Education Funding Agency: 2017 to 2018 post-16 funding allocations

Hello. My name is Colin Stronach, from the EFA young people’s funding team. I’m going to give you an update
on EFA 16 to 19 funding for 2017/18. I’m going to cover four main areas
in this presentation. Firstly, I’m going to describe how the
funding formula will work for 2017/18, and highlight the changes from last year. Secondly, I’ll talk through the timeline
for the allocations process and the data that we will be using to calculate your allocation. Then I’ll talk about the processes for
business cases and infrastructure changes, including those situations where the
lagged approach does not apply. And finally, I’ll give a brief update
on student support funding for 2017/18. So, starting with an overview of
the funding formula for 2017/18. The key decisions affecting funding fornext year
were set out in a letter from Peter Mucklow, EFA Director for Young People in December. The letter is available on our website
and is a key source of information for all institutions with 16 to 19 funding. Firstly, I’d like to emphasise three
areas where there is little or no change in 2017/18 from previous years. The national rate of £4,000 for
full-time 16 and 17 year olds is unchanged, and the rates for 18 year olds and
part-time students will also remain the same as in previous years. There is also no change to the arrangements
for formula protection funding or the condition of funding,
other than those previously published, and I will say more about those two
areas in a moment. There are then three main areas where
there is some change affecting allocations for 2017/18, and I will cover those in
detail later in the presentation. I will also say something about how
block 2 disadvantage funding will work in future with the new GCSE grades,
although that will not affect allocations for another couple of years. As we announced last year,
formula protection funding is being phased out over 6 years from
the baseline year in 2015/16, so that the final year for
any payments will be 2020/21. For many institutions, though,
their formula protection funding will have been removed before then.
We will apply a very similar approach to calculating FPF in 2017/18 as
we did in 2016/17. We will reduce your FPF per student by
the same amount as we did in 2016/17, so continuing the trajectory that we
started in that year. We will then multiply your FPF per student
by your total number of students funded in 2017/18,
but will cap that student number figure at 2015/16 levels,
to reflect the number of students you had protection for in that baseline year. A more detailed description of this
process and some example calculations are given on our formula protection
funding page on GOV.UK. We will continue to review
this calculation each year. Now, moving on to the
condition of funding. It is important to be aware that the
condition of funding policy was tightened in 2015/16. As well as requiring all students without
a grade C in GCSE maths or English to continue to study those subjects as part of
their post-16 study programmes, we introduced additional requirements for
those students who have achieved a grade D at GCSE. Full time students who have prior attainment
of grade D and started their study programmes on or after 1 August 2015 must be enrolled
on GCSEs rather than stepping stone qualifications. This additional requirement is being applied
to the 2015/16 data used to calculate 2017/18 allocations. Once the number of students not meeting
the condition of funding has been identified, the process will then apply in 2017/18 allocations
in a similar way to 2016/17. An overall tolerance of 5% will be applied
to any funding reductions, and any reductions above that tolerance will
be applied at half the national rate. More detail on the condition
of funding is given on GOV.UK.

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So, moving on to the timeline for the
allocations process. This first slide sets out the key dates up
to the end of February as set out in the funding letter in December.

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In January and early February,
we are sending out information on funding factors to give you early
information on the values we expect to use to calculate your allocation. Along with this, where possible,
we provide supporting information that shows how we have used your data to
calculate those funding factors. We then aim to send out allocations
to the majority of institutions by the end of February. Exceptions to this timing are those
FE institutions where the allocations are based on R06 data submitted in February,
some higher education institutions and a small number of
other more complex cases. In those cases, allocations are
likely to be sent out in March. Once you have received your allocation,
we expect that for most institutions that will be final. However, if there are significant
issues with the data you returned to us that affects your allocation,
you will have an opportunity to send in a business case.

