As my Colleagues have said, the report is a step forward in attempting to achieve full equity for schools. The Education Committee is, therefore, pleased that the consultation paper came out because it gave us an excuse to examine the common funding formula. Not many of us were keen on the current situation in schools. The Minister told us that there have been seven different formulae. I hope now that there will be only one - the common funding formula. As the Chairperson of the Education Committee stated in his press release, the Committee fully supports the introduction of that formula. Committee members have seen that the current situation is not satisfactory for schools, pupils or staff.

Any formula must be clearly capable of catering for the practical needs of each school, and the Committee is concerned that implementation of the formula will be difficult. The formula may eventually end up in total confusion over equality. That is one reason for considering the Committee's recommendations. The Committee has, therefore, outlined its concerns in the recommendations in the hope that a truly equitable formula will be arrived at that will engender total confidence in all schools.

Many educational organisations highlighted points of concern affecting their own schools and sectors to the Committee. Some education and library board officers and some principals answered in a doubtful manner the important question of whether the proposals will help to improve the learning of all pupils according to their needs. One witness said that, if forced to give a one-word answer, it would be "No". Another slightly more hopeful answer was that nothing is perfect and while it is impossible to have a formula that will please everyone, the formula is a step in the right direction. That statement is close to the Committee's attitude, but the report states that there are issues that must be addressed to ensure more satisfactory implementation.

The report is large and detailed. I do not intend to go through each recommendation. Other Members have done so, and I generally endorse their comments. I will concentrate on several issues that should be highlighted, both as a member of the Committee and on behalf of my party.

The Committee had several long discussions on the TSN position in the proposals. As the Chairperson said, the Committee fully supports this policy. However, I have many concerns about it, as do other Members. The Committee is worried that the targeting system is not always specific. It is also clear that some pupils do not claim free school meals, not because they do not need the support, but because their parents refuse to have them targeted as being in need.

The Committee therefore sees the need for a major review of the take-up process so that all pupils can benefit without feeling inferior. I fully support the recommendation that the current arrangements could be considered further. The Committee also asks if the proposed increase of 5% in TSN moneys has been considered in terms of value for money. We want to know, as other Members do, what the impact of that will be.

Integrated and Irish-medium schools already have budget problems with attracting and accommodating pupil numbers. There may be exceptional circumstances in which pupil numbers is not an appropriate criterion for funding, and not only when a school is being established. The Department should consider seriously the Committee's recommendation that a 5% figure for enrolment growth could be substituted in place of the proposed 10%.

Members are concerned about Irish-medium schools in particular as well as integrated schools. One reason that integrated and Irish-medium schools do not develop is that sometimes they are not allowed to. Those schools must be treated more generously than in the past. The Minister has made good strides in that direction, but further work must be done in those two sectors.

I add my concern to that of other Members who said that the proposals may have a serious impact on schools with special needs education difficulties. If the Department wishes to continue to promote mainstream education for children with special needs, it must reconsider the funding for that sector.

I endorse the recommendation on the effects on education and library boards' central services. The review of public administration is ongoing, but it will have an effect. There can be no further pressures on existing school budgets. I heartily support the recommendation that schools should be funded according to their relative need, and that includes mitigating the effects of social disadvantage.

I commend the Chairperson for keeping the Committee together on most points. I thank the Committee Clerk and staff, including the special adviser, for their commitment and work on this valuable document. The Committee has shown its concerns and its recommendations in the hope that an equitable formula will be arrived at that will engender total confidence in all schools.

I hope that the Department of Education will consider the recommendations seriously. I support the motion.

I am conscious of the severe time limitations. I declare an interest as a governor of two schools, and I point out that the two schools are at opposite ends of the spectrum with regard to the LMS impact on their operation.

I welcome the opportunity to support the presentation of the Committee's report to the Assembly, and I urge the House to support its recommendations. I also pay tribute to the Committee Clerks, our special adviser, the Committee Chairperson and my fellow members for the professional manner in which they undertook this onerous but necessary task.

The quality of evidence brought before the Committee was of a very high calibre. The enthusiasm and commitment of witnesses to improving the funding of schools, and consequently the delivery of core services, was encouraging. The report includes 30 recommendations which members felt would positively benefit schools in their task of educating our young people.

At the outset I make it crystal clear that the proposal to transfer £15 million from the general schools budget into the schools delegated budget would do a great disservice to the generally competent central services provided by education and library boards to all schools. That money should be new money, and as a possible source for some of the shortfall, the Minister should perhaps look more closely at those mysterious pockets of money which from time to time emerge from the Department of Education.

