Guidance and advice for Headteachers, staff and governors about Devolved Formula Capital allocations and use of this grant funding.
Introduction
Since 2000/2001, schools have received an annual allocation of devolved formula capital from the Department for Education (DfE). This capital grant gives all schools money to invest in their buildings, grounds and ICT equipment in order to improve educational standards.
The grant allocation for each school is determined by the DfE using pupil numbers from the previous year's spring census return and is based on:
- a fixed allocation per school
- an allocation per pupil according to the type of school
DFC is paid to the authority who then transfers individual allocations to schools on their DFC cost centre (cost centres starting with ‘CHD’) via code 313705 in one instalment, usually in July.
Use of DFC
DFC must only be used for capital purposes such as funding new buildings and facilities, ICT equipment, capital improvements and refurbishment in accordance with priorities set by each school and in line with the asset management plan (AMP) for the school.
Schools should ensure that DFC is not used for revenue purposes, such as:
- general maintenance
- redecoration (unless part of a refurbishment scheme)
- day to day repairs
- purchase of books, software or training materials
- funding leases in respect of equipment or facilities
- hire of temporary accommodation (unless needed as part of a larger capital project)
- staffing costs.
Please refer to the Capital expenditure GL codes document to see which codes can be used for capital expenditure.
DFC allocations can be combined with other sources (authority capital, specialist grants, school delegated budgets or private funds) to fund capital schemes.
ICT
Devolved Formula Capital includes an element of funding for investment in ICT equipment and infrastructure (but not software). Whilst it is up to schools to decide exactly what proportion of their DFC grant to spend on ICT, the DfE recommends an indicative split of 22% to 78% between ICT and capital.
Types of project
DfE guidance makes it clear that DFC funding should be spent on a school's most pressing priorities as identified in their assessment management plan, which are then rated according to condition, suitability and sufficiency data. The highest priority should always be given to condition type works.
Authority funded capital schemes
These are managed by the authority and funded through modernisation, basic need or planned maintenance capital grant monies. Schools included in the authority’s Capital Programme with one or more such schemes will be required to make a DFC contribution towards the total cost. The authority’s policy is to ask schools to contribute 100% of the appropriate year’s DFC, less a 22% deduction for ICT towards any scheme costing in excess of £100,000 and proportionately less for those under £100,000.
- As the authority’s Capital Programme may relate to one or more financial years when a school has more than one project within the same capital programme, it will only be asked to make a single year’s DFC contribution. The amount of the contribution in such cases will be based on the total cost of a school’s projects.
- Due to the peculiar circumstances of schools with cooking kitchens exporting meals and the random nature of kitchen distribution, schools will not be required to make a DFC contribution towards kitchen maintenance and improvement schemes.
- Schools will be informed of the inclusion of projects on the Capital Programme and of the requirement for a DFC contribution as soon as possible after approval by cabinet. They will be required to confirm their agreement to this contribution, which will then be debited from the school’s DFC (CHD cost centre) on code 313701 (Capital Scheme DFC). Upon completion of the scheme, an adjustment may be made to the school’s DFC on code 313701 to reflect the actual costs of the scheme, if they differ from the original contribution. Similarly, if the project doesn’t go ahead, the contribution will be returned to the school on code 313701.
School funded capital schemes
Where maintained schools wish to undertake any type of capital project funded by themselves through DFC allocations, their delegated budget or private funding (including any combination of these sources), they are required to submit a project approval form in order to gain the authority's agreement to undertake the work.
Accumulating DFC
Whilst schools have the option of accumulating DFC for more than one year to undertake larger capital projects, there is a general requirement to expend formula capital with three years of its allocation.
Any DFC not spent by a school within three years may be clawed back. In certain circumstances, it may be possible for a school to retain DFC for more than three years in order to fund a specific major project. If such a situation is likely, schools are advised to contact their area Assistant Education Officer for further advice.
Non-local authority schools
Voluntary aided schools receive their DFC from the DfE via the diocese, whilst academies receive their allocations from the DfE via academy trusts.
For further advice – contact:
Your school's Area Surveyor based at one of Property division’s area offices, or your Assistant Development Officer in the Development team if you wish to discuss a proposed capital scheme.
Judith Holmes, Business Services Officer, email: Judith.holmes@derbyshire.gov.uk for queries relating to DFC allocations or contributions to capital schemes.
Your school's Finance Officer to discuss DFC balances, debits and transfers.