Chapter 2: Review of the current funding system
Respondents identified a range of advantages to the current system. The involvement of local authorities in school funding was considered to be particularly valuable as it was felt to guarantee democratic accountability and the provision of specialist services.
While Devolved School Management ( DSM) was seen to provide headteachers with a degree of control over funding, there was some frustration over the lack of transparency and the apparent variation in the level of flexibility and autonomy granted to headteachers working in different local authority areas.
There was broad agreement that the level of bureaucracy in the current system was a major disadvantage. This included lengthy reporting mechanisms resulting from multiple funding streams, and burdensome procurement processes.
Respondents raised concerns about the heavy workload currently facing headteachers. There was broad agreement that the time involved in completing certain tasks under DSM schemes is reducing the time headteachers have to focusing on attainment within schools.
This chapter outlines the key messages arising from both the written submissions and focus groups regarding the current funding system. It answers the following questions in the consultation:
(a) What are the advantages of the current system of funding schools?
(b) What are the disadvantages of the current system for funding schools?
(a) What are the benefits to headteachers of the current Devolved School Management schemes?
(b) What are the barriers that headteachers currently face in exercising their responsibilities under Devolved School Management? How could these barriers be removed?
Question 1: Advantages and disadvantages of current system of funding schools?
Overall, responses to this question revealed both variations and differences of opinion.
While some respondents cited the 'equitable nature' of the current system of funding as a major advantage, many more argued that the allocation of resources within and between local authority areas was inconsistent and unfair.
Similarly, while some respondents argued that clear methodologies underpinning funding allocations meant that the system was transparent and offered accountability, perceived disparities had led several local authorities and headteachers/teachers to question the mechanisms behind decision making.
Opinions were also divided on the level of predictability in terms of funding under the current system, with some respondents citing this as an advantage but more arguing that they felt restricted by nationally set targets and short-term funding arrangements.
There was, however, broad agreement that the involvement of local authorities in managing risk and providing services that did not relate to teaching and learning was an important and valuable aspect of the current system.
2.1 Advantages of the current funding of schools
The consultation document asked respondents about the advantages of the current system of school funding. 78% of respondents answered this question.
This section does not include messages on the DSM schemes except where messages are discussing general advantages which include DSM. Specific issues relating to DSM are covered under Question 2 in this chapter.
A range of advantages were identified and have been listed in order of prevalence, beginning with the most frequently cited:
1. Local authority involvement in education and school funding;
2. The equitable nature of the system;
3. The predictability and transparency of the system;
4. Funding flexibility at the school level.
These themes are discussed in more detail below.
2.1.1 Local authority involvement in education and school funding
The involvement of local authorities was identified as a strength across the board, particularly among parents, headteachers/teachers, other organisations and local government. The main strengths suggested by respondents are detailed below:
- Most respondents highlighted the importance of specialised services that are currently provided by local authorities. Local authority management of school services that do not relate to teaching was felt to be appropriate as it allowed headteachers more time to focus on 'leading learning'. The services most frequently referred to were building maintenance, facilities, accountancy, and the management of contractors. Some respondents also argued that certain services currently available to all schools as a result of budget sharing would not be viable at a school level. These included services related to additional support needs ( ASN), educational psychology, social, emotional and behavioural needs ( SEBN) and training for staff on specialist skills.
- A wide range of respondents argued that it was important that certain risks were managed at a local authority level. The main examples provided were financial risks associated with factors outside a school's control, such as the cost of absence cover for staff on long term sick leave, transport costs in rural areas, and the training of underperforming or newly qualified teachers ( NQT).
- Accountability to the democratically elected council was regarded as a strength of the current system by many respondents. For this reason, it was argued that local authorities should continue to play a role in decision making around education and school funding.
- A few respondents felt that local authorities were best placed to manage and allocate the education budget, given their knowledge and understanding of local needs. There were several references, mainly from local government and other organisations, to the understanding that local authorities have of schools in the area and the broader policy context (for example, supporting the 'Developing the Young Workforce' agenda. For these reasons, respondents felt that local authorities could ensure that funding is targeted to those most in need and that allocations account for economies of scale. However, many headteachers/teachers completing written submissions and participating in the focus groups felt that the current system for allocating funding failed to account for economies of scale, leaving smaller, rural schools at a disadvantage.
