Decentralizing and Centralizing: tensions between local autonomy and central government education policy initiatives in England 1988- 2005 Rosalind Levačić Institute of Education, University of London World Bank Conference on Education Finance and Decentralization Washington January 2005
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Institute of Education, University of London
World Bank Conference on Education Finance and Decentralization
Washington January 2005
Movement for increased consumer choice: diversity and individualization.
Government concern with raised educational standards: economic prosperity and social harmony.
Education has changed over time from a local public good to a national public good.
Consequently the long-standing model of local decision making to ensure efficiency in the allocation of a local public good and fiscal equalisation across jurisdictions to achieve equity has fallen out of favour.
Market model (first phase) Conservative Gmt
ERA: brought in a major decentralization of the management of resources to school level;
formula funding of schools – demand led funding;
greater parental choice
But also a centralising strand:
National curriculum and testing: to both raise standards and inform parental choice;
1992 Office for Standards in Education – national inspections
‘The third way’: New Labour 1997- 2005Central government decides how education is best produced and promotes specific practices.
Backed by funding from central government. Growth in central government funding streams.
Furtherdelegation of resource management responsibilities to schools: all resources including small capital works.
Strengthened performance management.
School diversity promoted as well as co-operation.
An earmarked grant for LEA’s education expenditure: announced for 2006-7 in December 2004 by Department for Education and Skills.
Ends nearly 50 years of funding public schools through block grants to local authorities (school districts).
Educational standards too low due to teacher control of the curriculum and lack of incentives to perform.
Lack of parental choice of school: LEAs allocated pupils to school places.
Inefficient labour and management practices in LEAs – no competition to supply school inputs.
Main elements of decentralization introduced by Education Reform Act 1988
Separation of purchaser and providerParents choose school (constrained choice)
LEA purchases education from schools via formula funding
Budgets for most resources delegated to schoolGoverning Body and head teacher determine how to spend delegated budgetSchools choose own staffing establishment and staff
Governing Body appoints head teacher
Central government: ensures information provided and schools & LEAs regulated
National Curriculum (from 1990)
New key stage tests of English, maths and science at ages 7, 11, 14
Publication of school key stage and GCSE and GCE exam results at 16
Office for Standards in Education (OFSTED) inspections from 1993: inspects LEAs from 1998
School target setting for test and exam results (from 1998)
LEA Education Development Plans (from 1999)
Performance Management (2000): performance related pay for head teachers and teachers.
Building and repairs maintenance: all
Staff costs (cover, INSET)
Advisory and inspection services
Central support and ancillary services: payroll, financial, personnel, legal, governors’ support
School library and museum services
2002 Post 16 student funding for schools taken from LEAs and given the Learning Skills Council: has own formula. Schools can switch it to younger pupils. School finances managed through bank accounts.
LEAs must allocate at least 75% of the Individual Schools Budget according to the number and ages of pupils.
The rest may be delegated in relation to:
a fixed amount regardless of size of school;
‘objective’ indicators of social and/or educational disadvantage; indicators which relate to the costs of operating the school building and grounds (size, condition, split-sites, special facilities, etc).
Special schools & units may in addition be funded in relation to the number of places.
Teacher training programmes and incentives
School effectiveness and improvement grants
Improved teaching: national literacy and numeracy strategies: KS3 strategy; 14-19 curriculum reform.
Raising standards in disadvantaged areas: e.g. Excellence in Cities
School diversity, co-operation, dissemination: specialist schools, academies (run by trusts)
All funded via STANDARDS FUND
General increase in funding for school education.
Public service agreement targets: examples
Increase proportion of 11 year olds who achieve level 4 or above in maths and English to 85% by 2004.
By 2005 85% of 14 year olds achieve level 5 or above in English, maths and ICT and 80% in science.
Increase percentage of 16 year olds achieving 5 or more A* to C GCSEs to 55% by 2004.
1984 Conservatives introduced Grants for Education Support and Training. Very small percentage of total school funding.
1998 became Standards Fund.
Many streams: change annually. At first was bidding and a lot of earmarking. Now mainly distributed by formula and schools can use most of the grants flexibly.
2003/4 - 10% of school funding.
