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Hope for the lottery losers

There are high hopes that April 2003 will finally see the launch of a fairer funding system for schools. Peter Downes reports

A headteacher recently wrote to The TES (March 8) to ask why, at a time when government is allegedly increasing funding for schools, he was having to prepare next year's budget with less money for a school with more pupils.

This epitomises the mystery of the national funding system. The complex system is understood by few people; it produces different funding levels for schools in similar socio-economic circumstances; it uses data which are either out-of-date or irrelevant.

Although there is no doubt that since 1999 gross funding for education has increased, the amount distributed through the mainstream route via local education authorities (standard spending assessment, revenue support grant, fair funding formula) has scarcely matched inflation. The increase has been in capital funding, in specific and targeted grants tied to particular Government priorities, or in special high-profile initiatives from which only a minority of schools benefit.

The good news is that the Department for Education and Skills is working with teachers, governors and other stakeholders to devise a new system for distributing funding to LEAs in time for the financial year beginning in April 2003.

The essential purpose of the reform is clear and welcome. It is to produce a system which can guarantee that:

* wherever a child lives in this country, he or she has a fair allocation of funding for education;

* the funding provided matches the expectations and requirements of government policies;

* those responsible for providing educational services at school or LEA level are clearly accountable for making the best use of the funds they have received; and

* governors and heads can predict the funding they are likely to receive for more than one year ahead so that planning for school development can be more coherent.

To prevent the tensions which have arisen between schools and LEAs over delegation targets, funding will be split into a "schools' block" and an "LEA block".

The schools' block will be based on an activity-led and needs-based model - a detailed analysis of what schools do and the expectations placed on them.

The LEA block will be determined on the basis of previous expenditure patterns as a similar needs-led analysis is impractical. The education funding strategy group - the working group of stakeholders - has given great attention to ensuring that the new formula adequately protects children with special needs, with or without statements. The present use of proxy factors (free school meals) will probably be replaced by an index of deprivation for pupils in the younger age-groups and prior attainment scores in the case of older pupils.

The special problems facing schools with many deprived children, children with English as an additional language andor high pupil mobility have been convincingly presented.

There need be no fear of a dramatic switch of resources away from those who genuinely need them. All LEAs will receive funding for basic entitlement for all pupils plus additional money to combat disadvantage and meet special educational needs.

Some will receive extra funding because of geographical factors: for some, the sparsity of their population causes them to incur extra expense; for others, higher costs of paying, recruiting and retaining staff produces budget pressures.

Traditionally, this latter factor has been recognised in the area cost adjustment element of the SSA formula. Not surprisingly, the future of this element has been contentious: the current beneficiaries (London and south-east counties) defend it, while others complain that the criteria used for calculating the area cost adjustment are not based on the actual extra costs incurred by schools.

As part of the new regime every LEA will create a schools forum, mainly composed of heads and governors, which will contribute to decisions in relation to schools funding.

The Government, and LEAs, want the structure and election process for the forum to be devised by the LEAs themselves; the school and governor representatives on the official working group believe that the format and procedures should be the same across the country.

Governors will need to be fully aware of their local forum in the light of its potential influence.

A complete outline of the new system is expected at the end of April. What it will mean in practice for individual LEAs will not be clear until after the Government completes this summer's review of all spending for the next three years. Unless substantially more money is made available for education, the "winners" under the present system will lose out.

Peter Downes represents the Secondary Heads' Association on the education funding strategy group

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