NATIONAL FUNDING FORMULA, FAIR OR FAIL?

7 Mar 2017 | by Micon Metcalf

It's an interesting time to be writing a blog about school funding and finance. There has been a huge amount in the press recently about 'The Funding Crisis' with reports of 4-day weeks and governors strikes. Parent campaigns have also recently started and there is a lot of information about how much schools will lose in cash and real terms.

The catalyst has been the publication of the second phase of the National Funding Formula Consultation  along with the associated consultation on High Needs Funding. I would urge all Business Leaders to look at developing some  form of response to the consultation. Along with the background papers there is a spreadsheet which models the changes to individual school budgets, which is interesting and will support longer term planning.

With regards to the consultation I think there are two issue to consider:

  1. Are the principles of the funding proposal fair? 
  2. Can they be implemented realistically and successfully after 5 or 6 years of austerity?

 

It is at this point that I declare an interest. My school (and indeed authority) stands to lose 3% over the 2-year implementation phase. However, I recognise that the funding formula has been due an overhaul since the time of the last labour government. Patterns of migration and deprivation have changed tremendously since the LA allocations were last looked at. Pre-2012, there were also huge variations in how local authorities shared out the funding. The moves to more uniform factors and a guaranteed per pupil amount have to be good news for the system.

The trouble is that changes to LA allocations and formula factors inevitably lead to variations for individual schools and this is being felt at authority and school level. Some schools in low funded areas are still seeing losses. This makes it hard for us to be objective about what is right for the system. I would argue hard for a national funding formula whilst suggesting the government ensures there are  no losses in funding for any school. I would also ask that future salary increases had some kind of funding attached to them.

 

Whilst I hope the government hears what the sector is saying in response, it is also important that schools are responding to what will happen if the new formula is implemented as planned with no ‘additional’ funding. Setting deficit budgets without reserves is not a realistic option. Any advance of funding would accompanied by a severe financial recovery plan. There are a few strategies the business lead can employ to give heads and governors enough financial information to inform decisions:

 

  1. Multi-year budget plans - we might not know exactly what the funding will be, but we can make informed estimates.
  2. Scenario planning - what if our funding increased or decreased by x%
  3. Key performance indicators such as staffing cost in relation to funding and overall expenditure. If it's under 75% happy days. If it's over 85% there's cause for concern.
  4. Showing how the ratio has changed over the past 3 years. As salary increases have not been funded, for many schools, this figure is on the increase.
  5. Being realistic about what will happen if this critical ratio is not kept under control.

It struck me that there are probably few current heads who were in post before 1997/8 when Tony Blair focused on education, education, education. Throughout the noughties we saw exponential increases in school funding and consequent increases in teacher salaries. Are we a sector ill-prepared for what is being asked of us? It's ok to say we don't like the current lack of priority for education funding, but school business leaders have to help shape how schools cope. 

 

Resources

National Funding Formula Consultation : (https://consult.education.gov.uk/funding-policy-unit/schools-national-funding-formula2/)

By Micon Metcalfe - March 2017 

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