The Committee also welcomed the principle that schools of similar characteristics but in different areas or sectors should no longer continue to receive varying budgets. Such a situation is unsatisfactory, inequitable and should cease immediately.

Central to the protection of the core function of any school is its ability to deliver the curriculum adequately. However, it is in that area of operation that many schools, most of them in areas of social need, find themselves facing overwhelming difficulties. Such schools - indeed all schools - must have their core functions protected. They need adequate staffing levels to educate our children effectively, especially those who already face enormous social disadvantage. The North Eastern Education and Library Board is quoted in the report as talking about the full cost of "an approved teaching cohort".

How does the sacred cow of the current LMS structure help such children and their schools? Does it do so by driving them into serious deficits, some of which are in excess of £50,000? Again, I note from the report that 78 of the 144 schools in the Southern Education and Library Board's primary sector are in deficit. How do a principal and his governors attack such a deficit? Do they do so by making one, two or even three members of staff redundant? Under pressure from the education and library boards and from the Department of Education itself - subtle though it may be - what is the impact of such a redundancy in a school sited, say, in a housing estate and displaying multiple deprivation factors? It leads to composite classes, the loss of invaluable experienced staff, a reliance on cheaper, younger, inexperienced staff or temporary teachers. It leads to parental dissatisfaction, followed by the removal of pupils from the school and the school's slide into despair and perhaps eventual closure.

The reliance on average teacher cost must be replaced by the allocation of actual teacher cost to schools. Failure to do that will penalise schools which have experienced teachers - and consequently expensive teachers - more severely than schools with younger, less experienced staff. With the exception of the Department of Education, almost everyone who submitted evidence appeared to recognise that fundamental weakness in the existing arrangements.

Lest Members feel that only schools in TSN areas are ill served by the system, I cite an example from a document prepared for a board of governors and for release to parents. The school is full to capacity and has a staff of mixed age groups. The principal points out that he has £560,262 to cover his costs. His staffing costs come to £514,318, leaving him a balance of approximately £46,000. Ninety-two per cent of his budget is already eaten up by staffing costs.

He goes on to say that compared with many other primary schools, his school has again suffered from a lack of funding. The school in question is allocated little additional funding for social deprivation or special needs, and it does not usually benefit from other initiatives. That school is fully subscribed, it has good backing from the parents and it is in a "nice area". It has everything going for it, but it has less than £50,000 for its running costs.

That example illustrates the real impact of the current LMS regulations on our children. LMS is clearly not delivering at the chalk face. It is a blunt management tool that is impacting unequally on schools in different sectors. I notice from a previous statement in Hansard that Mr McHugh mentioned that it was a blunter instrument in many ways. Perhaps he will look that up and compare it with what he said in today's debate.

In presenting the report, the Committee's objective is to highlight the current deficiencies and inequalities. I trust that the points that have been made will help Members to focus on such factors.

TSN is an emotive subject, but the recommendations that the Committee makes will ensure that TSN moneys are targeted specifically to reduce the unequal educational outcomes. I am seriously concerned that the present arrangements may not include the whole cohort of the most needy pupils.

I ask the Member to bring his remarks to a close.

I am not satisfied by the Department of Education's reliance on free school meals as an adequate indicator, despite the Minister's restating of that stance in his answer to me yesterday.

Like the other Members, I thank and congratulate the Committee Clerk, her staff and the special adviser for their work on the report.

On a point of order, Madam Deputy Speaker. Can you explain the rotation system that you are operating for calling Members to speak in the debate?

We include the Chairperson and the Deputy Chairperson of the Committee in the round of Members to speak.

Further to that point of order, Madam Deputy Speaker. It seems to me that the normal practice is for the Ulster Unionist Party to lead, followed by the SDLP, the DUP and Sinn Féin. Is there a precedent that I am unaware of?

That is the normal procedure that we follow. The only time that the procedure changes is when the Chairperson and the Deputy Chairperson speak first and second. The round includes them. We are following that procedure. In fact, Mr Gallagher, you will be the next Member to speak.

I am very sorry if a Member was out of order. As long as I am allowed my six minutes, I would never usurp someone's time to speak.

The report contains 31 recommendations, which have been considered seriously, and I ask the Minister to note them. I point out - as I did during the Committee meetings - that despite the arguments and debates about the common funding formula, it should never be forgotten that the priority in a school, and in any educational system, is to ensure that we always deliver top-quality education to every pupil.

