School funding is rarely out of the news. It dominates most conversations I have with headteachers, multi-academy trust leaders and the unions. Yet, despite the noise from many parts of the sector, the issue of whether schools are “underfunded” is still contested. Many believe that schools simply aren’t being efficient enough or deploying their resources according to evidence.

The reality is that we don’t really know whether and to what extent these arguments are valid. When I worked on school funding in the Department for Education, we came under pressure from the Treasury (and, indeed, parts of the sector), to come up with an estimate of how much it costs to run a school. It was an impossible task. First, because every school is different - they have different pupil compositions in terms of disadvantage, SEND pupils and those with EAL, for example. Second, because a top-down model of how to run and resource a school runs entirely contrary to the post-2010 (and, indeed, post-1988) ambition of greater autonomy for schools.

How could we, in the DfE, encourage schools to be autonomous and innovative if we then gave them detailed instructions on how big their classes should be and how they should deploy their staff?

Increased costs for schools

And so no one has really been able to, definitively, answer the question about whether schools have enough money or not. While spending per pupil almost doubled in real terms between 1997-98 and 2015-16, schools have reported an increase in other pressures on their budgets, including the cost of supply teachers, recruiting new teachers and having to provide wider pastoral support to pupils and families in the face of cuts to local authority services.

New research published today by the Education Policy Institute, where I am director, provides an insight into the financial health of schools. We find that, in the last four years (to 2016-17), the number of local authority-maintained secondary schools in deficit nearly trebled - from 8.8 per cent 26.1 per cent. The average deficit among these schools also grew from £292,822 in 2010-11 to £374,990 in 2016-17. LA-maintained primary schools follow a similar trend, though on a smaller scale. We wanted to include academies in this analysis, but the data on deficits is not yet publicly available.

We also find that, in April 2018, around 7,500 mainstream schools (including academies this time) will not have enough additional funding to meet the cost of the 1 per cent pay settlement (even if they receive their full the National Funding Formula allocation for that year). Assuming the pay settlement continues at 1 per cent, by April 2019, almost half of schools will not receive enough additional funding to meet this pressure.

So, while we cannot (yet) say whether schools are using their resources in the most efficient and evidence-based way possible, we can now say that the financial health of schools is worrying and doesn’t look set to improve in the coming years.

Natalie Perera is the executive director at the Education Policy Institute

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