1. Why Review School Funding?
1.1 The Governance Review
The Scottish Government's Education Governance Review Empowering Teachers, Parents and Communities to Achieve Excellence and Equity in education: A Governance Review  was launched in September 2016. It sought views on the way education in Scotland should be run, and the principles that should inform our approach to fair funding for schools. Putting the relationship between pupils and teachers at its heart, its aim was to systematically consider and question how each part of the education system - from early learning and childcare provision, through to secondary school education - can support our vision of excellence and equity in education.
Following 16 weeks of engagement and consultation, the Governance Review closed on 6 January 2017. Over 1,000 parents, teachers, members of the public and organisations submitted formal written responses to the consultation and almost 700 people took part in the public engagement sessions across Scotland. All of those responses have been analysed, and are published alongside Next Steps and this consultation. In addition, we asked Children in Scotland, Young Scot and the Scottish Youth Parliament to ensure that the voices of children and young people were heard. In parallel with the Governance Review, the National Parent Forum undertook a review of the Scottish Schools Parental Involvement Act 2006. We have also drawn on evidence from the Organisation for Economic Co-operation and Development ( OECD), the International Council of Education Advisers ( ICEA) and international evidence to inform the way forward.
A consultation on the expansion of Early Learning and Childcare ( ELC) ran between October 2016 and January 2017. This covered a range of key policy areas, including funding models. The Scottish Government set out its response to the ELC consultation on 23 March 2017 in A Blueprint for 2020: The Expansion of Early Learning and Childcare in Scotland 2017-18 Action Plan  .
1.2 Education Governance: Next Steps - Empowering Our Teachers, Parents and Communities to Deliver Excellence and Equity for Our Children
The Scottish Government believes that teachers and practitioners are best placed to work with communities and parents to drive educational improvement. The organising system of education must be focussed on providing the best framework for them to do so. That framework must in turn be supported by building capacity for improvement in the system, a culture of leadership and collaboration and strong accountability.
Grouped around five main themes, Next Steps sets out specific proposals for reform in order to create an education system that:
- is centred around children and young people;
- is school and teacher-led;
- focusses on the quality of teaching and learning;
- supports leadership; and
- has a relentless focus on improvement.
1.3 Fair Funding
Effective governance needs to be supported by a fair and transparent funding system that puts children and young people at the heart of decision-making.
It is right that, as part of this whole-system review, we also ask whether current practice could be improved, and allocation more targeted to need, so that every child receives the teaching, support and guidance they require, regardless of their circumstances, the school they attend, or the local authority they live in.
Next Steps discusses three possible approaches to funding in the future to support our vision for a school and teacher-led system, and to bring greater consistency, transparency and fairness to school funding, including the development of a fixed national funding formula.
While many education systems have moved in recent years towards decentralisation of funding in this way, there is little direct evidence at present about the role and success of funding formulas in driving improved educational outcomes. In addition, moving towards a national funding formula could introduce unacceptable instability and inflexibility to education funding. Next Steps makes it clear that local authorities will remain democratically accountable for the provision of early learning and childcare and for schools. They will focus on delivering world class educational support services, and their role will be key in supporting headteachers and schools to drive improvements and deliver better outcomes for children. The vast majority of the funding for school education will continue to be channelled through local authorities, and they will continue to have a role in ensuring that public resources allocated for the delivery of education in Scotland are properly accounted for. The Scottish Government does not therefore intend to develop a fixed national funding formula.
However, there is some evidence that the approach taken to funding can help improve educational outcomes. The Accounts Commission report School Education (2014)  stated that "Evidence from our literature review suggests that it is how councils decide to spend their education budget rather than the overall level of spend which has most impact on attainment levels. The literature also suggests the impact of funding on attainment could be more significant if it was targeted at those schools and pupils where the need to improve attainment was greatest." A Centre for Economic Performance paper also found that "increases in resourcing are usually more effective for disadvantaged pupils and/or schools"  .
Funding can have an important role to play in achieving positive outcomes and supporting both horizontal equity - where there is equal treatment of similar pupils and/or schools, no matter where they are in Scotland - and vertical equity - whereby pupils or schools are treated differently, according to their differing characteristics and learning needs.
The development of a fair, more consistent, transparent and targeted method of allocating funding could provide a way to address current equity issues within the system and ensure that resource goes where it is needed most.
This consultation seeks views on two possible approaches to meeting those aims.
1.4 cope of consultation
This consultation focusses and seeks views on how we can ensure that operational funding for early years and school-age education at a school level is allocated fairly and to best effect. The following areas of school funding are therefore within scope:
- teacher costs;
- non-teaching staff costs, for example, teaching support or school administration staff; and
- all other school-related discretionary expenditure, for example books, materials, etc.
Some areas of expenditure cannot easily be assessed or allocated at individual school level, for reasons of complexity and accountability, and historically have been considered to be more effectively managed centrally (e.g. at an education authority level). They are therefore outwith the immediate scope of this consultation, although consultees are invited to offer views on what areas of school expenditure should or should not be managed at headteacher level (Question 4). At present, the areas generally dealt with centrally include the following:
- all capital expenditure, including any Public-Private Partnership ( PPP)/Private Finance Initiative ( PFI) costs;
- school building maintenance costs;
- IT services and their associated costs;
- utilities costs;
- central support services, such as Educational Psychologists;
- school meal services;
- school transport;
- some aspects of costs relating to Additional Support Needs;
- costs associated with early years provision outside school settings;
- other children's services, for example care services; and
- clothing grants and similar allowances.
The consultation sets out how education is currently funded, the benefits, limitations and implications of that approach, and the opportunities for developing a funding model fit for the future.
Email: Deborah Davies
Phone: 0300 244 4000 – Central Enquiry Unit
The Scottish Government
St Andrew's House