Purpose

Special Schools Funding Formula - 2025/26
funding levels. It is the Council’s responsibility to
establish a funding formula in accordance with the Schools and
Early Years Finance Regulations 2025 and High Needs Operational
Guidance 2025 when delegating funding to special and alternative
provision schools.

The funding formula school and pupil characteristics are updated
annually, such as place number changes and pupil needs to deliver
fair funding.

For the 2025/26 financial year, the mainstream top up rate will
increase from £11.84 to £12.08 per hour (2% increase).
In determining this inflationary uplift, the Council is very
mindful of both the financial pressures being experienced by
schools in this area, whilst also balancing this with the
increasing costs being faced to Lincolnshire’s High Needs
block.

Current and forecast spending levels are significantly greater than
the Government’s High Needs Block allocations leading to
material in-year deficits with Lincolnshire forecasting to go into
a structural Dedicated Schools Grant deficit at the end of this
financial year, with the deficit growing materially each year
thereafter. Lincolnshire must secure a financially sustainable
system; therefore, the Council’s intention is to review
mainstream top up and targeted funding arrangements with sector
engagement, with a view of implementing changes from September
2025. It is therefore important to note that high needs funding
levels for 2025/26 are indicative, and transition arrangements will
be considered in any future planned changes

Finance Commentary

Lincolnshire has received its High Needs block allocation for
2025/26 (c.£141m), which funds delegated high needs funding
to schools and providers, and high needs support services.

The special schools funding and mainstream top up and targeted
arrangements are met from the High Needs block of the Dedicated
Schools Grant (DSG).

The national context is of an unsustainable SEND system that is
causing material DSG overspends across many Local Authorities. The
extra £1bn nationally in high needs funding for 2025/26 is
forecast to contribute towards supporting significant in-year
funding deficits of high needs spending.

Lincolnshire is forecasting to go into a structural DSG deficit at
the end of this financial year for the first time, with the deficit
growing materially each year thereafter due to increased demand and
prices. The Council must achieve a balanced sustainable budget on
its High Needs block ensuring funding is directed to the right
activities and cost-effective provision to maximise the outcomes
for young people with SEND. Transformational work is still
considered fundamental to this, and the Council is taken forward a
number of measures to support the sustainability of the High Needs
block, including a review of the mainstream top up and targeted
arrangements.

It remains important to ensure fair funding to schools, which is
the basis of the funding decisions outlined. The overall cost
increase of the original special schools budget is c.£4.5m
for increased places agreed and band pupil changes with total
spending forecast at c.£47m (or c.£0.020m per place)
and after the CSBG allocation (£0.022m per place). The
mainstream top up increase is c.£1.1m with total forecast
spending being £36.4m
based on the current pupil cohort.

Decision

To approve the 2025/26 special schools funding
formula arrangements:
•Revised place numbers for the new academic year (2025/26)
through the annual place number review.
•Using the schools latest pupil band information governed
through the annual process into each schools band profile for
determining pupil band funding.
•Monetary formula factor values remain cash flat in
recognition of increases in staff pay being met by the
Government’s Core Schools Budget Grant (CSBG).
•Operation of the Minimum Funding Guarantee +0%.
•Applying the CSBG at the DfE monetary rate in accordance with
the recommended guidance.
•Applying the DfE condition to continue applying the
additional funding to special and alternative provision schools at
the same 2023/24 place monetary amount.
•Applying the Exceptional Funding criteria for schools in
financial difficulties only.

To approve the 2025/26 mainstream schools:

Increase to the Education Health Care plan top up hourly rate by 2%
in 2025/26.