EFA's January 16-18 funding letter - the implications for colleges

This week's Education Funding Agency (EFA) letter on education for 16 to 18-year-olds confirms a degree of stability when it comes to sixth form budgets. EFA will only make marginal changes to its funding formula and will pay colleges and school sixth forms at the same rate as last year. The national base rate for 16 and 17 year olds is fixed at £4,000. 18 year olds are valued at £3,300 (17.5% less). Funding for disadvantaged students, those without GCSE grade C in English and maths and those taking higher cost courses remain. 2016-17 sees the introduction of two factors which make the formula slightly more complicated: * the large programme factor for the relatively few high-achieving students is in the form announced in summer 2014.* a higher (75% rather than 60%) programme factor for institutions with specialist land-based resources So sixth form funding in 2016-17 follows a familiar recipe. At its simplest, the formula has various elements summarised in this chart: The EFA 16-18 Funding Formula EFA Funding.png Funding per student varies subtly each year depending on the characteristics of a school or college's whole population. In most cases these do not vary that much. The biggest determinant of next year's income is therefore this year's student numbers as this second chart shows: 16-18 student numbers drive finding EFA Funding2.png There are more than 3,000 state-funded sixth forms in England and constant change in the sector as a result of DfE opening new free schools, schools themselves opening new sixth forms and colleges reshaping what they offer. The chart below summarises the funding allocated by EFA in the 2015-16 academic year. Allocations for 2016-17 will be recalculated in line with the rules set out in today's letter and the student numbers reported by institutions in their Individual Learner Record and school census returns: 16-18 education - EFA funding EFA Funding3.png Although the national 16-18 funding formula is little changed, there are some savings at the margins. The Treasury has set DfE a challenging target to remove £160 million from the £6 billion budget over the next four years. Although this does not sound much as a percentage (2.6%), it is a substantial cash sum at a time of pressure on staff costs (partly because of Treasury decisions) and when expectations are rising. There are new technical qualifications, new A Levels and a mountain to be climbed in terms of post-16 maths and English. EFA will operate a tolerance scheme for the English and maths condition of funding in calculating 2016-17 allocations but for this year and beyond every student without a C grade in GCSE Maths and English will be expected to take an eligible qualification (note: sentence on tolerance scheme updated on Friday 15 Jan because earlier version was incorrect) So costs are up and funding is largely static with cuts around the edge. The letter doesn't explain how EFA will make its four year post-16 savings but it makes a start. Formula Protection Grant (FPG) will be removed from schools and colleges but with a cap where FPG exceeds 2% of programme funding. Meanwhile EFA will reduce discretionary bursaries that support students from disadvantaged families. Helpfully there will some flexibility for colleges to pool the money with their free college meal grants but still leaves a £15 million cut. In the short term, funding predictability makes it easier for college and school leaders to think through other changes to their 16-18 courses. As well as the curriculum changes listed above, there are also reforms in the institutional landscape. Colleges are involved in a national programme of area reviews which run until spring 2017. Some colleges will merge. Some sixth form colleges may convert to become academies. All colleges will be required to review and justify their 16-18 provision. The college sector is undergoing a national self-evaluation of its role to leave it in a stronger place for the future. The same sort of thing should be happening in schools. Government continues to handle colleges and schools in separate boxes but 16-18 education is where they co-mingle. There is a long tail of small sixth forms, some of who have low retention and achievement. The focus of Regional Schools Commissioners appears to be on creating multi-academy trusts. This should not stop school leaders taking a careful and close look at the real state of their post-16 provision. The bigger picture for the DfE is how it manages its toughest budget settlement for 20 years. In a period time when the apprenticeship levy will lift revenue spending on skills by more than 17%, DfE's budget rises by 6.5%. This is barely enough to keep up with pupil numbers let alone pay for additional nursery teaching or the transitional costs of the new national school funding formula. Balancing costly promises, rising expectations and an insufficient budget will not be an easy task for the DfE leadership or, indeed, for anyone in the education system.