I witnessed the introduction of the common funding formula in schools. At that time, it was much in demand by some principals. I am afraid that I was one of the more sceptical people. I thought that as long as I could secure my teaching staff and ensure that I could reward staff members who performed well, it was up to me and the board of governors to negotiate the add-ons that were necessary to make a school work.

That system worked effectively. People began to realise that every teacher had a growing responsibility to deliver and manage the system. It was an even greater shock to realise that schools were not equal - funding was different for all schools.

There are 31 recommendations in the report, but I wish to make only one or two points. The Council for Catholic Maintained Schools (CCMS), in particular, was concerned about TSN. On page 143 of the report, Mr Flanagan, Mr McArdle and Mr McCallion were keen to emphasise that they had asked for some investigation into the way that TSN is used in the school system. They wanted to know whether it was delivering and achieving what it set out to do. This was an area of dispute. Therefore the Committee suggested that we should be careful at this stage and stick with the figure of 5%. We asked for reasonable empirical evidence to justify any further funding for TSN.

We dealt with the funding for small rural schools in some detail. The Committee is keen to see how the salaries for teachers in small rural schools could be protected. There was much debate about whether teachers' salaries should be covered by the common funding formula. The Committee was impressed with the evidence given by Angus Council. Mr Clement came from Scotland to give evidence. They introduced their system five years after we looked at ours and waited until 1997 before implementing the programme. It may be prudent to look at how Scotland - and Angus Council in particular - dealt with the issue. I make this plea because, under section 75 of the Northern Ireland Act 1998, we have a duty to ensure that small rural schools receive full delivery of a full curriculum. There must be equality of opportunity for all pupils, irrespective of where in Northern Ireland they live.

Ensuring that teachers' salaries are separate and guaranteed would help small rural schools. While salaries may be included in school funding, they should be dealt with as a separate item and guaranteed as part of the funding operation. That would mean that such schools did not have to spend time debating whether retired, seconded or other types of teacher would give the school the greatest opportunity and flexibility to form consortia and clusters that could provide the full school curriculum.

I want to make a final point to support that because -

Order. Will the Member draw his remarks to a close?

Eighty per cent of schools with seven or fewer teachers were unable to pay teachers' salaries within school funding. A school required up to 12 teachers to make that possible. I plead with the Minister to ensure that small rural schools receive adequate funding.

I strongly support the Department's proposals for extra money for Irish-speaking schools. This is well justified because an Ghaeilge is the native language of the people of this island. As such, it is a key element of the cultural identity of many people in the North. Irish-medium schools play a vital role in the promotion of the language; they are a key element in its restoration, rejuvenation and resurgence. There is clear evidence that growing numbers of people wish to see their children educated in the native language.

On a point of order, Madam Deputy Speaker. The Member refers to the native language. Can he prove that point to the Members?

That is not a point of order.

I accept your ruling, Madam Deputy Speaker.

Thank you, Madam Deputy Speaker, for your ruling. Mr Robinson's point was rather absurd. [Interruption].

Order.

The growing numbers that choose that type of education should be given support. Language learning in all forms is extremely fulfilling, as I am sure everyone will agree. That is especially so when children learn to speak our ancestors' tongues. Likewise, it is rewarding for teachers to see their pupils become proficient in the language - both in school and in the community.

Teaching in Irish-medium schools places extra demand on the staff and incurs extra costs - a point that was well made in Comhairle na Gaelscolaíochta's submission to the Committee for Education. It is the SDLP's duty to ensure that those who wish to speak their native language have the full resources, teaching materials and necessary budgets at their disposal to help them along that path. Out of respect for diversity, and in the interests of fairness and justice, that same support should be made available for the development of the Ulster-Scots language, when and where there is a proven demand for it.

I am proud to request extra funding for Irish- medium schools, and I make no apology for calling on the Department of Education to ensure that the theory of parity of esteem translates into action.

One of the most disagreeable aspects of the old system was that schools were treated either as winners or losers. It is disappointing that the Department again brings up those terms in its proposals - they have no place in education. Now that an Equality Commission for Northern Ireland has been established and each Government Department is obliged to undergo an equality impact assessment, I hope that those terms will not appear in any future education publications. It is unacceptable that, under the proposals, some schools will gain while others will lose. Many schools will have to cope with a double penalty. They will have their budgets cut, which is understandable, but they may also have their services reduced because the centrally held services that come from the boards may be reduced, as the Department must find £15 million to back up the proposals. Additional moneys should be found, as we do not want to see key services being cut.

