Issue details

Proposed decision

The Cabinet Member for Education and Skills:

• APPROVE the funding arrangements for the Communities of schools’ process as per Key Decision and as set out in this report.

• APPROVE the transition arrangements of the Special Educational Needs (SEN) funding system for state funded schools between April 2025 and September 2026.

• NOTE that the development and establishment of the long-term plan to adopt an overarching SEN funding policy and system, will be subject to further governance and decision making in consultation with schools.

• DELEGATE authority to the Corporate Director of Children, Young People and Education, in consultation with the Cabinet Member for Education and Skills to implement the funding arrangements for the Communities of schools process as per Key Decision - 24/00026 - The Locality Model for Special Educational Needs Inclusion

• DELEGATE authority to the Corporate Director of Children, Young People and Education, in consultation with the Cabinet Member for Education and Skills to proceed with transition arrangements, between April 2025 and September 2026.

• DELEGATE authority to the Corporate Director of Children, Young People and Education to take other necessary actions, including but not limited to entering into contracts or other legal agreements, as required to implement the decision.

Reason for the decision

At the Children’s, Young People and Education Cabinet Committee on 16 May 2024 a suite of reports on the county’s Special Educational Needs and/or Disabilities (SEND) Transformation were presented, one of which related to the structures that would support increased local collaboration, (Report Pack - Item 8a, p53-80).

After public consultation (Locality Model for Special Educational Needs Inclusion | Let’s talk Kent) the decision was taken in August 2024 by the Cabinet Member for Education and Skills to proceed with the Locality Model implementation.

Part of adopting the Locality Model for SEN Inclusion (also known as Communities of schools) was to establish how the High Needs Block (HNB) of the Dedicated Schools Grant (DSG) would be allocated to mainstream schools in Kent to support the implementation of the new locality model, to meet the conditions set out in the safety valve agreement  with the Department for Education (DfE), and to ensure the effective allocation of resources to schools to further deliver improvements for children

Recent reviews of Special Schools (CYPE Cabinet Committee 21^st November, points 8.4 & 11.6.2 and 16^th May) and Specialist Resource Provision Review (CYPE Cabinet Committee 16^th May) also considered the suitability of the current funding systems for both education settings and shared principles for possible new funding models. These findings have been considered in developing these proposals.

Background

Kent County Council (KCC) is responsible for the distribution of SEN funding to schools & colleges to enable a pupil or student with high needs to participate in education or training (referred to as High Needs Funding (HNF), Element 3, or top-up funding). This funding is expected to be fully funded from the HNB of the DSG, provided by the DFE.

The method for allocating SEN funding to support pupils & students in either a mainstream schools, SRP or special schools has not been fundamentally reviewed for a significant number of years, with the last funding review of special schools and SRP taking place in 2010, and mainstream school funding review in 2018.

The combined spending on SEN top-up funding in mainstream schools and the total costs of places in SRPs and Special Schools equates to approximately 57% of the total High Needs Grant Income in 23-24. Therefore, it was important to review the current system for allocating funding to state-funded schools, and whether it still aligns to and supports the aims of the wider SEN transformation programme in Kent (including actions identified in both the Accelerated Action Plan and Safety Valve).

Options (other options considered but discounted)

Three other options were considered:

§  to maintain the current funding systems

§  to implement a Tariff funding system

§  to implement a Locality Model funding system

Option one was discounted as unsustainable for Kent. Existing systems for allocating the funding from the HNB of the DSG are not currently performing well in Kent. There are currently three different systems for allocating SEN funding to support children attending either special schools, SRPs or mainstream schools which has led to a lack of transparency and equity as to how funding is allocated to settings for children with comparable requirements for support or specific provisions. This is also being reflected in the increase in exceptional claims for individual children in SRP and special schools, where their average funding rates are no longer sufficient. The current system is also heavily dependent on the use of the identified “primary need” of a child to determine the funding rate which is being impacted by waiting times for diagnosis and does not reflect the level of support required. During the time these systems have been in operation, the level of overspend on high needs has continued to increase, with higher numbers of ECHPs being requested and demand for more specialist provision continuing to increase, whilst previous OFSTEDs have identified SEN outcomes were not being achieved.  This further indicates how our current methods for distributing SEN funding to schools is not sufficiently aligned to meet the required levels of support.

Option two was discounted as a viable ‘one single’ model for Kent due to tariff systems[1] tending to be used in conjunction with individual funding allocations for children (those with EHCPs) rather than for wider operations and funding of SEN Support in mainstream. The inflexibility this system would bring were considered too restrictive for SEN Support services in the county and would be a risk to the improvements already achieved in schools so was considered to be unsupportive of innovative use of resources (for mainstream) if used on its own. Merits were noted however in the stability a tariff model could offer smaller cohorts of pupils with higher levels of need.

