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<p>Since its introduction in the 2018/19 financial year, the schools national funding
formula (NFF) has distributed funding for mainstream schools in England fairly between
local authorities. This is based on the individual needs and characteristics of schools
and pupils. Local authorities then distribute that funding among their respective
schools, using their own formulae.</p><p>Following last year’s ‘Fair school funding
for all’ consultation, the department is moving to a direct funding formula for schools.
The formula will complete the reforms to school funding which started when the NFF
was introduced. A direct NFF will mean that the department determines funding allocations
for individual schools without substantial local adjustment, on the basis of a single,
consistent formula for the whole country.</p><p>Many local authorities have already
moved their local formula to follow the NFF more closely. 105 out of 150 local authorities
in England moved all of the values used in their local formulae closer to the NFF
between the 2018/19 and 2021/22 financial years, or kept them within 1% of NFF values
after allowing for the area cost adjustment. 73 local authorities are now mirroring
the NFF funding factors almost exactly.</p><p>The department will start the process
of transitioning fully to the direct NFF in the 2023/24 financial year by requiring
that local authorities use all, and only, NFF factors in their local formulae. Local
formulae factor values should move at least 10% closer to the NFF.</p><p>The department
is not setting a definitive end date at which the direct NFF will be implemented.
It will be important to continue to be guided by the impact of the initial transition
towards the direct NFF, before deciding on the further pace of change. However, to
give a sense of the likely timescales to inform schools’ and local authorities’ planning,
the department is setting out that it expects to have moved to the direct NFF within
the next five financial years, or by the 2027/28 funding year.</p><p>The department
hopes that it will move to the direct NFF sooner than this. As we move to the direct
NFF, individual schools’ budgets will continue to be protected, so that they do not
suffer an excessive year-on-year reduction.</p>
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