I wish to refer to the well-established link between underachievement and social deprivation. Everybody agrees that schools in socially deprived areas need extra resources so that pupils can improve their literacy and numeracy and overcome many of the other educational disadvantages that arise as a result of poverty. TSN plays a central role.

The Department plans to increase resources, but I am concerned about the way the plan proposes to distribute them. Everyone expects that schools with the highest levels of deprivation will benefit most, but according to the Department's own admission the most difficult problems arise in schools where social deprivation is highest. Under these proposals, schools with more than 50% of their pupils from socially deprived backgrounds will derive the least benefit. This has been indicated in the submission by the Equality Commission. We need more research, discussion and debate in order to deliver TSN moneys to the children and the schools that most need them.

Go raibh maith agat, a LeasCheann Comhairle. Ba mhaith liom fáilte a chur roimh an díospóireacht seo agus roimh an ábhar atá faoi chaibidil, siúd is nach bhfuil Sinn Féin mar pháirtí ar aon intinn lena bhfuil sa cháipéis.

I welcome the Minister's presence, particularly in the circumstances of a family bereavement, which should be noted. I welcome the debate generally and lend support to many of the issues raised in it. I disagree with the content and emphasis of some of the recommendations, which was made clear in the course of deliberations by Mr McHugh - often on my behalf due to my commitments on other Committees.

It is inevitable that there will be discord in a debate such as this, and the report will not necessarily be the collective distillation of all our thinking on every issue. At the outset I want to commend our Committee Clerk and her hard working colleagues, all those who took time and trouble to make submissions, our specialist adviser, and our senior education research team who serve our Committee very well in many debates and deliberations.

I support increasing TSN money substantially now - do not delay, pending discussions on its impact. I welcome the Department's acknowledgement that 5% has not been enough in the form of its proposal to increase the amount by 0·5%. An increase of 3% would be closer to the mark, so that it can begin to bite into problems in our schools caused by social disadvantage. Mr McHugh quoted from documents from the Standing Advisory Commission on Human Rights (SACHR). Interestingly, there is a quote I want to cite:

To those people who argue that there should be no increase in TSN moneys until additional information is available I ask them to collect the data. That is important, and there is a real urgency about having serious research on social need and how the money has been spent so far. However, it should not halt the march of more TSN money to schools. There is established evidence about the educational attainment of individual pupils being affected by their school environment, which includes group attitudes and expectations regarding education.

In schools where there is a high entitlement to free school meals there is the compounding effect of social disadvantage. It has been proven that the socio- economic background of parents is a more accurate indicator of a child's academic performance than any other single indicator. One can only imagine the additional pressure that accompanies a school with 70% of children entitled to free school meals - and they do exist. I strongly feel that free school meals is as good an indicator of social deprivation as currently exists.

I want to take issue with the Chairperson and Deputy Chairperson of the Committee in relation to their remarks about funding for Irish-medium schools. I do not find it surprising given that neither has taken up a particularly enlightened position with respect to the Irish language generally. Both are on public record saying very unenlightened things.

Irish was once banned in the education system. It has come a long way since then. However, it must travel further. It has come a long way since the time when pupils were subject to corporal punishment for uttering "cúpla focal as Gaeilge". The Department of Education, among others, has considerable catching up to do on the requirements of the Good Friday Agreement to

Teachers in Gaelscoleanna have additional time commitments and additional costs in translating materials, and they are often left to their own devices because teaching resources in the medium of Irish are lacking. We have often heard about the bureaucratic burden on teachers, but it is certainly heaviest on múinteoirí who must often stay after classes to translate material.

The lower pupil-teacher ratio is crucial in the immersion education system. Sinn Féin agrees with an additional £100 per pupil for Irish-medium primary schools and units. That should not be reduced to £25 per pupil for post-primary schools. We agree with developing an Irish-medium unit factor and with funding Irish-medium units in the same way as special units. We approach educational management with the same resolve and determination as we approach any other aspect of education in order to deliver the best possible education system to all our children. Go raibh míle maith agat.

First, I congratulate the Chairperson, the Deputy Chairperson, members of the Committee, officials and all who were involved in producing this timely report. I must declare an interest as a member of the Western Education and Library Board and vice-chairperson of that board's finance committee.

