Government Schools Lose from Government Funding of Private Schools

A new study says that government schools are the clear “losers” from government funding of private schools over the past four decades. It shows that government funding of private schools in Australia has increased socio-economic segregation between government and private schools and allowed private schools to improve school quality rather than reduce their fees.

Government funding of private schools has led to much higher concentrations of lower socio-economic status (SES) students in government schools. This has widened the achievement gap between government and private schools and imposed much higher cost burdens on government schools. As a result, the study says, government schools should receive higher funding per student than private schools.

The study also says that private schools will continue to use government funding to improve school quality by reducing student/teacher ratios and attract higher SES students away from government schools unless their funding is made conditional on regulation of fees and selection of students.

The study is published in the latest issue of the Australian Journal of Education. The authors are Dr. Louise Watson from the University of Canberra and Dr. Chris Ryan from the Research School of Economics at the Australian National University.

The study shows that government recurrent funding for private schools increased in real terms (that is, adjusted for inflation) from about $500 per Catholic secondary school student in the early 1970s to over $6000 in 2007 and from less than $1000 per Independent secondary student to about $5000 in 2007.

It demonstrates that private schools have used the increased funding to increase school quality by reducing student/teacher ratios rather than to reduce fees and open up their schools to students from low socio-economic status (SES) families.

School fees have continued to increase in real terms: Catholic school fees increased by 160% from the early 1970s to 2002 in real terms while Independent school fees increased by 70%. These increases far exceeded increases in real income over the same period: per capital real household disposable income increased by 46% between 1972 and 2002 while real male average weekly earnings increased by 26%.

The additional resources available for private schools from increased government funding and fees allowed them to significantly improve student/teacher ratios. In the early 1970s, there were about 23-24 students to every teacher in Catholic secondary schools; by 2007, it was less than 13 per teacher. The ratio for Independent secondary schools fell from over 14 to 10.5 students per teacher. The student/teacher ratio in government schools fell from 15 to just over 12 over the same period.

The improvement in student/teacher ratios in private schools has been much greater than in government schools. The student/teacher ratio in Catholic secondary schools as a proportion of the government school student/teacher ratio fell from about 1.4 to 1.0 in 2008. The Independent school proportion relative to government schools fell from 1.1 to less than 0.9.

The study shows a strong relationship between the relative improvement in private school student/teacher ratios relative to government schools and their increasing share of total enrolments. Improving student/teacher ratios enabled by government funding and fee increases has been a factor in the shift in enrolments to private schools since the early 1980s.

The study also shows that increasing school fees have ensured that it is mainly higher SES families that have been able to take advantage of the improvement in private school quality. The students who transferred from government to private schools between 1975 and 2006 tended to be from the middle to the top SES families. About 60% of the decline in government school enrolments over the period was from the top half of the SES distribution.

Those who transferred were from above-average SES families relative to the 1975 government school population, but below the average SES of the 1975 private school population. This meant that while the average SES of students in government schools fell between 1975 and 2006, the average SES of private school students also fell. However, the average SES of both Catholic and Independent schools remained significantly higher than that of government schools in 2006.

The transfer of higher SES students to private schools has significantly changed the socio-economic composition of government secondary schools. In contrast to 1975, the majority of students in government secondary schools in 2006 attended schools whose SES is below average. Moreover, the proportion of government secondary schools with concentrations of low SES students increased between 1975 and 2006.

In 1975, there were two more common types of government secondary schools: one with students from SES backgrounds well below the average of the community and one with students whose SES was above average. In 2006, government schools with above average SES were less common. Indeed, the average SES of the ‘high’ SES-type government schools was below the average SES of the community.

The study says its findings have two significant implications for education policy.

First, a widening of student achievement between government and private schools can be expected because of the lower average SES of students in the government sector. It is a well-established research finding that student SES has a significant impact on educational attainment. As lower SES students now make up a higher proportion of government school enrolments average achievement levels in government schools can be expected to be lower than in private schools. Further, the higher concentrations of low SES students in government schools can be expected add more downward pressure on student achievement.

A second implication is that this trend can be expected to increase costs per student in the government sector. It means that the cost of educating a government school student to an agreed standard will always be higher than in a private school. Government school systems also bear the additional costs of taking all students regardless of background and supporting small schools in rural areas.

As result, the study recommends that government schools should be funded at a higher level per student than private schools.

…when governments set funding benchmarks for all schools, they should expect private schools to operate effectively at a lower level of resources per student than public schools. This is a reasonable assumption as long as private schools enrol a smaller proportion of low SES students than public schools and are free of any expectations regarding universal provision. [p.104]

The study also suggests that strong government regulation of fees and enrolments in private schools should be minimum requirements in any funding system aiming to expand educational opportunities by supporting private school choice.

Trevor Cobbold

The publication details of the study are as follows:

Watson, L. & Ryan, C 2010. Choosers and Losers: The Impact of Government Subsidies on Australian Secondary Schools. Australian Journal of Education, 54 (1): 86-107.

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