Private School Funding is Corrupted by Special Deals

This is a summary of an open submission to the National Education Ministers’ Council by Save Our Schools on the future funding arrangements to apply from 2018 that are currently being negotiated behind closed doors between the Federal and state/territory governments and between the Federal Government and private school organisations. The submission can be downloaded below.

The Federal Education Minister, Simon Birmingham, says that he wants to fix the “corruption’’ at the heart of the Gonski funding model. He should start on the special deals and arrangements that provide several billion dollars in over-funding to private schools that corrupt the principle of needs-based funding for schools.

The current system of funding private schools is full of special deals that contradict the Gonski principle of needs-based funding. Many private schools, including those serving the most privileged and wealthy families in Australia, receive more funding than they would be entitled to under a truly needs-based funding model. This over-funding amounts to over $3 billion a year that would be much more effectively used to support disadvantaged schools in both the public and private sectors.

There are several sources of the over-funding. One is that many schools receive more funding than they are entitled to because they have been allowed to keep funding that they would have otherwise lost when the current funding model was introduced in 2014. This form of over-funding was highlighted by Birmingham on the ABC’s Q&A program in September.

A second source is that many private schools are funded to a much higher level than public schools, even though they have far fewer disadvantaged students. In particular, the income from fees and donations of many exclusive private schools far exceeds government funding of public schools, yet these elite private schools receive substantial government funding running into millions of dollars even though they enrol very few or no disadvantaged students. Government funding also enables many other private schools whose fees and donations are less than government funding of public schools to have a higher level of resourcing than public schools.

Both these sources of over-funding are the result of an edict by the former Prime Minister, Julia Gillard, that no school would lose a dollar of funding under the new model. One of the Gonski Panel members, Ken Boston, has said that this edict was “the albatross around the neck of the Gonski Panel”.

Gillard’s edict was a new “no losers” guarantee that replaced the “no losers” deal done by the Howard Government to maintain over-funding of private schools when the old socio-economic status (SES) funding model was introduced in 2001. The Howard Government created the new category of “funding maintained” schools that were allowed to keep funding they would have otherwise lost if the SES model had been strictly applied. It guaranteed continued government funding for all private schools, including the wealthiest.

Labor’s new “no losers” guarantee means that many private schools with similar demographic profiles will continue to receive different levels of funding for a long time into the future. It has completely distorted government funding of private schools and contradicts the Gonski report principle of operating “within a coherent and principled framework that is applied consistently to all non-government schools”.

A third source of over-funding is the use of an area-based measure of the SES of private schools to determine their level of government funding instead of a family-based measure. The area-based measure systematically over-estimates disadvantage in private schools because, on average, it is the wealthiest families in any area that send their children to private schools. As a result, private schools are attributed a higher level of disadvantage and receive more government funding than if the wealth of the school community was measured directly using a family-based measure. The area-based measure of school SES was originally introduced under the Howard Government’s SES funding model for private schools.

A fourth source is a new special deal arranged between Prime Minister Gillard and the Catholic Church. Under the deal, Catholic schools are guaranteed at least the share of total public funding that they had prior to the introduction of the new funding model, irrespective of changes in the proportion of disadvantaged students. The deal was then extended to the whole private school sector by the Labor Government.

These special deals have corrupted the integrity and coherence of the “Gonski” funding model which was designed to make school funding solely needs-based. They apply only to private schools with the result that a large proportion of private schools are not funded according to the Gonski principle. They do not apply to public schools, whose funding was to be fully need-based.

The funding arrangements to apply from 2018 must be fully needs-based. All schools sectors should be funded on the same needs-based principle. Over-funding in the first two categories should be phased out by the end of the next quadrennium in 2021, and the guaranteed share of government funding for private schools should be terminated from 2018. In addition, the capacity to contribute of schools and school systems should be calculated according to a family-based measure of SES, not an area-based measure, from 2018.

Another issue in the current system of funding private schools is that school systems, such as Catholic systems in each state, are block funded by the Federal Government and they are not required to reveal how they distribute that funding to member schools. This lack of transparency was heavily criticised by the Gonski Report. Reports by the National Audit Office and the Victorian Auditor-General provide compelling evidence that Catholic systems do not fully re-distribute taxpayer funding on a needs-basis. It should be a legislative requirement that school systems should disclose how they allocate taxpayer funds to member schools.

The basic principle for government funding of private schools is that it should be based on need. It should consist of two components. It should fill the gap between funding from fees and donations and the base Schooling Resource Standard (SRS) and it should support disadvantaged students.

Private schools operating at below the standard should receive government funding to ensure that they can provide an adequate education. No private or public school should operate with fewer resources than the SRS. Disadvantaged students enrolled in any private school should attract the relevant disadvantage funding loadings.

The extent of baseline funding for private schools should be conditional on eligible schools fulfilling a similar social role as public schools. The full difference between private-sourced funding and the base SRS should be provided only to private schools that meet similar social and curriculum obligations as public schools.

Trevor Cobbold

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