No one in the Chamber will disagree with expanding the general principles to underpin common funding formulae in order to include mitigation of the effects of social disadvantage. I unreservedly support that basic principle. The report emphasises the need to ensure that if the common formula were implemented using the high aggregated schools budget model, additional resources of £15 million above the existing baselines would be needed to ensure that present levels of education and library boards' central services to schools were not undermined. That is of crucial importance. Indeed, the Western Education and Library Board alone requires an additional £5·7 million in order to avoid cuts to central services.

The Committee suggested that if the additional £15 million cannot be made available, the transition period should be extended from three years to five years. It must be emphasised that merely extending the transition period will not solve the fundamental funding problem for services provided to schools directly by boards.

On targeting social need (TSN), the report recommends that further research and discussion are necessary before any changes can be made to the current 5% level of top-slicing. Many of the areas need further research.

Schools in the west would clearly benefit if top-slicing were increased to 5·5%. However, the perceived underfunding of schools in the west would be lower if TSN funding were left at 5%. The focus on funding arrangements by the Southern Board for pupils with moderate learning difficulties provides the Assembly with an opportunity to explore funding for special education in general. This is timely in light of increasing pressure to integrate pupils with special needs into mainstream schools. Recent figures suggest that spending by all education and library boards on special education has risen by 30% in the past two years.

I support the view that the proposed use of test results from Key Stage 2 is not a satisfactory means of assessing a primary school's special education funding. A perverse incentive would arise in some schools. Would it not be more appropriate to apportion funding on the basis of the number of pupils on a school's special needs register?

With regard to teachers' salaries within local management of schools (LMS) arrangements budgeting, the Assembly and the Minister should agree to further investigation of alternative methods of providing schools with the actual cost of employing teachers, even though that might undermine the Department's timetable for implementing a common formula. Is it not better to get it right first time? A careful study should be undertaken of the arrangements in Scotland for funding and the general management of schools. Scottish arrangements offer an alternative approach that appears to enjoy wide public support. Surely it is acceptable that the inescapable costs of employing teachers in schools are provided for in the formula.

Arising from its consideration of contingency funding for enrolment increases, the Committee suggests that the Department may wish to consider whether a three-year rolling average of enrolment might be used for any per capita indicator in a common formula. It is worth noting that the Burns review recommends that a three-year rolling average of enrolment be used as a basis for the LMS formula. It is also interesting to note that the Department has not yet given a clear indication for next year's formula for the use of actual as opposed to composite enrolments. Clearly, a decision must be taken as soon as possible.

I welcome and support the Committee's emphasis on additional funding to ensure that post-primary schools are protected and that boards can undertake to provide administrative and landlord services to voluntary grammar and grant-maintained integrated schools.

The Committee for Education's report is an important, well-informed critique of the Department's proposals. Acceptance of the report's recommendation means that the basis of the common funding formula document will need to change and the proposed timetable will need to be extended. I support the report 'Proposals for a Common Funding Formula for Grant-Aided Schools in Northern Ireland' and trust that the Assembly will do likewise.

I was surprised as I listened to Mr McHugh. Many of the things that he seemed to be complaining about this afternoon were things that he agreed with at Committee meetings. For example, I cannot understand how he can make a statement in defence of free school meals, when in the Committee he is recorded as describing free meals as

Nevertheless, he defended that in the Chamber this afternoon.

The report made recommendations on actual teacher costs as opposed to average teacher costs. Several of the bodies that gave evidence to the Committee, particularly the education and library boards, highlighted the financial pressures that the use of average teacher costs placed on many schools. Teachers' salaries - and I speak as one who served on a board of governors and who relied on a teacher's salary for many years - use up the vast bulk of a school's budget.

All sorts of problems are caused to boards of governors if they must manage a budget most of the cash of which is based on a theoretical average rather than on what it actually costs their schools. In working out a budget, which the boards of governors must do, it would be much better if governors knew that built into their budget was all the money needed to pay the salaries of their teachers. Building that in would be a much better approach to the organised planning of school budgets. It would help governors to decide where to spend the rest of the money. They would know exactly what amount was for teachers' salaries and what exactly was left, and thus they could begin to plan to spend it.

As a teacher, I felt that Key Stage 2 tests were not designed for use as indicators of underachievement. On the contrary, they were aimed at highlighting a school's achievements and progress. The performance of schools was judged according to the results of those tests; some were highlighted as being successful because their pupils were seen to be achieving and making progress, while others lagged behind.

A school, if it meets the Key Stage 2 test criteria aimed at determining pupils' improvement, might be allocated fewer funds to target underachievement, especially if the test results reveal that its pupils have made progress. The amount of funds that a school receives to spend on its underachieving pupils would be cut. It would lose out, even though it might have the same number of underachieving pupils, as the same test results are used to determine school funding allocations to assist underachieving pupils.

