Advice for Schools: How to Spend your Government-Allocated Funding (2026 Guide)

Posted by EYR Team on 11th Sep 2023

Practical advice for planning, prioritising and making the most of your school’s funding allocation.

Updated for 2026 with the latest National Funding Formula (NFF) and Early Years funding guidance

Understanding Government Funding for Schools (2026)

Government funding for schools in England is primarily delivered through the Dedicated Schools Grant (DSG), which includes the Schools Block, Central School Services Block, High Needs Block, and the Early Years Block. Funding is allocated based on a combination of national formulae and local authority decisions.

National Funding Formula (NFF) — What You Need to Know

The National Funding Formula (NFF) determines how much funding should be allocated to each local authority for schools and high needs. For 2026–27, the provisional NFF allocations are published and include:

A core per‑pupil funding amount, with different rates for primary, key stage 3, and key stage 4 pupils.
Continued movement towards ‘mirroring’ the NFF across local authority funding formulae — meaning local funding must align closely with the national formula unless already closely matched.
Additional funds such as those previously paid separately for teacher pay and National Insurance contributions have been rolled into the base NFF figures for simplification.

What this means for your school: Your notional funding figure is based on a set of formula factors agreed nationally, but local authorities still determine your actual budget share — so understanding how your local authority interprets those factors (and consults schools) is important.

Early Years Funding: What’s Changed

Funding for early years provision (children aged 0–5) is set by a separate early years funding operational guide — the most recent being for 2026–27.

Key Changes in 2026-27

For financial year 2026–27, the government expects all local authorities to publish their early years funding rates to providers by 28 February, which is now a statutory requirement.

Entitlements include:

30 hours funded childcare for eligible working parents from 9 months to age 2
30 hours entitlement for eligible 2‑year‑olds
15 hours universal entitlement for all 3‑ and 4‑year‑olds, plus the additional 15 hours for eligible working parents
Extra supplements such as Disability Access Fund (DAF) and Early Years Pupil Premium (EYPP) — which providers and schools should allocate appropriately.

Implication for early years settings: Strong forecasting and termly planning are needed, as funding is now moving towards termly headcount payments based on actual attendance data.

Strategic Budget Planning

Good financial planning isn’t just about spending what’s available — it’s about prioritising based on impact and incorporating strategic, long‑term thinking.

1. Understand Fixed vs Flexible Costs

Schools and early years settings typically spend funding on:

Staffing & workforce costs (often the largest proportion)
Curriculum delivery and learning resources
Premises, maintenance, H&S
Back office and administrative costs

Mapping out your fixed obligations vs flexible budget helps you see where you can invest in improvements.

2. Use Multi‑Year Forecasts

Funding isn’t static — pupil numbers, entitlement changes and inflationary pressures can cause significant changes year to year. Create multi‑year financial forecasts so you’re prepared for budget changes, including:

Changes to pupil numbers (which directly affect NFF allocations)
Growth or reductions in early years take‑up
Capital and maintenance requirements

woman holding pencil and reading documents

Practical Tips to Make Funding Go Further

Here are practical tips that maintain the original blog’s intention and add strategic impact:

1. Prioritise Quality Resources

Invest in adaptable, open‑ended resources that support multiple learning areas.
Balance digital and traditional resources to ensure flexibility and accessibility.

2. Reuse and Recycle Smartly

Reusable materials, wipe‑clean worksheets, and classroom organisation tools save costs over time.
Cross‑year group use of materials maximises value.

3. Shop Around & Benchmark

Look for bulk saver deals or value ranges from suppliers.
Use benchmarking tools to compare your spend against similar schools/local authorities.

4. Plan for Contingencies

Include contingency funds in your planning.
Forecast different scenarios (best case, worst case, expected) and build in responses.

5. Look for Additional Funding Streams

Supplemental grants (e.g., for SEND, innovation, pupil premium)
Local partnerships
Community and charitable funding — but always align these with priorities.

Useful Resources

Official Guidance

School Funding Operational Guide 2026–27 – official DfE guidance on how schools block funding works in 2026–27.
Early Years Funding Operational Guide 2026–27 – outlines early years entitlements and funding.
High Needs Funding Operational Guide 2025–26 – explains funding to support SEND and alternative provision.

Recommended Tools

Early years funding benchmarking tool – helps compare allocations and planning.

Final Thoughts

Funding is more than a line in a budget: it’s a strategic resource for achieving better outcomes for children and young people. By keeping abreast of the latest government guidance, engaging in robust financial planning, and using practical budgeting strategies, schools and early years settings can spend their government‑allocated funding with confidence and clarity.