"[The current funding system] combines local democratic accountability with economies of scale which provides value for money" - Other organisation.
2.1.2 The equitable nature of the system
Some responses referred to the way in which the current system promotes equity in educational opportunities. This included the following elements:
- A needs-based funding allocation system based on school roll and pupil need which " ensures that all schools get an equitable amount" - Local Government;
- Further targeted funding programmes such as the Attainment Challenge, Pupil Equity Fund, the 1,140 hours of early learning, and the Devolved School Management ( DSM) systems; and
- An ability to re-deploy surplus teachers to cover gaps as required.
2.1.3 The predictability and transparency of the current system
Some respondents felt that the current funding system had the merit of predictability. Funding allocations made by local authorities followed clear methodologies that provided schools with predictable and consistent funding allocations. Several respondents felt that this process was consultative and that there were good working relationships between local authorities and schools.
A few respondents also felt that the level of transparency around funding and governance in their area was good and that this was an important feature of the current system.
2.1.4 Funding flexibility at the school level
Some respondents, predominantly local authorities, argued that the current flexibility that headteachers had for funding at a school level was a strength of the current system. For example, there were a few references to the fact that there is no maximum amount that can be spent on a child, meaning local authorities and schools can recognise and respond to individual needs.
2.2 Disadvantages of the current funding of schools
The consultation document asked respondents about the disadvantages of the current system of school funding. 72% of respondents answered this question.
This section does not include messages on the Devolved School Management ( DSM) schemes except where messages are discussing general disadvantages which include DSM. Specific issues relating to DSM are covered under Question 2 in this chapter.
A variety of disadvantages were identified and have been listed in order of prevalence, beginning with the most frequently cited:
1. The level of bureaucracy with the current system;
2. Inequitable allocation of resources within the current system;
3. Insufficient funding for education undermines progress;
4. Insufficient flexibility of the current system;
5. Insufficient accountability and transparency in the current system.
These themes are discussed in more detail below.
2.2.1 The level of bureaucracy with the current system
The majority of respondents regarded the high level of bureaucracy within the current system as a disadvantage. Local authorities and headteachers/teachers were most likely to make this point; however, this was also supported by many parents and other organisations.
"The system is overwhelmed with paper." - Headteacher/teacher
In addition to a general view that the system was overly bureaucratic and required too much reporting, three particular issues were identified:
- Having multiple funding streams added to the level of bureaucracy in the system. There were specific references to the reporting and monitoring involved in Pupil Equity Funding ( PEF) and the Attainment Scotland Fund ( ASF).
- The processes in place for staff recruitment and procurement were considered burdensome for schools. Some respondents argued that council procedures involved in recruiting new staff made it difficult to respond quickly and flexibly to staff shortages. Headteachers participating in the focus groups considered procurement processes to be inefficient and time consuming and they involved long delays. Some argued that they would be able to find better deals, more quickly, themselves and that they should have this option.
- As the financial year does not align with the school year and unspent funds cannot always be 'carried forward' from one year to the next, this can place restrictions on how and when money can be spent.
2.2.2 Inequitable allocation of resources within the current system
The large majority of other organisations argued that the allocation of resources both within and between local authorities was inequitable. This was supported by many local government respondents, parents and headteacher/teachers.
There were many references to perceived variations in the amount allocated to education budgets by different councils and the level of control granted to headteachers over school budget spending.
Many respondents felt that disparities were apparent across local authorities. This included different approaches taken to class sizing, per pupil spending, support available for pupils with, for example, ASN, or dealing with LGBT issues. This was felt to be inconsistent and unfair.
Two respondents felt that it was inequitable to have a national teacher wage as it did not account for different living costs across Scotland. This therefore compromised the ability of schools in certain regions to recruit quality teachers.
2.2.3 Insufficient funding for education
The majority of respondents argued that there was insufficient overall funding for education. The quotes highlighted below summarise the views across different types of respondents:
"What schools need is improved funding levels, not a complex redistribution of the current inadequate funding." - Other organisation.
"No system can make up for manifest funding shortages and cutting of services that benefit and assist pupils." - Parent.
"To allow headteachers to make the best decisions for their school the appropriate resources would need to be put in place… question whether simply giving more financial responsibility to headteachers will encourage excellence and equity for all." - Other organisation.
