Schools Forum Growth Fund 2021-22

This report sets out the budget required  for growth funding in 2021/22 plus estimates for  the following two years, and recommends the criteria to be used in allocating this funding in 2021/22.

1.    Recommendations

1.1 AGREE: the criteria to be applied in allocating the funding to schools (paragraphs 6.1).

1.2 AGREE: that the allocation of the estimated £1,577k growth funding in 2021/22 is split £388k for the school formula and the remaining £1,189k is set as the budget for bulge classes/continuing expansions, and that any unspent funds will be carried forward towards meeting future year shortfalls.

2.    Background

2.1 Growth funding is allocated to the local authority to meet the cost of increases in pre-16 pupil numbers either in new schools or bulge classes set up to meet basic need. This is because the funding a school receives is retrospective and based on pupil numbers from the previous October census, and therefore does not include the additional pupils.

2.2 The funding is allocated through its own separate formula and is part of the schools’ block DSG allocation. It is not ring-fenced specifically for growth, but if there is a shortfall, this needs to be met from a top slice from the main schools’ block allocation. If the funding is not required for growth, it can be added into the school formula.

2.3 In 2019/20 the Government used a new formula for allocating funding for growth, based on actual growth in pupil numbers. The growth is measured within each “middle layer super output area” (MSOA). These smaller areas will detect pockets of growth within the wider local authority area – in Reading there are 17 MSOAs. For the 2021/22 allocation, increases in pupil numbers between October 2019 and October 2020 in each of these areas are counted; only positive increases are counted, so a local authority with positive growth in one area balanced out by negative growth in another will still receive funding.

2.4 The growth factor values applied for the 2021/22 formula are as follows:

  • £1,506 for each primary growth pupil (£1,475 in 2020/21).
  • £2,251 for each secondary growth pupil (£2,205 in 2020/21).
  • New school lump sum: £71,105 for each brand new school which opened in the previous year (£67,000 in 2020/21).

The values have increased by 2% compared to the previous year. They include an area cost adjustment for Reading.

2.5 Previously, growth was funded on actual budgeted spend and in 2018/19 Reading received £2.092m. In 2019/20 under the new formula, the allocation reduced to £1.658m (protected transitional funding). In 2020/21 the allocation was £1.345m, and in 2021/22 it is estimated to reduce by £501k to £0.845m.

2.6 Growth funding can only be used to support growth in pre-16 pupil numbers to meet basic need; support additional classes needed to meet infant class size regulation; and to meet the revenue costs of new basic need schools. The growth fund must not be used to support general growth due to popularity of a school – this is managed through lagged funding.

2.7 New growing schools, where the change is permanent and a significant change to numbers must be funded through the school formula by adjusting the pupil numbers. The funding to support this will still be met from the growth fund.

2.8 The Schools’ Forum must agree on an annual basis the total size of the growth fund and the criteria on which it will be allocated. All schools must be funded on the same criteria, new and existing maintained schools and academies.

2.9 This report sets out the estimated growth funding requirements for 2021/22 and the following two years, and based on this knowledge and estimated funding, proposes the criteria and budget to be applied for 2021/22.

3.    Growth Fund Requirements 2021/22 to 2023/24

3.1 In the primary sector, all schools have now completed their expansions, with Churchend now full this academic year. The new school Civitas will have its final year group added in September 2021. The brand new two form entry primary school at Green Park Village opened in September 2020 and will require funding for 60 places from the growth fund as it adds each year group over the next six years.

3.2 In the secondary sector, Highdown will complete its expansion in 2021/22. The new River Academy (8 form entry) is due to open in September 2023. In the meantime, it is estimated that four secondary bulge classes will be required in 2021/22 and six bulge classes in 2022/23.

