years providers. Special Schools Funding • Growing numbers and new school opening in Daventry in September 2016. • Overall budget increased by £0.7 million to reflect growth. • -1.5% per pupil cash protection for Special Schools and Special Academies between 2015/16 and 2016/17 • Individual special school budgets now on the NCC website • Funding cap on per pupil increases set at 1.5% due to budget constraints and work on new Resource Allocation System (RAS). Plan is to undertake further modelling work on the RAS and to consult with special schools in 2016. National Fair Funding Formula • “From 2017-18, the amount of money schools and local authorities get will be based on the characteristics of their pupils rather than purely historic calculations.” • “…better-funded authorities could lose up to 15% of their schools grant.” • “…there will be “political pain” and that implementing such a change over the life of this parliament may be too ambitious, but… there will be real anger if the government does not act decisively.” 2017-18 Implementation • The School and Academy Funding (SAF) Group is advising the DfE on matters relating to all aspects of school funding including secure a partnership approach in creating a fairer school funding system. • The Government have stated they will consult shortly on national funding formula for all 3 DSG blocks (Schools, Early Years and High needs) in 2017-18. • Once we have more information on this we will share with Forum and schools – need to respond to consultation • Already announced a further cut in ESG £802m in 16/17 £600m extra to be cut – over 60% of funding in academies. • There will be winners and losers Update…..7th March 12.01am • Two part consultation launched 1. Agree funding factors 2. Weighting on various factors • 4 factors in funding formula – – Basic per pupil funding – Additional needs – deprivation, low prior attainment and EAL – School costs – fixed costs and those related to schools serving rural communities – Area costs – additional funding goes to schools in parts of the country where costs for infrastructure are highest Update…..7th March 12.01am • Reduced role for LA – all funding coming centrally apart from high needs – 2 year transition. Changing statutory duties for LA expected to be consulted upon. • Concerns – – Timing – mayoral elections / area costs – PFI schools / local issues – London Boroughs expected to lose • Consultation will be distributed when available. And finally….. ‘Schools must continue to improve with less money’ ‘More shared resources and collaboration’ It is hoped the move to national funding will benefit Northants and its schools and other providers but until announced this is not known. Questions?