The way in which the Dedicated Schools Grant, one of the main components of school funding, is calculated is changing. The Department for Education says that, for the first time in a decade, funding will be based on pupil characteristics rather than historic levels of spending. With additional guidance recently brought out on this recently, Schools Week takes a look at what the changes mean.

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The Dedicated Schools Grant (DSG) is changing and this matters for both maintained schools and academies. The DSG is the core of funding given to local authorities, and is then distributed on to maintained schools in their patch. For academies, the amount of Dedicated Schools Grant a local area receives feeds into the formula which determines how much cash an academy gets through one of their main streams of revenue funding – the School Budget Share.

The changes take effect from April 2015 for maintained schools and September 2015 for academies. These reforms do not affect the Pupil Premium or universal infant free school meals grants that schools receive, or academies’ Education Services Grant – the rates for these will be announced separately by the DfE.

So, what is the Dedicated Schools Grant?

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As you can see in graphic B (right), the DSG is made up of three blocks: the schools block, the high needs block and the early years block. Only the schools block is changing right now. (High needs changes have already happened and early years is still being reviewed).

Academies do receive money from the DSG but it goes through a rather circular route. The changes to DSG will affect an academies ‘school budget share’ but not its education services grant.

Local authorities receive the Dedicated Schools Grant for all maintained schools and most academies in their areas. In some cases, in 2015/16 the amount of funding which local authorities will get through the DSG will be increased (because of Fairer Schools Funding changes – I’ll explain these next week but the map (below) gives a preview).

Each local authority has a ‘schools forum’ with which it makes decisions on local school funding. These forums feature one or more academy representatives, and the DfE says they are increasingly being chaired by academy heads.

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School forums are consulted on regarding a local formula, where 14 variables, covering things such as deprivation and pupil mobility, are set, and determine how schools are funded across the local area. (We will come back to this in week 3).

In the case of maintained schools, when applied to the characteristics of their pupils, this formula determines how much they will receive from the local authority.

For the majority of academies, once the amount which they would receive according to the local formula has been calculated, this is recouped from the local authority by the Education Funding Agency (subject to a recoupment adjustment). Academies are then funded by the Education Funding Agency based on the recoupment amount.

Around 10 per cent of academies are ‘non-recoupment academies’, and have to date been excluded from the Dedicated Schools Grant which local authorities receive. From 2015/16, they will
be brought into this process, so local authorities could see an increase in the Dedicated Schools Grant they receive as a result, but also an increase in recoupment.

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Philip Nye is a former auditor at the National Audit Office