The proposal that the pupil count should revert to the previous arrangement is to be welcomed. It was ridiculous that a school's budget was determined not only according to the average teacher costs - which it was never certain of - but according to the school principal's estimate of the pupil intake for the coming year. The earlier system, whereby pupil-count funding was allocated on the basis of a school population, was a clearer and more easily managed method. That was carried out in October, and a top-up was allocated if any additional pupils came to the school later. I would welcome a return to that system.

I thank everyone who was involved in compiling the report. It is a genuine and well-intentioned effort to try to bring equality of funding to schools. It is to be welcomed by the House.

Go raibh maith agat, a LeasCheann Comhairle. I welcome the Education Committee's report and Members' contributions. We have had a constructive and informed debate. Before making a final decision on the issue, I will consider carefully all the points made.

Funding is a critical issue for all our schools. It is on the agenda of almost every meeting that I have with school representatives, and it forms a considerable proportion of the correspondence that my Department receives. Not surprisingly, the main concern is the lack of funding, and I share that concern. Our primary and post-primary schools are underfunded, by comparison with schools in England, Scotland and Wales. I have consistently argued the case for additional funding in the Executive and the Assembly. As the record shows, that has resulted in some success, but our schools remain underfunded, and I will continue to press for further resources.

Although the amount of money that is made available to schools is an important issue, the main focus of the common funding formula is on how the available resources should be distributed. It is vital that the distribution of funding is seen to be fair. The effect of our current system of seven different formulae is that similar schools in different areas receive different levels of funding.

My key objective in introducing the common funding formula is to remove these inequities to ensure that schools of similar size and characteristics receive similar levels of funding, regardless of their location or sector.

It is reassuring that there is overwhelming support for a common formula. The issue, not surprisingly, is the make-up of that formula. As Members may be aware, my officials and I have worked closely with our education partners and the Committee in developing our proposals for consultation and in considering and responding to its outcome. This high level of co-operation and constructive participation has been helpful in ensuring that our proposals for a common formula reflect the needs of schools.

The Committee's understanding of the key issues is reflected in the comprehensive report before the Assembly. It is heartening that so many of my proposals have been supported by the Committee and by those schools and organisations that responded to the consultation documents. The consultation exercise generated the largest response that the Department has received in recent years. It even exceeded the response to the consultation by the post-primary review body. This has been open and genuine consultation. My officers explained the proposals at 10 seminars across every board area, and most of our partner bodies organised conferences to discuss them. The analysis of the responses received has been placed on the Department's web site for all to see.

I am pleased that the Committee's report supports the funding principles, and I am content to accept its suggested amendment that schools should be funded according to relative need, including mitigating the effects of social disadvantage. I agree that the division of responsibilities between boards and schools can be reviewed in the light of the outcome of the review of public administration, and I note the Committee's general endorsement of the proposals for small schools and premises. I am happy to reflect further on the proposals for landlord maintenance and vocational education and training as requested.

Some concerns have been expressed about the impact on education and library boards services if £15 million is transferred from these budgets to schools delegated budgets. I should first clarify the fact that the consultation document refers to a sum of up to £15 million. Ken Robinson, Tommy Gallagher and a number of others raised that matter. The figure was based on the amount of money required in the 1999-2000 financial year if the four boards brought the level of their age-weighted pupil units (AWPU) up to the level of the highest AWPU. The Department continues to urge boards to increase delegated funding. It is hoped that by April 2003 the disparity between the levels of delegation in boards will not be as wide.

I will also confirm that the £15 million does not necessarily have to come from a realignment of centrally managed budgets within boards. The Department will review the overall budget position in the context of the 2002 spending review and will seek additional funding from the Executive to assist the move to the common formula. We will of course accept the support of Members in that endeavour.

I remind Members of the reasoning behind this proposal. Under present arrangements, there are wide differences across boards in the levels of funding delegated to schools and the levels of funding retained centrally. Some, but by no means all, of this is due to differences in characteristics, such as higher transport costs for boards in rural areas. To achieve true common funding requires not only common funding delegated to schools but a common level of funding for services provided from the centre. Otherwise, inequalities in the support for schools will continue to exist.

Our clear priority is to increase the level of resources in the classroom, which means increasing the level of resources delegated to schools. The high aggregated schools budget (ASB) option will move a further £15 million into school budgets, money that schools would currently receive if the levels of delegation across boards were equally high. Those are the reasons the Department favours the high ASB option.