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We will confirm the deadline for
business cases when we send you your allocation, but currently we expect that deadline to be
the 7th April for most institutions. We will then review business cases during
April and May, and we expect to confirm the
outcomes by early June. I will say more about the process
for handling business cases shortly. Moving on now to the data we will
use to calculate your allocations, starting with mainstream schools and academies. I will say more about
special schools and academies later. The main data that we use for your allocations
is based on the autumn 2016 census. This gives us data for two
different groups of students. Firstly, we will use the data you
return in the census for students enrolled this year, 2016/17, as the basis
for your lagged student numbers for next year. And secondly, we will use the data for
those students enrolled last year, 2015/16, to determine the main funding factors
size of programme, cost weighting and so on that we use to calculate your
funding allocation. This information is also used to calculate
any impact of the new condition of funding. This year, for the first time,
we will also be using information from the autumn 2016 census to calculate
funding for disadvantage block 2 I’ll say more about this later on.

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As last year, we will also use matched
data to calculate funding from the large programme uplift. Finally, we will use data collected from
local authorities to determine high needs element 2 place funding for
mainstream academies. Element 2 provides the first £6,000
of support costs for high needs students. For mainstream maintained schools, the
process has changed slightly this year and element 2 place funding will be
allocated at local authority level. Local authorities will then agree allocations
of element 2 directly with their schools. For FE institutions, then, the data
sources are set out on this slide. In most cases, your lagged student numbers
will be based on the ILR R04 return from December. We will then use data on in-year
recruitment patterns from last year to give the expected number of
students for the whole year. We will review the R04 figures
against the R06 return received in February. Where there is a significant increase or
decrease in student numbers, we will then revise the allocation accordingly. For those Commercial and Charitable Providers
where there is significant in-year recruitment we will use data for the rolling 12 month
period February 2016 to January 2017. And for some institutions we will use
whole-year data for 2015/16 instead. The detail of these approaches will
be set out in your allocation statement. As for schools,
we will then use data from 2015/16 to determine the funding factors that
we use to calculate your allocation, including for the first time
block 2 disadvantage funding. We will then use matched data on
student achievement to calculate the additional funding for large programmes. Finally, as in previous years we will
use data collected from local authorities to determine high needs element 2 place funding. Special post 16 institutions will continue
to be funded on the basis of element 1 programme funding calculated using the
post 16 national funding formula and element 2, which will provide the
first £6,000 of support costs for high needs students. Both element 1 and element 2 numbers will
be derived from ILR data and we expect to confirm by the end of January which dataset
will be used, along with the approach to
calculating funding factors. For non-maintained special schools,
the value of funding for students of all ages, both pre and post 16,
will remain at £10,000 per place. Student numbers will be derived from
school census data and again we expect to confirm by the end of January
which data set will be used. For maintained special schools and special academies,
we will again use data collected
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from local authorities to
determine place funding allocations. As for non-maintained special schools,
the value of funding for students of all ages will remain at £10,000 per place. As I mentioned earlier,
we are changing the data source used to calculate block 2 disadvantage funding this year
that is, the funding allocated based on the number of students who had not achieved
a grade C or above in GCSE maths and English by the age of 16. This year, for the first time,
we will be using data returned directly by institutions in the ILR or
school census to calculate this funding. This means that the data used for this
will be consistent with that for most other funding factors, and the data lag
will reduce from 3 years to 2. While this is an improvement in the process
and increases transparency, we recognise that for some institutions with decreasing
numbers of students eligible for this funding, this change will bring forward the reduction
in disadvantage funding they will receive. We will therefore be mitigating the impact
of the change in the first year by calculating the equivalent factor from the
matched data as we did previously. If there is a decrease as a result of the
change in data sources, we will take the average of the two factors.

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We have reviewed the data for all institutions,
and in most cases this appears to be robust, but in a small number of cases we have
identified possible data quality issues. If an institution does have any issues
with data quality, then they will need to raise this with
us as a business case as described later on. There is also a second point to note on
disadvantage block 2 funding, although this will not affect
allocations in 2017/18. As most of you will know,
the grading system for GCSEs is changing, and this will affect students taking
maths and English GCSEs this year. The new grades are numeric from 9 to 1,
and replace the existing A* to G system. As a result, we need to update the threshold
for maths and English grades that will apply to the calculations of disadvantage
block 2 funding in future. The threshold we will apply for this
purpose is a grade 4 that is, students with grades below 4 will be
eligible for block 2 funding in a similar way to students with grades
below C based on the current grades. The first cohort of students this will
affect will be enrolled in post-16 education and training from 2017/18,
so the new grading will first affect block 2 allocations from 2019/20.
This is a similar approach to the one we have already communicated on
the condition of funding in maths and English, and at this stage we have confirmed in the funding letter that the grade 4
threshold will apply for the first two years of the new grades.

