Guidance

Academies and dedicated schools grant 2023 to 2024: calculation of recoupment

Updated 14 February 2024

Applies to England

1. Introduction

This guide explains how we, the Education and Skills Funding Agency (ESFA), calculate dedicated schools grant (DSG) schools block recoupment for the 2023 to 2024 financial year. This guide is primarily aimed at local authority finance officers and runs alongside the 2023 to 2024 authority proforma tool (APT) guidance.

It does not describe how we deduct funding from the schools’ block of the DSG for high needs places. That information is available in the dedicated schools grant technical note.

Local authorities provide an individual schools’ budget (ISB) for each school in their area, in the APT that they submitted to us in January 2023. This includes the notional budgets for all academies and free schools in their area, including university technology colleges and studio schools. It also shows the funding that academies would have received if they were maintained schools. As local authorities are not responsible for funding mainstream academies or free schools, we will deduct the amount of ISB for those schools from the total DSG allocated to local authorities. We refer to this deduction as ‘recoupment’.

Local authorities should use the national non-domestic rates (NNDR) values provided in the APT as the basis of their calculations for adjustments to reflect NNDR liabilities; these were part of the indicative national funding formula (NFF) allocations published in July 2022.

Where authorities made growth fund payments to academies in the 2022 to 2023 financial year for basic need, they should continue to provide these until the academies receive their new budgets from September 2023. We adjust recoupment accordingly in these cases to provide authorities with the funding to continue these payments. We do not adjust recoupment for diseconomy of scale or start-up funding as published in the school revenue funding operational guide Local authorities should continue to meet the cost of these elements from their growth funds.

2. New free schools

We will continue to recoup for all free schools from the date they opened for the financial year 2023 to 2024.

To help local authorities estimate the recoupment amounts for new free schools, we included details of the expected pupil numbers for those they predicted to open in the next year when we sent the APT in December. We request local authorities to combine this data with their own local knowledge when submitting their 2023 to 2024 financial year APT, to determine the most accurate estimate of the number of pupils for new free schools.

The ISB should reflect the funding for the period in the year that the new academies are open - local authorities should use the ‘Opening/Closing’ factor on the ‘Local Factors’ worksheet to do this. We will not pro-rata the calculation for these academies. Local authorities should note that premises factors are not pro-rated by the ‘Opening/Closing’ factor, we will recoup any premises funding at the value listed in the APT.

Local authorities may need to adjust these estimates; therefore, you should reflect any differences that you identify in the 2024 to 2025 financial year APT.

We expect local authorities to provide estimates for all new free schools. In rare cases where a school has opened and it was not possible to provide data in the APT, we will accept an estimate in-year to avoid delaying recoupment. This helps reduce the adjustment in the 2024 to 2025 financial year APT.

3. New provision academies

We asked local authorities to include any new provision academies on the APT that they submitted in January 2023.

This meant that local authorities had to estimate pupil numbers and characteristics for all these schools. This is the same as those opened under the new presumption free school arrangements.

The regulations allow retrospective adjustments in the following financial year, so that we fund schools appropriately if the actual numbers are different from the estimated numbers. Although this is a decision for the local authorities, we would generally expect to see these adjustments. It is up to the local authority to decide whether to use a threshold for these adjustments.

4. Recoupment calculation

We use the data provided by local authorities on their APTs to calculate recoupment.

For converting academies that opened after 11 January 2023, we asked authorities to show these schools as maintained schools on the APT. From this year, indicative business rates and historic rates adjustments will be deducted from the DSG for all mainstream providers rather than being recouped for academies.

The date that a school converts to academy status depends on whether we allow de-delegation:

• where a school converts to academy status on or before 1 April 2023, no de-delegation can happen

• where a school converts between 2 April 2023 and 1 September 2023 (inclusive), the authority can retain any de-delegated funding until 1 September 2023

• where a school converts to academy status between 2 September 2023 and 31 March 2024 (inclusive), the local authority can retain any de-delegated funding for the remainder of the 2023 to 2024 financial year. This will help service providers plan their future operations

The following table shows the columns in the APT that we use in the recoupment calculations.