4.    Criteria Proposed for Allocation of Funding in 2021/22

4.1 New schools are paid through the school formula based on their estimated pupil numbers and characteristics. For schools agreeing to take a “bulge” class or are a planned expansion, the current 2020/21 funding rates per additional pupil in the additional class (assumed at maximum capacity, usually 30) are £3,750 primary and £5,000 secondary. These are the 2020/21 recognised minimum per pupil funding levels used in the national funding formula and much higher than the basic per pupil funding rate (AWPU) used by many other local authorities.  The one-off grant for new schools pre-opening costs is currently £67,000 to reflect the funding received (retrospectively) through the schools’ block funding allocation.

4.2 For 2021/22 the equivalent rates are £4,180 primary, £5,415 secondary (a significant increase due to the Government adding the teachers’ pay and pension grants to the minimum funding levels) and £71,105 pre-opening costs for a brand new school. It is proposed that these rates are applied to the allocations of growth funding in 2021/22.

4.3 Note that growth funding can only be paid to schools taking enough additional pupils that require an additional class and teacher (i.e. it is not paid for filling spaces in existing classes), and that this increase is as a result of basic need in the area. The increase must have been agreed by the local authority as part of its place planning in order to meet shortfalls in overall places. All other growth in pupil numbers is funded retrospectively through the normal school funding process, based on the previous October census.

4.4 Payments to schools are made in November after the pupil numbers have been verified with the approved October census data. This covers the period September to March. Academies receive a further payment in April to cover the period April to August (this payment is made by the local authority but is recovered from ESFA and is not taken from the growth fund DSG allocation).

4.5 Schools need to be aware that funding for a bulge class is one off funding, and in the following year the funding for that year group will be based on the school funding formula and actual pupil numbers. The organisation of classes therefore needs to be based on actual pupil numbers, and schools should not be setting up arrangements based on one off growth funding, if in the long term this will make them unviable. Schools should also be prepared to reduce the number of classes when the bulge class comes to an end; the lagged funding received through the school formula is not deducted, so schools have this additional funding in the final year to make the necessary arrangements. 

4.6 It is impossible for the local authority to guarantee any future allocations of funding that is subject to changes in Government legislation and national funding allocations, so the decision on growth funding allocations is for one year only. Funding will be reviewed on an annual basis and with reference to current regulations. We do not know yet how the Government will allocate growth funding as part of a full National Funding Formula.

5.    Budget Proposed for 2021/22

5.1 Appendix 1 shows the budget and expected outturn for 2020/21 and contains a breakdown of the requirements for 2021/22 and the following two years based on current known requirements as set out in section 3 of this report. The funding requirement uses the values outlined in paragraph 4.2 for 2021/22 and the following two years.

5.2 In the current year, the budget for the growth fund was set to underspend by £535k. This underspend has increased to £623k as only one bulge class for secondary was required in September 2020. This amount is added to the resources available for 2021/22.

5.3 In addition to the estimated in year funding of £845k, £109k is received from ESFA to pay academies their April to August allocation, and £623k is estimated to be carried forward from 2020/21, a total of £1,577k available. The budget requirement in 2021/22 is £971k.  Of this, £388k is for new schools which will go into the school funding formula, and £583k for bulge classes/expanding schools. This would leave a surplus balance of £606k at the end of 2021/22.

5.4 In the three year model it is assumed that the in-year funding will remain the same in the following two years, as will the rate used to allocate the funding to schools. Due to the uncertainty of this, it is proposed to ring fence the funding and keep the surplus balance within the growth fund for future requirements. With the recent pattern of funding significantly reducing each year and with a new 8 form entry school to fund for several years, this would be a sensible and prudent action. 

