From April 2011, all local authorities will have implemented the Early Years Single Funding Formula (EYSFF). This means that all providers  – whether maintained, private, voluntary or independent – will be funded through a common formula in each local authority, based mainly on participation. The formula will have been developed in full consultation with each authority’s schools forum and has already been  implemented in pilot and pathfinder authorities covering half the country over the last couple of years.
As more schools convert to academy status, there is now a significant  number of academies with early years provision. In accordance with  the principles of the EYSFF, these should be funded consistently with  other providers in each local authority area. Academy funding generally uses the local authority’s formula from the previous financial year; this involves a time lag which means local formula changes take longer to feed through. For Early Years funding, this is not appropriate because, in many areas, moving to the EYSFF is a fundamental shift towards a level playing field between providers based on participation.
Schools which have recently converted to academy status or are considering conversion will have been closely involved as a maintained school in the  development of their EYSFF and will be expecting to be funded on this basis.
Where schools have converted to academy status since September 2010, therefore, local authorities will be responsible for calculating their EYSFF allocation and making payments to them as with any other provider from September 2011 (as academies are funded according to  the academic year, existing allocations remain in place until August  2011).
Where schools convert during the 2011-12 financial year, then the  academy will continue with the budget it received as a maintained  school at the start of the year. Following conversion, the academy will continue to receive the EYSFF element of its budget from the LA and will receive the remainder of its funding from the Education Funding Agency (EFA - formerly the YPLA).
Free Schools’ nursery pupils would also be funded directly by the LA  through the EYSFF. Potential free schools should speak to their LA to find out whether they could be a provider for the free entitlement and what funding they would get through EYSFF.
The only exceptions to this will be the small number of academies which existed prior to September 2010 with Early Years provision,  because of the nature of their funding agreements. They will continue to be funded by the EFA through replication.
The change means that academies will be treated on the same basis as other private businesses and independent schools with Early Years provision. There is no change to the academy’s autonomy and  independence from the LA. Nor should there be any increased burden on academies; they should already be supplying relevant data to the LA for it to replicate its formula and will be familiar with the factors in their local EYSFF as it has been developed.
There should be no significant financial impact on individual academies unless the previous year’s LA formula was based on places and they have a large number of empty places.
The changes should not have any significant impact on LAs. They should have already budgeted for the EYSFF allocations to academies; the only change will be that these are paid out to the  academies as part of the ISB rather than being recouped through DSG. We do not require any amendments to section 251 statements if these have already been completed.
Neither should LAs need to change their EYSFF. Schools which have nursery classes and which have converted to academies should be  funded on the same basis as maintained schools with nursery classes. If an academy is delivering the free entitlement through another provider to whom it rents building space, then the provider would receive the funding and not the academy.
Arrangements for 2012/13 and future years are subject to the wider review of school funding.