Victorian Education Minister Fails in His Response to Criticism of Funding Guarantee for Private Schools

With its legislative guarantee that private schools will receive 25 per cent of expenditure on public schools, the Victorian Government has joined with the Abbott Government in sabotaging the Gonski school funding agreement.

In response to criticism by the Gonski panel member, Ken Boston, the Victorian Education Minister, James Merlino, has claimed this is not important because state government funding of private schools is based on need. This is highly misleading, even disingenuous. The Minister’s claim ignores the fundamental fact that private school funding by the state government is based on public school costs instead of need in the private system. Some of the money may be eventually distributed according to need, but the total bucket of private school funding is determined by expenditure in public schools.

Under the legislation passed in the Victorian Parliament, the total amount of state government recurrent funding for private schools is determined as at least 25 per cent of total expenditure on public schools. That is, the total bucket of money given to private schools is determined by need in public schools, not by need in the private sector.

The number of disadvantaged students in the private school sector has no influence on the level of funding it gets from the state government. Indeed, the proportion of disadvantaged students in the private sector could decline but it would still get the same 25 per cent of the cost of public schools. Similarly, even if the proportion of disadvantaged students in private schools increased it would not attract any additional government funding because it is determined by expenditure on public schools. The Gonski funding model dispensed with this absurdity.

In Victoria, as elsewhere in Australia, disadvantaged students account for a much greater proportion of public school enrolments than they do in private schools. In 2013, 29 per cent of public school students in Victoria were from low socio-economic status (SES) families compared to only 15 per cent in Catholic schools and only eight per cent in Independent schools. That is, the proportion of low SES students in public schools was double that in Catholic schools and nearly four times that in Independent schools.

Similarly, the proportion of Indigenous students in public schools was three times that in Catholic schools and five times that in Independent schools. Overall, the proportion of disability students in public schools was double that in private schools.

On average, the school results of disadvantaged students are much lower than for other students and additional funding is provided to improve their results and to meet the higher costs of educating students with disabilities. This increases average expenditure across public schools.

This is where the unfairness of this funding system comes in. Despite having much lower proportions of disadvantaged students, Catholic and Independent schools get state government funding that is based on the costs of the public system which are higher because of its higher proportions of disadvantaged students. So, if the state government increased funding to government schools to address issues of disadvantage, at least 25 per cent of it would flow on to private schools, whatever their enrolment of disadvantaged students. This link sets up a perverse incentive for the private sector to reduce their already low commitment to disadvantaged students, and simply pocket the funding.

Once the total bucket of money is determined for private schools, some of it is then distributed according to need. Under what is called the Financial Assistance Model (FAM), there is a per capita component and a needs-based component to state government funding of private schools.

Each school gets a per capita component which is not based on need. It is the minimum level of state government funding for all schools. Schools such as Geelong Grammar, Scotch College, Brighton Grammar, Lauriston, etc. down to the poorest private school all get a per capita funding amount. This amount is very slightly modified according to a formula to determine each school’s capacity to support its student population. Lower SES schools get a slightly higher per capita grant than higher SES schools. The per capita component makes up about 40 per cent of state funding of private schools.

The needs-based component is determined by student and school characteristics. Schools attract additional funding based on the number of low SES, Indigenous and disability students. This needs-based component accounts for about 60 per cent of state recurrent funding of private schools.

However, funding for private schools that are part of systems such as the Catholic, Seventh-Day Adventist, Lutheran and Ecumenical school systems is given to the system authority, such as the Catholic Education Commission, to distribute to individual schools as it sees fit. There is no requirement for the authority to distribute the money according to the formula of the Financial Assistance Model. Moreover, the system authority is not required to demonstrate how the money is distributed. The Catholic Education Commission, for example, has consistently refused to divulge how its funding is distributed.

These system authorities account for the large majority of private schools in Victoria and the large part of state government funding for private schools. Yet, there is no public information available on how the money is distributed.

The lack of information on how taxpayer funding for private schools systems is distributed has been strongly criticised by national reports on school funding. A 2009 National Audit Office report (pp. 22, 85) and the Gonski report (p. 47) on school funding both criticised the lack of transparency on how school systems distribute taxpayer funds to their member schools.

The Minister representing the Minister for Education in the Legislative Council, Steven Herbert, told the Council last week that the Catholic Education Commission distributes the funding to its schools based on need. He said:

The Catholic Education Office has a fully grown system. We respect the system and we respect the way it operates, and it distributes the funding according to its formula of need and according to its needs.

But, the Minister did not say what that formula is. The fact is that the Government does not know. It is operating on faith that private school systems distribute their funding according to need. This is not enough for accountability to the taxpayer.

The contrast with its approach to public school funding is instructive. The Education Minister has promised to reveal how much federal and state funding each public school has received under the Gonski funding plan. He should do the same for private schools. School systems should be required to disclose how they allocate taxpayer funds to member schools.

Instead of obfuscating, the challenge is now for the Victorian Education Minister and the Victorian Labor Government to bring their education funding policies into line with those of Federal Labor and Gonski on what may be a key issue in the next Federal election. If they don’t, they will have simply joined Abbott and Pyne in their sabotage.

Trevor Cobbold

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