DfE sets 2027-28 schools funding rules with new SEND inclusion factor

The Department for Education (DfE) has published the rules local authorities in England will use to fund mainstream schools in the 2027 to 2028 financial year. The schools national funding formula (NFF) summary policy document, first published on 2 October 2026, keeps the same formula factors as 2026 to 2027. It folds in a pay grant, adjusts budgets for a large cut in teachers’ pension costs and gives councils a new way to move special educational needs and disabilities (SEND) money into mainstream school budgets.

The document does not include factor values or school-level allocations. DfE says these will follow later in autumn 2026, so the cash effect on individual schools and academy trusts is not yet known. DfE updated the document on 9 October to add a line on maternity pay funding.

Pension cut and grant roll-in

Employer contributions to the Teachers’ Pension Scheme fall from 28.6% to 17.6% of pensionable pay from April 2027. The NFF document says schools’ funding will be reduced to reflect the lower rate, so the spending power of the schools sector as a whole will not fall.

DfE published a separate funding adjustment methodology on 8 July. Its publication page says funding for schools and other eligible settings will be reduced from 1 April 2027. It covers schools, academies, early years providers and centrally employed teachers, with post-16 providers handled through separate grant publications, and does not mention universities or independent schools.

The rate was set after the Government Actuary’s Department completed the scheme’s 2024 valuation, Pensions Age reported on 2 July. UCEA said the cut offered short-term financial relief for its member institutions, according to the same report.

The mainstream element of the schools budget support grant 2026 (SBSG 26), which provides extra money in 2026 to 2027 for staff pay awards, is being rolled into the formula for 2027 to 2028 so that it stays in schools’ core budgets. The document does not say which factors absorb it.

Free meals, local formulae and SEND

Free school meals eligibility was extended to all children in households receiving Universal Credit from the 2026 to 2027 academic year. Because the formula uses lagged data, the change is not reflected in 2027 to 2028 NFF allocations. Instead, local authorities will receive extra funding through their dedicated schools grant (DSG) schools block allocations in December 2026.

Councils must move each local formula factor value at least a further 10% closer to the national value unless they already mirror it. Values within 2.5% of the NFF count as mirroring, and councils cannot exceed the national value by more than 2.5%. Rates, private finance initiative and exceptional circumstances factors are exempt. Minimum per-pupil funding levels and the funding floor continue, and the minimum funding guarantee remains a mandatory local factor. No values are given for any of them.

New for 2027 to 2028 is a local SEND inclusion factor, which lets a council move money from its high needs budget into the schools budget to give mainstream schools upfront SEND funding. DfE says it generally does not expect councils using the factor also to transfer schools block money to high needs, though it will consider cases with local support for transfers in both directions. Councils can still move up to 0.5% of the schools block with schools forum approval. Larger transfers, or those a forum rejects, need a disapplication request explaining how the move fits the council’s local SEND reform plan.

DfE plans to release the authority proforma tool in mid-December 2026, populated from the autumn 2026 school census, with DSG allocations in December. Councils must return the tool by late January 2027.

What it means

TED analysis: three readings for those who run, fund and supply schools and colleges.

• Academy trust finance: the pension reduction and the grant roll-in change baselines at the same time. DfE’s assurance on spending power is a sector-wide statement; trusts need the autumn allocations and the two methodologies to see their own position.
• SEND suppliers: the inclusion factor creates a formal route for high needs money to reach mainstream schools as upfront funding. Take-up will show in local consultations and schools forum papers.
• Universities in the pension scheme: the 11-point fall in the employer rate from April 2027 applies to scheme employers, but the DfE funding deductions published so far are framed around schools, early years, councils and post-16 providers. TED found no reference to universities in them.