Monday 20 June 2011

Academy Funding and LACSEG

Share this:

LACSEG and the funding of Academies

  1. Schools converting to academy status receive the same basic funding they would have received if they had remained as LA maintained schools. In addition, they receive a top-up called LACSEG (Local Authority Central Spend Equivalent Grant). This is allocated to academies based on the number of pupils on roll. The cash amount varies from LA to LA because of the different policies for delegation and central hold-back as well as the size of the allocations to each LA. The highest LACSEG in the secondary sector is £771 and the lowest £156. The average for secondary pupils is £318 and for primaries £302. An additional sum is paid in respect of SEN pupils. The stated aim of the LACSEG is to enable academies to purchase the services they no longer receive by becoming independent of the LA.

 

  1. The government has said many times that it does not wish a school converting to an academy to have a financial disadvantage or advantage. The same principle is repeated in the latest consultation of the rationale and principles for a new funding methodology.

 

  1. The issue addressed by this briefing paper is the fact that schools converting to academies do have a significant financial advantage compared to maintained schools in the same LA.  By ‘financial advantage’, we mean the extra money available to the school in addition to what they need to provide the missing LA services. For the purposes of this briefing paper, we will use the word ‘bonus’ to refer to this extra money.  In fact, most schools converting to academies cite the financial bonus as the reason for taking this step, rather than the other ‘freedoms’ associated with academy status. The extra money is a particularly significant attraction for schools in the poorest funded LAs.

 

  1. Exactly how much ‘bonus’ accrues to each school will depend on many factors such as the condition of the school buildings, the socio-economic intake of the school, the age-profile of the staff and the previous delegation policy of the LA.  Figures obtained from schools converting in the last financial year indicate that as much as 65% of the LACSEG is ‘bonus’.

 

  1. The LACSEG is calculated separately for each LA by the DfE and then used by the Young People’s Learning Agency (YPLA) to distribute money to academies. LACSEG is based on certain lines from the S 251 financial return. The calculation for 2011-2012 is different from that for 2010-2011 and this has generally resulted in a lower LACSEG figure. For example, the secondary LACSEG in 2010-2011 for a shire county was £318 and in 2011-2012 is £247. Even the lower figure gives the converting academy a sufficient bonus to justify the work and extra responsibility of converting but the bonus margin probably drops to about 50%.

 

  1. Nobody seems to be absolutely certain of the reasons for this bonus but the main possibilities are as follows:
    1. The S251 return gives the total expenditure for all schools under each line. The YPLA divides that figure by the number of pupils in the LA (separate calculations for primary, secondary and special) but this does not take into account the complexities of the way the LA allocates money for pupils in order to meet the particular needs of individuals, or schools in particular circumstances. In other words, it is a very crude method of reaching a per pupil figure.
    2. Schools with post-16 pupils receive a LACSEG for their Year 12/13 students even though the basic funding for them does not come through the Dedicated Schools Grant. This gives a particular advantage to large schools with Sixth Forms.
    3. Many of the schools opting for academy status are ‘outstanding’ or ‘good with outstanding features’. This probably means that they will not have on roll many of the pupils for whom the LA retains emergency central funding and so will not need to buy in the specialist help.
    4. There is also the possibility that the academy may be able to purchase services more cost-effectively than those previously provided by the LA  but the evidence so far suggests that this is only a very minor factor. By dropping out of LA collective provision, the academies may make the provision of those services to other schools more expensive as economies of scale are lost.
    5. The LA’s expenditure on ‘statutory and regulatory duties’ is included as a LACSEG factor even though these duties do not have to be bought back by the academy but are provided by the YPLA. In the case of the shire county mentioned above (para. 5) this amounts to £84 in the secondary sector.
    6. In addition to the LACSEG grant, academies receive an extra payment to cover the cost of insurance which is usually twice as high as it would be if the academies remained as LA schools.

 

  1. The LACSEG is recouped in two ways:
    1. from that part of the dedicated Schools Grant that is centrally held by the LA, with the agreement of the Schools Forum, to provide support for pupils in cases of particular hardship or difficulty, (low incidence high cost pupils), for whom a realistic distribution formula could not be established owing to the erratic and unpredictable nature of the demand.   Other contingency sums are also included in the recoupment, thus reducing the LA’s capacity to deal with contingencies and emergencies that might arise in maintained schools.
    2. by a top-slice of the DCLG grant to all relevant LAs amounting to £148 million in 2011-2012 and rising to £265 million in 12-13. This top-slice has been applied irrespective of the number of schools converting in any particular LA.

 

  1. Given the large number of schools, particularly secondaries, seeking conversion to academy status by September 2011, driven, as explained above, by the attraction of the bonus, it is difficult to accept that the LACSEG total will be matched by the recoupments outlined above. This means that there is probably a black hole in the DfE budget and serious questions now need to be asked: how big is that hole and how will it be filled? Some fear that there will be further top-slicing of DCLG grants to LAs which will have an impact on the other services outside education provided by the LAs.

 

  1. The problem of over-funding the academies has been compounded by the DfE’s decision to protect the LACSEG at 90% of the previous year’s level, even when the revised LACSEG is considerably smaller. In the shire county example given above, this means that the secondary academies will attract a per pupil LACSEG of £286.20 even though the correct adjusted figure for the coming year would be £247.

 

  1.  The DfE have recently produced a consultation on the rationale and principles of school funding in which they emphasise, many times, that equitable funding for all types of schools is a priority. If this aspiration is to be honoured, urgent measures need to be taken to reduce the LACSEG to the correct bonus-free level for 2012-2013, without ‘protection’.  Some would argue that equity demands that the excess bonus for the preceding years should be identified and clawed back.

 

  1.  The new distribution formula will need to pay particular attention to the problems outlined in this paper in order to avoid:
    1. massive dissatisfaction among heads, teachers and governors at the gross unfairness of the situation in which we now find ourselves
    2. great pressure on the DfE budget which might require major adjustments to other schemes and priorities, just so that some schools can benefit financially.

 

Peter Downes, June 1st, 2011

 

Appendix A

 

Item Section 251 Budget  Table 1 2010-11

LACSEG Relevant

1.2.2 Provision for pupils with SEN, provision not included in line 1.2.1

Y

1.3.2 Behaviour Support Services

Y

1.3.4 14 – 16 More practical learning options

Y

1.4.1 School Meals  – nursery, primary and special schools

Y

1.4.2 Free school meals –  eligibility

Y

1.4.3 Milk

Y

1.4.4 School kitchens  –  repair and maintenance

Y

1.5.2 Museum and Library Services

Y

1.5.3 School admissions

Y

1.5.4 Licences/subscriptions

Y

1.5.5 Miscellaneous (not more than 0.1% total of net SB)

Y

1.5.7 Staff costs – supply cover (not sickness)

Y

1.5.8 Supply cover – long term sickness

Y

1.5.9 Termination of employment costs

Y

1.6.1 School Development Grant – Non-Devolved

Y

2.0.3 Therapies and other health related services

Y

2.1.2 Pupil support

Y

2.1.8 Education Welfare Service

Y

2.1.9 School improvement

Y

2.2.1 Asset management – education

Y

2.2.3 Music services (not Standards Fund supported)

Y

2.2.4 Visual and performing arts (other than music)

Y

2.2.5 Outdoor Education including Environmental and Field Studies (not sports)

Y

7.0.1 Statutory / Regulatory Duties

Y

7.0.2 Premature retirement costs / Redundancy costs

Y

7.0.7 Monitoring national curriculum assessment

Y

If you liked this post please share it:

Comments are closed.