Grafting new onto the old Education & Training
The decentralized school funding system which developed after the 1988 ERA was grafted onto the existing local authority block grant allocation system.
Introduced in 1958.
Fiscal equalization formula introduced in 1960s. Modified in 1980s.
1: from central government to LEAs:
Revenue Support Grant (Office of Deputy Prime Minister)
School Standards Fund (DfES) to LEAs and schools
2. from LEAs to schools (the Local Schools Budget) via a formula. A global budget for schools to determine how to spend.
Consists of two parts:
1. An assessment by central government of need to spend on each service by each LEA. This was called Standard Spending Assessment and now is (Education) Formula Funding Share
2. A deduction from this needs assessment of the amount of council tax the authority can levy on residential property from a notional standard rate.
Adequacy - government pressure on LEAs to delegate more.
Irrationality – school formulae not needs based; SSA calculation not needs based.
Horizontal inequity – LEAs fund schools differently: a national funding formula?
Uncertainty – schools can’t plan long term.
Complexity and lack of transparency because of many funding streams.
DfES: cannot ensure funding increases get to schools.
Vertical inequity – not all LEAs fund sufficiently for disadvantage.
Some LEAs did not ensure schools managed finance efficiently.
Education Formula Spending Share divided into 2 blocks: amount LEA is assessed as needing to spend
under 5s, primary, secondary, high cost pupils
LEA central functions
Youth and community
For under 5s, primary & secondary
Basic entitlement: split into minimum entitlement + basic allowance for Additional Educational Needs
Top- ups for:
Additional educational needs: based on evidence on costs
Sparsity (primary only)
High cost pupils sub-block
HCP = (0.01 + 0.07*income support + 0.21*low birth weight)* no. pupils 3-15
Shifted some Standards Funds into EFSS
DfES obtained powers to force a LEA to increase its Schools Budget
Strategic budget management: if LEA set 3 year school budgets could claw back schools’ excess balances
I believe the new system is a substantial step forward from the old: it is evidence based, not backward looking; it reflects LEAs’ and schools’ separate responsibilities; it uses up-to-date data, that are relevant to the current needs of children; and it is simpler than the old system. We promised a fairer, simpler system, with rising budgets across the country, and I believe this has been delivered.
In 2003/04 schools promised a 5% per pupil real increase in funding. But when budgets announced many schools complained of cuts.
Some Standards Funds put into block grant
Not allowing sufficiently for increased pensions contributions
Redistribution of block grant between LEAs
LEAs not passing on all of increase to schools
Schools having too high expectations
Schools’ poor financial management
Schools guaranteed a minimum x% increase on previous year’s baseline budget:
(a) per pupil for variable costs
(b) on fixed cost part of budget.
Schools with falling rolls get more than x% and schools with rising rolls less than x% of last year’s baseline budget.
For 2005/ 6
Primary & nursery schools: x = 5% (minimum = 4.9%)
Secondary schools: x = 4% (minimum = 3.9%)
Guaranteed floor increase in Schools Formula Spending Share - 5.5% in 2005/6.
Central expenditure limits: LEAs cannot increase central spending by more than they increase Individual Schools Budgets.
Transitional grant (2004/5 and 2005/6) which LEAs applied for to help schools in financial difficulties.
DfES continued to fund teachers’ threshold pay
A hypothecated grant to each LEA for all its expenditure on school education.
Every school gets a guaranteed per pupil increase over three years.
Funding channelled through LEAs which use a formula to determine its distribution. Not a national formula.
LEA grants calculated using same EFSS as currently.Schools in LEAs which spend more than EFFS will be protected from central grants – for how long not clear.
LEAs still responsible for capital planning, SEN, school places and transport plus school improvement.
Financial stability – schools can plan strategically.
Guaranteed increases in per pupil spending.
Gives schools greater control.
Enables further moves to streamline funding streams.
Ends annual wrangling between central and local government on funding.
Can local authority discretion in funding co-exist with central government attaching great importance to education policy?
Some retrograde features of policy making on the hoof: school budget relativities are now historically determined. LEAs unlikely to change formula to redistribute funds because must meet guarantee of annual increased per pupil funding for every school.
Blunting of financial discipline: schools with deficits received help.Budget stability: better financial planning should be possible. (For how long?)