THE good news is that there will be more money spent on the nation’s schools in 2003-04 than ever before. The bad news is that the increase governors saw on the draft budget allocation recently is not as large as it appears.

The problem is that, though schools have more money, they will have to do more with it. For example, there is a 4.75 per cent increase in employers’

contributions to teachers’ pensions and an increase of 1 per cent in national insurance contributions. There is also this year’s teachers’ pay rise of 2.9 per cent (outside London).

Governors also have to adjust to changes in the standards funding that comes directly from central government. From April 2003, this will be largely rolled into mainstream funding. Gone are the substantial grants for school improvement and assistants, together with smaller sums for induction of newly qualified teachers and administration of performance management.

Taking account of extra costs and inflation, the real improvement in budgets is modest: between 2 and 3 per cent, though this very much depends on how much your area has benefited from changes to the way local education authorities are funded by central government.

This new distribution method makes more explicit what should be spent on pupils (the “formula spending share”). But again, beware! Some money you think is yours (in the so-called “schools share” of the budget) in fact has to cover LEA activities such as running admissions and free school meals.

Each LEA now gets a basic entitlement, plus a top-up for “additional educational needs” (to combat disadvantage) plus another top-up for area costs, such as higher staffing costs in London. The basic entitlement is the same for every child in the country:

* under fives - pound;2,548.83;

* primary - pound;2,006.14;

* secondary - pound;2,659.16.

The top-up for additional needs is pound;1,300 per qualifying pupil, those who come from families on income support, for example, or who do not have English as their first language.

The new “area cost adjustment” is more sensitive that the old one and has been granted to more LEAs than before. For inner London this adds 26 per cent to the budget, in East Sussex just over 1 per cent.

Each authority remains free to decide how it distributes money to schools.

But it must negotiate the formula for doing so in new schools forums, on which governors have a voice.

In order to protect losers from the new system, the Government set a “floor” guaranteeing a per-pupil increase of 3.2 per cent. There is a corresponding “ceiling” capping rises to 7 per cent. Authorities will get a guaranteed minimum rise for the next three years. The Government will also put a three-year freeze on changes to the education funding formula.

The system is undoubtedly an improvement. It is easier to understand and the data on which distribution of funds is based are more up-to-date and relevant.

Sadly, for standards grants, schools are still crudely divided into bands based on size. This makes it vital for them to recruit pupils to get into a higher size band and get a bigger grant.

And inequities still abound: extra cash from leadership grants and specialist school status will still leave some significantly better off than others.

Peter Downes is a former secondary head, a county councillor and governor of a Cambridgeshire infant school