National school funding formula ruled-out, but school funding still requires urgent review

(Title Image: BBC Wales)

Children & Young People Committee
School Funding (pdf)
Published: 10th July 2019

“The system for funding schools is hugely complex, multi-layered and dependent on many factors. While it would have been easy for us as a Committee to simply recommend additional funding for education and for schools, we absolutely believe that increasing the level of funding alone is not the solution. The funding must also be used effectively.”
– Committee Chair, Lynne Neagle AM (Lab, Torfaen)

1. The funding mechanism for schools in complex and should be urgently reviewed

Pic: National Assembly of Wales

Decisions over how much money schools actually get largely lie with local councils, though the Welsh Government plays a role by setting the overall budget for local government as well as adding top-up funding for specific education initiatives (like the Pupil Deprivation Grant).

In 2018-19, £2.57billion was spent on schools, working out at £5,675-per-pupil – slightly higher than 2017-18 in cash terms, but after inflation is taken into account it’s actually lower. 84.2% of the schools budget actually goes to the schools, with councils retaining the other 16.8% (£407million) to cover the cost of centrally-provided services like home-school transport. The proportion of school budgets retained by councils has actually decreased from 25% in 2010-11.

There are only 29 fewer pupils in 2018 compared to 2010, but over the same period, the equivalent of 1,416 full-time teachers have been lost.

Witnesses said the main problem was the size of the overall pot, not necessarily how it’s spent. Within the education sector, it’s believed the Welsh Government doesn’t prioritise education to the same extent as the NHS, while schools have to compete with social care within local council budgets.

The Committee recommended the Welsh Government urgently reviews how much funding is required to provide schools with sufficient resources based on a basic minimum cost, with specifics (for deprivation and sparsity) added afterwards.

2. There’s a lack of transparency in the way schools are funded

There are big differences in per-pupil funding between different local authorities, ranging from £4,432-per-pupil in the Vale of Glamorgan to £5,755-per-pupil in Powys during 2018-19. Headteachers raised concerns about the transparency of grants awarded by regional consortia as well, while there were further concerns that councils and regional consortia were effectively duplicating their school improvement service spending – raising worries over potentially wasted money.

A number of teaching unions complained of a “funding fog” too, though three main reasons were given for local differences: overall funding to a council from the Welsh Government; local authority prioritisation of the education budget; how much the local authority retains to run education services centrally.

The WLGA argued that while the current funding mechanism for councils was imperfect, it was the best method available and there will always be winners and losers. The Welsh Government have said repeatedly they’re open to changing the council funding formula if councils can reach a consensus – but that hasn’t yet happened and there’s no indication that the WLGA want a review.

The Committee recommended that if the formula is changed in the future, it should be needs-based and use the aforementioned basic minimum cost for education.

3. There were mixed views on the need for a national funding formula

Each council decides for itself how much an individual school gets using their own formulae, but witnesses said this sometimes led to schools with similar characteristics in different local authorities having up to a £1,000-per-pupil difference in funding.

However, there was no consensus on whether there should be a national funding formula. Swansea Council said such a system would lead to winners and losers in itself, while the Association of School and College Leaders (ASCL) called for a national formula and even went a step further by supporting possible direct funding for schools by the Welsh Government.

The Committee would prefer more consistency between local authorities, retaining local control over spending, than recommending any kind of national funding formula.

4. Schools should move to a three-year budget model

As far back as 2006, it was recommended that schools be put on a three-year budget cycle instead of an annual one – though it would have to be taken forward alongside a three-year budget settlement for councils. It’s believed a three-year cycle would allow schools to plan more effectively over the long-term.

The Pupil Deprivation Grant is fixed for two years, for example, but the Committee was warned that the Welsh Government doesn’t know with any certainty what their own funding will be beyond 2020 because of a severely delayed spending review by the UK Government.

The Committee didn’t believe this prevents the Welsh Government from providing three-year settlements to councils and schools and recommended they take a serious look at it.

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