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Moving on now to an issue which
primarily affects colleges and private training providers. Students aged 19 or over on 31 August,
who do not have high needs, are normally funded by the Skills Funding Agency. However, those students aged 19 or over who
are continuing a programme they began aged 16 to 18 that was funded by EFA,
continue to be funded using the EFA funding formula and rates to the
end of that programme. This ensures that we maintain a consistent
funding approach for the whole programme. Although the EFA formula is used
for all these students, the responsibility for paying for them
is split between the two agencies. At present, EFA funds these 19+ continuing
students in schools, academies and sixth form colleges while SFA funds them
in FE colleges and private providers. From 2017/18 we are going to streamline
the position so that all 19+ continuing students are funded by EFA,
no matter what institution they are enrolled in as long as that institution is already funded
by EFA for 16-18 provision. This will affect those colleges and
private training providers with existing 19+ continuing students
funded by SFA. For those institutions, in this first year,
we will calculate the amount of funding for this activity and then subtract
that amount from your SFA allocation and add it to the EFA allocation
so there will be no impact on your overall funding. Also for 2017/18 we will update the guidance
for the ILR to enable you to record your 19+ continuing students as EFA-funded. From 2018/19 onwards, this provision
will then be included in your EFA allocation on a lagged basis. Moving on now to some other key elements
of the allocations process. Firstly, business cases. As in past years, the default position
is that we use the data you return to us to calculate your allocation,
but by exception we will consider business cases where there has been
a major error in the data. In the December funding letter we have
confirmed the thresholds that will apply to most business cases,
and they are set out on this slide. We have not specified a threshold in
advance for block 2 disadvantage cases at this stage, as we are using a
new data source for that factor as mentioned earlier. To ensure we have a consistent approach,
we will therefore set the threshold for those cases once we have reviewed any
cases that we receive, to ensure we have a consistent approach. Note that in 2016/17 allocations,
as an exception, we did not apply these standard thresholds
to any cases related to planned hours data from the autumn 2014 school census. This reflected the unusual nature of
that particular return, where it was used to collect planned hours data for
two separate years and so could otherwise have a material
impact on two years’ allocations. For 2017/18 onwards, it is important to
be clear that the standard thresholds apply to all planned hours data cases,
whether for schools, academies and FE institutions. Note also that in 2017/18
we will now be apply a threshold to cases for data error affecting the
condition of funding, as set out on this slide. It is important to note that these
thresholds purely determine whether we will consider a case or not
we will then decide whether to agree the case based on the evidence provided. As mentioned earlier, the deadline for
business cases is likely to be 7 April, although this may vary for some
institutions depending on when their allocations are sent out. We will confirm the deadline when
we send you your allocation statement, and it is very important that any
cases are submitted by the published deadline. In previous years we have had too
many cases submitted after the deadline, and if we receive late cases this year
there is no guarantee that we will be able to consider them. We will confirm more detail of the
process for sending in business cases in the guidance with your allocation.

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In most cases, other than those academies
that are funded on the basis of their estimated numbers, we calculate the
allocations for institutions on the basis of lagged student numbers. However, there are some situations
where the lagged approach does not apply, particularly where there are infrastructure
changes as set out on this slide. The lagged approach does not apply
to new provision, and I’ll say more about that in a moment. It also doesn’t apply to closing provision,
either where provision closes totally in a particular year, or where it is
winding down over a period of time. We may also remove institutions from
the lagged approach where a significant transfer of provision takes place. This might be linked to a merger
or re-organisation, or it might be linked to the transfer
of a sub-contracting arrangement. Where there is a transfer of numbers
between institutions, we would usually expect there to
be growth in one institution and a reduction elsewhere. It’s only in exceptional circumstances
that we’d expect there to be net growth overall. Where institutions funded on a lagged
basis have exceptional growth in-year, we review those cases annually. The thresholds for this can vary from
year to year subject to affordability, but it is important to be aware that
these are generally very high to reflect the exceptional
nature of this growth. Typically we might expect only around
1 per cent of institutions to be in scope for in-year growth. This process does not apply to
private training providers funded under a contract,
who have separate arrangements for reconciliation of over- and under-delivery, or to academies funded on estimates who
are subject to pupil number adjustments. Now, a little more on new sixth forms.
Guidance on the process to add a sixth form to an existing school or
academy is available on GOV.UK as part of the process for making
‘significant change’ to an institution. There are separate documents for academies
and for maintained schools. The guidance explains the criteria that
will be used by Regional School Commissioners and Local Authorities in making
decisions on new sixth forms.

