NORTH YORKSHIRE COUNCIL
CYPS EXECUTIVE MEMBERS
19 AUGUST 2025
2026-27 DEDICATED SCHOOLS GRANT
FUNDING CONSULTATION APPROVAL REQUEST
1.0 PURPOSE OF THE REPORT
1.1 This report provides an overview of the funding consultations which are likely to be required to be undertaken in respect of the use of the 2026-27 Dedicated Schools Grant (DSG) budgets to determine the budgets for schools, special schools, and early years providers for the 2026-27 financial year. At this stage, due to the timing of the Government’s Spending Review on 11 June 2025, the Department for Education (DfE) have stated that the schools, high needs and early years national funding formula (NFF) rates and allocations will not be published until autumn 2025. In order to ensure that a timely response can be provided by North Yorkshire Council on receipt of the 2026-27 funding information, CYPS Executive Members, in conjunction with the Corporate Director – CYPS, are asked to provide approval for principle-based consultations to be undertaken as follows:
a. With mainstream schools and academies within North Yorkshire; subject to the receipt of the 2026-27 funding information from the DfE and based on previous years, the expected consultation content is:
· The level of the Minimum Funding Guarantee (MFG) for 2026/27;
· The methodology to be used in the event of any surplus or shortfall in funding on the 2026-27 Schools Block DSG after the calculation of school funding formula allocations using the NFF values, as determined by the DfE;
· The calculation of the 2026-27 notional SEN budget, based on the latest analysis of the numbers of pupils with SEND in mainstream schools and academies, if amendment is deemed to be required;
· Any request by the local authority to transfer funding from the Schools Block DSG to the High Needs Block budget for the 2026-27 financial year.
b. With special schools and academies within North Yorkshire; subject to the receipt of the 2026-27 funding information from the DfE and based on previous years, the expected consultation content is:
· The level of the Minimum Funding Guarantee (MFG) for 2026-27, in the event of the funding level increase not being prescribed by the DfE.
c. With early years providers within North Yorkshire; subject to the receipt of the 2026-27 funding information from the DfE and based on previous years, the expected consultation content is:
· The principles to be utilised for the calculation of early years provider base funding rates for 3 and 4-year-olds (universal and working parents), 2-year-olds (disadvantaged and working parents) and 9-month-olds of working parents for 2026-27;
· The value of the early years Special Educational Needs Inclusion Fund (SENIF) for 2026-27;
2.0 BACKGROUND
2.1 Under normal circumstances, the DfE provide information in mid/late-July each year on indicative funding levels and funding formula changes for the DSG Schools Block, High Needs Block and Central School Services Block for the following financial year. The funding information for the Early Years Block DSG is usually received in November/December each year from the DfE. The provision of the 2026-27 DSG funding information will be provided in Autumn 2025 due to the Government’s Spending Review being delivered on 11 June 2025. The determination of budgets from the DSG funding sources for mainstream schools, special schools and early years’ providers require local decisions, and associated consultation, to be undertaken on the funding formula elements in respect of the level of the MFG and early years’ provider base funding rates. At this stage, it is anticipated that the local decision-making process, and associated consultation with stakeholders, will continue to be required for the 2026/27 funding determination process.
3.0 2026-27 SCHOOL BUDGETS
3.1 In advance of confirming the schools National Funding Formula (NFF) factor values and allocations for the 2026-27 financial year, the DfE have provided summary policy information. This guidance confirms that there are no structural changes to the schools NFF for 2026-27, with no changes to the NFF factors and how they operate compared to 2025-26. The DfE have confirmed that the local authority disapplication request process will operate for the 2026-27 financial year. On this basis, it is expected that consultation will be required with mainstream schools and academies in the Autumn 2025 term inviting them to provide their views on the following matters in respect of 2026-27 school budgets:
· The methodology to be used in the event of any surplus or shortfall in funding on the 2026-27 Schools Block DSG after the calculation of school funding formula allocations using the NFF values, as determined by the DfE.
· Any request by the local authority to transfer funding from the Schools Block DSG to the High Needs Block budget for the 2026-27 financial year
3.2 For information, the following local decisions were implemented by North Yorkshire Council for school budgets for the current 2025-26 financial year:
· A MFG of 0% (the maximum level allowed by the DfE).
· The use of Lump Sum as the methodology for the allocation to school budgets of any surplus funding available within the Schools Block DSG after the calculation of the school funding formula using NFF values.
· The use of a higher funding gains cap and higher scaling back percentage for managing the recovery of any funding shortfall on the Schools Block DSG after the calculation of the school funding formula using NFF values.
· The inclusion of an exceptional circumstance lump sum of £50,000 for very small sparse secondary schools, which would otherwise be unable to attract sufficient funding to remain viable, in the 2025/26 North Yorkshire school funding formula.
4.0 2026-27 SPECIAL SCHOOL MINIMUM FUNDING GUARANTEE
4.1 Over recent years, the DfE have prescribed the Special School MFG level; for the 2025-26 financial year this was 0%. In advance of DfE guidance for 2026-27, NYC intends to undertake consultation with special schools and academies to ensure that a timely response can be provided in the event that a local decision is required on the level of the Special School MFG for the 2026-27 financial year.
5.0 2026-27 EARLY YEARS PROVIDER FUNDING RATES
5.1 In the Spring 2023 Budget, Government announced the significant expansion of funded early years provision for working families, with 15 hours of funded provision being offered to the working parents of 2-year-olds from April 2024, 15 hours of funded provision being offered to the working parents of 9-month-olds from September 2024, and 30 hours funded provision for the working parents of 9-month-olds from September 2025. The 2026-27 financial year will provide the first full year of the operation of the expanded entitlements for working parents.
