The Leeds School Forum met to discuss the Dedicated Schools Grant (DSG) ¹ budget monitoring report for month five of 2025/26, the DSG medium term financial strategy for 2026/27 to 2028/29, and a school funding update for 2026/27. The forum noted the projected overspend on the general DSG and the ongoing work to manage the financial position. They also received updates on school funding arrangements and planned consultations.

DSG Monitoring Report 2025/26

The forum reviewed the DSG monitoring report for month five of 2025/26, which showed a projected in-year overspend of £24.390 million, representing 3.92% of the estimated funding. This overspend is primarily due to the high needs block, with minor variations in the other blocks. The cumulative deficit carried forward to 2025/26 is £14.247 million, leading to a projected deficit of £38.637 million by the end of March 2026.

• Schools Block: There was an underspend of £34,000, mainly due to underspending on growth funds.
• Early Years Block: An underspend of £2.134 million was reported, with funding based on a different method for under-twos and two-year-olds. The additional 8 pence for providers' funding continues into 2025/26.
• High Needs Block: This block is overspent by £18 million, after a £3.5 million transfer from the schools block. The largest variance was an £8.7 million overspend on out-of-area and residential placements. There was also a £4 million overspend on SEN top-ups to institutions, with significant increases in special and mainstream school top-ups. As of 22 September 2025, there were over 7,000 active Education, Health and Care Plans (EHCPs).
• Central School Services Block: An overspend of £66,000 was noted, primarily due to licenses and admissions costs.

The report also addressed the use of reserves and de-delegated reserves, clarifying that they are for specific purposes and cannot be used for other services.

DSG Medium Term Financial Strategy 2026/27 – 2028/29

The forum discussed the medium term financial strategy for the DSG, covering the period 2026/27 to 2028/29. The DSG is projected to overspend from £45.8 million to £85.3 million per year if no action is taken, with the majority of the overspend in the high needs block. The council is reviewing options for managing this, as required by the Department for Education (DfE).

It was noted that Leeds does not receive the full allocation of DSG under the national funding formula, due to a gains limit factor. If this factor were not in place, Leeds would have been allocated an additional £40 million between 2018/19 and 2025/26.

The council intends to consult on a further block transfer for 2026/27, as it has been confirmed that this will be permitted within the school funding regulations.

School Funding Update 2026/27

The forum received an update on school funding for 2026/27. The DfE has not yet published full operational guidance on the schools block, early years block, or high needs block formula, nor has it issued the DSG indicative funding allocations for 2026/27. However, the DfE has published a Schools National Funding Formula (NFF) summary policy document for 2026 to 2027.

Key updates include:

• Free School Meals (FSM): Starting from September 2026, free school meals will be extended to all children in households receiving Universal Credit². For 2026 to 2027, the funding needed for the FSM expansion will be provided through a separate grant.
• Rolling in of Previous Grants: The mainstream elements of the National Insurance Contribution (NICs) Grant and the Schools Budget Support Grant (SBSG) will be incorporated into the NFF in 2026/27.
• Local Authority Formulae: Local authorities will continue to decide local funding formulae for mainstream schools in their area for 2026 to 2027.
• Transfers Out of the Schools Block: Local authorities can transfer up to 0.5% of their schools block to other blocks of the DSG, with Schools Forum approval.

The consultation with schools on the 2026/27 funding arrangements will be launched in October 2025 and will include de-delegation proposals for 2026/27.

Other Matters

• School Forum Membership: Vacancies remain for one academy mainstream representative, one academy alternative representative, and one academy special representative.
• De-delegated Budget Report: Councillor John Garvani raised concerns about the formula for allocating convener time for trade union facilities. Phil Evans clarified that it is a local agreement negotiated with trade unions.
• DSG Management Plan: Phil Evans discussed ongoing work on the DSG deficit management plan, emphasising increasing interest due to the growing deficit.