Agenda item

Report ED17034

The Sub-Committee considered a report setting out information on the 2017/18 Dedicated Schools’ Grant (DSG) and how it would be allocated.

On 20^th December 2016, the DfE released the DSG allocations for 2017/18 alongside the second stage of the consultation on the National Funding Formula (NFF) and the High Needs Funding Formula to be introduced for 2019/20.  The consultation was due to close on 22^nd March 2017.

The DSG allocation was in line with the expectation of LA officers.  For 2017/18 the blocks were not ring-fenced and therefore an overspend in one block could be offset against an underspend in another block to ensure that the DSG was balanced overall.

The Early Years Block funding had been allocated based on the New Early Years funding Formula (EYFF) consulted on earlier in the year.  As anticipated, the allocation for Bromley had increased meaning that not only had the LA not needed to find any savings in this area but also that most EY providers would see an increase in their funding in 2017/18.  In November 2016 the Schools’ Forum was consulted about the proposed funding formula for 2017/18.  The outcome of the consultation supported the LA’s recommendation to only have one element (deprivation) in the new funding formula, but for this to be allocated using both IDACI (Income of Deprivation Affecting Children Index) and EY Pupil Premium entitlement as the measures of deprivation. 

As a result of this most settings would see an increase in funding, with the exception of a small number of settings that had previously received additional funding through the SEN factor which was no longer an allowable factor.  It was however anticipated that the impact of this would not be significant.

Funding for 2 year olds would remain at £6.00 per hour, however the funding received by the LA would increase from £5.28 to £5.66, reducing the amount by which this was subsidised by 3 and 4 year old funding.

The outcome from the consultation also introduced a requirement for all LAs to establish an SEN Inclusion Fund – for Bromley it had already been proposed that the expenditure relating to the SEN Support in Pre-schools (SIPS) programme would move from the High Needs Block to the Early Years Block.  That this was deemed to fulfil the new requirement.

The following additional new funding allocations for  2017/18 would also be received:  (i) Disability Access Funding of £73,800 – allocated to pupils in receipt of the Disability Living Allowance; and (ii) Additional 15 hours free childcare of £2.6m which would come into effect from September 2017.

The Early Years Block had been balanced to zero as expected and was therefore neither subsidised by nor subsidising either the Schools Block or the High Needs Block.  The High Needs Block had received an allocation of £46m from which the DfE deducted funding recouped for an agreed number of places at special academies, AP academies and other post 16 institutions at a total of £6.774m which then brought the High Needs Block down to £39.2m.

It was anticipated that around £2m savings needed to be identified and achieved within the High Needs Block in 2017/18.  There were a number of concerns from Officers and Schools Forum members that the full scale of the savings required would not be able to be achieved as many of the proposals would not take effect until September 2017 and therefore would only achieve 7/12ths of the required saving.

The following savings had been identified and included in the proposed budget allocation for 2017/18.  (i) 1.5% reduction on top up bands for special schools, AP provision and unit places from September (£86,000); (ii) 1.5% reduction on banded top up funding for statemented pupils in mainstream schools from September (£25,000); (iii) Savings to be identified within the Darrick Wood Hearing Impaired Unit/sensory support (£50,000); (iv) Additional funding target for primary and secondary schools to contribute towards the cost of non PEX (permanently excluded pupils) at the PRUs  (£100,000); (v) Savings to SEN transport costs charged to the DSG (£100,000); and (vi) Savings to be identified within the Phoenix Pre School Service (£392,000).  This totalled savings of £753,000, considerably short of the target that was originally identified.  Even after having received approximately £460,000 for population growth, the High Needs Block remained overspent by £820,000. 

As the three blocks within the DSG were not yet ring-fenced and as the EY Block had been balanced against the revised EY allocation, it was proposed that the overspend within the HN Block should be met by further savings within the Schools Block.  The need to find savings of around £1.5m had previously been identified and the Schools’ Forum had agreed that this should be done by reducing the lump sum and the low cost high incidence SEN factor for primary schools.  This would then have the effect of not just achieving the required savings but also moving the primary:secondary ratio  from 1:1.19 to 1:1.24 in preparation for the introduction of the NFF. The agreed rates were for the primary lump sum to reduce from £155,000 to £130,000 and the primary LCHI factor to reduce from £1,858 to £1,450.  The additional £1m to support the shortfall of funding in the High Needs Block had been taken from the AWPU value across primary and secondary schools so there was no further impact on the ratio. Adjusted AWPU values were: Primary AWPU reduced from £2,938 to £2,930; Secondary KS3 AWPU reduced from £4,168 to £4,160; and Secondary KS4 AWPU reduced from £4,559 to £4,550.

In 2017/18 the DfE was changing the ESG (Education Services Grant) paid to LAs. Currently this was split into two elements – General Funding rate based on the number of pupils in maintained schools and the Retained Duties element based on the number of pupil in academies and maintained schools. In 2016/17, Bromley received a combined figure of £1.2m which was made up of £543,000 for the General Fund element and £742,000 for the Retained Duties element. In 2017/18, it is anticipated that the General Fund would reduce to £181,000 for the period April to August at which point it would cease.

The DfE had introduced a new function allowing LAs to retain funding within the Schools Block to cover the cost of statutory duties for maintained schools previously funded through the General Fund element of the ESG. The proposal was that schools should be asked to agree to a notional sum of £30 to be retained for each pupil which would generate a total of £97,000.  This needed to be agreed by the relevant Schools’ Forum representatives and at the meeting, the representatives of the maintained schools voted against the payment.  In the light of this there were two options available. The first option was to take this to the Secretary of State for a final decision. The second was to adjust the funding made available in the overall funding pot.  It was recommended that the second route be taken as this was a relatively small amount in comparison to the overall funding, there was a chance that the Secretary of State would uphold the decision and as there were so few remaining maintained schools, and it was expected that they too would convert to academies, this was a short term position that was not worth pursing further.