Members should therefore understand that a simple summation and redistribution of existing delegated budgets - the low ASB option - will be detrimental to schools in those boards that have higher levels of delegated funding. Their additional funding would be skewed to schools and boards with lower funding levels. Those schools would continue to benefit from higher levels of central support from the board. Provision for central services must be brought onto a common footing alongside the introduction of the common funding formula.

TSN funding was raised by Ms Lewsley, Eileen Bell, Mr McHugh, Mr McElduff, Sammy Wilson, Ken Robinson, Mr Gibson, Mr Gallagher and others, and it represents a huge issue. Our proposals for this key area have attracted much comment from the Committee, the respondents to the consultation and from Members today. Again, it is reassuring that the Committee supports the continued inclusion of a factor in the formula that seeks to recognise the additional costs incurred by schools in mitigating the effects of social disadvantage and low educational achievement.

The key issues are the level of funds to be made available and how they should be distributed. The amount allocated to TSN is a matter of judgement, balancing the needs of schools where pupils require additional support against those with few, if any, such pupils. It is essential that all schools have sufficient core funding to meet the needs of their pupils. It is proposed to increase the level of TSN funding from 5% to 5·5% of the total schools recurring funding budget. That would raise expenditure on TSN within the LMS arrangements by about £4 million. The increase is designed to facilitate the change in the TSN indicator by supporting schools in addressing low educational achievement, regardless of social background, while also ensuring that schools currently in receipt of TSN funds do not lose out. We need to monitor how effectively the funds are used, and the document outlines proposals to do that.

There is clear evidence of improvement in the performance of free school meal pupils and schools that have high proportions of pupils with entitlement to free school meals. However, we must continue to ensure that best use is made of TSN funds. The Committee has suggested some measures relating to the use of entitlement to free school meals as the indicator of social deprivation. As the report acknowledges, the issue of uptake will be researched in the family resources survey to be conducted later this year.

Arrangements for determining entitlement to free school meals have traditionally mirrored those applicable in England, and I understand that consideration is being given to extending entitlement to include families who are entitled to working families tax credit, which will extend coverage of the indicator.

Financial assistance towards the cost of school uniforms is based on the same criteria as entitlement to free school meals. Whatever indicator is used for social deprivation, it must be robust, objective and capable of being updated regularly as circumstances change. It must also be pupil-related, not least because pupils do not always attend their nearest school. That is a problem which reduces the value of census-based indicators such as Noble and Robson. Entitlement to free school meals remains the most robust indicator of social deprivation - a view widely supported by schools in the consultation. I will keep the issue under review and I will utilise more effective indicators should they become available.

A key aspect of our proposals for TSN was the inclusion of an education indicator in order to target more effectively schools with pupils who are not socially disadvantaged but are nevertheless performing below the expected level for their age. This addresses one of the long-standing criticisms of the current TSN allocation within the LMS arrangements. I recognise fully the concerns expressed with regard to my proposal to use key stage assessment results as the primary indicator of special educational need in primary schools, and I shall give careful consideration to all the alternatives suggested. As we discussed with the Committee, the difficulty is in identifying a suitable alternative that measures ability on intake, differentiates between pupils and is robust. Baseline assessments and Key Stage 1 results do not meet all these requirements. A standardised test may be developed, but that would involve additional testing and bureaucracy for schools.

I also note the point made by the Committee regarding the incorporation of a free school meals indicator within this element. The Department was aware of that issue. The suggested approach sought to reflect the close correlation between free school meals entitlement and educational performance and provide a balance for the use of Key Stage 2 results, which is an output measure. As I indicated to the Committee during our earlier meeting, I am happy to consider the issue further.

Another issue that has attracted considerable attention is the position of teachers' salaries within LMS. I welcome the recommendation that teachers' salaries should remain within LMS. I agree with the Committee that the removal of teachers' salaries would undermine the principles of LMS. I note the Committee's recommendation that my Department should undertake further investigations with a view to moving to a situation where salaries are funded.

The Department looked at the devolved school management system in Scotland, an issue raised by Mr Gibson and Mr Hussey. Our conclusion was that the Scottish system operates in an entirely different context. The introduction of a system here along those lines would require the development of a new set of arrangements including standard staffing formulae, agreed maximum class sizes in all classes and standard organisational arrangements, all of which would require careful planning and, doubtless, a new round of consultations, especially given the high level of support from schools for the current arrangements. Therefore, I intend to proceed with the proposals in the document. However, I will ask my officials to continue to examine other approaches to funding teachers' salaries.