Option three was discounted as a viable ‘one single’ model for Kent because the flexibility was considered too much for the whole system at the current time; the county needs higher levels of financial oversight and accountability due to the sustained levels of overspend in the HNB. Merits were noted however in the innovative and adaptive way it could serve mainstream schools for pupils with wider support needs.

Proposals were then developed combining elements from options two and three into a single funding system for Kent. The system will utilise the structures of Communities of schools to deliver a flexible Community budget that can be used to fund SEN support services (including specific funding allocations for the support of individual children and other specific SEN services) alongside the use of a tariff funding structure to support the allocation of specific  funding to schools for pupil’s with more complex needs that looks at the adaptation of provision that might be needed.

How the proposed decision supports Securing Kent’s Future andFraming Kent's Future - Our Council Strategy 2022-2026

Undertaking this work will support Framing Kent’s Future through:

Priority 1: Levelling Up Kent and our commitment to maintain KCC’s strategic role in supporting schools in Kent to deliver accessible, high quality education provision for all families, specifically:

-       Maintain improvement support services for all Kent schools, including maintained schools and academies, to maintain Kent’s high-quality education system.

Priority 4: New Models of Care and Support and our commitment to support the most vulnerable children and families in our county, specifically:

-       Respond to national policy changes on SEND provision, work with SEND families to rapidly improve the service provided to SEND children and work with mainstream schools so more can accept and meet the needs of children with SEND, increasing choice and proximity of school places.

Undertaking this work will support Securing Kent’s Future by:

-       Supporting Objective 1 in bringing the budget back into balance through cost avoidance achieved by supporting more children in mainstream schools from the outset of their statutory education and avoiding the use of non-maintained independent special school placements.

-       Objective 3 looking at policy choices and the scope of the Council’s ambitions maintaining discretionary services that add value and support outcomes the council is seeking to achieve, where we must be more rigorous in assessing the value of those services, and where necessary re-scope the council’s ambition and interventions to something that is proportionate and affordable.

-       Further transforming the operating model of the Council (Objective 4) through a greater focus on understanding and demonstrating impact will enable more effective decision making about how and where to focus the use of resources.

Financial Implications

Total spending on mainstream top-up and SRP & Special Schools Places is forecast to be approximately £225m in 2024-25. Top-up funding for mainstream schools is forecast to be approximately £50m and includes funding for SEN support services for individual children (equating to approximately 40% or £20m) along with funding for children and young people with an Education, Health, and Care Plan (EHCP). Total funding for SRPs & Special Schools places is approximately £175m of which £80m (46%) relates specifically to Element 3 top-up funding, whilst the remainder relates to core placement funding (not the subject of this proposal). This is funded from the HNB of the DSG which is a specific ring-fenced education grant from the DfE.

KCC is one of a number of Local Authorities which have a DfE Safety Valve Agreement to support with the highest overspends on SEN services to achieve a financially sustainable longer-term position. Kent’s annual overspend on the High Needs Block had progressively grown to over £50m by 2022-23, resulting in an accumulated deficit of nearly £150m. The agreement meant the DfE would make additional contributions of £140 million, alongside an £82 million contribution from KCC itself, to pay off the estimated accumulated deficit and help to balance the high needs budget by 2027-28. In return for this, KCC must implement actions intended to resolve the in-year overspend and achieve future financial sustainability. The Safety Valve agreement has avoided the need for KCC to otherwise impose up to £222 million of spending reductions on SEN services over the equivalent period. The Kent Safety Valve agreement states:

“The authority agrees to implement the DSG management plan that it has set out. This includes action to:

3.1. Implement a countywide approach to ‘Inclusion Education’, to further build capacity in mainstream schools to support children and young people with SEND, thus increasing the proportion of children successfully supported in mainstream education and reducing dependence on specialist provision

3.7. Ensure there is sufficient and consistent capacity across the county to support children with severe and complex needs in their local area where possible

3.8. Develop a school/area-led approach to commissioning of SEN support services (Locality Based Resources), to better respond to the needs of children and young people with SEND”

(page 2 and 3 DfE DSG ‘Safety Valve’ Agreement: Kent)

Kent must implement a sustainable approach to HNF to meet the DfE Safety Valve agreement and to ensure financial sustainability in this area moving forwards; the proposed SEN funding model in conjunction with the wider locality model is expected to build the robust governance and monitoring processes required to implement the necessary new approaches outlined in the agreement through the use of one overarching funding model  across mainstream, SRP and special schools.

Legal Implications  

Local Authorities must follow government guidance on distribution of their HNF Block and work under the SEND Code of Practice 2015, these guidance documents were used in the development of the funding model proposed. Links are provided below in the ‘Supporting Documents’ section.

Under the Children and Families Act 2014 KCC has a duty to ‘to support the child and his or her parent, or the young person, in order to facilitate the development of the child or young person and to help him or her achieve the best possible educational and other outcomes’.

Advice will be sought from Legal Services as required during the implementation phase of the decision.