Accounting for Needs? Formula Funding in the UK School Sector
33 Pages Posted: 5 Apr 2011
Date Written: December 1, 2008
Purpose: The purpose of this paper is to analyse whether the development of a needs-based funding formula for resource allocation incorporates the needs of funders or the needs of the service providers.
Methodology: The paper analyses interview data and documentary evidence gathered from a UK Local Education Authority about the creation of a “needs-based” formula for sharing resources to schools. It employs and extends a framework developed by Levačić and Ross (1999) to evaluate needs-based formula funding.
Findings: Although formula funding is purported to be a more objective method of resource allocation, the paper finds that as with other resource allocation methods the power relations between the users and the providers of funds impact on the extent to which service provider needs are incorporated into the funding formula. The main benefit of a funding formula lies in the debates that surround its creation. This allows the formula to be accepted though it may not necessarily fund service provider needs.
Research limitations: This work considered only the funding of schools. Further work is needed to investigate formula funding for other public services.
Research type: Case study.
Practical Implications: Debates between funders and service providers should be encouraged by policy makers to ensure that outcomes of resource allocation are acceptable to users.
Keywords: Needs based, formula funding, public sector, resource allocation, service provider needs, service provider wants, education funding
JEL Classification: M41
Suggested Citation: Suggested Citation