Overview
School funding plays a vital role in ensuring that every child and young person receives the education and support they need to thrive.
No school, child, or local authority is the same. Each has unique circumstances, challenges and priorities. This means funding must be flexible and responsive, reflecting the diverse needs across the education system.
At the heart of school funding is the principle that funding follows the pupil.
This means resources are given based on the number and characteristics of pupils in a school, ensuring that funding is directed where it is most needed.
Schools and local authorities are entrusted with using these funds effectively to support children and young people, helping them achieve their full potential regardless of background or starting point.
How schools are funded
Most state-funded schools in England receive funding through two main funding pots which determines what the money can be spent on – revenue funding and capital funding.
Revenue funding is used to pay for the day-to-day running costs of a school, such as teacher pay, support staff pay, energy bills, minor maintenance, and teaching materials. Schools can decide how they spend their revenue funding.
Capital funding is a separate pot of money used to pay for new school buildings and improvements to the school estate.
How the local authority is funded
The Government allocates funding to local authorities for education through the Dedicated Schools Grant (DSG) which is ringfenced for schools and education services.
The DSG is divided into four blocks:
- The Schools Block funds mainstream schools
- The High Needs Block funds Special Educational Needs and Disabilities (SEND)
- The Early Years Block funds pre-school nurseries and childminders
- The Central Schools Services Block funds specific local authority education functions
National formula funding
The schools national formula funding determines how the Government distributes core funding for 5 to 16-year-old pupils in mainstream schools.
The formula determines the funding each local authority receives. Local authorities then set their own formulae to distribute that funding across maintained schools and academies in their area.
The funding formula is made up of 14 factors:
- Basic per pupil funding
- Basic entitlement
- Additional needs funding
- Deprivation
- Low prior attainment
- English as an additional language
- Mobility
- School-led funding
- Lump sum
- Sparsity
- Premises
- Rates
- PFI
- Split sites
- Exceptional premises
- Growth
- Geographic funding
- Area cost adjustment
- Protection funding
- Minumum per pupil level
- Funding floor
For the majority of children, resources are provided routinely through the annual budget share process. Funding is decided through a formula which allocates resources between schools. This includes the first two elements of SEND funding:
Element 1 – Basic per pupil funding (age-weighted pupil unit - AWPU)
Funding is allocated according to the number and ages of pupils at a school each October. This is the main source of funding for teacher and teaching support costs. It is intended to enable the delivery of a curriculum that is appropriately organised to meet the needs of all children on roll. A percentage of the AWPU funding is notionally identified as SEND funding.
Element 2 – Additional needs funding
Additional needs funding relates to the characteristics of the pupils in the school. The amount of funding a school receives in its budget share is determined by a range of indicators.
The data on pupil characteristics is provided to the local authority by the Department for Education (DfE). This includes:
- deprivation
- prior attainment
- English as an additional language (EAL)
- mobility
Notional SEN for mainstream schools
Mainstream schools are notified each year of a clearly identified but notional budget, within their overall budget allocation, towards the costs of fulfilling their duty to use their ‘best endeavours’ to secure that special educational provision for their pupils with SEN.
A school’s notional SEND budget comprises:
- Basic per pupil funding (AWPU) 5%
- Deprivation 15%
- EAL 15%
- Prior Attainment 100%
- Lump Sum 5%
- Split Site 5%
- Additional Lump Sum for Amalgamation 5%
- Minimum Funding Guarantee 5%
The notional SEN budget is not a budget that is separate from a school’s overall budget. It is an identified amount within a maintained school’s delegated budget share or an academy’s general annual grant. It is intended as a guide for a school’s spending decisions, and is neither a target nor a constraint on a school’s duty to use its ‘best endeavours’ to secure special provision for its pupils with SEN.
In discharging that responsibility, amongst other expectations set out in the SEND Code of Practice, mainstream schools are expected to meet the costs of special educational provision for pupils identified as on SEN Support in accordance with the SEND Code of Practice and contribute towards the costs of special educational provision for pupils with high, up to the high needs cost threshold set by the regulations (currently £6,000 per pupil per annum).
