Agenda item

Jenny introduced the report which presents the high-level detail of Dedicated Schools Grant (DSG) Settlement and the National Funding Formula (NFF) for 2022/23.

Jenny said that the DfE published in July the indicative NFF allocations for schools but are not complete as they do not include premises funding and are indicative as based on the October 2020 census and the final school budgets will be set on 2020/21 census data.  Jenny said that the funding settlement has changed one or two things in terms of it has added £10k to the sparsity values making a difference to some small schools and there is a 3% increase to the other factors.  Jenny added that the settlement includes a guaranteed increase of 2% per pupil allocation therefore schools with falling rolls may not see a 2% cash increase in their budget.

Jenny stated there are still schools that sit on the funding floor which would continue to be raised with the DfE because without the DfE guaranteeing an increase in funding those schools would be at a cash standstill in their budget.

Jenny stated that the NFF operates with a number of protections, notably the Minimum per Pupil Funding level (MPPL) and the Minimum Funding Guarantee (MFG).  It remains that local authorities would be funded at the 2020 census and schools at 2021 therefore changes in the census data such as an increase in the number of pupils eligible for FSM may ultimately create an affordability gap which may require amendments to some aspects of the 2022/23 through the minimum funding guarantee.

Jenny said that in terms of the high needs block Leicestershire continues to sit on the funding floor so receive the minimum increase of 8% per head of population.  Jenny commented that whilst creating specialist provision it was not necessarily generating high needs DSG especially when a provision in a special needs unit is attached to a mainstream school as those schools are reflected in the main school census and not the high needs census.  Jenny added there were issues too in terms of central services including the DSG contribution made to school effectiveness and historic premature retirement costs.  The DfE in the NFF consultation are also proposing changes to the way Leicestershire are funded from 2023/24 onwards.

Jenny added that the high needs settlement does improve but not significantly and certainly not enough to recover the deficit.

Jane Dawda referred to the consultation released at the end of July on the sparsity factor and felt that the DfE actually looked at the comments and had added a tapering scale.  Jenny said that tapering has always been in place and local authorities could adopt it.  In Leicestershire the NFF has been delivered as defined by the DfE without any local changes to any factor.  Jenny added that sparsity however does not provide the financial protection to small rural schools as set out by the DfE. 

Graham referred to paragraph 7 and the way schools are split and asked if more detail could be provided for Schools Forum.  Jenny agreed to filter out the table and circulate.

Graham Bett asked for clarity on paragraph 8 of the report.  Jenny referred to the schools block transfer proposal which has a disproportionate effect across different groups of schools in Leicestershire.  Jenny added that because the minimum per pupil funding level and the minimum funding guarantee overwrite the formula so taking out funding could mean that these protections put it back in again so when discussed at the June Cabinet report Leicestershire put a disapplication request to the Secretary of State to see if the Secretary of State would allow a variation to the minimum per pupil level – that disapplication went in to the DFE but they requested more detail and have not made a decision which is why the consultation presents two proposals one of which is within the gift of Leicestershire to deliver with the approval of Schools Forum and the second that will need a Secretary of State decision. 

Karen Allen commented that previously Schools Forum voted against a Schools Block Transfer and the next vote will probably be the same.  Karen said that Jane said that one option in the consultation could be delivered in Leicestershire if Schools Forum agree and the other one will need Secretary of State decision.  Jenny stated that if Schools Forum do not agree the option is deliverable that too would need Secretary of State decision.

Carolyn Lewis asked about the impact of national insurance on budgets and how a helpful message might be shared with schools in terms of the difficulties they face with their budget setting processes.  Jenny said this issue had been raised with the ESFA and they suggested conversations were taking place with the Treasury as part of the Comprehensive Spending Review.

Graham referred to paragraph 11 in terms of the difference between the Government’s increase of £7.43m and the planned increase of £5.7m so therefore the difference is what the County Council are planning to take out of schools budgets for the high needs budget.  Graham stated that therefore the County Council do not need to do the transfer as the Government has increased the funding.  Jenny stated that within the high needs plan £2m had been factored in and what this is doing is reducing the deficit from £43m to £35m and therefore does not resolve the problem.  Jane Moore added that it looks like the Government has given the extra funding to prevent the transfer however this is not the case.  As a local authority the projection was a financial increase of 5.7% but actually received 7.3% which mathematically looks like the amount of the transfer.  This has taken a cumulative deficit of £3.78m so need to reduce to zero in order to not cause the concerns within the local authority but take Graham’s point of what it looks like but the local authority will still need to go ahead with the proposals for a transfer.

Jane Lennie referred to the five local authorities that have entered into agreement with the DFE who will provide additional funding to remove the high needs deficits but such an arrangement is not expected to be available to Leicestershire and asked why this was not the case.  Jenny said that conversations with the ESFA have taken place around this at regional financial meetings; the 5 local authorities all have transformation plans and bring their DSG back within the level of grant and the current Leicestershire plan does not do this.  Jenny added that the DfE are having conversations with other local authorities but have not approached Leicestershire and they are not guaranteeing there is going to be further funding for any further agreements.

Kelly Dryden referred to what appears to be inconsistency between the funding protection for special schools.  Jenny stated that there are no funding guarantees within the high needs settlement for special schools which has been raised before as mainstream school funding has increased but special school funding has not.  The DSG settlement for high needs is quite complex as it takes into account a number of factors and quite interesting that the population factor which is 8% per head is quite a small element of the DSG settlement so the 8% generated the £7.4m.  Jenny said that in terms of the units this has been raised with the DfE as pupils are picked up within the mainstream count so those pupils will be part of that 2% per pupil increase but all of their top-up funding comes from the high needs so they cross the two.

Martin Towers asked if it was possible to share the letter to the Secretary of State requesting the 0.5% transfer.  Jenny said that no request has been made and was dependent upon the outcome of the consultation and any decisions made by Schools Forum.  It will be these two things that will form the content of the letter for which the deadline is 21 November.  Martin commented that he presumed the letter had been sent based on previous conversations and thought Schools Forum voted to not agree it in a previous meeting and it was said the letter would be going to the Secretary of State as evidence that all options have been explored.  Jane Moore stated that the transfer was disagreed two years ago and Leicestershire are now making another proposal which has not formally been presented to Schools Forum for a decision; any request to the Secretary of State would be dependent upon that decision.  At the last meeting discussion took place and Schools Forum members were quite clear around views but had not been presented formally for the vote to be taken before approaching the Secretary of State.

Schools Forum noted the report, particularly the approach to be taken in the event of an affordability issue to align school budget allocations to the Schools Block DSG.