The current level of funding was thought by respondents to have resulted in the following issues:
- A shortage of teachers;
- Difficulty managing school estates;
- A reduction in back office support and administration;
- Difficulty addressing ASN.
One local government respondent in particular mentioned that, in an environment of heightened scrutiny of budgets, developing simple funding systems becomes difficult.
2.2.4 Insufficient flexibility of the current system
Many respondents referred to the inflexibility of the current system for funding. This applied to two key areas: restrictions imposed by national guidelines and targets, and the constraints of year-to-year funding.
- Most local authorities and other organisations mentioned inflexibility in the context of nationally set targets and restrictions. Some examples included the recommended pupil-teacher ratio, teacher number restrictions, non-class contact time and working time agreements.
- Single year funding arrangements were also said to constrain longer term planning and investment. This point was raised by some local authorities and many headteachers who participated in focus group discussions. There were specific references made by both respondent groups to the changeable nature of the amount received each year, making it difficult to predict and plan accordingly.
2.2.5 Insufficient accountability and transparency in the current system
Several respondents perceived there to be a lack of accountability and transparency in the mechanisms used to allocate funding. Local authorities and headteachers/teachers were most likely to refer to this issue. However, local authorities were referring to the allocation of funding from the Scottish Government, while headteachers were referring to the allocation of funding from local authorities.
Many headteachers involved in the focus groups discussions felt unclear about the rationale for variations in the amount of money allocated to primary and secondary schools and schools operating in different local authority area. This appeared to have led to some distrust in council decision making.
Question 2: Benefits and barriers of Devolved School Management schemes
2.3 Benefits to headteachers of the current Devolved School Management schemes
The consultation document asked respondents about the benefits of the current Devolved School Management ( DSM). 59% of respondents identified benefits to DSM schemes. The key benefits in order of prevalence were:
- Headteacher control over funding;
- Local authority support;
- Clarity and planning.
These are outlined in more detail below.
2.3.1 Headteacher control over funding
Many respondents, predominantly local authorities, argued that the current system gives headteachers local control over funding and improves decision making at the school level. Three aspects of this were mentioned:
- Some DSM schemes provide an agreed mechanism for schools to carry forward unspent funds to the next financial year. This gives headteachers the possibility of more effective budget planning, such as being able to plan larger items of expenditure which are in line with the school's long-term improvement plan. There was widespread agreement amongst headteachers participating in focus group discussions that the ability to 'carry forward' funding allowed for greater control over school budgets, but there was some frustration that this option was not provided to headteachers in all local authority areas.
- Some DSM schemes allow headteachers the flexibility of transferring funds between different budget headings (referred to as 'viring').
- All headteachers involved in the focus groups stated that they would like greater flexibility in how they spend additional funding. While there appeared to be considerable variation in the level of autonomy granted to headteachers working in different local authority areas, some of those who appeared to have more autonomy argued that they were restricted by guidelines and reporting measures imposed by their local authority. There was broad agreement that headteachers best understand the needs of pupils in their schools, and it should therefore be their responsibility to decide how additional funding is used.
2.3.2 Local authority support
Many respondents considered the level of support available to headteachers from their local authority as a major advantage of DSM schemes. This was supported by both headteachers/teachers and local authority respondents, who identified two main reasons for this:
- While the current DSM arrangements can give headteachers 'local control over funding' (see 2.3.1.), it equally frees them from wider financial responsibilities and accountabilities which currently rest with the local authority. Many argued that this ensured headteachers were not overburdened with bureaucracy and allowed them more time to focus on learning and teaching.
- In terms of the support provided by local authorities under DSM, many respondents felt that it was important that headteachers could access pooled services. These included legal services, IT services, human resources, school transport, and school repairs and maintenance.
2.3.3 Clarity and planning
Many local authorities felt that DSM was beneficial to headteachers as it provides clear guidelines and the opportunity for long-term planning. Two particular aspects of this were identified:
- DSM provides clear and transparent guidelines and is well understood by all relevant stakeholders, including headteachers. Conversely, many headteachers participating in the focus groups described feeling uncertain about the guidelines.
- Under DSM, schools are advised, in advance of each school year, which funds will be available to them. Respondents argued that this allowed headteachers, in partnership with their school staff and their local authority, strategically to plan expenditure and allocate resources over the academic year.