Agenda item

Recommended

 

The Council’s Executive is asked to note the contents of this report, and to agree:

 

a.     That the Council applies a Minimum Funding Guarantee (MFG) of 0% in the calculation of mainstream school budgets for the 2026-27 financial year.

 

b.     That the Council uses Age Weighted Pupil Units (AWPU) 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 National Funding Formula (NFF) values for the 2026-27 financial year

 

c.     That the Council uses 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 for the 2026-27 financial year. In the event of any funding shortfall being too significant to manage through the use of the capping and scaling mechanism, the Corporate Director – Resources and the Corporate Director – Children & Young People’s Service, in consultation with the Chair of the Schools Forum, will determine a school funding methodology that delivers affordability within the 2026-27 Schools Block DSG and associated reserves.

 

d.     That the Council includes 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 2026-27 North Yorkshire school funding formula.

 

e.     That the Council uses the exceptional circumstance formula factor for schools where their approved rent costs are in excess of 1% of their delegated budget

 

f.      That the Council transfers 0.5% of funding from the Schools Block Dedicated Schools Grant (DSG) to the High Needs Block, as agreed by the North Yorkshire Schools Forum on 20 November 2025.

 

g.     That the Council applies MFG funding protection of 0% for special schools for the 2026-27 financial year, as prescribed by the DfE.

 

h.     That the Council applies 2% to the Banded Funding allocations (top up/ ‘element 3’ allocations) received by mainstream and special schools and academies for the 2026-27 financial year.

 

i.       That the Council applies 2% to the Banded Funding allocations (top up / element 3 allocations) received by pupil referral units and alternative provision settings for the 2026-27 financial year.

 

j.       That the Council applies 2% to the factor elements within the Special school contextual funding for the 2026-27 financial year.

 

k.     That the Council will continue to lobby for a fairer and more equitable funding settlement for schools in North Yorkshire. We will also continue to lobby for a fairer settlement of High Needs resources.

Considered – A report of the Corporate Director Children and Young People’s Services in relation to mainstream school and special school funding for 2026/27, as required by guidance issued by the Department for Education (DfE).  The report made recommendations in respect of the local schools funding formula for mainstream and special schools and approval was sought for associated protections and top-up changes.

 

The Executive Member for Education, Learning and Skills, Councillor Annabel Wilkinson, outlined that the authority must operate a local funding formula in line with the National Funding Formula.  Following consultation and consideration by Schools Forum on 20 November 2025, a 0.5% transfer from Schools Block to High Needs for 2026/27 had been approved, reflecting significant local pressures.  The paper proposed the maximum funding protection of 0% for mainstream schools and compliance with the DfE mandated 0% protection for special schools, with capping and scaling only if necessary.  It also proposed a 2% increase to element 3 top up funding.  Where final allocations created a surplus/deficit once pupil characteristics were updated, Dedicated Schools Grant reserves and growth funding would be used before any capping/scaling.  It was noted that North Yorkshire remained amongst the lowest funded authorities nationally for High Needs on a per head basis.

 

Councillor Janet Sanderson expressed grave concern at the forecast cumulative High Needs deficit which would reach approximately £24m by 31 March 2026 and potentially £40m by March 2027 without mitigation, and called for urgent action by the government.

 

Resolved (unanimously)

 

That Executive note the contents of this report, and agree:

 

a.     That the Council applies a Minimum Funding Guarantee (MFG) of 0% in the calculation of mainstream school budgets for the 2026-27 financial year.

 

b.     That the Council uses Age Weighted Pupil Units (AWPU) 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 National Funding Formula (NFF) values for the 2026-27 financial year

 

c.     That the Council uses 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 for the 2026-27 financial year. In the event of any funding shortfall being too significant to manage through the use of the capping and scaling mechanism, the Corporate Director – Resources and the Corporate Director – Children & Young People’s Service, in consultation with the Chair of the Schools Forum, will determine a school funding methodology that delivers affordability within the 2026-27 Schools Block DSG and associated reserves.

 

d.     That the Council includes 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 2026-27 North Yorkshire school funding formula.

 

e.     That the Council uses the exceptional circumstance formula factor for schools where their approved rent costs are in excess of 1% of their delegated budget

 

f.      That the Council transfers 0.5% of funding from the Schools Block Dedicated Schools Grant (DSG) to the High Needs Block, as agreed by the North Yorkshire Schools Forum on 20 November 2025.

 

g.     That the Council applies MFG funding protection of 0% for special schools for the 2026-27 financial year, as prescribed by the DfE.

 

h.     That the Council applies 2% to the Banded Funding allocations (top up/ ‘element 3’ allocations) received by mainstream and special schools and academies for the 2026-27 financial year.

 

i.       That the Council applies 2% to the Banded Funding allocations (top up / element 3 allocations) received by pupil referral units and alternative provision settings for the 2026-27 financial year.

 

j.       That the Council applies 2% to the factor elements within the Special school contextual funding for the 2026-27 financial year.

 

k.     That the Council will continue to lobby for a fairer and more equitable funding settlement for schools in North Yorkshire. We will also continue to lobby for a fairer settlement of High Needs resources.

 

Reasons for recommendations

 

The local authority is responsible for operating a local school funding formula for mainstream schools and academies in line with the National Funding Formula, Schools and Early Years Finance Regulations and Schools operational guide: 2025 to 2026. The local authority must also engage in open and transparent consultation with all maintained schools and academies in their area, as well as with their Schools Forum, about any proposed change to their local funding formula. The local authority is responsible for making the final decisions on their formula including ensuring sufficient time to gain political approval before the authority proforma tool (APT) deadline in January 2026. Political approval means approval in line with the local authority’s local scheme of delegation; the schools forum does not decide on the formula.

 

Within this framework, the local authority must make some decision prior to the January 2026 deadline in respect of:

­   Minimum Funding Guarantee for mainstream school funding for 2026-27

­   the funding approach to an overall deficit or surplus on the available DSG allocation (which will not be known until late in December 2025)

­   the inclusion of an exceptional lump sum of £50,000 for very small, sparse, secondary schools within the local formula for 2026-27

­   the use of the exceptional circumstance formula factor for schools where their approved rent costs are in excess of 1% of their delegated budget.

­   the proposed Block transfer of funding from Schools Block to the High Needs Block for 2026-27

­   any changes to the banded funding/E3 top-up funding or funding framework for 2026-27