Agenda item 8: Schools Block 2021-22

Schools forum report from the Head of Health, Adults, Families, Children and Learning Finance.

• To update the Schools Forum on the government announcements relating to the Schools Block for 2021/22. This indicates a provisional increase of £11.7m in 2021/22 for Brighton and Hove.
• To update the Schools Forum on the changes considered regarding the operation of the local formula for the allocation of the Schools Block in 2021/22.
   

• To note the changes considered to the application of the formula for 2021/22. These options were presented to the Schools Block Working Group (SBWG) at a meeting on September 2020. In summary, the considerations are:
  • changes to secondary basic entitlement age weighted pupil unit (AWPU) rates to adopt differential unit rates for KS3 and KS4
  • increase the unit rate of funding for the low prior attainment factor
  • incrementally extend the use of the ever-6 free school meals and the income deprivation affecting children index (IDACI) factors as previously agreed by Schools Forum and recommended by School Block Working Group
  • adopt the minimum funding per pupil levels set by government – these are £4,180 for each primary school, and £5,415 for each secondary school, including funding transferred into the Schools Block for teachers’ pay and pension grants
  • to review the level of the minimum funding guarantee

  At the meeting of SBWG there was a consensus to restrict changes unless there is a clear and compelling reason for these to be implemented, particularly as there is still uncertainty about the timing of the introduction of a ‘hard’ national funding formula. The LA is in agreement with this approach and propose to only make minimal changes to the funding formula, these will mainly be where prescribed as mandatory by government or where prior agreement has been reached with Schools Forum (such as establishing a more balanced set of indicators within the deprivation factor).

• To note all funding models are illustrative and show the impact had they been applied in 2020/21. For 2021/22, all data will be updated to reflect the October 2020 census, new funding levels, and the baselines will be taken from the 2020/21 financial year.
   

3.1    The funding formula is applied for mainstream schools within parameters set by the Department for Education (DfE) and a compliance test is carried out before the LA is able to allocate budgets to schools.

3.2    There are 14 allowable factors and Brighton & Hove is currently operating the majority of these within the funding formula. The factors that Brighton & Hove are not using are: sparsity, London fringe and post-16. These are relatively small factors that have been considered in previous years and the LA does not feel would add any significant value to the current funding model.

3.3    While it remains the Government’s intention that a school’s budget should be set on the basis of a single national formula, local authorities will continue to determine final funding allocations for schools 2021/22. The national funding formula (NFF) will set notional allocations for each school, which will be aggregated and used to calculate the total schools block received by each local authority.

3.4    Nationally, school funding through the NFF is increasing by 4% overall in 2021/22. The NFF will distribute this funding based on schools’ and pupils’ needs and characteristics. The main features in 2021/22 are:

• the key factors in the NFF will increase by 3%, providing a significant increase to those schools already attracting their NFF allocations
• the minimum per pupil funding levels will ensure that every primary school receives at least £4,000 per pupil, and every secondary school at least £5,150 per pupil, reflecting the government’s pledge to level up the lowest funded schools
• on top of that, these schools will receive an additional £180 and £265 per pupil respectively to cover additional teachers’ pay and pension costs previously funded through the separate grants. This means the adjusted minimum per pupil funding levels will be £4,180 for each primary school, and £5,415 for each secondary school

3.5    Locally it is estimated that the gross schools block allocation from DfE will increase from £139.997m in 2020/21 to £151.669m to 2021/22. The estimated increase of £11.7m is made up of £5.2m relating to additional government funding and 6.5m for the integration of the pay and pension grants into the schools block. The actual final schools block for 2021/22 will be updated to reflect pupil numbers in the October 2020 census and the estimate for 2021/22 is based on the same pupil numbers across both years.

3.6   The DfE has undertaken an analysis of local authorities’ schools block funding formulae for 2020/21. An analysis of this is provided in a separate paper - appendix 8.1. 

4.1    Following the analysis of the Brighton and Hove formula in comparison to the national funding formula (NFF) and wider current national position, the following areas of the formula have been identified for potential review in 2021/22:

• consideration for differential AWPU values to be assigned to KS3 and KS4 (rather than continuing with one single rate for all secondary year groups
• increasing the unit rate of the low prior attainment factor
• change the distribution of funding though the deprivation factor to a more even spread between free school meals, ever-6 free school meals and IDACI (this proposal has already been agreed by Forum and has been applied over a 3-year period)
• the level of the minimum funding guarantee that will operate within the local formula
• the implementation of the new minimum funding per pupil levels as mandated by DfE

These points are considered in more detail below.

