It proposes to replace all local management and grant-maintained schemes with "100 per cent delegation" from April 1999. But 100 per cent of what? Are schools ready to have it all?
Along with education development plans and the draft code of practice on local education authority-school relations, these proposals form the three legs of the Government's statutory tripod for supporting school improvement.
Schools will run their own budgets. Local authorities would retain four key funding roles: strategic management, access (mostly planning places, admissions and transport), school improvement and special education. The rest is almost all delegated. So the answer to "100 per cent of what?" is "quite a lot".
Like GM schools at present, all schools will choose between the local authority or other suppliers to provide services as diverse as professional advice, supply cover, school meals, building repairs and maintenance. Even some minor capital works would be delegated, funded by a separate formula.
This allocation could be supplemented from the budget or even carried forward for a limited period for larger projects. All strategic capital work would be the responsibility of the local authority - a major change for GM schools.
If schools do not choose to "buy back" these services from the local authority, local education authorities will decline - or even disappear. Such facilities as a school library service or outdoor education may still be provided by the local authority, if, say, 80 per cent of governing bodies of user schools vote to use its services. At last, we may see more clearly what schools really, really want from their local authority.
Some services receive special treatment in the document. Authority-wide music services are offered protection by funding from the DFEE Standards Fund, with local authorities having their budgets top-sliced. Where there may be similar economies of scale, as with local authority-wide programmes for sport or expressive arts, similar arrangements may develop.
Schools are encouraged to club together in consortia to create mutual funding arrangements and pool balances for school or inter-school projects.
Of course, individual schools want to know how much money they each will get. Many formulas are hard to follow and compare. Things should improve somewhat in the new dispensati on.
Local authorities will have to improve the presentation of information about school expenditure - and education generally. Any remaining favouritism for GM schools will end. Differential funding will only be allowed for significant differences in responsibility. This will be very limited.
In future, formula funding will be controlled by published regulations. This should reduce delays, since authorities will no longer have to wait for DFEE approval of their detailed schemes. Allocations will continue to be dominated by weighted pupil numbers. Other familiar indicators related to special needs, deprivation and the school's site or sites will still be allowed.
Two potential changes, however, may surprise governors. First, adjustments to reflect actual teaching salaries in budgets will be allowed for schools of all sizes, if the local authority so desires. This may mean that those with many experienced staff get more money, but at the expense of schools with more young teachers. In removing some schools' financial problems, will this also make it harder for newly qualified teachers?
Second, sixth-form funding is likely to move towards the further education model, linked to student achievement as well as recruitment and participation. I expect downward pressure on school sixth-form costs in future, reflecting college funding levels. This would mean less money and will make the remaining grammar schools particularly apprehensive.
Following much of the present GM model, all schools will be allowed a bank account. Many schools will find this a simpler way to control their cash flow than the present entanglement with the local authority budgets. The Funding Agency for Schools' Rainbow Pack for financial monitoring is suggested as a model.
Only for the minority of local authorities retaining substantial central funds will these proposals seem very radical. They are an evolutionary convergence of LM and GM practice.
But how will schools cope? Headteachers will have to recommend to governing bodies how much of their time the management team can sensibly devote to newly devolved responsibilities. In smaller schools - and in the primary phase - they may well opt to buy back most or all local authority services. Larger secondary schools may relish opportunities to decide more for themselves, as GM schools presently do.
The main educational danger is that schools in budget difficulties may be tempted not to buy in services which they really need. Governors should avoid such pressures. Budgets for training and for curriculum advice are vital. Making candle-end economies can prove as dangerous in the medium to long term for schools as for businesses.
The consultation document is available by phone on O845 6O2 2260 until July 31, or on the Internet at www.open.gov.ukdfeefairfund
Mike Fuller is senior lecturer in econometrics and social statistics in the University of Kent's business school. He is a governor of primary and secondary schools in Canterbury, chair of Kent and Medway NAGM and an added member representing governors on Kent education and libraries committee.