Table 1: APT columns used in the recoupment calculations

Date of opening	Calculation (from the APT)
Free schools open before 2 September 2022	Column BO (23-24 Post MFG budget) from the ‘New ISB’ sheet, minus column BX (23-24 NFF NNDR allocation) from the ‘New ISB’ sheet
Academies open by 11 January 2023	Column BO (23-24 Post MFG budget) from the ‘New ISB’ sheet, minus column BX (23-24 NFF NNDR allocation) from the ‘New ISB’ sheet, plus column I (Growth funding adjustment for April 2023 to August 2023) from the ‘Recoupment’ sheet
Academies open from 11 January 2023 to 1 April 2023	Column BO (23-24 Post MFG budget) from the ‘New ISB’ sheet, minus column BX (23-24 NFF NNDR allocation) from the ‘New ISB’ sheet
Converter academies open from 2 April 2023 to 1 September 2023	Column BU (Post de-delegation budget) from the ‘New ISB’ sheet, minus column BX (23-24 NFF NNDR allocation) from the ‘New ISB’ sheet pro rata for the period that the academy is open plus 7/12 of column BT (De-delegation) from the ‘New ISB’ sheet
Converter academies open from 2 September 2023 to 31 March 2024	Column BU (Post de-delegation budget) from the ‘New ISB’ sheet, minus column BX (23-24 NFF NNDR allocation) from the ‘New ISB’ sheet pro rata for the period that the academy is open
New free schools	Column BO (23-24 Post MFG budget) from the ‘New ISB’ sheet, minus column BX (23-24 NFF NNDR allocation) from the ‘New ISB’ sheet

5. Examples of recoupment calculations

This section gives some examples of our calculations. We use the data in table 2 below for all the various scenarios (see sections 5.1 to 5.6) for when a free school or academy opens.

Table 2: examples of relevant data on the APT

APT information	APT data source
2023 to 2024 Post MFG budget	Column BO from the ‘New ISB’ sheet
2023 to 2024 NFF NNDR allocation	Column BX from the ‘New ISB’ sheet
De-delegation	Column BT from the ‘New ISB’ sheet
Post de-delegation budget	Column BU from the ‘New ISB’ sheet
Growth funding adjustment for April 2023 to August 2023	Column I from the ‘Recoupment’ sheet

The following examples show the differences in the recoupment calculation depending on when the free school or academy opens in the academic year.

5.1 Example 1: for free schools open before 2 September 2022

We will recoup the figure shown on the ‘2023 to 2024 Post MFG budget’ of the APT data minus 2023 to 2024 NFF NNDR values:

2023 to 2024 Post MFG budget – 2023 to 2024 NFF NNDR allocation = total recoupment

5.2 Example 2: for academies open before 11 January 2023 (inclusive)

We will recoup the figure shown on the ‘2023 to 2024 Post MFG budget’ of the APT minus 2023 to 2024 NFF NNDR allocation values, minus growth fund (for the period April 2023 to August 2023) if a local authority provided appropriate justification:

2023 to 2024 Post MFG budget – 2023 to 2024 NFF NNDR allocation − growth fund = total recoupment

5.3 Example 3: for academies opening from 11 January 2023 to 1 April 2023 (inclusive)

The calculation in this example is the ‘2023 to 2024 Post MFG budget’ of the APT, minus 2023 to 2024 NFF NNDR allocation values:

2023 to 2024 Post MFG budget – 2023 to 2024 NFF NNDR allocation = total recoupment

5.4 Example 4: for academies opening from 2 April 2023 to 1 September 2023 (inclusive)

Where a maintained school converts to an academy during this period, recoupment is calculated as follows:

Post de-delegation budget – 2023 to 2024 NFF NNDR allocation = full year recoupment

We then pro-rata this for the days the academy has been open in the financial year:

• (full year recoupment ÷ 366) × days open = recoupment adjusted pro rata

We finally add the de-delegated funding pro-rata for 7 months of the year (September 2023 to March 2024):

(recoupment adjusted pro rata + 7 months de-delegation) = total recoupment

5.5 Example 5: for academies opening from 2 September 2023 up to 31 March 2024

Where a maintained school converts to an academy during this period, recoupment is calculated as follows:

Post de-delegation budget – 2023 to 2024 NFF NNDR allocation = full year recoupment

We then pro-rata this for the days the academy has been open in the financial year:

(full year recoupment ÷ 366) × days open = total recoupment

We will not recoup the de-delegation funding for the financial year.

5.6 Example 6: for new free schools opening on 1 September 2023

For new free schools opening during this period, we will recoup the figure shown on the ‘2023 to 2024 Post MFG budget’ of the APT. The APT is likely to reflect a 1 September opening date. If a free school does not open on 1t September, we will pro-rata this figure to reflect the opening date:

Post MFG budget – 2023 to 2024 NFF NNDR allocation = total recoupment

6. Recoupment adjustments

We expect recoupment to remain throughout the financial year as we originally calculated based on the APT. However, it may be necessary to apply adjustments to the level of recoupment on a case-by-case basis in exceptional circumstance. The most common reasons for recoupment adjustments are set out below.

6.1 Growth

Where local authorities have provided growth fund payments to academies in the 2022 to 2023 academic year, they must continue these payments to the end of August 2023. To provide the authority with the funding to make these payments, we will provide a recoupment adjustment for the amount entered to the ‘Recoupment’ tab of the APT, provided the value shown is supported by the appropriate justification.

If an academy converts in year, and the local authority has been unable to show growth figures for April 2023 to August 2023 on the APT due to it being classed as a maintained school, we will adjust recoupment to reflect the growth. We adjust this through the anomalies process once the financial year has started if you provided the appropriate calculation and justification to support this.

6.2 Private finance initiative (PFI)

Where local authorities delegate PFI funding to academies for the first time, we will automatically adjust recoupment for the period April 2023 to August 2023. This is so that local authorities do not need to begin invoicing academies for the financial year 2023 to 2024 until September, as this is when the academies start to receive the funding needed to pay PFI costs. Local authorities must not invoice academies in the period that the costs are covered by recoupment adjustment.

If a significant increase in existing PFI delegation occurs between 2022 to 2023 and 2023 to 2024 we will not adjust recoupment automatically. However, if the increase in the amount invoiced from April causes financial difficulty for the academy (because the corresponding additional funding does not start until September), we will consider a request to make a similar April to August adjustment on a case-by-case basis.

6.3 Academy closures and infrastructural changes

If an academy closes, we will usually stop recoupment at the point of closure and pro-rata for the number of days remaining in the financial year. If a local authority has already accounted for the closure in the APT, we will continue to recoup until the end of the financial year.

When an academy has closed and the displaced pupils have been admitted to other establishments, it is the local authority’s responsibility to fund these pupils using the growth fund. ESFA will return the pro-rated closing recoupment value via an in-year adjustment to the recoupment value for that academy. This allows the local authority to fund the pupils through the growth fund.

A closed academy will not feature in the local authority’s recoupment reports in the financial year following the closure.

Where there are mergers or demergers that affect academies within a local authority, we will not change recoupment for the remainder of the financial year. The changes will take effect from the following financial year, for example, academy names changes, LA codes, and any split recoupment values following a de-merger, or joined up recoupment values following a merger.

7. Recoupment timetable

We will write to each authority several times during the year to provide their recoupment calculations. These dates are:

• April 2023

• July 2023

• September 2023

• November 2023

• January 2024

• March 2024