School funding reforms: a crash course

The changes

School funding has changed. On 1 April, new local funding formulas came into effect. The changes are considerable. There are fewer factors in the new formula, and significant changes to how funding for special schools and special units attached to mainstream schools are calculated.

Funding for schools is first distributed to local authorities via the Dedicated Schools Grant (DSG). Local authorities then distribute the majority of that money to schools via an agreed local formula. The first part of the process – the calculation of the DSG – has been the subject of much angst over the years, largely because the methodology for calculating it is lost in the mists of time.

Indeed, in giving evidence to the Public Accounts Committee in late 2011, the then permanent secretary at the Department for Education, Sir David Bell, said in talking about the DSG distribution methodology: “Madam chairman, you were too generous when you said that our funding formula in the Dedicated Schools Grant goes back to 2005. The truth is that, actually, it is based on historical decisions made in the 1980s and before, because essentially what has happened is that it has just been rolled forward and rolled forward.”

This method of allocation currently results, according to the DfE’s own evidence, in “per pupil funding in schools with similar characteristics varying by as much as 40 per cent”.

During most of 2011 and the early part of 2012, the department consulted about proposed changes to both the DSG distribution formula, and local formulas. Ministers decided after consultation that, while accepting that the way in which the DSG is calculated is not fit for purpose, it was good enough for another three years.

However, they determined that councils did have to make significant changes to their local formulas, which affect every state-funded school. Whether it is a small community primary or a large secondary academy, a school’s revenue budget is calculated according to the relevant local authority formula. This budget determines how many teachers a school can employ, what sort of curriculum it can offer, and what additional services it can afford to buy in.

The timescale was tight. The DfE announced final details on 28 June last year and local authorities were expected to revise, model and submit details of the changes by 31 October 2012, resulting in some hectic local modelling and consultation through the summer and autumn.