Schools national funding formula: CIPFA responds

05-05-2016

by Kerry Ace, Finance and Policy Manager, CIPFA  

The Department for Education’s (DfE) recent consultation on the proposed national funding formula for schools was the first of two planned. This one focused on three issues: the principles to underpin the formula, the building blocks for the formula and the factors to be included. CIPFA’s views are summarised below. CIPFA’s full response can be found here

CIPFA supports the view that schools’ funding should be more transparent, fairer and that the outcomes of the formula should support opportunities for all pupils. However, there is still much to be decided and it is not yet possible to see how the new formula will operate across the sector. In particular, it is not possible to see what the impact of the factors will be until they have weightings attached to them.

Winners and losers

Introducing a new formula could see significant losers in terms of funding and has the potential to generate significant turbulence across the sector. Key to a successful implementation is the need to ensure that there is sufficient funding overall to provide for a high quality education system and that there is appropriate transitional protection to allow schools to adjust to changing funding levels. Although the consultation considers the transition to a reformed funding system, further detail is required regarding what the protection arrangements will be and how they will be funded. Plans to phase in changes over several years are noted, but the maximum rate at which schools lose funding will also need to be considered and set out as well as a defined timescale to help schools plan accordingly. 

Increasing efficiency

It is important that successful schools deemed to be overfunded do not quickly become unviable. The consultation paper look at how those schools that will lose funding will need to increase their efficiency. To reduce costs, it is essential that school leaders are clear about what they spend their money on and the associated outcomes. They require appropriate knowledge, skills and support to carry out this role effectively. 

While acknowledging that there are factors within the proposed funding formula intended to address such issues as deprivation, sparsity and exceptional circumstances, we are concerned that the difficulties in recognising and accommodating local circumstances should not be underestimated. It is currently far from clear how effective a national funding formula could be at addressing a range of local circumstances which impact on disadvantage such as high urban costs, remoteness, high travel to school costs and dilapidation of schools’ estates and equipment. 

Adequacy and capability of accounting systems?

At a practical level, the DfE will need to set out how schools will be paid - some small schools do not have bank accounts or the accounting systems to handle their own payments. A further concern is that many do not have the management accounting capacity to monitor their expenditure. Where local authorities choose to withdraw further from providing services to schools, an increased number of schools will also need to negotiate contracts directly and require the necessary procurement expertise to do so.

Download CIPFA's full response