6.    Recommendations for Schools’ Forum Approval

6.1The criteria proposed for 2021/22 to be approved by Schools’ Forum is as follows:

  1. Existing expanding schools. Where a school (maintained or academy) has agreed with the local authority to increase its admission number and provide an extra class as an on-going commitment, or to provide a bulge class, both scenarios being in response to meeting basic need in the area, additional funding will be allocated. The increase in numbers must have been agreed by the LA as part of its place planning in order to meet shortfalls in overall places. The additional funding will be paid in the Autumn following the October census when the additional numbers have been confirmed as requiring an additional class (to cover the period September to March). It is not paid for filling spaces in existing classes. Funding payable is at the national minimum per pupil funding (MPPF) rate x by the additional number of pupils as agreed by the LA x 7/12. For 2021/22 the MPPF rate is £4,180 primary and £5,415 secondary. Academies will receive a further 5/12 in the following April to cover the remainder of the academic year April to August.
  2. New/growing schools. New schools are funded through the school formula by varying the pupil numbers, based 7/12 on the published admission number for the following September.
  3. New schools opening in response to basic need. New schools will be paid a one off additional grant for pre-opening and set up costs. This grant will be £71,105 for schools due to open in the 2021/22 academic year.

6.2 Of the estimated growth fund allocation of £1,577k, £388k is transferred to the school formula for new schools and the growth fund budget for 2021/22 is set at £1,189k, with any under allocation in 2021/22 being carried forward to 2022/23.

7.    Appendices

Appendix 1 – Growth Fund – Three Year Plan 2021/22 to 2023/24

School type20/21 rate21/22 rate22/23 rate23/24 rateNotes
Primary£3,750£4,180£4,180£4,180Academies are funded for 12 months due to academic financial year.
Secondary£5,000£5,415 £5,415 £5,415 Academies are funded for 12 months due to academic financial year.
SchoolExpanding/bulge classAdditional Class size to be Funded Proportion of Year 2020/21 Budget 2020/21 Actual 2021/22 Budget 2022/23 Budget 2023/24 Budget Notes
Primary:         
Churchend ACADEMYExpanding by 30 per year (to 60)300.58333333365,62565,625    
Churchend ACADEMY(met by DfE for April to August)300.41666666749,52549,52546,875  Full from September 2020
          
Secondary:         
Highdown ACADEMYExpanding by 30 per year (to 250)300.58333333387,50087,50094,763   
Highdown ACADEMY(met by DfE for April to August)300.41666666763,72563,72562,50067,688 Full from September 2021
       
The Wren ACADEMY(BULGE 19/20 met by DfE for April to August)280.41666666759,47759,477    
Highdown ACADEMY(BULGE 19/20 met by DfE for April to August)300.41666666763,72563,725    
Blessed Hugh BULGE 20/21300.58333333387,50087,500    
Any SchoolBULGE 20/21300.58333333387,5000   Not used in 2020/21
Any SchoolBULGE CLASSES 21/221200.583333333  379,050  4 bulge classes
Any SchoolBULGE CLASSES 22/231800.583333333   568,575 6 bulge classes
Academy Bulge Classes(met by DfE for April to August)0.416666667   270,750406,125 
          
New Schools (pre opening start up costs only):        
Green Park Primary   67,00067,000   Opening September 2020
River Academy       71,105Opening September 2023
          
Total for Expanding Schools/Bulge Years   631,577544,077583,188907,013477,230 
       
Add: Total Growth Funding used in School Formula for new schools      
Civitas136,666136,666241,1860 Full from September 2021
Green Park Primary235,751235,751146,300146,300146,300Opening September 2020 2 FE
The River Academy    845,600Opening September 2023 8 FE
       
Total for New Schools  372,417372,417387,486146,300991,900 
       
Total to be met from Growth Fund Allocation  1,003,994916,494970,6731,053,3131,469,130 
       
FUNDING:      
DSG Schools Block Growth Fund Allocation1,345,2641,345,264845,000845,000845,000Year 2 and 3 assumes same level of funding
Carry Forward from Previous Year-90,322-90,301622,671606,373736,498 
Paid by DfE for Academies (April to August lump sum for new school payment) via Recoupment Adjustment47,75047,750    
Paid by DfE for Academies (April to August payment) via Recoupment Adjustment 236,452236,452109,375338,438406,125 
Total Estimate of Funding  1,539,1441,539,1651,577,0461,789,8101,987,623 
       
Surplus / (Shortfall)   535,150622,671606,373736,498518,493