Dedicated Schools Grant consultation: Mainstream schools document 2025

Executive summary

For the 2025-26 financial year, the allowable range for the Minimum Funding Guarantee (MFG) in mainstream schools was set between -0.5% to 0.0% per-pupil. The Local Authority (LA) used a 0.0% MFG, replicating the funding floor through the National Funding Formula (NFF) while protecting schools against losses during tight budget periods. However, for 2026-27, the LA is considering whether the continued use of the maximum MFG allowable by the Department for Education (DfE) remains the most appropriate option.

The cost of the MFG mechanism, to ensure affordability, is that schools who would otherwise gain (i.e. due to changes in pupil-led factors) received a reduced gain.  I.e. a lower level of MFG protection would mean that protected schools would receive less protection and need to adjust their spend accordingly, due to less 'smoothing', while schools without protection would see increases in their 'gains' in line with NFF factors and values.

The document highlights the differences in how the DfE's funding floor and the MFG protections work. The DfE funding floor does not protect MFG allocations included within a school's budget share from the previous year, whereas a 0% MFG replicates the DfE's funding floor for NFF and protects against losses of the per-pupil amount already within a school's budget share.

The amount of MFG within schools' budgets tends to reduce over time as the overall level of DSG Schools Block funding increases at a higher rate than the MFG percentage used. This reduction is also dependent on pupil demographics, which can affect individual schools' formula allocations.

The document provides technical illustrations of different MFG levels applied to the 2025-26 formula, with or without a block transfer, to show the potential impact on schools.

In summary, the document outlines the current and potential future methodologies for ensuring the affordability of the mainstream schools funding model, considering the impact of MFG and the transition towards a direct NFF.

10.1. What is Minimum Funding Guarantee and why is it important

Minimum Funding Guarantee (MFG) is a mechanism used to protect schools against significant changes in the overall level of funding received through the pupil-led factors of the funding formula, intended to support stability in schools' individual budgets, allowing adjustments to be made over time.

The level of protection set locally within limits set by the Department for Education (DfE).  For 2025-26, the allowable range for MFG in mainstream schools was -0.5% to 0.0% per-pupil, meaning that the funding formula could either allow schools to lose funding on a per-pupil basis compared to the previous year, or to protect them against losses.

The cost of the MFG mechanism, to ensure affordability, is that schools who would otherwise gain (i.e. due to changes in pupil-led factors) received a reduced gain, i.e. a lower level of MFG protection would mean that protected schools would receive less protection and need to adjust their spend accordingly, due to less 'smoothing', whilst schools without protection would see increases in their 'gains' in line with National Funding Formula (NFF) factors and values.

The DfE's MFG arrangements for 2026-27 will be announced in the autumn along with other school funding information.  For now, it can only be assumed that the allowable MFG range might be similar to 2025-26, being -0.5% to 0.0% per-pupil compared to the previous year's funding.  However, it could also be an amended range or a fixed percentage requirement (for example, the range for 2024-25 protection was 0% to 0.5%).

Additionally, as another form of protection, the DfE identify Minimum Per Pupil Levels (MPPLs) of funding.  These are set by the Government and have to be adhered to regardless of other local decisions made.  This consultation is not concerned with MPPLs, but schools should be aware that they are a protection that exists when considering MFG.

Visit the Norfolk Schools and Learning Providers website for further information about Minimum Funding Guarantee (MFG) and Minimum Per Pupils Levels (MPPL). Details of how the Minimum Funding Guarantee protection is applied are included in section 20 of the DfE's Schools operational guide: 2025 to 2026 - GOV.UK.

10.2. Norfolk context

In November 2023, Schools Forum voted to remove the previous hard cap on gains in the local funding formula for 2024-25, instead reducing the National Funding Formula factor values, within the DfE's allowable range, to enable allocations to schools to balance within the DSG funding envelope from DfE following a 1.45% Schools Block to High Needs Block transfer approved by the Secretary of State in line with Norfolk's Safety Valve agreement.

If a Schools Block to High Needs Block transfer does not take place, then a reduction to factor values may not be needed for 2026-27 (or the adjustment may be less).  This would enable Norfolk to mirror the National Funding Formula factor rates even more closely than it already does.

Each year, as well as reducing the National Funding Formula factor values, the Local Authority (LA) has included within consultations the maximum allowable Minimum Funding Guarantee (MFG) protection, creating stability, and protecting schools against per-pupil funding losses between years.

For 2025-26, the LA used 0.0% MFG (maximum protection allowable), which replicated the funding floor through the National Funding Formula, whilst also protecting schools against losses at a time when budgets are tight and remaining in line with previous agreements to replicate NFF methodologies are closely as possible.

10.3. Review of Norfolk's previous approach to maximising protection

Following discussion with Schools Forum, the LA has been asked to consider whether the continued use of the maximum Minimum Funding Guarantee allowable by DfE remains the most appropriate option within current contexts for 2026-27.

Whilst the DfE applies a funding floor, which prevents against reductions in the DfE's NFF per-pupil formula between years, and the DfE allows alignment of MFG on the same basis, there is a difference in how the two protections work.  The DfE funding floor itself does not protect Minimum Funding Guarantee allocations included within a school's budget share from the previous year, whereas the application of a 0% Minimum Funding Guarantee not only replicates the DfE's funding floor for NFF (mirroring NFF methodology) but also protects against losses of the per-pupil amount already within a school's budget share, including any Minimum Funding Guarantee embedded within it.

