School Funding Formula Consultation 2025-26

National Funding Formula

1. A national funding formula (NFF) was introduced for schools from 2018/19 and as in previous years, in 2025/26 local authorities will continue to decide, following consultation with their schools and Schools Forum, whether this formula is applied or a locally determined formula is used.
2. This document comprises a consultation with all Westmorland & Furness mainstream schools/academies and Schools Forum to seek views on the proposed changes to the schools funding formula in 2025/26.  The consultation also considers some of the continuing challenges around high needs budget.
3. All schools are encouraged to respond to this consultation using the online survey at TBC.  The deadline for responding to the consultation is 25 October 2024.  The outcome of the consultation will be reported to Schools Forum at their next meeting on 6 November who will, after taking into consideration the consultation results, make a recommendation to Cabinet members who will decide on the final shape of the school funding formula for 2025/26 in December 2024.
4. In July of each year the Education & Skills Funding Agency (ESFA) usually announce details of the dedicated schools grant (DSG) funding for the next financial year.  However, following the general election the indicative allocations for 2025/26 have not yet been published with, at the time of writing, no indication of when these may be published.  This means that any changes to the funding formula are unknown.  However, the timeline for consultation of schools, feedback to Schools Forum, a decision by Cabinet on the formula, and publication of school budget shares for 2025/26 by the LA means that a consultation in principle is required to ensure the deadlines can be met. 

Westmorland & Furness Schools Funding Formula in 2024/25

5. Following consultation with schools and Cumbria Schools Forum the school budget shares were calculated using the NFF in 2024/25 and it was recommended by Schools Forum and agreed by Cabinet members that if there was a leftover balance remaining after allocating the school budgets on this basis that up to 0.5% would transfer to the High Needs Block.  When the DfE confirmed the final Schools Block funding for 2024/25 in December 2023, the school funding formula was calculated on the basis agreed and there was a surplus of £0.033m.  As recommended by Schools Forum and agreed by Cabinet, this was transferred to the High Needs Block to support budget pressures.

Shape of the National Funding Formula in 2025/26

6. It has been assumed that local authorities will continue to have flexibility to set a local school funding formula in 2025/26 and that the government will continue to be committed to moving towards a ‘hard’ NFF whereby individual school budgets will be set directly by the DfE rather than independently through a locally agreed funding formula. 
7. In 2024/25 local authorities whose factor values were within +/-2.5% of the respective NFF values in 2024/25 were deemed to be mirroring the NFF and could only be allowed to set their 2024/25 local factor values between +/-2.5% of the NFF.  As the NFF indicative allocations and guidance has not yet been published it has been assumed that this restriction will continue to apply in 2025/26.  
8. It has been assumed that as in previous years, local authorities will be allowed, with the agreement of their Schools Forum, to transfer up to 0.5% of the School Block funding to support the High Needs Block budget.  The ability to transfer between blocks will be confirmed when the Schools Block Operation Guide 2025/26 is published.
9. The Westmorland & Furness Schools Forum recommends that the NFF is used as the basis for allocating funding to schools in 2025/26 and that if, after applying the formula on this basis and taking into account any budget required to support growth needs there is shortfall or balance remaining in the Schools Block funding then it is proposed that the following principles are applied:

• if there is shortfall reduce the basic per pupil funding factor values in the formula;
• if there is a remaining balance transfer up to 0.5% to the HN Block and allocate any leftover balance after that, if available, to schools by increasing basic per pupil funding factor values in the formula. 

10. This would continue be the most prudent method of allocating the school budget shares in 2025/26 given that it is assumed that the government still intend to transition to a ‘hard’ formula in future years and that the majority of local authorities have either adopted the NFF or moved their own local formulae closer towards the NFF in preparation for this change.  It will also provide schools with the full funding due to them under the NFF, subject to affordability.   
11. A shortfall or balance remaining in the Schools Block funding can arise after allocating the funding to schools using the NFF due to the way local authorities are funded.  The actual primary and secondary units of funding at local authority level are based on October 2023 pupil data and changes in pupil characteristics such as eligibility for FSM or changes in attainment levels are not reflected in the primary and secondary units of funding used to allocate the core NFF funding to local authorities in 2025/26.  It is anticipated that the number of children eligible for FSM will have increased between the October 2023 and 2024 census dates and therefore this could mean that applying the NFF in full may be unaffordable in 2025/26.
12. The alternative option would be not to transfer any leftover Schools Block funding to the HN Block but to allocate it, after applying the NFF, to schools through the school funding formula by ‘topping up’ the AWPU factor values.  However, assuming the same restrictions as applied in 2024/25, any increases would be limited to +2.5%.  However, it is not yet known how much funding will be available (if any) after applying the NFF as the final Schools Block funding, which will be based on the October 2024 census data, will not be made available until December 2024. 
13. As indicative DSG allocations have not yet been published, it is not possible to model the impact on individual school budgets of either of the above options.
14. If any leftover Schools Block funding were to be allocated to schools through the schools funding formula by increasing the AWPU factor values above the level of the NFF values, not all schools would see an increase in their budget shares.  This is because some schools receive protection through the MPL and MFG factors and therefore, unless the increase in APWU takes them over these levels of protection then they will see no change to their budget shares. 
15. There is also a risk that, due to the proposal requiring local authorities to move their local formula closer to the NFF, ‘topping up’ the NFF factor values by allocating additional funding through the formula would create turbulence for some schools, although they would receive protection against year-on-year reductions through the MFG.
16. The proposed school funding formula for 2025/26 will impact on maintained schools with effect from 1 April 2025 and for academies from 1 September 2025.
17. Final allocations for 2025/26 will be based on the December 2024 dataset which will use October 2024 census pupil data.