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LPHA – 24th June 2010 Developing Financial Landscape for Schools

LPHA – 24th June 2010 Developing Financial Landscape for Schools Kevin Williams – Head of Finance (Children, Families & Adults). Equal Pay for Schools. Equal Pay for Schools. LCC offer to maintained schools: Capitalise expenditure and spread cost over 20 years

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LPHA – 24th June 2010 Developing Financial Landscape for Schools

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  1. LPHA – 24th June 2010 Developing Financial Landscape for Schools Kevin Williams – Head of Finance (Children, Families & Adults)

  2. Equal Pay for Schools

  3. Equal Pay for Schools LCC offer to maintained schools: Capitalise expenditure and spread cost over 20 years Defer repayment until 2011-12 Charge cost of financing at going rate (£75k per £1m) Example: primary schools with estimated outlay = £90k Annual repayment = £6,750 Total repayment (20 yrs) = £135,000

  4. DCSF Consultation: School Funding • Intention to mainstream as many specific grants as possible into DSG; SDG (Devolved) excl. specialist schools; SSG; SSG(P); School Lunch Grant; EMAG; Extension of the Early Years Free Entitlement; Extended Schools – Sustainability and Subsidy • MFG would apply to a base that includes both funding through DSG and grants that are to be mainstreamed • Ensure funding via formula towards underperforming ethnic groups and pupils with EAL is at least as great as total of EMAG plus amount of DSG already nationally distributed

  5. DCSF Consultation: Schools Funding • Structure of the Formula: a) A basic entitlement b) Additional Educational Needs c) High Cost Pupils d) Sparsity e) Area Cost Adjustment • Calculated in four separate blocks: i) Early years setting (using a, b, d and e) ii) Reception to Year 6 (using a, b, d and e) iii) Year 7 to 11 (using a, b and e) iv) High Cost Pupils (using c and e) • Fixed annual GUF per pupil for each LA and for each block

  6. DCSF Consultation: School Funding • Options for distributing deprivation funding: 1. Out of Work Tax Credit Indicator 2. Free School Meals (FSM) 3. Child Poverty Measure 4. Average IDACI (Income Deprivation Affecting Children Index) 5. FSM with additional 500,000 pupils in most deprived areas by the IDACI score not on FSM • Concerns that none of the options seems to be reflecting Liverpool’s “most deprived authority” status

  7. DCSF Consultation: School Funding • Meeting additional needs: - LAs to pass on their deprivation funding to deprived pupils by 2014-15 (Liverpool assessed at 59% in 2008-09) - LAs to operate a Local Pupil Premium from 2012-13 - LAs to decide operation of their Local Pupil Premium (to be agreed with their Schools Forum) Liverpool does have a similar factor in its current formula (calculated at £1,100 per pupil in 2010-11)

  8. DCSF Consultation: School Funding • Area Cost Adjustment - four geneic options: t - General Labour Market approach (currently used) - Cost of living approach - Specific cost approach - A Hybrid approach • Evidence drawn from Section 52 and other resources indicates that schools are not incurring substantial cost of this type

  9. DCSF Consultation: School Funding • Transition: School Level Protection: - Single set of transitional arrangements that applies to a baseline incorporating both DSG and specific grants - Propose to allow Schools Finance Regs to enable LAs to include specific grants as formula factors for 2011-13 • Transition: LA Level Protection: - Intend to have per pupil floor set above the MFG. No LA would receive an increase lower than the per pupil floor in either 2011-12 or 2012-13 - Intend to do away with cash floor mechanism

  10. Initial Observations from Finance • Local Pupil Premium would have to be set at a significantly high level to alter school’sin-take patterns to narrow the gap • Full roll-out of deprivation funding to 100% by 2014-15 will cause turbulence • Creation of four separate funding blocks will inevitably lead to pressure to reflect distribution locally (protected sector ISB?) • None of the deprivation indicators recognise Liverpool’s ‘most deprived authority’ status • Mixture of mainstreaming specific grants, deletion of cash floor plus Liverpool’s reduced share of overall funding is a concern. The full impact may not materialise until 2013-14 (i.e. post transitional arrangements) • Level (and possible existence) of ACA needs to be challenged

  11. MFG in Liverpool

  12. MFG Issues • MFG is significant factor in Liverpool (£3.0m 2010-11) • Impacts on all schools as MFG is funded by lowering AWPU rates at all ages • 39% of (pri + sec) schools are currently on the MFG • 20 schools currently receive over £50k in MFG

  13. MFG Future • DCSF Consultation - MFG likely to continue • To be used as smoothing mechanism if SDG and SSG are incorporated into ISB • Level of MFG will be below inflation/cost pressures • Likely to be 1% or less • Built in efficiency savings in MFG level

  14. Overview of pupil premium • Fixed extra amount for each disadvantaged pupil at a school • Funding is already weighted towards disadvantaged pupils • Pupil premium could be on top of this (a la Lib Dems) • Could simplify and centralise the current system • Single national funding formula (Conservative position) • Could also be used to fund non-state providers (e.g. free schools) • Potential for large winners and losers from such a reform

  15. What the parties have said • Liberal Democrats • Additional £2.5bn funded by savings elsewhere (CTC) • Effectively another specific grant • How would local authorities response? Conservatives • Plan to introduce a pupil premium within current schools budget (cost-neutral!) • Eventual aim for a single national funding formula (but not in manifesto commitment) • What price simplicity?

  16. Possible mechanism for improving achievement Extra resources Change mix of pupils across existing schools Pupil premiums Improved attainment Increased competition New providers Specialist schools

  17. Summary of empirical evidence • Direct effects of increasing resources • Evidence of a positive but small effect • Likely effectiveness across schools Indirect effect of peer groups • Demand side: unclear. Parents may have less incentive to pay a house price premium, but probably still care about peers “like us” • Supply side: unclear. Likely that schools have little scope to change their intake, but it may reduce the disincentive to take disadvantaged pupils Indirect effect of increased supply • Likely demand on financial incentives and established process • But a possible increase in segregation

  18. Closing schools deficit balances

  19. Early Retirement Costs

  20. Net Schools Revenue Balances 2005-06 to 2009-10

  21. Secretary of State statements (to date) Reductions: • Buddying and 0-7 partnership pilots • Local Delivery Support Grant 14-19 • High Performing Specialist Schools • TDA Grants • Extended Services capital grants (single capital pot reduction) • Specialist schools capital grants (schools notified) • Free school meals extension • Area Based Grants - 24% reduction across total DfE ABG (LAs to decide how to manage locally)

  22. Secretary of State statements (to date) Areas to be maintained: • Frontline spending on Sure Start, Schools and 16-19 Participation protected • Schools will receive all the money allocated to them for One to One tuition; Every Child Literacy & Numeracy and Every Child a Talker programmes • 3 & 4 year old 15 hours protected • Provision for 20,000 most disadvantaged 2 year olds (2 year old Pilot) • Educational maintenance allowance to be paid in full • TDA Grants (golden hellos) • No reduction to Formula grant

  23. Secretary of State statements (to date) De-ringfencing: • Think Family • Youth Opportunity • Challenge and Support • Fair Play Pathfinders capital • Fair Play Playbuilders capital • Youth Crime Action Plan

  24. Chancellor’s Budget 22nd June 2010 • Directly related headlines: • 2-year Pay freeze for public sector employees paid over £21k – 11-12 & 12-13 • Council Tax freeze for one year in 11-12 • Additional £30 billion public sector cuts to be announced in October following CSR • Review of public sector pensions as part of CSR • VAT increases to 20% from 4/1/11 • No further reductions in Govt capital spending – “careful choices” to be made

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