The Reform of Schools Funding: Some Case-Study Lessons

Since the Education Reform Act of 1988 there has been substantial change in the funding of schools in Britain. Individual schools now have their own budgets which are determined by formula, and they have substantial freedom to spend their budgets as they wish. They are also entitled to keep any savings which they make, and these are rolled forward to the next financial year. The funding formula for a school is designed by its local education authority, subject to constraints imposed by central government. More recently a class of self-governing, or grant-maintained, schools has developed with a parallel funding system which is also formula based. A new institution, the Funding Agency for Schools, has been created to oversee the financing of these schools. In this paper, which is based on interviews with officers in six local education authorities and on documentation from several others, the author assesses these recent changes in the education ‘market’. It is concluded that the market is not working well due to the complexity of the funding arrangements, the institutional arrangements, the inappropriate incentives offered, and the change in the ‘atmosphere’ of the education market.