An Analysis of Differences Between Historic and Formula School Budgets: evidence from LEA LMS submissions and from detailed study of two LEAs

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Abstract
This paper examines the nature and causes of school budget gains and losses brought about by formula funding. Data on school budget gains and losses in 17 LEAs is examined but the main focus is a detailed analysis of school level budget and related data for two county LEAs. Using regression analysis and budget modelling it is concluded that the main causes of school budget gains and losses are differences between schools’ teaching staff complement and the number of teachers notionally allocated by the formula and differences in teacher salary costs; the former variable has a larger impact. A further finding is that differences in LEA formula construction (e.g. with respect to the special needs and school area) also explain budget gains and losses. The move to a formula based on pupil numbers not class group size and changes in age weightings to reflect the needs of the national curriculum explain some of the difference between actual staff numbers and the staffing presumed by the formula, but failure to adjust staff numbers to falling rolls is also a factor.

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