New dawn for funding

ASCL funding specialist Lindsey Wharmby looks at the future of school and college funding, including thorny issues such as post-16 funding via local authorities and the need to operate schools more like businesses.

We have come a long way in the last 25 years as can be seen from Peter Downes' article The best thing since... - but where do we need to go in the next few years?

At the school level, three-year budget information is helpful but uncertainty about funding or cost levels is not the real barrier to good strategic financial planning. The real barrier is a cultural one, both with schools and politicians.

Schools have to recognise what colleges have known for some time now - that they are running businesses where the purpose is not shareholder profit but the best education possible for students given the resources available. Everything should be geared towards using resources as efficiently and effectively as possible to obtain the best conditions for learning.

Running a business requires the appropriate staff, and workforce reform has accelerated the movement towards having the finance or business manager on the strategic senior leadership team in most secondary schools. These key people are now playing a full part in the leadership of schools, as they have long done in colleges.

The information available to run the business has improved considerably in the last few years. There is good benchmark data on the use of resources (the CFR website) and websites help schools to obtain the best value for money for the range of things they need - books to electricity, computers to cleaning.

What school needed now is the staff with expertise to manage all this - and the excellent innovations from workforce reform have shown that they do not need to be teachers.

All schools should be planning the use of their resources over at least three to five years - from the deployment of staff through to capital depreciation of their assets (computers, science equipment, all-weather pitches, for instance).

How much is enough?

Where student numbers are declining, schools may need to reserve some money in the early years to protect the curriculum provision as they manage the change towards a smaller staff.

Reserves, contingencies and balances are a great deal more complicated than simply the money in the bank on a given day in the year and we need a distinctly more sophisticated discussion of this thorny issue.

No one is defending the squirreling away of large amounts of revenue for no particular reason, but planned and managed resources over the ups and downs of school life is a different, and more complicated, matter. So let us move to the position where everyone recognises that schools are running businesses that educate young people and require the staff and practices to do that.

In the national funding system for schools we have taken several steps forward in the last ten years and one or two backwards again. The forward steps included a national formula for distributing resources to local authorities in 2003 and a 100 per cent ring-fenced Dedicated Schools Grant (DSG) for local authorities' school budgets in 2006.

However, in the step towards the DSG we lost the connection with the national formula before we had reached the state where every authority was getting its fair share. Since 2006 all authorities have their 2005-06 expenditure plus an annual increase (the Spend Plus).

This means that any anomalies in the system in 2005 are still there and becoming embedded. We need to move back to a national formula for distributing resources to the DSG - and ASCL will be arguing strongly for this in the promised review of the funding formula.

Our major criticism of the original 2003 formula is that it was never based on an assessment of the cost of delivering the basic curriculum. This can be done, as has been shown by the LSC and many local authorities, and is an absolute essential.

Until you know what is covered by the basic entitlement, you cannot begin to discuss the resources for additional educational need.

Levelling up for post-16

One step forward has been the introduction of a national formula for post-16 students applied at school level which was introduced by the LSC in 2002. The formula and associated planning system has changed over the intervening years and now has the capacity to move the funding for all post-16 students onto a level playing field - which has long been ASCL policy.

However we are on the brink of another change in post-16 planning and funding with the creation of the DCSF and DIUS and the proposed changes to the LSC. We shall argue hard for the retention of all the good aspects of the national system, whilst recognising that the planning of the new entitlement curriculum 14-19 needs to be managed regionally within a national framework.

The problem is that none of the existing local arrangements exactly match the reality on the ground. Some local authorities are either too small to provide a coherent 14-19 entitlement or too large.

There are plenty of small authorities where the local FE college may be in a neighbouring authority or may take students from a wide range of authorities. Equally some of the very large authorities have correspondingly large boundaries, with neighbouring authorities that might make much more sensible partners at the local level.

The LSC was originally based on various congregations of local authorities. It has moved to a regional structure based on the government regional offices, but with local teams based in local authorities.

Somewhere between the large regions and the local authorities, there must be an arrangement capable of organising a full range of opportunities for all our students delivered by individual schools, colleges and other providers. It would be sensible to have a national funding system that supported the development of this coherent system that will operate across local authority boundaries.

The LSC formula is activity-led. Using an impressive national database, they work on the average cost to deliver a good quality course for the particular (national) qualification. This course weighting will recognise the need for smaller classes in some practical subjects and the additional technical or equipment support needed.

Since schools and colleges (and other providers) are teaching the same national qualifications to the same national standards, this makes sense. After that the funding formula recognises that some areas of the country are more expensive (the area cost adjustment), and some students need extra support.

Like all formulae, it needs to be constantly monitored to ensure that it realistically reflects the cost of delivering the required qualifications and is sensitive to identified need.

SEN funding

Finally we need to address the difficulties in funding the special educational needs of the small number of students who require very considerable support. For the majority of these students their needs can be met from a formula distribution of resources, but the few who require a very high level of support do not easily fit a formula allocation. There needs to be a national system for assessing and providing for these students so that support does not become a postcode lottery.

The introduction of local schools forums was welcomed by ASCL and where they work well, they work brilliantly. However there are some issues, particularly in areas where there is an inbuilt primary school majority because it does not look at the overall picture.

The recent changes to the make-up of forums, with the addition of 14-19 and under-fives representation will improve the balance in forums. It would make sense, as the post-16 funding system changes, to review the representation for post-16 students in secondary schools and colleges.

Meanwhile all school forums could do with the time and space to gain the knowledge and experience to deal with their rapidly increasing workload - either that or a slow down in the number of initiatives hitting schools!

So, while many gains have been made in the last 25 years, there is still plenty to fight for to ensure that our funding system supports the work that schools and colleges are doing to provide the best possible education for our students.

Lindsey Wharmby is ASCL's funding consultant and a former headteacher in Leeds.