A future direct National Funding Formula might not include local flexibility/MFG arrangements.  If a direct NFF is implemented by DfE at some time in the future, the DfE may need to consider temporary transitional arrangements for schools that have MFG protection locally within their budget shares at that point, but there is currently no information on the approach that would be taken nationally in this scenario.

In the current year (2025-26), the Schools Block to High Needs Block funding transfer is a significant factor in the level of MFG.

• Norfolk currently has £3.088m of MFG in 2025-26 financial year, but this would have been reduced to £0.562m in the current year without the block transfer due to higher factor values then being possible.
• If there is no block transfer for 2026-27 (proposal indicated earlier in the consultation) and presuming that DfE's own National Funding Formula factor values increase (information awaited from the DfE regarding provisional changes as detailed elsewhere), then the level of MFG required in 2026-27 should reduce significantly even on the same basis of 0% MFG.
• If we reduce the Minimum Funding Guarantee (MFG) percentage, it allows some schools to receive less funding per pupil than before. This speeds up the process of aligning school budgets with the National Funding Formula (NFF), which means schools would be funded more directly based on the NFF's factor values.  However, the local funding formula would no longer mirror the Department for Education's (DfE) "funding floor" - a safeguard built into the NFF that protects schools from losing funding at NFF level due to changes in pupil numbers or characteristics from one year to the next.  

The amount of MFG within schools' budgets tends to reduce over time as the overall level of DSG Schools Block funding increases at a higher rate than the MFG % used.  Therefore, this reduces the MFG requirement on an overall per-pupil basis, although it is also dependent on pupil demographics, which can affect individual schools' formula allocations.

Local authorities can choose how much Minimum Funding Guarantee (MFG) protection to apply (within the DfE limits). Reducing this protection means some schools may see faster reductions in their budgets — which would need to be carefully managed.  At the same time, this would allow more funding to flow through the formula itself, meaning other schools could receive slightly higher allocations based on their factor values.

10.4. Modelling the impact

Without provisional DSG allocations or an APT (Authority Proforma Tool) modelling tool:

• It is not possible for the LA to provide reliable technical illustrations of what different options could mean in practice for individual schools in 2026-27 although it is expected that the overall cost of MFG required should be significantly less without a block transfer in place. 
• Instead, a technical paper is provided based on current funding arrangements in 2025-26, using 2024-25 MFG baselines as the comparison. 

The LA has provided a technical paper for the 2026-27 consultation (Excel doc, 107 KB) based on different levels of MFG applied to the 2025-26 formula, with or without a block transfer included, as an illustration of the potential options and impact.

10.5. Which schools would be impacted

MFG protection is due to changes in pupil characteristics between years, not due to one particular school type or another.  It is likely that some MFG amounts still in place relate to historic changes in the overall funding formula, e.g. Funding Reform, or National Funding Formula, that may have reduced over time but have not been reduced fully due to ongoing block transfers reducing the funding available to put through formula factor values (which would otherwise have reduced the amount of MFG protection needed more quickly).

There is no obvious pattern to the distribution of MFG amongst schools, other than by DfE-prescribed formulaic calculation which protects schools on a per-pupil basis compared to the previous year.  For example:

• 46% of secondary/all-through and 50% of primary schools had MFG in 2025-26, which is quite a similar proportion.
• The size of school also does not determine the level of MFG protection that a school currently has, for example, one school with 16 pupils has a similar MFG protection amount to another school that has 1,428 pupils, whilst there are schools between those sizes with considerably more or less MFG.

10.6. Illustration of the financial impact for Norfolk of protection at different levels

The technical paper shows that in 2025-26:

• 196 out of 400 schools (49%) received a Minimum Funding Guarantee protection of 0% costing a total of £3.088m, with individual schools' protection amounts ranging between £6 and £152,992. 
• At a lower -0.25% MFG protection, 145 schools (36%) would have received a total of £2.174m MFG with individual protections ranging between £79 and £122,356.
• At the minimum level of MFG protection, -0.5%, 120 schools (30%) would have received a total of £1.619m MFG with individual protections ranging from £133 to £115,383.
• The difference between the maximum 0% MFG protection and minimum of -0.5%, of £1.469m, represents approximately 0.2% of overall formula funding that would have been allocated across schools with formula gains if the lower MFG percentage had been used in 2025-26, but with 76 fewer schools then being protected against per-pupil losses.

As an alternative, the technical paper also demonstrates the impact using 2025-26 budgets but without the £9.7m Schools Block to High Needs Block transfer (as no block transfer is proposed for 2026-27).  In that scenario:

• 40 out of 400 schools (10%) would have received MFG protection at 0% MFG costing a total of £0.562m with individual protection amounts ranging between £90 and £89,070.
• At a lower -0.25% MFG protection, 32 schools (8%) would have received a total of £0.467m with individual protections ranging between £43 and £83,952.
• Based on the minimum level of MFG protection, -0.5%, 23 schools (6%) would have received a total of £0.404m with individual protections ranging between £644 and £78,937.

The table below is provided as a summary: