Issue details

Proposed decision

To approve the adoption and phased implementation of the second phase of the Special Educational Needs (SEN) Funding Model, the Banding System, from September 2026. This follows the earlier approval and implementation of the first phase: the Community of Schools model and associated budget allocations in September 2025.

To approve the percentage uplift to Special Educational Needs payments made by the Local Authority to State-Funded Schools and Post 16 Providers (FE Colleges & Specialist Post 16 Providers from 1 April 2026.

Reason for the decision

The current Special Educational Needs funding arrangements for state-funded schools have been in place since 2010 and are based on need types and average payment rates, which overtime has resulted in inconsistencies and operational challenges for both Kent County Council and educational settings. The proposed banding system introduces a more transparent and equitable approach by allocating funding according to the level of support required rather than diagnosis. This second phase of the proposed SEN funding model aims to replace the current three separate funding mechanisms for Mainstream Schools, Specialist Resource Provisions (SRP), and Special Schools with a single, overarching model for children and young people with an Education, Health and Care Plan (EHCP). Adoption of the Banding system aligns with Department for Education guidance and reflects best practice already implemented by other local authorities for the distribution of High Needs Funding across state-funded schools.

The decision will also confirm any uplifts proposed to Special Educational Needs payments with the final approach to be confirmed at the point the decision is taken and will be informed by Central Government announcements on the High Needs Block for 2026-27. 

Background – Provide brief additional context

Kent County Council (KCC) is responsible for distributing Special Educational Needs (SEN) funding to schools and colleges to enable pupils and students with high needs to access education or training. This funding is currently allocated to schools through a combination of place funding (up to £10,000) and High Needs Funding (HNF) top up funding (or Element 3) as prescribed by the Department of Education (DFE). Payments to schools are expected to be fully funded through the High Needs Block (HNB) of the Dedicated Schools Grant (DSG) from the DfE.

In January 2025, Cabinet approved the first phase of the new SEN Funding Model, introducing the Communities of Schools and associated budget allocations, which have been in place since September 2025 (Key Decision: 24/00120 - Special Educational Needs Funding System). The second phase is intended to focus on the development and implementation of a banding system to allocate funding for our most complex children, based on the level of support required rather than diagnosis. This approach is intended complement the Community of Schools funding model and together, replace the three separate funding mechanisms with a single, consistent model for children and young people with an Education, Health and Care Plan (EHCP). The intention of the overall model is to reduce the administration burden from the current models of funding for both for the Local Authority and Schools, increase certainty and transparency on funding allocations for individual provisions and ensure available funding is apportioned proportionally to the level of support required.

The proposed banding system is supported by funding descriptors that have been developed with schools. Feedback from the consultation completed last year, on the proposed SEN funding model, has been used to inform the future approach. Along with gathering further feedback across the sector including the Schools Funding Forum. To support this work, an extensive sampling exercise has also been undertaken to map a statistically representative group of children and young people across special schools, Specialist Resource Provisions (SRPs), and mainstream schools. The purpose of this exercise was to:

1.    Estimate costs based on the proposed SEN banding model.

2.    Evaluate the impact at both individual setting level and across the Local Authority.

3.    Help inform future implementation planning to transition all eligible children and young people onto the new banding system.

The DfE has delayed the DSG funding announcements for the HNB and detailed HNF guidance until the Autumn (and had been not published at the time of writing). This will inform the funding approach for all payments for SEN services in 2026-27.

Options (other options considered but discarded)

1.    Do Nothing: Maintain the current three separate funding mechanisms for mainstream schools, Specialist Resource Provisions (SRPs), and special schools. However, this approach would conflict with KCC’s future direction and priorities, given financial pressures and the requirements of the Safety Valve agreement. 

2.    Implementation of individual funding agreements with each school: This would involve individual negotiations with each school, SRP and mainstream school. This approach would be time consuming to implement and lead to inconsistency in funding arrangements for similar schools.  

3.    Introduce the new proposed banding system in September 2026: This would replace the current three separate funding mechanisms for mainstream schools, SRPs and special schools. Implementing the Banding system would align with DfE guidance and reflect best practice already established by other local authorities for High Needs Funding. However, fully implementing the system in September 2026 would be significantly labour intensive and could not be implemented required time scales. It could lead to short term financial instability in schools.

Alignment with Reforming Kent 2025 - 2028 (draft) Strategy

Aim 2: Reforming Kent County Council

Objective 5: Ensure the council focuses on delivering better outcomes that make a difference, not just managing processes.

Aim 3: Supporting Residents that Need Help

Objective 6: Improve processes and outcomes for our SEND services while tackling unsustainable growth in demand.

Financial Implications

Total revenue spending on mainstream top-up and SRP & Special Schools Places is forecast to be approximately £241m in 2025-26. Top-up funding for mainstream schools is forecast to be approximately £54m and includes funding for SEN support services for individual children (equating to approximately 39% or £21m) 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 £187m of which £86m (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.

The costs of the new proposed revenue SEN funding model and any general rate increases for SEN payments are expected to be fully met from the DSG and is not a cost to the General Fund. However, whilst the intention is for recommended increases to be met from grant funding, it should be noted, in relation to High Needs, the Council has agreed to fund £82m from General Fund towards the accumulated High Needs deficit (estimated to be £222m by 2027-28) arising from the total spend on SEN services exceeding the annual Grant received from the DfE for High Needs services since before 2018-19

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. The agreement means 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. 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. Whilst Central Government has recently announced the intention to take back HNB deficits from Council balance sheets from 2029 there is currently no detail on how this will be implemented and any ongoing responsibilities of the local authority. Therefore the Council continues to still be bound by the agreement at the time of writing.

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”

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 Community of Schools 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^[1]. Links are provided below in the ‘Supporting Documents’ section. The Code of Practice states that:

“Schools are not expected to meet the full costs of more expensive special educational

provision from their core funding […] the responsible local authority, usually the authority where the child or young person lives, should provide additional top-up funding where the cost of the special educational provision required to meet the needs of an individual pupil exceeds the nationally prescribed threshold”.

In addition to the Code of Practice, the DfE has also published operational guidance for the administration of LAs HNF budgets (the “Guidance”). The Guidance states that LAs should plan for HNF budget, gives advice on what can be provided, and information on which costs LAs are not expected to contribute to as part of any HNF allocation.

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’.