5.2 The DfE have confirmed the key changes to the local early years funding rules for the 2026-27 financial year ahead of the publication of the local authority rates in autumn 2025. The key changes relate to:
· The minimum pass-through requirement in respect of the level of the local authority early years’ DSG funding paid to providers will increase from 96% in 2025-26 to 97% in 2026-27. The 97% includes the following for each of the entitlements separately:
- base rate funding for all providers
- supplements for all providers
- lump sum funding for Maintained Nursery Schools (MNS) (only applicable to 3 and 4-year-olds, and excluding any funding from DfE’s MNS supplementary allocation)
- the funding paid directly to providers from the special educational needs Inclusion fund (SENIF)
- contingency funding
The current pass-through rate for North Yorkshire Council is 97%. In this respect, the local authority is already complying with the DfE requirement for the 2026-27 financial year.
· The Schools and Early Years Finance (England) Regulations will be updated for the 2026-27 financial year to reflect the 28 February being the new statutory deadline for local authorities to confirm local funding rates to providers. The DfE stated this expectation for the 2025-26 financial year but there was not a statutory requirement to meet this deadline.
· The funding for all early years’ entitlements will be based on termly headcounts. For the 2025-26 financial year, the funding for the working parent entitlements related to two-year-olds and under two-year-olds is based on termly headcounts and the funding for three & four-year-olds and disadvantaged two-year-olds is based on five twelfths of the January 2025 and seven twelfths of the January 2026 headcounts.
5.3 Subject to the receipt of further early years’ funding guidance from the DfE for the 2026-27 financial year, the local authority intends to undertake a principle based consultation with early years providers within North Yorkshire on the methodology for the calculation of provider base funding rates for 3 and 4-year-olds (universal and working parent entitlement), 2-year-olds (disadvantaged and working parent entitlement) and 9-month-olds of working parent entitlement for 2026-27. The consultation may also include any other funding consultation items deemed to be required for the 2026-27 financial year resulting from the expansion of early years funded provision and the planned DfE early years’ funding regulation changes.
6.0 FUNDING CONSULTATION TIMESCALES
6.1 Subject to the receipt of any further 2026-27 DSG funding information from the DfE, the indicative timescales for the funding consultation processes are detailed in the table below:
|
Date |
Process |
|
10/09/2025 |
Publication of DSG Funding Update reports to Schools Forum |
|
18/09/2025 |
DSG Funding Update reports to Schools Forum including details of 2026/27 funding consultations |
|
19/09/2025 – 24/10/2025 |
Consultation with schools & academies (mainstream and special) and early years providers on 2026-27 funding arrangements |
|
20/11/2025 |
Consultation feedback considered by Schools Forum |
|
06/01/2026 |
Final Decision by Full Executive on Mainstream School & Academy and Special School & Academy Budgets 2026-27 |
|
20/01/2026 |
CYPS Executive Member Decision on 2026-27 early years provider funding rates |
7.0 FINANCIAL IMPLICATIONS
7.1 The funding consultations considered in this paper are related to the Dedicated Schools Grant (DSG). There is no direct impact on the Council’s budget.
8.0 LEGAL IMPLICATIONS
8.1 No specific legal implications are identified as a result of the recommendations contained within this report.
9.0 EQUALITIES IMPACT ASSESSMENT
9.1 Equalities Impact Assessments (EIAs) will be undertaken in respect of the consultations detailed in this report.
10.0 CLIMATE CHANGE IMPACT ASSESSMENT
10.1 Climate Change Impact Assessments (CCIAs) will be undertaken in respect of the consultations detailed in this report.
11.0 RECOMMENDATIONS
11.1 CYPS Executive Members, in conjunction with the Corporate Director – CYPS are asked to provide approval for consultations to be undertaken as follows:
a. With mainstream schools and academies within North Yorkshire; subject to the receipt of further funding information from the DfE for the 2026-27 financial year and based on previous years, the expected principle-based consultation content is:
· The level of the Minimum Funding Guarantee (MFG) for 2026-27
· The methodology to be used in the event of any surplus or shortfall in funding on the Schools Block DSG after the calculation of school funding formula allocations using the NFF values, as determined by the DfE.
· The calculation of the 2026-27 notional SEN budget, in the event that, based on the latest analysis of the numbers of pupils with SEND in mainstream schools and academies, the notional budget is required to be amended.
· Any request by the local authority to transfer funding from the Schools Block DSG to the High Needs Block budget for the 2026-27 financial year
b. With special schools and academies within North Yorkshire; subject to the receipt of further funding information from the DfE for the 2026/27 financial year and based on previous years, the expected principle-based consultation content is:
· The level of the Minimum Funding Guarantee (MFG) for 2026-27, in the event of the funding level increase not being prescribed by the DfE.
c. With early years providers within North Yorkshire; subject to the receipt of further funding information from the DfE for the 2026-27 financial year and based on previous years, the consultation is expected to be principle-based in respect of:
· The early years provider base funding rates for 3 and 4-year-olds (universal and working parent entitlement), 2-year-olds (disadvantaged and working parent entitlements) and 9-month-olds working parent entitlement for 2026/27
· The level of the early years Special Educational Needs Inclusion Fund (SENIF) for 2026/27
· Any other funding consultation deemed to be required as a result of the implementation of the expansion of early years funded provision and the planned DfE early years’ funding regulation changes for 2026-27.
SIR STUART CARLTON
Corporate Director – Children and Young People’s Service
Report prepared by: Howard Emmett, Assistant Director - Resources