Decentralizing and Centralizing: tensions between local autonomy and central government education policy initiatives in England 1988- 2005

1
Decentralizing and Centralizing tensions between
local autonomy and central government education
policy initiatives in England 1988- 2005

• Rosalind Levacic
• Institute of Education, University of London
• World Bank Conference on Education Finance and
  Decentralization
• Washington January 2005

2
Tensions between centralisation and
decentralisation in education

• Movement for increased consumer choice diversity
  and individualization.
• To increase citizen satisfaction
• To increase efficiency of education sector
• 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.

3
Levels of decision making in the English school
system

• DfES - Department for Education and Skills
  Secretary of State for Education
• LEAs - Local Education Authority (149)
• Schools
• 18,000 primary schools
• 3,600 secondary schools
• 7.6 million students

4
England since Education Reform Act of 1988

• 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

5
England since Education Reform Act of 1988

• 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.
• Further delegation of resource management
  responsibilities to schools all resources
  including small capital works.
• Strengthened performance management.
• School diversity promoted as well as
  co-operation.

6
Dedicated Schools Budgets

• An earmarked grant for LEAs 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).

7
State welfare model English school system before
1988 Education Reform Act

• Dept for Education set general policy framework
  but did not intervene
• Local Education Authorities (LEAs) ran schools
  (are now 149 were around 100)
• LEA appointed headteacher and managed teaching
  force could deploy a teacher to a school
• LEA allocated pupils to schools on
  administrative criteria
• LEAs managed resources centrally a unitary form
  organisation
• Schools had small budget (capitation) for books,
  materials
• Light inspection, no performance targets
• Schools had large degree of curricular freedom

8
England assignment of powers between levels pre
1988
School Local authority Central government
Resource management v
Funding v v
Curriculum v v
Regulations on inputs v v
Admissions v
Evaluation v

9
What did the reformers see as wrong with the
English school system in the 1980s?

• 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.

10
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

11
Centralizing measures introduced by ERA 1988 and
later

• 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.

12
Further financial decentralization to schools
from 1999

• 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
• Devolved capital
• 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.

13
England assignment of powers between levels post
1988 first phase
School Local authority Central government
Resource management v v much reduced
Funding v v
Curriculum v much less v removed v QCA
Regulations on inputs v much reduced v
Admissions v v much less Sets policy
Evaluation v removed v OFSTED

14
Funding formulae each LEA has its own

• 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.

15
Central government education interventions

• 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.

16
Sources DfES Departmental Reports Statistics
for Education Training
17
2004 Spending Review for Education

• Total spending on education in England will be
  12 billion higher in 2007-08 than in 2004-05, an
  average growth rate of 4.4 per cent per year in
  real terms
• Education spending will rise to 5.6 per cent of
  GDP by 2007-08 from 5.4 per cent in 2004-05
• Schools for the Future capital investment in
  education will rise from 0.8 billion a year in
  1997-98, 5 billion in 2004-05, to 7 billion a
  year in 2007-08
• Efficiency gains worth at least 2.5 per cent of
  the DfES 2004-05 baseline will be made each year
  over the Spending Review period, releasing
  additional resources for the front line.

18
Spending Review Targets 2000 examples

• 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.

19
Increased central funding of schools

• 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.

20
Standards Funds 2004/5

• Ethnic minority achievement grant
• Advanced Skills Teachers Teachers threshold
  grant
• Golden Hello Payments for teachers in shortage
  subjects
• Targeted support for primary strategy and KS3
  strategy
• Leadership incentive grant
• Targeted improvement grant
• Leading edge programme
• Specialist schools and Training schools
• Extended schools and Federations
• Summer schools for gifted and talented children
• Excellence in Cities and Excellence Clusters
• Targeted behaviour and improvement programmes
• Aimhigher (yes it is one word!)
• Fresh start and new partnerships

21

• Grafting new onto the old
• 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.

22
School Funding System in England 2002 -2005
23
System of financing schools 1988 - 2002/3

• Two stages
• 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.

24
Formula for distributing Revenue Support Grant to
LEAs Fiscal Equalisation

• 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.
• .

25
Complaints re post 1988 school funding system

• 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 cant 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.

26
Main features of the new system for 2003/4

• Education Formula Spending Share divided into 2
  blocks amount LEA is assessed as needing to
  spend
• SCHOOLS BLOCK
• under 5s, primary, secondary, high cost pupils
• LEA BLOCK
• LEA central functions
• Youth and community

27
Sub-block formulae for EFSS

• 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
• Area costs
• Sparsity (primary only)
• High cost pupils sub-block
• HCP (0.01 0.07income support 0.21low
  birth weight) no. pupils 3-15

28
Other elements of the new system

• 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

29
Minister virtues of the new system

• 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.
• December 2002

30
School budget fiasco 2003

• In 2003/04 schools promised a 5 per pupil real
  increase in funding. But when budgets announced
  many schools complained of cuts.
• Possible reasons
• 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

31
Minimum guarantee to schools budgets

• Schools guaranteed a minimum x increase on
  previous years 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
  years baseline budget.
• For 2005/ 6
• Primary nursery schools x 5 (minimum
  4.9)
• Secondary schools x 4 (minimum 3.9)

32
Other DfES measures

• 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.
• (51 LEAs)
• DfES continued to fund teachers threshold pay

33
Dedicated schools budgets for 2006/7

• 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.

34
DfES rationale

• 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.

35
Reflections on 17 years of decentralised and
re-centralised school 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?)