School Funding Formula for 2026/27 Consultation

National Funding Formula

A national funding formula (NFF) was introduced for schools from 2018/19 and as in previous years, in 2026/27 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.

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 2026/27.  The consultation also considers some of the continuing challenges around high needs budget.

All schools are encouraged to respond to this consultation using this online survey.  The deadline for responding to the consultation is 24 October 2025.  The outcome of the consultation will be reported to Schools Forum at its next meeting on 5 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 2026/27 in December 2025.

In July of each year the Department for Education (DfE) usually announce details of the Dedicated Schools Grant (DSG) funding for the next financial year.  However, due to the timing of the Spending Review this summer, the DfE have confirmed that the provisional allocations will not be available until autumn and, at the time of writing, no release date has been confirmed.  However, in order to assist local authorities in planning their school funding formula for 2026/27 the DfE have issued a summary document setting out the structure of the National Funding Formula (NFF) in 2026/27 although no financial values have been published.  Due to the timeline for consultation with schools, feedback to Schools Forum, a decision by Cabinet on the formula and publication of 2026/27 school budget shares by the statutory deadline of 28 February means that a consultation with schools in principle is required to ensure the deadlines can be met. 

Westmorland & Furness Schools Funding Formula in 2025/26

Last year, following consultation with schools and Schools Forum the school budget shares were calculated using the NFF in 2025/26 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 2025/26 in December 2024, the school funding formula was calculated on the basis agreed and there was a surplus of £0.106m.  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 2026/27

Local authorities will continue to have flexibility to set a local school funding formula in 2026/27 and the government continues its commitment 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. 

The DfE have confirmed that the NFF will use the same formula factors as the 2025/26 NFF including the Minimum Per Pupil Level (MPPL) and Minimum Funding Guarantee (MFG) and all factors will operate in the same way as they did in 2025/26 although no values have been published.  Those local authorities whose school funding formula factor values were within +/-2.5% of the respective NFF values in 2025/26 are deemed to be mirroring the NFF and are only allowed to set their 2026/27 factor values between +/-2.5% of the NFF values.  As Westmorland & Furness Council mirrored the NFF in 2025/26 these restrictions will apply in 2026/27.

In previous years, local authorities have been 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, however, it has not yet been confirmed if transfers will be allowable in 2026/27.

The Westmorland & Furness Schools Forum recommends that the NFF is used as the basis for allocating funding to schools in 2026/27 (as in previous years) and 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. 

This would continue to be the most prudent method of allocating the school budget shares in 2026/27 given 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.   

A shortfall or balance remaining in the DSG Schools Block funding can arise after allocating the funding to schools using the NFF due to the way local authorities are funded.  The actual 2026/27 primary and secondary units of funding at local authority level are based on October 2024 census data however the NFF allocated to schools is based on October 2025 census data.  Therefore, changes in pupil characteristics, such as eligibility for FSM or changes in attainment levels between years, are not reflected in the primary and secondary units of funding used to allocate the core NFF funding to local authorities in 2026/27 which is only updated for changes in pupil numbers.

For example, if there is a significant growth in Free School Meals (FSM) eligibility between years, this can mean that applying the NFF in full is unaffordable.  Westmorland & Furness Council is currently undertaking FSM auto-enrolment which aims to auto-enrol pupils who are entitled to FSM but whose families have not applied, unless they opt out.  The eligibility checks will be completed in time for the October 2025 census but at this stage it is not known what the impact will be however it is expected to increase deprivation funding for eligible schools through the school funding formula, pupil premium and the High Needs Block.  Whilst this is welcome, it could present a short term Schools Block cost pressure in 2026/27 due to the lagged funding arrangement.

The alternative option would be not to transfer any leftover Schools Block funding to the High Needs Block but to allocate it, after applying the NFF, to schools through the school funding formula by ‘topping up’ the basic per pupil factor values.  However, any increases would be limited to +2.5% due to the restrictions that the DfE apply on local authority flexibility.  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 2025 census data, will not be made available until December 2025. 

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.

If any leftover Schools Block funding were to be allocated to schools through the schools funding formula by increasing the basic per pupil 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 MPPL and MFG factors and therefore, unless the increase in factor values takes them over these levels of protection then they will see no change to their budget shares. 

There is also a risk that as local authorities must 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 in future years, although they would receive protection against year-on-year reductions through the MFG.

The proposed school funding formula for 2026/27 will impact on maintained schools with effect from 1 April 2026 and for academies from 1 September 2026.

Final allocations for 2026/27 will be based on the December 2025 dataset which will use October 2025 census pupil data.