ITEM NO:B1(a) DECISION - MAKER: CABINET MEMBER FOR LIFELONG LEARNING AND TRAINING DATE OF DECISION: 2 ND FEBRUARY 2004 SUBJECT: REPORT OF: AUTHOR AND CONTACT DETAILS: EXECUTIVE DIRECTOR CONTACT DETAILS CHANGES TO THE SCHOOLS LOCAL MANAGEMENT OF SCHOOLS (LMS) FORMULA 2004-05 HEAD OF RESOURCES POLICY AND PLANNING, DIRECTORATE OF LIFELONG LEARNING AND LEISURE LYNN FRANKLIN SUPPORT TO SCHOOLS ACCOUNTANT Tel: 023 8083 4346 Email: Lynn.franklin@southampton.gov.uk IAN SANDBROOK EXECUTIVE DIRECTOR FOR LIFELONG LEARNING AND LEISURE Tel: 023 8083 2771 Email: ian.sandbrook@southampton. gov.uk A. RECOMMENDATION(S) That the following changes be adopted and used for calculating 2004-05 budget shares:- The delegation of funding for staff maternity to schools should be withdrawn. Funding for the Performing Rights Society licence should be on the basis of pupil numbers. The primary small school salary deduction should be eliminated. Foundation scores should be used to allocate special educational needs funding for pupils in Year R. The amount allocated for pupil turbulence should be ringfenced at 50,000 and only schools entitled to a turbulence funding of 2,000 or more should receive funding. Calculations relating to infant class size funding should be based on 5/12ths of the actual January PLASC pupil numbers and 7/12ths forecast September pupil numbers in line with the rest of the budget share. Where actual January numbers differ to forecast September pupil numbers, a number on roll adjustment should be used to clawback or allocate additional funds. The new budget share layout, shown in Appendix A should be adopted for future budget shares.
B. REASONS FOR REPORT RECOMMENDATIONS The first two proposed changes are recommended by the Department for Education and Skills (DfES). The other five changes are designed to make school budget shares fairer and/or simpler to understand. C. ALTERNATIVE OPTIONS CONSIDERED AND REJECTED The proposed changes have been developed in consultation with the Schools Forum. Not amending the LMS formula would go against DfES recommendations. D. WARDS /COMMUNITIES AFFECTED: SUMMARY All wards. 1. Each year the Local Education Authority (LEA) updates its Local Management in Schools (LMS) Formula used to calculate budget shares. The updates are a combination of DfES imposed changes and amendments to improve the way the formula works. BACKGROUND & REPORT DETAILS 2. The first two proposals have resulted because of DfES recommendations. Fair funding phase three: Funding for staff maternity 3. The LMS formula currently allocates funds to schools in order to buy back insurance to cover the cost of staff on maternity leave. The funds are allocated on the basis of numbers of female teachers in schools. The DfES have informed the LEA that this is not an allowed method of allocating funds. 4. It is proposed that maternity funding is de-delegated in 2004-05 and not allocated to schools through the budget share. The maternity cover service level agreement with schools would need to be withdrawn from April 2004, and schools would not have the option to opt out of maternity reimbursement. 5. Schools would be reimbursed at the end of the financial year for the cost of any Statutory Maternity Pay or Occupational Maternity Pay plus associated on costs charged to the school s budget. This reimbursement would be from a centrally held budget and would be limited in practice to the size of the budget. If the total costs were more than the total maternity budget, all claims would be pro-rated down. This ensures the budget does not overspend. Fair funding phase three Licence for Performing Rights Society 6. Funds are delegated to schools through the budget share in order to allow schools to buy back a licence purchased by the LEA on the school s behalf.