At its meeting on 12^th January 2017, Schools’ Forum members were unhappy at the level of funding reductions required in order to balance the DSG budget. Forum members stated that it was regrettable that schools were being asked to find cuts and asked the Local Authority to find additional funding from alternative sources to offset this. This proposal had not been considered by officers and it was assumed that expenditure should remain within the overall funding envelope.

In opening discussions, the Chairman noted that the additional 15 hours free childcare would benefit parents across the Borough.

Turning to the savings that had been identified, the Chairman queried whether the additional contribution towards the cost of non-permanently excluded pupils at the PRU would be voluntary contributions.  In response, the Director of Education reported that there was a large piece of work within the Department which was trying to identify how to address the continuing challenges in this area.  One of the main issues was that of double funding whereby schools continued to receive funding for pupils that had been excluded and had therefore been provided with additional funding to attend the PRU for a period of time.  The Portfolio Holder for Education highlighted that the Government White Paper appeared to be suggesting that the responsibilities placed on Local Authorities in this area may change and the Council’s Education Department were trying to establish systems that would address these future challenges.  A Member suggested that if schools were to be required to pay for places at the PRU they should be afforded the choice and responsibility as to how the services available at the PRU were used.  The Member reported that on a number of occasions had teachers had suggested to her that short periods of respite in the PRU could prevent a permanent exclusion yet this option was rarely made available to head teachers.  In response, the Director of Education explained that the current referral route for non-permanent exclusions was the Core Panel.  As part of this process schools had to demonstrate that interventions had taken place which, the Director of Education acknowledged, Head Teachers currently found challenging.  The Portfolio Holder for Education highlighted that the Education Department continued to work with schools to reduce the number of permanent exclusions across the Borough which were currently too high.  It was possible that in this respect there was a role for multi academy trusts to work collaboratively to provide respite across their schools for more challenging pupils when this was required.

Turning to the savings to be identified within the Phoenix Pre-School service, a Member recalled that in the past there had been concerns about high rents and sought assurances that officers were satisfied that the current rents were competitive.  The Director of Education confirmed that the rent had reduced and that other aspects of the service were now being reviewed.  The Portfolio Holder reiterated that there was a fixed funding envelope and the LA needed to ensure that funding in the High Needs Block was appropriately allocated.  Members stressed that the services – the health, support and nurturing ethos – were key and must be retained, the physical building was of less importance.  The Portfolio Holder reminded Members that as the Local Authority assured itself that the available funding was being used in the best possible way it was clear that Members would be required to take more difficult decisions.

In relation to the overspend in the High Needs Block, the Head of ECHS Finance explained that the Local Authority had not taken the decision to realign funding from the High Needs Block to the Schools’ Block in 2016/17, this decision had been taken by the DfE in preparation for the introduction of the NFF. This meant that funding shifted from the High Needs Block to the Schools block where the actual spend was taking place. Since this tiome the high needs block expenditure has continued to grow. However the funding has not followed and therefore a pressure has occurred which needed addressing.  A Member suggested that it would be helpful for Members to have been provided with a more detailed breakdown of the overspend in the Schools’ Block.  In response, the Director of Education explained that bulge classes had a significant impact on the Schools’ Block as funding for equipment and an additional teacher was required, even when the class was not filled to capacity.  In addition to this the opening of a Free School in the Borough also had an impact on the Schools’ Block as pump prime funding placed additional pressures on the available budget.  Previously the Department for Education had provided the funding for the start-up costs of Free Schools however this responsibility now fell to the Local Authority.  The Head of ECHS Finance agreed to provide the Sub-Committee with a briefing note detailing the costs associated with bulge classes and single form entry schools.

Action Point: that the Sub-Committee be provided with a briefing note detailing the costs associated with bulge classes and single form entry schools. (Head of ECHS Finance)

The Head of ECHS Finance provided the Sub-Committee with details of the discussion held at the meeting of the Schools’ Forum on 12^th February 2017, reporting that the Schools’ Forum had been unhappy about the level of cuts being proposed.  Members of the Sub-Committee noted that the level of cuts to the schools’ budgets were mirrored those currently confronting the Local Authority.

In response to a question from the Chairman, the Head of ECHS Finance reported that the Local Authority had known about the ring-fencing of the blocks in Summer 2016.  Local Authority Officers had been in consultation with schools since then, especially primary schools.  The Head of ECHS Finance reported that at the meeting of the Schools’ Forum a Secondary Head Teacher Representative had reported that secondary heads were unhappy with the proposals and wanted the primary/secondary funding ratio to be brought in line with NFF proposals.

A Member noted that within the information provided to the Sub-Committee, there were six or seven schools where there was no caveat that pupil numbers were changing and where decreases in funding were in excess of 4%.  The Member requested that the Head of ECHS Finance provide an explanation of any reductions in funding greater than 3% that did not already have an explanation.

Action Point: That an explanation be provided for any reductions in funding greater than 3% that do not already have an explanation. (Head of ECHS Finance)

RESOLVED: That:

(a)  the DSG allocation for 2017/18 be noted;

(b)  the Portfolio Holder for Education be invited to consider the comments made by the Education Budget Sub-Committee; and

(c)  the Portfolio Holder for Education be recommended to approve the DSG allocation for 2017/18.