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Once a new sixth form has been approved,
the numbers funded will follow a standard approach as the institution
builds up its numbers. In year 1, we will normally fund a new sixth form
based on one-third of its overall planned capacity. In year 2 we will then fund that sixth form
for twice the number actually recruited in year 1. And then in year 3 we will
fund them based on the lagged approach. Our experience is that this standard
approach matches the profile of recruitment for most new sixth forms.
However, some institutions plan to build up more quickly and others
more slowly, so we will consider well evidenced business cases for a
different profile on an exceptional basis. Now, an update on sub-contracting.

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We updated the guidance on sub-contracting
in summer last year. The new guidance stated that,to comply
with the school registration regulations, all pupils enrolled at a school or
academy must attend that institution at least ‘some of the time’. This means that schools and academies
can no longer sub-contract the whole of a student’s programme
to another organisation. That means that we would not expect to
fund any sub-contracted student starting a programme who was not attending the school
or academy at least once a week. We set out in the sub-contracting guidance
the approach for winding down existing arrangements that are not compliant
with the new guidance. The guidance stated that existing arrangements
could continue in 2016/17, but any whole-programme sub-contracting by
schools and academies for 2017/18 should be agreed in advance by the EFA
by September 2016, and any suich arrangements must be completed
by the end of 2017/18 at the latest. It is also important to note that sub-contracting
can’t be used to avoid existing age restrictions for example, a college could not sub-contract
19-24 high needs provision to an 11-18 school, and a school with a sixth form could not
sub-contract provision to an 11-16 school. As I mentioned earlier,
where an institution withdraws from a significant size of sub-contracting arrangement
that is then picked up by another institution, we will review the impact on their lagged numbers
and would normally expect to transfer the student numbers between the two institutions.
Where sub-contracting does take place, we expect institutions and your governing bodies
to assure yourselves that you are compliant with all of the sub-contracting controls
guidance and our other funding guidance. We are monitoring the levels of sub-contracting
through data returns, and auditors will be checking to ensure that provision is compliant. Now, moving on to student support funding. This year we will calculate free meals
allocations for FE institutions based on the end-year ILR data for 2015/16 as well
as the in-year data for 2016/17. As last year, we will again make an adjustment
to allocations to take account of the overlap between free meals and discretionary bursary funding.
And also as last year, there will be no ring fence between the free meals and bursary allocations
to maximise flexibility for institutions receiving both allocations.

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The requirement to promote and provide
free meals for all eligible students who request them remains.
No change is planned to the £2.41 rate for free meals. There are no significant changes to other
Student Support schemes for the coming year. Vulnerable Bursaries and Care to Learn
continue to be managed through the Student Bursary Support Service operated
by Capita on our behalf. The rules for eligibility for
funding for those schemes remain unchanged. Finally then, how to find out more
if you have further queries. Firstly, there is a large amount of
information online on our website. This slide shows some of the
main links that you may find useful. If you can’t find what you want through
one of those links, then the search function on GOV.UK may well
help you find the right information. Our e-bulletins are also an important
source of information and we use those to highlight key publications as well as
letting you know when we issue specific documents related to allocations.
The e-bulletin is issued weekly at most times of year, and we’d encourage you to subscribe to
ensure you receive the most up-to-date information. Finally, if you have any queries that
can’t be resolved through these routes then please do contact us directly. This slide has a link to the online form
you can use to send a query through to our enquiry service. Thank you for listening,
and I hope you have found this helpful.

Stephen Childs


  1. Where can the slides be found without having to listen to a 23 minute video? Thanks

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