Allocations are currently made on a banded scale based on the number of pupils. 7. It is proposed that funding for this licence is allocated on a per pupil basis in line with DfES recommendations. 8. The following proposals are as a result of improvements to the LMS formula. Primary Small School Salary Adjustment 9. Primary schools budget shares include an adjustment for schools of less than 10 teaching staff (excluding a headteacher and deputy head). The notional number of teachers in the school is multiplied by the difference between the school average and city average cost of a teacher. This amount is then either added to the budget share (if the school average cost is more than the city cost) or deducted (if the school average cost is less than the city average). If the school's staffing requirement is between 6 and 10 other teachers, then its funding is based partly on the school average salary and partly on the city average. 10. This has the effect of penalising a small school, which tries to reduce its costs by employing a cheaper member of staff, such as a newly qualified teacher (NQT). 11. It is proposed that Small School Salary deductions are eliminated from 2004-05 primary budget shares. Special Educational Needs (SEN) Funding 12. Current funding for SEN is based on free school meal numbers and Standard Assessment Tests (SATS) and Baseline pupil scores in each primary and secondary school. 13. It is proposed that Foundation scores are used to allocate Special Educational Needs (SEN) funding for pupils in Year R. Funding for pupil turbulence 14. Primary and Secondary schools are currently funded for pupil turbulence when the average number of pupils who started or left each school during the course of the last two complete academic years is higher than the city average. 15. It is proposed that the amount allocated for pupil turbulence is ringfenced at 50,000 and that only schools entitled to a turbulence funding of 2,000 or more would receive funding. Funding for Infant Class Size 16. Funding for Infant Class size was incorporated into this year s budget shares. Currently, forecast September pupil numbers are used to calculate the number of infant classes a school needs.
17. It is proposed that the number of pupils used to calculate the number of infant classes will be based on 5/12ths of the actual January Pupil Level Annual School Census (PLASC) pupil numbers and 7/12ths forecast September pupil numbers in line with the rest of the budget share. 18. It is also proposed that where actual January 2004 numbers differ to forecast September 2003 pupil numbers, a number on roll adjustment will be used to clawback or allocate additional funds relating to 2003/04. This adjustment would continue in future years. New Budget Share Layout 19. Attached at Appendix A is the proposed new layout for 2004-05 budget shares. This is in response to the DfES s call for simpler information provided to schools. 20. The new layout shows total per pupil funding plus funding for additional factors such as floor area, number of free school meal pupils and actual cost of rent and rates bills. The third page shows allocations for service level agreements, repair and maintenance and rates for information purposes. 21. It is proposed that the new budget share layout is adopted for future budget shares. POLICY FRAMEWORK IMPLICATIONS 22. The proposals set out in the report are consistent with the strategies and policy objectives set out in the Education Development Plan (EDP). LEGAL IMPLICATIONS 23. LMS formulae are governed by The Financing of Maintained Schools (England) Regulations 2004. FINANCIAL IMPLICATIONS 24. The changes to the scheme have the following revenue implications based on 2003-04 pupil numbers. 25. De-delegating staff maternity will move 194,000 from the Individual Schools Budget (ISB) to the central schools budget. DfES regulations state that central school budget expenditure should not increase by more than ISB expenditure. We will therefore need to seek DfES approval to carry out this change. 26. Eliminating the Primary School Salary deduction will cost 67,000 at 2003/04 levels of funding and changes to funding for Infant Class size will cost 11,000. These costs will be met from other savings made within the ISB by year on year reductions in pupil numbers. 27. All the other changes have zero cost implications.
CONSULTATION AND CONCLUSIONS 28. Southampton s Schools Forum has been consulted on all of the changes detailed above, and the proposals have been amended in the light of their recommendations. 29. The Financing of Maintained Schools (England) Regulations 2004 states that a Local Education Authority must consult the governing body and headteacher of every maintained school about any proposed changes to the LMS formula. 30. The results of the consultation are as follows, as at 7 th January. The closing date for responses is 9 th January. Appendices: Percentage Percentage Proposed Change replying agreeing Funding for Staff Maternity 26% 91% License for Performing Rights Society 26% 100% Primary Small School Salary Adjustment 21% 89% Special Educational Needs (SEN) Funding 24% 80% Funding for pupil turbulence 26% 73% Funding for Infant Class Size 24% 100% New Budget Share Layout 26% 100% Appendix A shows the proposed new layout for school budget shares. Documents in Members Rooms None. BACKGROUND PAPER The Financing of Maintained Schools (England) Regulations 2004 Documents available for inspection at: Education Directorate, Southampton City Council, Frobisher House, Nelson s Gate, Southampton.