Members raised several other issues, and I am not sure if I will have enough time to deal with all of them. Mr Kennedy raised the issue of the release of data. I thought that it was important for the consultation to be conducted on the basis of what is best for the education of our children rather than whether a particular school receives a slightly larger or smaller budget. However, we recognised that the impact on schools is a key consideration. The document did not contain details of the outcome for individual schools, because there would be a danger of seriously misleading schools due to certain assumptions having to be made where up-to-date data are not available, and the situation may change substantially between 2000-01 and implementation in 2002-03. The document would also have become unmanageably bulky.

However, the document contained comprehensive information on the financial impact on school sectors and on a wide range of different school models, and would reflect variations in the key factors that affect school funding. This was followed on 19 June by an illustrative outcome for a large grammar school. On the same day, the Department informed all recipients of the consultation document that the values of the age-weighted pupil unit used were 1,236 in the high ASB model and 1,203 in the low ASB model. I am satisfied that that enables schools and other organisations to get a reasonably clear picture of how commonality is likely to affect them.

Mr Kennedy also raised the issue of balance between primary and post-primary schools. I want to reaffirm the commitment to increase funding for primary schools. Investment in early years should avoid costly remediation in later years. There is no doubt that this investment will assist secondary schools.

I also want to point out that the proposed skewing of resources to the primary sector has been supported by 85% of schools, with 53% strongly supporting it. Indeed, almost 50% of post-primary schools agreed to the change. I acknowledge the concerns regarding the impact on nursery and post-primary schools, but I should explain that, within a fixed amount, if one sector is to gain, another must lose. The issue is to keep change manageable.

Mr Hussey, Ms Lewsley and Mr Kennedy raised the issue of the Southern Education and Library Board's special units. The proposals for special units took the advice provided by the education and training inspectorate into account and are designed to bring arrangements across education boards to an even footing. The Southern Education and Library Board is the only authority that allocates an additional lump sum to special units, although other boards have units that fulfil the same role. Contrary to the views expressed by those who seek to retain the lump-sum allocation, there is no evidence that the level of provision for pupils, or the extent of inclusion, is higher in the Southern Education and Library Board area than in any other area.

Mr Kennedy and Sammy Wilson also discussed Irish- medium education. I note that the Committee was unable to reach an agreement in respect of my proposals for Irish-medium schools and units, and that no consensus emerged as a result of the consultation. One funding principle is that schools should be funded fairly and on an objective basis. In so far as it is possible, allocations should be determined by using objective measurements of the factors that give rise to unavoidable and significant additional expenditure. I am satisfied that the proposals are equitable. Specialist provision in Irish-medium schools and units results in significant additional costs, and the formula must take account of those costs. The approach is in full accord with the principles upon which the formula has been developed, and it will result in funding according to relative need. Before deciding on the matter, I will consider every point that was made.

Sammy Wilson spoke about the proposals for the funding of Irish-medium schools and units. Strictly speaking, it is incorrect to assume that everyone who disagreed with the proposals did so because they felt that there should be less funding. Some objectors wanted more funding.

Eileen Bell mentioned increased enrolments. There is widespread support for basing funding calculations on the census return. That change will be introduced before the introduction of the common funding formula to facilitate its implementation. Alongside that arrangement it must be ensured that schools at which additional pupils enrol each year will have access to the additional funding that they need to provide for those pupils. As was the case when those arrangements operated in the past, cumbersome or unnecessary administration must be avoided. It was suggested that a threshold of 10% of enrolments be applied, but the Committee suggested a lower threshold. The Department is examining that proposal with its partners.

Ms Lewsley raised equality issues. The Department is considering points that the Committee and others, including the Equality Commission, made in respect of the equality impact assessment.

Ken Robinson stated that teachers' costs could be higher if a school has staff who are at the top of the pay scale as a result of their incremental progression. Other factors include protected salaries for principals and vice-principals, and decisions by boards of governors in respect of responsibility points. It is difficult to determine genuine cases of need in the latter category. The problem of teacher redundancies will persist under any agreed staffing formula, especially when enrolment figures decrease.

Some Members may be unaware that the LMS formula tends to change each year; the common funding formula will also do that. It will need to be refined, where necessary, to adapt to new circumstances. The Department will wish to make changes manageable so that schools have the capacity to plan ahead with confidence. However, there is no reason why there cannot be fine-tuning and further developmental work on aspects of the formula in the years to come.

TOP