Issue details

Proposed decision:

To approve changes to the Kent County Council local funding formula for schools and early years providers that is used to calculate school budgets and early years rates from 1 April 2026. 

Delegate authority to the Corporate Director of Children, Young People and Education to make any necessary changes to the Local Funding Formula rates once final affordability is known and outcome of any Secretary of State dis-applications.

Delegate authority to the Corporate Director of Children, Young People and Education, in consultation with the Cabinet Member for Education and Skills, to agree the distribution method for new school and early years specific education grants during 2026-27 provided by the Department of Education, in line with grant conditions.  

Reason for the decision:

·   The Government has confirmed the Council continues to be responsible for operating a Local Funding Formula for Kent maintained schools (and this formula is also used by the Education and Skills Funding Agency for calculating Kent academy budgets) during 2026-27. 

·   The Council is also responsible for setting the Early Years Local Funding Formula which is used for setting the rates paid to early years providers for the Free Entitlement offer for children aged between 9 months and 4 years attending nurseries or childminders, for up to 30 hours of free childcare a week (dependent on eligibility).

·   This decision will confirm how funding will be distributed to schools and early years in line with Government guidelines. In addition, during the year, the Department of Education can sometimes announce additional grants that must be paid directly to schools or early years providers (for example: contributions towards teachers’ pay award, pension increases or national insurance changes) to ensure these grants are paid to schools and early years providers in a timely manner, the proposal extends the delegation to distribute these specific grants during the year.

·   The final budget approach will be confirmed at the point the decision is taken.

Background:

·   The Department of Education provides Local Authorities with a specific ring-fenced grant each year to fund the school budgets (mainstream primary & secondary schools), early years free-entitlements for children under 5, high needs (Special Educational Needs Education Placements including special schools) and central services for schools. It is the Local Authority responsibility to distribute this funding to schools, eligible early years and to provide SEN services and other services for schools in Kent. 

·   The Department of Education has delayed the Dedicated Schools Grant funding announcements and detailed guidance until the Autumn (and had not been published at the time of writing). A policy document outlining the principles on which Local Authorities can set the schools funding formula for primary and secondary mainstream schools was published during the Summer confirming that Local Authorities will remain responsible for setting the schools budgets and outlining the parameters in which Local Authorities must operate. No further guidance has been given at the time of writing on the setting the early years rates for 2026-27.

·   A consultation is taking place with schools during October – November on the principles of setting the school budget, in line with the Governments policy document (ahead of Government funding announcements). A consultation with early years providers will take place, if required, when further guidance is published.

·   The Schools Funding Forum is a statutory body made up of a representative group of headteachers, governors or other senior members of staff (i.e. school finance manager) within Kent schools including academy trusts, maintained schools, primary, secondary and special schools. Along with Post 16 and Early Years providers. The Local Authority is required to consult with the Schools Funding Forum on the school budget and early years rates prior to the key decision being taken. 

·   In previous years, the Local Authority has taken the decision to transfer funding from the Schools Block to the High Needs Block to fund services for SEN Support in mainstream schools, alongside adjusting the schools funding formula (by reducing all factor rates including the minimum per pupil funding level) to help afford this. If the proposed decision recommends to continue with this approach, a dis-application from the Secretary of State will be required. (This has been agreed in previous years.)    

Options (other options considered but discarded):

·   School Budgets: The options considered for setting the primary and secondary school budgets will be outlined in the consultation document to schools and the preferred option will be set out at the point of decision. This will include:

1.    Whether a transfer of 1.2% should continue to be made from the Schools Block (funding for primary and secondary mainstream budgets) to support the cost of SEN Support Services funded from the High Needs Block (in 2025-26 this equated to £16,500,000).

2.    The basis on which the school budget formula is calculated and rates are set including whether to reduce the statutory minimum per pupil level.

However, the option to deviate excessively from the National Funding Formula (NFF), used by Government to allocate school funding to local authorities for distribution to primary and secondary schools, was discarded at an earlier stage.

This is in line with previous recommendations from both schools & the Schools Funding Forum who have supported the general principle that “our Local Funding Formula should move towards the NFF, but at the same time continue to utilise local flexibility to address areas of local concern”.

·   Early Years Payments: The options will be set out at the point of key decision and considered in line with DfE guidance when published.

Links to Securing Kent’s Future and the Council’s Strategic Statement:

·      

·     Whilst the decision relates to the distribution of ring-fenced grant, this decision is linked to achieving the overall objectives of ‘Securing Kent’s Future – Budget Recovery Strategy’ whereby proposals will support the financial recovery of the High Needs Block of the Dedicated Schools Grant. 

Financial Implications

·     The costs of the new proposed funding formulas will be fully met from the Dedicated Schools Grant, a specific ring-fenced grant from the Department of Education, used to fund primary & secondary school budgets and Early Years Free Entitlement, and will not be a further cost to Council funding.

·     This decision will impact the High Needs Budget for 2026-27. The agreement to transfer funding from the schools block to the high needs block will increase the funding available to help support SEN Support Services provided by the Council and reduce the overspend on this block of funding. Overspends on the High Needs Block have led to an annual deficit on the Dedicated Schools Grant since 2018-19.This has arisen where the total spend on SEN services is exceeding the annual grant received from the DfE for High Need Services. As a result the Local Authority is part of the Safety Valve Programme, a DfE initiative to support Local Authorities with highest deficits, of which the Council has agreed to fund £82m from General Fund, between 2022-23 and 2027-28, to help reduce the accumulated High Needs deficit, alongside an extra £140m from DfE. The transfer of funding from the schools block to support the High Needs block is part of the plan to avoid higher overspends during this period.

Legal Implications

·     The Local Authority is required to set the schools budget in accordance with the Education Act 2002 and the Conditions of DSG Grant 2026-27. School Budgets and Early Years funding rates must be published by 28th February of each year.  

·     Proposals will be made in accordance with the prevailing grant conditions for the Dedicated Schools Grant set by the Department of Education. Where relevant, Secretary of State approval will be sought if recommendations require a dis-application of these conditions.

·     Section 149 of the Equality Act 2010, provides that “…a public authority must in the exercise of its functions, have due regard to the need to a) eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under the Act, b)  advance equality of opportunity… c) foster good relations between persons who share a relevant protected characteristic and persons who do not share it..”