4.2   The comparative position relating to AWPU rates is shown in the table below.

The vast majority of LAs and the NFF apply differential unit rates for KS3 and KS4, whilst Brighton and Hove continue to apply a single rate. To ease transition to a future NFF, consideration should be given to establishing a differential unit rate for KS3 and KS4 in 2021/22. This change will cause some fluctuation in funding between secondary schools depending on the spread of students across different key stages.

A model of the impact of this is included in appendix 8.2 and shows the position had this approach been adopted in 2020/21. Within the model the rate assigned to the KS3 AWPU is £4,163 and the rate allocated to the KS4 AWPU is £4,706. These rates are higher than the NFF but mean that there is no change to the overall amount of AWPU funding being allocated to secondary schools compared to the existing formula model.
 

4.3   The following table shows the current unit rates used within the BHCC formula for low attainment and the comparative rates used in the NFF.

For 2021/22, consideration should be given to increasing the unit rates of the low attainment factor to bring these in line with the NFF rates. This could be achieved by applying a higher proportion of the additional funding allocated by government in 2021/22 
to this area, in comparison to other areas of the formula.

The low attainment factor is the element of the formula most closely linked with SEND incidence and therefore is the most effective way of directing funding to meet need.

A model of the impact of this is included in appendix 8.3 and shows the position had this approach been adopted in 2020/21. The additional funding to be applied to the low attainment factor has been deducted from basic entitlement in the model.
 

4.4   Brighton and Hove has generally always applied a higher weighting of funding to the deprivation factor than is the case nationally, and is linked to the local priority of reducing the attainment gap between pupils from different social backgrounds.
Currently, 9.4% of the total funding being allocated is directed through the deprivation factor in Brighton, compared to 9.0% in the NFF.
 
Additional analysis shows that Brighton and Hove currently allocate a lower proportion of funding through the ever-6 free school meals and Income Deprivation Affecting Children Index (IDACI) factors within the deprivation category when compared to the NFF. This is something that has been discussed at length with the Schools Block Working Group and Schools Forum and reflects the transition that is being made in Brighton from using free school meals eligibility as the sole factor for recognising deprivation to adopting a combination of the 3 factors. 

Schools Forum has previously given support to move to a position in 2021/22 where deprivation is allocated equally between the 3 factors as summarised in the table below:
 

It should also be noted that 2021/22 will see the incorporation of the 2019 update to the Income Deprivation Affecting Children Index (IDACI), meaning that the deprivation funding through this factor targets schools most likely to need additional funding.

4.5   The MFG protects the per-pupil funding of schools from one year to the next. For 2020/21 local authorities were able to set a rate between 0.5% and 1.84%, compared to the range of -1.5% and 0.5% in 2019/2020. This change allows local authorities to mirror the 1.84% funding floor protection included in the NFF which the majority of local authorities chose to reflect in their MFG rate in 2020/2021. 

In 2020/21, Brighton and Hove chose to restrict the MFG rate to 0.5%. The rationale for adopting this approach was to offer a degree of protection to schools that are not otherwise gaining funding on a per pupil basis but to balance this with ensuring schools who are gaining through characteristics identified in the formula receive a fair proportion of their gains. A higher level of MFG will mean that the scaling back of formula allocation increases would be subject to a greater level of scaling back.

For 2021/22, local authorities will be able to set an MFG between +0.5% and +2% per pupil. Prior to the application of this calculation an adjustment will be made to the 2020/21 baselines to ensure that the impact of new delegation for teachers’ pay and pension grants is considered. This means that schools on the MFG will also have their pay and pensions grant funding protected.

It is proposed for 2021/22 that Brighton and Hove adopt an MFG level of +1%. This represents a balance between the approach taken in 2020/21 (applying MFG at the lowest level) and that taken by the majority of LAs (applying MFG at the maximum level. 

4.6   The LA will adopt the minimum per pupil funding levels as set by DfE (see 3.4). The only factors not included in per-pupil funding for the purpose of the MPPL calculation are premises and growth funding.