THE balance between local and national control - and ultimately the fate of councils - lies at the heart of the debate over the future funding of schools.
The two headteacher unions, the School Teachers' Review Body and Chris Woodhead, the chief inspector, all want a national funding formula. Such a move however, would seriously erode the financial base of councils as education accounts for the bulk of their budget and prevent local electors from voting for more council spending on schools.
Most agree that the tangle of education funding needs to be sorted out but the Audit Commission's report states: "The answer is not greater centralisation and control over education funding.
"Such moves would be impractical, inefficient and centralise a raft of funding choices that are better made locally. Central and local government need to work better together."
It believes that councils have an important role to play in monitoring and supporting financial and resource management in schools.
Responsibility for council funding rests with the Department for the Environment, Transport and the Regions. Councils in turn decide how much cash to pass on to schools.
A Government discussion paper on local government finance published inmid-September pledged more cash for the worst-off and a simpler funding formula.
Education Secretary David Blunkett appears to have lost the fight to ring fence school spending. But he is determined to increase the amounts of money passed on to schools.
But the Government does not take into account the fact that most councils spend well over the amount ministers assess as necessary. This year English authorities will spend pound;330 million more on education than the Government believes is enough.
Councils already delegate 84 per cent of their schools budget and more than three-quarters of heads surveyed by the Audit Commission were satisfied with levels of delegation.
On average, English schools get an extra pound;43 per pupil because their council spends more than the Government deems necessary - pound;10,000 in an average primary and pound;41,000 in a secondary.
THE FUNDING TREE
Formula funding pound;17.9bn
* From council tax and government grant
*Delegated via LMS formula.
Standard Fund pound;2.2bn
* Specific grants from government
* Local 'matched funding'
Local Income pound;230m
*Fees and charges
* Government zones
* 'Grant's eg Lottery